History > 2006 > USA > Internet (I)

David G. Klein

This Time, the Revolution Will Be Televised

NYT

22.1.2006

http://www.nytimes.com/2006/01/22/business/yourmoney/22frenzy.html

U.S. asks Internet firms to save data

Posted 5/31/2006 11:09 PM ET
USA Today
By Jon Swartz and Kevin Johnson

Top law enforcement officials have asked leading Internet companies to keep histories of the activities of Web users for up to two years to assist in criminal investigations of child pornography and terrorism, the Justice Department said Wednesday.

Attorney General Alberto Gonzales and FBI Director Robert Mueller outlined their request to executives from Google, Microsoft, AOL, Comcast, Verizon and others Friday in a private meeting at the Justice Department. The department has scheduled more discussions as early as Friday. Last week's meeting was first reported by CNET, an online news service.

The meetings reflect a new approach by law enforcement in anti-terrorism efforts. Previously, the Justice Department had invoked the need for data retention only to battle child pornography. Since the Sept. 11 attacks, Internet traffic has become increasingly critical to terrorism investigations, too.

Justice is not asking the companies to keep the content of e-mails, spokesman Brian Roehrkasse said. It wants records such as lists of e-mail traffic and Web searches, he said.

Roehrkasse said the government is required to seek proper legal authority, such as a subpoena, before obtaining the records. He said any change in the retention period would not alter that requirement. Law enforcement officials have seen investigations derailed "time and time again" because of a lack of data, Roehrkasse said.

The government's request forces the companies to strike a balance between satisfying law enforcement demands and honoring the privacy of millions of customers.

"The issue for us is not whether we retain data, but we want to see it done right," says Dave McClure, president of the U.S. Internet Industry Association, which represents 150 companies, primarily Internet service providers. "Our concerns are who pays for it, what data is retained, and if it is retained legally without violating federal laws and subscriber agreements."

Lee Tien, a lawyer for the privacy advocacy group Electronic Frontier Foundation, said he was concerned.

"I think that the request raises some really, really major privacy problems," he said. The Justice Department is "asking ISPs (Internet service providers) to really become an arm of the government."

The request creates a logistical challenge: Most Internet providers store data such as Web searches for 30 to 90 days. Storing such information significantly longer is more expensive, McClure and others say.

"We strongly support Gonzales' interest in assuring that the Internet is safe for everyone," Phil Reitinger, Microsoft's senior security strategist, said in a statement Wednesday that acknowledged the company's participation in the meeting at Justice. "But data retention is a complicated issue."

"We believe (data retention and preservation) proposals deserve careful review and must consider the legitimate interests of individual users, law enforcement agencies, and Internet companies," Google spokesman Steve Langdon said Wednesday.

Gonzales broached the issue of record retention in April during a speech at the National Center for Missing & Exploited Children in Alexandria, Va.

Gonzales, who has made fighting child exploitation a prominent part of the national law enforcement agenda, said the pursuit of child predators depends on the availability of evidence often in the hands of ISPs.

This isn't the first time Gonzales has gone to Internet companies with a request related to their records. In March, a federal judge ordered Google to hand over Web search records requested by Justice as part of its efforts to shield children from sexually explicit material online. Google balked at an earlier request, saying it would expose trade secrets. AOL, Yahoo and Microsoft cooperated with the government, but they said their assistance was limited and users' privacy was not violated.

Contributing: William M. Welch

    U.S. asks Internet firms to save data, UT, 31.5.2006, http://www.usatoday.com/tech/news/internetprivacy/2006-05-31-internet-records_x.htm

Technology leaves teens speechless

Posted 5/29/2006 8:30 PM ET
USA Today
By Olivia Barker

To be sure, the monthly bills — as high as $300 — were a problem.

But there were other, audible consequences of the fact that Alexandra Smith would pound out more than 1,000 text messages from her Razr cellphone a month: She was chatting — constantly, exhaustively — but she wasn't talking. It got so that Smith's parents were begging her to put the phone to her lips instead of her fingertips.

So these days Smith, 18, is practicing something that came oh-so-naturally to tides of teens before her: the art of vocal gab. Instead of holing up at home and punching out digital dialogue, Smith is making an effort to actually meet up with her three best friends and flex her larynx muscles.

"I figured I should probably go over and learn how to talk to somebody," says the Eugene, Ore., high school senior. "I didn't want to be the dork at college who texts all the time."

She needn't worry. College suitemates, even roommates, pick up their phones to ping each other. Otherwise, they're communicating via instant messaging or the social networking sites MySpace and Facebook.

With their mouths largely shut but their laptops and flip phones open, teenagers' bedrooms are beginning to sound like the library.

So is the dinner table. On her show May 10, Ellen DeGeneres ribbed guest Lindsay Lohan: "Every time I've seen you, you're out with eight or nine girls, having dinner. You're all sitting around the table on your BlackBerries." Lohan matter-of-factly explained that she had "like 1,000" messages to answer.

Not long ago, prattling away on the phone was as much a teenage rite as hanging out at the mall. Flopped on the bed, you yakked into your pink or football-shaped receiver until your parents hollered at you to get off.

Now, Sidekicks and iBooks are as prized as Mom's Princess phone, and conversations, the oral kind, are as uncomfortable as braces. Which makes employers and communications experts anxious: This generation may be technologically savvier than their bosses, but will they be able to have a professional discussion?

"We are losing very natural, human, instinctive skills that we used to be really good at," says Sonya Hamlin, author of How to Talk So People Listen: Connecting in Today's Workplace.

A couple of years ago, Hamlin was asked to teach a class of "very bright" California high school seniors about the college admissions interview. Their mock answers were "extremely short and not informational. Nothing came out, really, because it's such an unused skill."

Part of the reason, Hamlin says, is because "they're not listening. With IM, you can reread six times before deciding how to answer." There's no improvisation, she says, none of the spontaneity of phone banter or a face-to-face chat. "Talk is a euphemism. We do it now in quotes," Hamlin says.

And when face-to-face chats do occur, there are other verbal kinks. Stefani Beser, a freshman at Villa Julie College near Baltimore, texts so much — 20-40 times a day "if there's a lot going on" — that the shorthand creeps into her live conversation. "You'll be talking and all of sudden you'll say, 'Oh, LOL,' " text-speak for "laughing out loud."

Back home, Beser would e-mail her mom a stairwell away to ask when dinner was ready. Her boyfriend courted her through Facebook and then IM. With roommates, "we could literally lean our computer chairs back and talk to each other, but we IM and text."

A 2005 report for Achieve, a non-profit organization that helps states raise academic standards, found that 34% of employers were dissatisfied with the oral communication skills of high school graduates; 45% of college students and 46% of high school graduates who entered the workforce instead of college said they struggled with their public speaking abilities.

Among teens who go online daily and own a cellphone, 53% most often communicate with friends via written messages, according to a 2005 report by the Pew Internet & American Life Project, and 61% of the time they're chatting via IM. Texting wasn't prevalent enough when the study was conducted to figure prominently in the data, but it likely would now, says project research specialist Mary Madden.

In 2004, 22% of North American cellphone subscribers were active texters, according to Nokia's Bill Plummer. Last year, it was 36%. In 2005, more than 500 billion text messages were sent and received worldwide, as reported by Verizon Wireless. By 2010, it is projected to be more than 2.3 trillion.

In the meanwhile, phone companies are tapping into teens' tapping tendencies. Virgin Mobile is unveiling Switch_Back, a kind of junior BlackBerry with a qwerty keyboard and AOL IM built in. "We really think that text is the new talk," the company's Howard Handler says. A quarter of Virgin Mobile's teen customers use their phones for texting more than talking. "We are living in a 160-character nation," the maximum text message length, Handler declares.

Erica Beal's slide into text-based talk reads like the plunge any addict takes: From age 12, her ear was attached to her cellphone. "I'd call my friends, who I had just seen, all day, and talk to them all night." At 15, she got hooked on texting. At 17, it was MySpace. Now, the 18-year-old Manhattan high school senior texts 10 to 15 times a day "at least" and checks Facebook as soon as she gets home.

Four years ago, Carol Weston did "the nice-mom thing" of getting her older daughter, Lizzi, then 14, her own landline. It lasted two years. "I realized we were paying for nothing, really," says Weston, author of Girltalk: All the Stuff your Sister Never Told You. (IM had become Lizzi's medium of choice.)

Nowadays, the family phone doesn't ring very much, either. "On the one hand it's nice and peaceful at home," says Weston, who lives in Manhattan. "On the other hand, it's hard to figure out which boys are calling." Hence another consequence of a text-centric household: "Mom and Dad just can't eavesdrop as much as they used to."

So some of them are adjusting. When Brett Dicker's son spent his junior year in London, "we probably spoke to him less than half a dozen times the whole year, yet we were literally daily IMing." Now that Matt, 22, is back at the University of Southern California, he and his mom text "all the time," says the fiftysomething Dicker, who works in marketing and lives in Woodland Hills, Calif.

The primacy of the keyboard has been, well, a lifeline to the kind of guys who, a generation ago, grasped the family room receiver with a sweaty palm and a pounding heart. IM "makes life easier, absolutely," says Nick Kacher, 17, a junior from Waltham, Mass. "I'm not a big sit-around-and-chat-on-the-phone kind of person." Friends, and girlfriends, would needle him about his phone phobia. Now, with IM, "I definitely do chat."

But even for a texting and IM fiend like Heather Hogan, who's known to slide her Sidekick under the table and punch away at family events, there are limits. Last month she met a guy while out with her friends. They swapped numbers, but he never called. He texted Hogan, 18, four or five times a day. It got "kind of annoying," she says. Without any verbal cues, gauging his interest level became tough. So Hogan stopped texting him.

In the past three years alone, the standards have become "so different," says Hogan, a Nassau Community College freshman from Bellmore, N.Y. "No one talks, really, unless you're with people."

But experts aren't necessarily worried about what this signals for the future of interpersonal relationships. "Girls get the nourishment that comes with female bonding," Weston says, whether "electronically, telephonically or in person." Guys, on the other hand, "if they're lucky, learn to have tête-à-têttes, or real talk in real time, but they don't come by it as naturally."

Smith does call one person regularly: an ex-boyfriend who lives three hours away. At first, it was only for five minutes a chat. Now she has reached a marathon 40-45 minutes. "It was hard for me to talk on the phone. It was a big change."

Contributing: Mary Pilon

WRITING BECOMES WAY OF LIFE

Today's teens may not be talking, but they're writing regularly and eloquently.

Amy Goldwasser, a Manhattan-based freelance editor and writer who's about to submit to publishers a collection of essays by teenage girls from across the USA, says the 1,500 submissions she has received about "life and death and God" are fluid, articulate and intimate.

"If you're a teenager today, you live your life in words," tapped out into text and instant messages and onto blogs and MySpace pages. There's "no more precious divide between how they live their lives and writing as a formal, school-assignment kind of thing."

Educators also see the benefits of an extracurricular life lived largely online. "In the long term, it will be very good for kids," says Carol Jago, co-director of the California Reading and Literature Project and a spokeswoman for the National Council of Teachers of English. "It builds fluency in their writing."

By conversing with their peers in the blogosphere, "they're getting more authentic feedback than teachers writing 'awk' or 'frag' in red," Jago says. "School is an artificial construct for many students, and now they're writing for real at a very young age. That's tremendously powerful."

In her original call for submissions, Goldwasser included her phone number. She got only about a dozen calls including a few stammering voices asking for her e-mail address.

Technology leaves teens speechless, NYT, 29.5.2006, http://www.usatoday.com/tech/news/techinnovations/2006-05-29-teen-texting_x.htm

First Amendment Applies to Internet,

Appeals Court Rules

May 27, 2006
The New York Times
By LAURIE J. FLYNN

SAN FRANCISCO, May 26 — A California appeals court ruled Friday that online reporters are protected by the same confidentiality laws that protect traditional journalists, striking a blow to efforts by Apple Computer to identify people who leaked confidential company data.

The three-judge panel in San Jose overturned a trial court's ruling last year that to protect its trade secrets, Apple was entitled to know the source of leaked data published online. The appeals court also ruled that a subpoena issued by Apple to obtain electronic communications and materials from an Internet service provider was unenforceable.

In its ruling, the appeals court said online and offline journalists are equally protected under the First Amendment. "We can think of no workable test or principle that would distinguish 'legitimate' from 'illegitimate' news," the opinion states. "Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment."

The ruling states that Web sites are covered by California's shield law protecting the confidentiality of journalists' sources.

Apple had argued that Web sites publishing reports about Apple were not engaged in legitimate news gathering but rather were misappropriating trade secrets and violating copyrights. But in its ruling on Friday, the panel disagreed.

"Beyond casting aspersions on the legitimacy of petitioners' enterprise, Apple offers no cogent reason to conclude that they fall outside the shield law's protection," the ruling states.

If upheld, the ruling could have far-reaching impact in California courts on other writers who publish electronically, including bloggers who regularly publish news and opinion online without the backing of a mainstream news operation.

"This ruling will probably prove instructive to other online writers," said Kurt Opsahl, a lawyer with the Electronic Frontier Foundation, a civil liberties organization, who argued the case in front of the appeals court last month. "It says that what makes a journalist is not the format but the function."

Apple declined to comment Friday on the ruling or on a possible appeal.

Apple's close guarding of company secrets, particularly unannounced products, is legendary. Friday's ruling arose from a suit filed in December 2004 against the unknown individuals who Apple said had leaked information about unannounced Apple products to two sites devoted to news of the company, AppleInsider and PowerPage.org.

Both sites published reports in November 2004 describing secret Apple projects, including one known at Apple by the code name Asteroid.

Apple did not sue the sites directly but sought to subpoena their e-mail records. As part of the investigation, Apple subpoenaed the e-mail records of Nfox, the company that provided Internet service to Jason D. O'Grady, the publisher of PowerPage.

About the same time, Apple filed a trade-secret suit against Think Secret, another online news site that the company accused of publishing confidential data about its future products. That case is pending.

Friday's ruling is also significant because it addresses whether private e-mail is protected from subpoenas. "The court correctly found that under federal law, civil litigants can't subpoena your stored e-mail from your service," said Kevin Bankston, a lawyer for the Electronic Frontier Foundation.

    First Amendment Applies to Internet, Appeals Court Rules, NYT, 27.5.2006, http://www.nytimes.com/2006/05/27/technology/27apple.html

What's Online

Publicly Debating Privacy

May 27, 2006
The New York Times
DAN MITCHELL

WIRED NEWS shook the blogosphere (though not the mainstream media) this week by publishing documents that appear to support accusations by a former AT&T employee that the company has helped the government monitor huge amounts of private Internet traffic (wired.com).

Mark Klein, a former AT&T technician, had earlier submitted the documents as part of a lawsuit against AT&T by the Electronic Frontier Foundation. The United States District Court judge in the case had ordered the documents sealed while he considered contentions by the government and by AT&T that making them public could compromise national security.

Wired News decided to publish them because "we believe the public's right to know the full facts in this case outweighs AT&T's claims to secrecy," wrote Evan Hansen, the site's editor. Ryan Singel, a reporter, obtained the documents from "an anonymous source close to the litigation," he added.

The documents are highly technical, detailing the methodology behind the AT&T program. But they also describe how the company set up a "secret room" for the operation in a San Francisco switching center. In an introductory note for the documents, Mr. Klein wrote he was "presenting this information to facilitate the dismantling of this dangerous Orwellian project."

The information has been described in previous media accounts, but releasing all 30 pages, along with some photos of the secret room, allows people to assess Mr. Klein's assertions for themselves.

And so they are. The denizens of Slashdot, a site dominated by network managers and programmers, have for the most part decided that Mr. Klein's accusations are true.

There is some disagreement, though, as to what it means. For instance, while Slashdotters are largely appalled at the notion of the National Security Agency's reading their e-mail messages, one anonymous poster called them "hypocrites" and pointed out that their own network policies were often similar. "It's everywhere; what's bothersome is knowing you are being monitored. If you are doing something illegal/immoral/nasty/dumb/stupid maybe the N.S.A.'s monitoring system will make you think twice about doing it."

Contested Space Hollywood WireTap, a gossip site, revealed this week that several famous pornography stars are promoting themselves on MySpace, a community site that's popular among people of all ages — but especially teenagers.

As a result, Hollywood WireTap reported, Weight Watchers has withdrawn its advertisements and T-Mobile is talking to MySpace, which is owned by the News Corporation, about the situation. Both companies told the site that their contracts with MySpace, which takes in a reported $156 million in annual ad revenue, are intended to prevent their ads from appearing on pages that promote pornographic material.

The pages of sex-film stars like Jenna Jameson and Tera Patrick show they have thousands of "friends" — other MySpace users who ask for full access to a user's page. Those pages, in turn, link to the stars' own homepages, which are often replete with pornographic images.

Their MySpace pages are "popular with the kids who are MySpace's mainstay," according to Hollywood WireTap. Some of the stars' "friends" are as young as 14. "Obviously parents, already concerned about the site's alleged pedophiles, won't be happy with this newest twist," the gossip site concludes.

The Wrong Guy In retrospect, it seems inevitable that Guy Goma — the man accidentally interviewed by the BBC last week in a case of mistaken identity — would become an Internet celebrity. The BBC hauled Mr. Goma onto its soundstage and started asking him about downloading music. He had no idea what was going on, but he answered well enough. The interviewer thought he was Guy Kewney, a technology journalist, but he was just a guy who was there looking for a job.

The video has been passed around the Internet, and is featured on a new site, guygoma.com, dedicated to the incident and to Mr. Goma's job search.

    Publicly Debating Privacy, NYT, 27.5.2006, http://www.nytimes.com/2006/05/27/technology/27online.html

Your Money

Timing the Electronics Market

for the Best Deal on a New PC

May 27, 2006
The New York Times
By DAMON DARLIN

Lower prices are part of the natural order in the world of electronics. Sometimes, though, the slow but relentless drop in price turns into a torrent. That's happening now in personal computers.

Prices are falling fast on notebook computers, as much as 18.5 percent so far this year, according to statistics compiled by Current Analysis, a market research firm. The bulk of notebooks now sell for less than $1,000.

The lower-priced notebooks are pushing desktop prices down, too. "I would expect even more intense price competition," said Charles Smulders, an analyst with Gartner, another market research firm.

The pace of price cuts has accelerated because a price war has broken out that offers great benefits to anyone in the market for a PC. And that could be a pretty large market. Forrester Research estimates that 70 percent of PC's in use are more than two years old and 90 percent of second, third and fourth computers are even older. The wars started quietly a year ago this week when Acer, a PC maker in Taiwan, re-entered the American market. The strategy was to get into the top tier of PC vendors as quickly as possible, which meant it would grab market share by keeping prices low.

Acer and other makers took business from Dell, which began to look less like the growth company that its investors were accustomed to. Dell's response came earlier this year as it cut prices.

Intel, meanwhile, was losing a significant portion of the microprocessor market to Advanced Micro Devices. Intel's share dropped to 77.9 percent from 81.5 percent in the first quarter of this year, according to Gartner, while A.M.D.'s market share grew to 20.4 percent from 16.6 percent two years ago. Intel is fighting to win back share, which means PC makers use the rivalry to get a price break.

Apple switched its processor to an Intel chip. Apple also makes running Windows applications on a Mac very easy. Owners of iPods are beginning to notice that Apple does more than sell music.

At the same time, Microsoft has pushed back the release of Vista, its new operating system, from before Christmas to early next year. Normally that would slow PC sales. But Microsoft is considering whether to offer incentives for consumers to buy PC's before Vista's release.

Some analysts had expected coming into the year that prices would actually go up slightly. Instead, the average price of a notebook computer dropped to $963 in April, an 18.5 percent decrease from a year ago, according to Current Analysis, which is based in Sterling, Va.

When an electronic device breaks through the $1,000 psychological barrier, sales take off. Samir Bhavnani, director for research at Current Analysis, said 37 percent more notebooks have been sold so far this year. About 60 percent of all notebook computers sold last month were priced below $1,000. He credits Dell, saying, "They love getting down in the mud."

Dell is running a promotion, which it bills as a celebration of its 22nd anniversary, with a $400 discount on PC's, plus a free monitor and free shipping.

Another statistic will tell you just how good consumers have it. While the number of notebooks sold is up 37 percent, revenue growth in the period is up only 15.5 percent, Mr. Bhavnani said. Companies are making less money on each notebook. Desktop computers are literally being given away. Retailers sold 14.8 percent more of them in the first five months of the year, but revenue declined 4 percent, Mr. Bhavnani said. Half of the computers sold for less than $500.

Consider the Hewlett-Packard Compaq Presario desktop offered this week at Office Depot. For $300 you get a PC with 512 megabytes of RAM and a 100-gigabyte hard drive. Office Depot tossed in a 17-inch CRT monitor and a printer.

"The material cost, before the printer, was around $400," estimated Mark Hill, Acer's vice president for sales in the United States. "It's crazy." Not that he's complaining. Acer has gained one point of market share this year by artful pricing.

So how does a consumer play this? As always with electronics, it is worth waiting. Expect even better deals around the Christmas season. But if you need to get one now, you certainly won't suffer. Deals will abound during the back-to-school season, which starts in June just as the school year ends.

Many consumers will end up waiting for Vista, Microsoft's new operating system. Some analysts expect that to keep computer sales from flagging during the year-end holidays, manufacturers will pressure Microsoft to offer a free upgrade to Vista to anyone buying a new PC.

Decide on the particular features you want on the computer. A notebook with one gigabyte of random access memory and an 80-gigabyte hard drive is recommended. Don't worry about the processor. Unless you are using the computer for designing nuclear power plants or playing video games professionally, any one of them on the market will serve you well.

Why a notebook, rather than a desktop? Convenience, mostly. Desktop models are becoming a relic of a bygone era as the artificial price difference between notebooks and desktops collapse. Notebooks now outsell desktops in stores. IDC estimates that by the middle of next year, more than half of all PC's sold will be notebooks.

Decide on a size. The computers that weigh less than four pounds are considered ultra portables, the kind you take on business trips. Anything heavier is a desktop replacement, perfect for moving from room to room or on a jaunt to the coffee shop. Go to a store to test the heft.

Reflect on how much style you want. As this category matures, manufacturers differentiate their products by making some notebooks look prettier than others. They charge more for anything on the color wheel besides gray and anything that glows.

Then watch the prices at retailers and at the manufacturers' Web sites. The last time you bought a PC, the best deals were probably online. That's not necessarily true anymore. The best deals can be inside the stores because those retailers are using PC's and notebooks in particular as loss leaders to drive traffic.

Here is another business trend that is helping consumers. As the prices of PC's drop, even if retailers sell more units their year-on-year revenue comparisons may drop. Investors closely watch that figure. So stores need to bolster revenue by selling even more of them. They do that by offering even better deals on notebooks because notebook buyers tend to buy other gear like bags and home networking equipment.

The brand you pick will depend on which one gives you the most computer for the price. Current Analysis compiles a "competitive value index" that measures the price of PC's against the features offered. When it looks at computers sold in all channels, the top berths go to Acer, Gateway, Dell and Hewlett-Packard.

Columns providing advice on buying a computer usually have a paragraph or two where the writer pauses and briefly genuflects at Apple. Great computer, they'll say, but — there is always that but — they carry a premium of 20 percent to 30 percent over a similarly configured computer running Windows.

Here comes those paragraphs. However, that required "but" may soon be retired. Gene Munster, a senior research analyst with Piper Jaffray in Minneapolis, compared Mac notebooks with similarly equipped notebook computers running Windows and discovered that the premium for a Mac is now only about 10 percent. "I don't think consumers go through this exercise," he said. The premium shrank, not because Apple cut its prices, Mr. Munster said, but because Apple, in switching to an Intel processor, increased the performance of its Macs, and then didn't raise prices.

A few more consumers may notice. Apple's market share, which climbed as high as 2.5 percent last year before the switch to Intel, has grown from 1.8 percent. Macs compete at the high end of the PC market, where the machines costing more than $1,500 are loaded with multimedia features like TV tuners and bigger hard drives to store photos, videos and music. Some have special chips designed to enhance the performance of video games. Price cuts have not been as deep up there, which is one reason Mr. Munster thinks the premium won't go back to 30 percent.

He said that the media viewing and editing software that comes with the Mac compensates for much of the remaining premium. "Apples are always going to be at a premium," he said.

    Timing the Electronics Market for the Best Deal on a New PC, NYT, 27.5.2006, http://www.nytimes.com/2006/05/27/technology/27money.html

Advertising

Yahoo Makes Deal on Ads With eBay

May 26, 2006
The New York Times
By SAUL HANSELL

EBay and Yahoo, two top Internet companies that have been losing ground to Google, said yesterday that they would work together in several areas, including advertising and online payments.

The deal will expand Yahoo's share of Internet advertising, a market where it lost leadership to Google. Investors have been worried that eBay's highly profitable shopping site is being undercut as consumers increasingly find products through search engines or through free listing services like Craigslist. Google and Yahoo have introduced similar free services.

At the same time, eBay is spending $260 million a year to advertise its auctions on search engines, with 60 percent of that on Google, according to estimates by Jordan Rohan, an analyst with RBC Capital Markets.

The deal announced yesterday gives eBay some new ways to make money from its large audience, but it does not directly address the concerns about competition. Yahoo will continue to offer its auctions and other online shopping services that compete directly with eBay.

For Yahoo, however, the deal represents a potentially significant expansion of its advertising business. EBay agreed to place on its site text advertisements sold by Yahoo. That gives Yahoo a major new partner just as the MSN service of Microsoft, which was the largest outlet for Yahoo's text ads, has switched to selling its own advertising.

Small text ads that automatically appear next to related material on Web pages have proved hugely profitable, but eBay has long been wary of placing them on its site because they are likely to refer people to sites that compete with its marketplace.

"EBay is selling a little bit of its soul by doing this deal," Mr. Rohan said. "The idea of eBay as a destination site is marginalized by a deal that drives traffic outside of eBay."

Margaret C. Whitman, eBay's chief executive, said the company was starting to change its policy because "we have to embrace some of the things that are happening on the Web." Still, she said, the company will test the impact of the text ads to make sure they do not hurt revenue.

Ms. Whitman added that the text ads would be restricted so they did not offer products that competed directly with eBay's sellers. They will be for "complementary products" like cases for digital cameras, she said, and they will also appear when a user searches for a product that is not available on eBay.

EBay also agreed to have Yahoo sell graphical display advertising on its site, the first time Yahoo has sold graphic ads for another company.

"EBay brings the best of quality inventory and a huge community," said Terry S. Semel, Yahoo's chief executive. "It gives us the opportunity to do a big job."

Yahoo and eBay said the revenue from the deal would be small this year, and they declined to characterize its financial impact for next year. Mr. Rohan said that if eBay placed text ads on 25 percent of its pages, the revenue could be about $130 million a year, and about 80 percent of that would go to eBay.

Mr. Rohan said the deal might help establish Yahoo as an advertising network that is an alternative to Google. "Yahoo was clearly able to play the fear-of-Google card," he said.

Microsoft, too, has been trying to establish its own advertising network and is reported to have bid for eBay's business.

Google, which is by far the leader in selling text ads for other Web sites, has been moving to sell graphic ads as well, and said this week that it would start selling video advertisements for other sites.

Google's approach is to create an automated auction in which marketers enter their own advertisements and bid for placement. Yahoo, which uses such an auction for text ads, will sell graphic ads on eBay through its traditional sales force, which negotiates rates with major marketers.

EBay will also offer its customers a new version of its browser toolbar that will encourage people to use Yahoo search and other services. Yahoo agreed to offer eBay's PayPal payment service as an option for customers buying goods and services through Yahoo's site.

The companies said they would explore developing features that would let people click on ads on either of their sites and be connected with the advertiser through either eBay's Skype voice chat service or the voice calling feature of Yahoo Messenger.

EBay's shares rose to $33.88, up $3.68. Yahoo rose $1.13 to $32.92

Ms. Whitman said the deal did not mean eBay would cut back its huge spending on Google advertisements. Search and other advertising brings in about 40 percent of eBay's traffic.

She said she did not see the competition from search engines and free classified sites as undercutting eBay's position with consumers.

"There is a lot more to running a marketplace than getting a lot of listings," she said. "There is trust and safety, and payments and reputation. That stands eBay in good stead."

    Yahoo Makes Deal on Ads With eBay, NYT, 26.5.2006, http://www.nytimes.com/2006/05/26/business/media/26adco.html

Google Reaches Agreement to Have Its Software Installed on New Dell Computers

May 26, 2006
The New York Times
By LAURIE J. FLYNN

SAN FRANCISCO, May 25 — Google and Dell have reached an agreement to install Google software on millions of new Dell computers over the next few years, Google's chief executive said on Thursday.

The executive, Eric E. Schmidt, said the arrangement meant that Google's search toolbar would appear on the screens of new Dell systems, and that Dell users would be directed to a Web page branded by the two companies.

Mr. Schmidt, speaking at a Goldman Sachs Internet conference in Las Vegas, said the companies would share revenue from the deal.

While financial terms were not disclosed, many analysts assumed that Google would pay Dell a fee for the arrangement. If that is the case, said Safa Rashtchy, an analyst with Piper Jaffray, this will be the beginning of a era in which Google pays for alliances in order to maintain its growth rate.

Spokesmen for both companies declined to comment.

Mr. Schmidt said that this would be first of several agreements with Dell. The time period of the deal was not disclosed.

The software, Dell said, would be put only on machines sold to consumers and to small and medium-size businesses. While the consumer market accounted for roughly 14 percent of Dell's revenue last quarter, the deal would nonetheless involve millions of new computers over time.

Google could receive a significant boost in its intense competition with Microsoft for search advertising revenue. By ensuring prime real estate on Dell computers, Google will gain exposure to millions of consumers who might otherwise have used Microsoft's search technology.

The agreement comes only two weeks after the Justice Department found that the design of Microsoft's new Web browser did not pose a threat to competition in the Internet search market. Google had expressed concern to antitrust officials that Microsoft's browser routinely steered users to its search service, MSN, giving it an unfair advantage.

"This is very important for Google, particularly if you look at how Microsoft is going to be pushing its search technology by embedding it in Internet Explorer," Mr. Rashtchy said. "Most people are going to stay with the default search technology that comes with their machine."

Google announced the deal at the close of regular trading. Shares of Google rose $1.74, to $382.99, and were roughly unchanged in after-hours trading. Dell shares increased 12 cents, to $24.30, then rose another 8 cents in after-hours trading.

The prospect of additional revenue from the deal would be a welcome lift for Dell, which has been struggling to hold onto its market share and maintain the heady growth rates it once enjoyed. Dell's profit declined 18 percent in the first quarter, though revenue grew 6 percent, mainly from growth overseas.

"It's a slight positive for Dell," said Cindy Shaw, vice president for research at Moors & Cabot. "But it will not solve Dell's larger issues. It's not going to be what gets people to buy a Dell."

    Google Reaches Agreement to Have Its Software Installed on New Dell Computers, NYT, 26.5.2006, http://www.nytimes.com/2006/05/26/technology/26google.html

Financial firms attack child porn

Updated 5/26/2006 1:22 AM ET
USA Today
By Wendy Koch

The nation's leading banks and credit card companies will soon team with law enforcement in a groundbreaking coalition to catch people who sell child pornography online.

The financial institutions will report child porn sites they discover on the Web to a central tip line, slated to expand next month to receive the information. The companies will block transactions for online child porn or, if law enforcement opens an investigation, help track sellers and buyers.

The Financial Coalition Against Child Pornography represents a new phase in the war against what has become a multibillion-dollar, international business. Internet service providers, including AOL, already report child porn sites they find.

"The scope of the problem is much greater than we ever thought. It's mind-boggling," says Ernie Allen of the National Center for Missing & Exploited Children, a private group that runs the tip line. Allen says one website can attract tens of thousands of customers, mostly men, who use credit cards to buy $29 monthly subscriptions. "People are getting into this because they see children as a commodity. There's no question organized crime is involved."

Eager to take profitability out of online child porn, Allen and Sen. Richard Shelby, R-Ala., brought together the companies.

"This is the broadest, most comprehensive coalition we've been involved in," says Joshua Peirez, a MasterCard executive. "This is not a competitiveness issue. This is about protecting children," he says.

"I haven't seen anything like it," adds Drew Oosterbaan, chief of the Justice Department's child exploitation section. "We're here to support the effort."

Participants include Visa, MasterCard, American Express and Discover, which cover most of the U.S. credit card market. Also involved are Bank of America, Chase, Citigroup and PayPal. Visa, MasterCard and American Express say they will identify sites accepting their cards to sell child porn but won't reveal customers unless subpoenaed.

    Financial firms attack child porn, UT, 26.5.2006, http://www.usatoday.com/tech/news/2006-05-25-firms-fight-online_x.htm

Marketing fraud investigation yields 565 arrests, 2.8 million victims

Updated 5/24/2006 1:49 AM ET
AP
USA Today

WASHINGTON (AP) — More than 2.8 million people in the U.S. paid to obtain credit cards, claim sweepstakes winnings and get in on lucrative investments that turned out to be too good to be true, officials said Tuesday as they announced hundreds of arrests in an international investigation.

Authorities in five countries have arrested 565 people in fraud schemes that netted more than $1 billion. Many of those arrested are west Africans who were attempting variations of the notorious Nigerian Internet scam, the Justice Department said.

Many of the victims were elderly or immigrants. One scam consisted of telephone calls to Spanish-speaking U.S. residents who were seeking to establish credit and were promised credit cards in return for a couple of hundred dollars. The cards didn't exist, said Federal Trade Commission Chairwoman Deborah Platt Majoras.

"Those that prey on consumers know their vulnerabilities," Majoras said at a Justice Department news conference with Attorney General Alberto Gonzales. "They zero in on those who will actually believe them."

The scams were carried out through telemarketing, mass mailings and the Internet and included bogus lottery, prize and sweepstakes offerings, invitations to pour money into non-existent investments and supposedly legal enticements to avoid paying taxes, officials said.

In the Nigerian scam, criminals send junk e-mail to thousands of unsuspecting people offering them a share in a large fortune in exchange for a smaller amount of money up front. The con artist takes the money and then disappears.

Gonzales called the 14-month investigation, dubbed Operation Global Con, "the largest enforcement operation of its kind." It has so far resulted in 139 arrests and 61 convictions in the United States and another 426 arrests in Canada, Costa Rica, the Netherlands and Spain.

Last week, Costa Rican and U.S. authorities made arrests in a telephone-based scam in which prospective victims received offers of up to $4.5 million from the Sweepstakes Security Commission and other fictitious organizations.

The winners first had to pay "insurance fees." Some victims were contacted again, this time by people pretending to be customs officials who demanded additional payments, the department said.

    Marketing fraud investigation yields 565 arrests, 2.8 million victims, UT, 24.5.2006, http://www.usatoday.com/money/2006-05-23-marketing-fraud-arrests_x.htm

Google users promised artificial intelligence

Tuesday May 23, 2006
Guardian
Richard Wray


A search engine that knows exactly what you are looking for, that can understand the question you are asking even better than you do, and find exactly the right information for you, instantly - that was the future predicted by Google yesterday.

Speaking at a conference for Google's European partners, entitled Zeitgeist '06, on the outskirts of London last night Google chief executive Eric Schmidt and co-founder Larry Page gave an insight into perhaps the most ambitious project the Californian business is undertaking - artificial intelligence (AI).

"The ultimate search engine would understand everything in the world. It would understand everything that you asked it and give you back the exact right thing instantly," Mr Page told an audience of the digerati representing firms from Warner Music and AOL to BSkyB and the BBC. "You could ask 'what should I ask Larry?' and it would tell you."

Speaking after what was tabled an end of day 'fireside chat', Mr Page said one thing that he had learned since Google launched eight years ago was that technology can change faster than expected, and that AI could be a reality within a few years.

Certainly in that short period of time, Google has gone from a start-up in Mountain View to one of the most recognised brands in the world. As evidence of its meteoric rise, the Hertfordshire hotel in which the conference took place was also home to the England football team. The post-conference press roundtable was briefly interrupted by assistant manager Steve McLaren who had evidently got the wrong room.

Google's executives were also forced to defend their tactics. While suggesting the business could one day capture a 20% share of the $800bn (£424bn) global advertising market, Mr Schmidt explained that the apparently scatter-gun approach to research that lets engineers spend a fifth of their time working on pet projects, also allows the company to innovate faster than any rival.

While this has created some products (such as shopping service Froogle) that have not been a great success, it also led to the Gmail email service which despite still being only in test form is rapidly catching up with market leaders such as Hotmail.

But Mr Schmidt admitted that the company is spending more energy than perhaps it has in the past on integrating some of these seemingly random ventures back into its core revenue-generating search tool, something that could be seen as a sea change within the business, though Google executives maintain it is not going through a major consolidation phase.

But the lack of a visible pipeline of development from Google - which never gives a clear indication of what it is working on until it is released - infuriates some of its stockholders, who would rather it concentrated on a few lucrative services.

"We are very clear and I want to be clear and on the record," said Mr Schmidt. "We run the company for the benefit of our end-users globally."

Looking at the current court case in Houston where Kenneth Lay and Jeffrey Skilling, former executives of collapsed energy giant Enron, await the outcome of their trial for fraud, he added: "Speaking as an American company chief executive, when the management team starts focusing on the stock price rather than focusing on its business and customers you get a really bad outcome. We are focused on doing the right thing for the long-term"

Mr Schmidt also attacked suggestions from some major US cable companies that providers of capacity-hungry internet services - such as video and TV - should be charged to run their services over the web. This presents a challenge to what is generally seen as the internet's neutrality, that everyone should be able to get on to it.

"We believe this violates one of the founding principles that built the internet today and it could stifle the next wave of innovation," he said.

In fact Google is currently working on its own video tool. While adamant that the company is not looking to get into the provision of content itself, it is looking to produce a video tool that will allow broadband TV viewers to find the shows they want from the hundreds that are available across the world. It is looking for media partners interested in using such a tool.

Mr Schmidt also had a few consoling words for the traditional media business which sees its profitability being utterly eroded by online rivals. He said usage of traditional media placed online is rising rapidly, but circulations - the revenue generator - are declining. "You don't have a lack of audience problem, you have a business model problem," he said.

    Google users promised artificial intelligence, G, 23.5.2006, http://technology.guardian.co.uk/news/story/0,,1781121,00.html

Advertising

Google Moves to Sell Space for Video Spots on Network of Web Sites

May 23, 2006
The New York Times
By SAUL HANSELL

GOOGLE is taking its first steps to go after the huge market for television advertising this week with a new service that will place video commercials on the many Web sites where it sells advertising.

For now, Google isn't placing video advertising on Google.com or the other sites it runs, but it says it is considering doing so in the future.

Advertisers have been eager to buy the relatively limited supply of spaces for online commercials at prices that equal and sometimes exceed the rates charged by major networks, as measured by cost per thousand viewers.

Google's move expands the online advertising space to the network it has established for text and graphical ads — a group of sites whose number it will not disclose, though it is estimated to be in the hundreds of thousands.

Google's announcement came a week after AOL said that it had acquired Lighteningcast, a company that sells video advertisements on about 150 sites, including Space.com and Nascar.com. Lighteningcast will be merged with AOL's own Advertising.com unit, which mainly sells banner advertisements on other sites but is also getting into sales of video advertising.

Lighteningcast and other video advertising networks are focused on inserting commercials into video programming. The video ads that Google is placing, by contrast, will appear on conventional Web pages; users will see a single image, and the video will play only if they click a button.

Matt Wasserlauf, the chief executive of Broadband Enterprises, which sells video advertisements on 500 sites, said that major marketers prefer their commercials to be part of a stream of programming rather than be on Web pages.

"No one will click to watch a Pampers ad," he said. For example, he said, Procter & Gamble would rather "put Pampers on relevant or entertaining content."

Google says its system would bring video advertising into reach for small businesses.

"A large percentage of video ads will come from small advertisers," said Gokul Rajaram, a director of product management at Google. "A small resort owner in Maui probably already has video of their great beachfront property. Now they can put it in an ad and reach a qualified set of users."

Mr. Rajaram also suggested that large advertisers will be able to use the system to test different treatments for commercials they hope to run on television.

"You can upload a video tonight and have it run tomorrow," Mr. Rajaram said. "You can really afford to experiment and figure out what works."

Google has become a powerhouse in advertising largely by selling short text advertising closely associated with topics people are researching or reading about on the Web. But it is increasingly looking to place more elaborate advertisements that are more attractive to marketers promoting product brands. Last year, it started allowing advertisers to bid to place advertisements using graphics and animation on sites it represents.

Sites have the option to reject the graphic advertisements and will be able to opt out of the video ads as well — for instance, because they are already selling such ads themselves. But Google said most of the sites in its network had agreed to display the video advertising.

And Google is also working to branch out to other media. It has experimented with running auctions for advertisements in magazines. And in January, it bought DMark Broadcasting, a company that sells radio advertising. Google has said for some time that it hopes to begin placing video advertising not only on the Web but also on television.

Until now, most sites and networks that sell video advertising have largely negotiated prices one on one with advertisers. Google, by contrast, wants to bring its highly automated auction system to video advertising. Indeed, it will run a single auction for text, graphical and video ads. Advertisers, moreover, can bid either as a price for each time a user clicks on the ad to visit their site or a fixed fee to show the ad to 1,000 users.

Google's computers will evaluate all of the bids and decide which one will end up making the most money. At the advertiser's discretion, ads can be placed on pages with content relating to specific keywords, or on sites of their choice.

Mr. Rajaram said Google estimated that advertisers would generally need to bid "in the single digit dollars to low double digits" to display their video ads to 1,000 people using Google's network. That is less than the $20 or more that other video sites are charging.

David Card, an analyst with Jupiter Research, said this auction approach might not represent the way that many marketers approach television commercials.

"The people who buy search words are not the people who buy video ads," he said. "The people who buy TV advertising want to do big deals with the CNN's of the world."

    Google Moves to Sell Space for Video Spots on Network of Web Sites, NYT, 23.5.2006, http://www.nytimes.com/2006/05/23/business/media/23adco.html

An Internet Phone Pioneer, Poised to Go Public, Has Rivals at Its Heels

May 23, 2006
The New York Times
By KEN BELSON and MATT RICHTEL

Thanks to its relentless marketing and low prices, Vonage has quickly become synonymous with phone service over the Internet. But when Brandon Sehlke and his wife, Jennifer, moved into a new home in San Antonio two weeks ago, they chose a new Internet phone service from Time Warner Cable, not Vonage or AT&T, his old provider.

The deal Time Warner offered was just too good: phone service with a television package and a broadband connection for a promotional price of $89.95 a month.

"Getting all three services was better than anything else we could find," said Mr. Sehlke, a 24-year-old dental student in San Antonio. "I briefly looked into Vonage. But paying $90 for all that was hard to pass up."

As more people make similar choices, Vonage's run as the industry leader is likely to end. While Vonage is still the largest Internet phone company, with 1.6 million subscribers, Time Warner, Cablevision, Cox and others are rapidly catching up, using their marketing heft and their ability to offer bundles of services.

The change comes at an inauspicious time for Vonage and its founder and chairman, Jeffrey Citron. The company is expected to go public this week in a roughly $500 million offering that, had it occurred a year ago, might have been hailed as a victory for a plucky upstart that outfoxed the traditional phone companies.

Instead, industry analysts are asking whether Vonage can compete — not just against giants like Time Warner, but against even feistier companies like Skype, which lets customers make free calls.

"Vonage is not the company people are going to identify with voice-over-Internet phones six months from now," said Jeff Halpern, a telecommunications analyst at Sanford C. Bernstein & Company.

Mr. Halpern said that the company "could be getting in under the wire" by going public now. "Vonage is going to be in a position where it is a single-product company and other companies are offering multiple services," he added.

Brooke Schulz, a Vonage spokeswoman, said she could not comment, citing regulations prohibiting companies from discussing their business before a public offering. People briefed on the company's plans, however, said that Vonage would probably issue new shares on Wednesday.

For now, Vonage remains a success story. It is one of a handful of Internet companies that rose out of the ashes of the telecommunications bubble of the 1990's. While many start-ups ran through millions of dollars and attracted few customers, Vonage took a rather obscure technology and created not only a familiar brand but also a sizable business.

Vonage added 878,000 new subscribers in the last year, including 328,000 in this year's first quarter. Vonage accounted for 29 percent of new subscribers to domestic Internet phone services in 2005; at year's end, it had 31 percent of the market, according to Sanford C. Bernstein estimates.

Customers are moving to Vonage because of its price — $24.99 for unlimited local and long-distance calls in North America and some European countries. The service is so cheap because unlike traditional phone companies that maintain expensive copper networks, Vonage and its competitors turn calls into data and send them over the Internet.

Vonage also offers conveniences like call forwarding, voice mail through a Web site and a portable modem that can be used with any broadband connection, so customers can make "local" calls even if they are overseas.

Vonage has also struck deals with Best Buy, Target, Wal-Mart and RadioShack to sell its equipment and services in their stores, and it is working with an array of manufacturers to develop handsets and other products.

But Vonage's share of the market for Internet calling, also known as voice-over-Internet protocol or VoIP, has slipped from 34 percent in 2004 because cable companies are grabbing a greater percentage of new customers. Time Warner had 1.4 million customers at the end of the first quarter, while Cablevision had 900,000 subscribers.

The Internet calling market, which also includes independents like Primus, SunRocket and Packet8, is still just a sliver of the overall phone business. But it is growing at the expense of Bell phone providers like Verizon and AT&T, which have introduced their own Internet phone services to keep customers from defecting. The Bells are also developing television services to win over cable customers.

As the big phone and cable companies lock horns, analysts say, one-product companies like Vonage risk being lost in the shuffle.

In some ways, Vonage may be a victim of its own success. The company helped popularize a product that most ordinary consumers did not think they needed a few years ago. Then imitators rushed into the market.

"Vonage is analogous to TiVo," said Renee Shaening, an analyst at Kagan Research, referring to the company whose name has become synonymous with its digital video recorders. "TiVo was on the forefront of offering time-shifted video service, but now the cable companies have their own."

Customers have also found that not all Internet phone services are the same. Vonage calls are connected by a variety of companies that route voice data over their networks. Some customers complain that calls can sound tinny.

Cable companies, by contrast, use their own networks to connect most calls, which can mean more reliable connections. They also have workers who can visit customers' homes, not just operators at call centers. And with deeper pockets, they can offer more discounts and new services.

Last week, for instance, Cablevision introduced a flat-rate plan that includes 500 minutes of calls to any foreign country for $19.95 a month.

Significantly, cable companies can also pitch their phone services to their millions of existing customers through the mail and on their television systems.

For now, Vonage plans to spend more on advertising to find new customers, instead of focusing on trying to turn a profit.

"In order to grow our customer base and revenue, we have chosen to increase our marketing expenses significantly, rather than seeking to generate net income," the company said in a regulatory filing this month.

"This strategy, however, will result in further net losses, which generally have increased quarterly since our inception," the filing said.

The company said it spent $88.3 million on marketing and lost a net $85.2 million for the first quarter.

In its filing, Vonage also acknowledged growing competition from cable companies that can bundle phones with broadband and television at a discount.

"These offerings," the company said, "could negatively affect our ability to acquire new customers or retain our existing customers."

Though Vonage appears focused on the likes of Comcast, it must also grapple with services like Skype, which eBay bought last year. Since in most cases Skype routes calls entirely over the Internet, its service is less reliable than Vonage's. But it is also free when Skype users call each other using their computers.

Last week, Skype said customers in the United States and Canada could call free from their computers to traditional phone lines anywhere within their own countries until the end of the year. Calls previously cost 2 cents a minute. Skype hopes the promotion will encourage more people to buy a phone number from them so that others can call their computer from an ordinary phone line.

Even with all these challenges, most analysts expect Vonage to remain an attractive option for customers who do not like the Bells or their cable company, or who want a cheap second phone line for their home or office. Other companies, like Packet8 and SunRocket, which have more than 100,000 customers each, should benefit from the same anti-establishment sentiment, the analysts say.

But the rebel market is a limited one, and Vonage is likely to struggle against behemoths that are turning into one-stop shops for telecommunications services.

"I kind of assumed Vonage would go away after a while," Ms. Shaening said.

    An Internet Phone Pioneer, Poised to Go Public, Has Rivals at Its Heels, NYT, 23.5.2006, http://www.nytimes.com/2006/05/23/technology/23voip.html

E-Commerce Report

An Online Market Blooms for Video Clip Reruns

May 22, 2006
The New York Times
By BOB TEDESCHI

YOU might not care that a student pilot in Idaho flipped his plane while landing last month and left himself with an injured hand and a cranky flying instructor. You might care even less to know that a local news station got film of the plane lying belly up in a field, and that the clip is now available online.

But someone cares. And on the Internet these days, as long as someone cares, cash flows.

In this case, the beneficiary is KTVX, an ABC affiliate in northern Utah owned by Clear Channel Communications. Until recently the station was like other local broadcasters in that it had little use for its news clips aside from posting them on its Web site for a couple of days and then relegating them to the digital vault. Now a new online service, ClipSyndicate, is finding Web sites like AeroSpaceNews.com that are happy to show these reruns and share the advertising revenue that may follow.

The idea behind ClipSyndicate is to give local television stations, which have long watched as online upstarts have stolen viewers and advertising dollars, their own foothold on the Web. Local stations have failed miserably in attracting audiences to their Web sites. But given the fascination with online video, that model is now serendipitously flipping. After all, why struggle to build an audience of your own when new Internet businesses will find video-starved viewers for you in the far-flung corners of the Web?

"Web sites and bloggers would love to add video, and news outlets would love to give it to them, but they haven't figured out a way to do it without getting ripped off," said Allen Weiner, an analyst with Gartner, a technology consulting firm. "So this addresses a major pain point."

ClipSyndicate, a service of the online video search company Critical Mention, indexes videos from Bloomberg, The Associated Press and other news outlets. Web publishers then visit ClipSyndicate.com and search for clips they like. ClipSyndicate allows Web sites to show the clips only as long as they are not broadcast companies themselves (and as long as they do not also show pornography).

Publishers either pay an undisclosed fee to ClipSyndicate each time they show a clip — then display their own ads with the clip — or they can run the videos with ads sold by ClipSyndicate and earn 5 percent of the advertising revenue. The video's owners, meanwhile, receive 30 percent of whatever revenue is generated from each clip.

Mr. Weiner, of Gartner, said ClipSyndicate was the only service of its kind at the moment, but he expected many competing online video companies, like Veoh and Revver to introduce similar initiatives.

Television networks are also embarking on efforts that can help them find more eyeballs for their local stations' video assets, without having to share the proceeds with an outside company.

Take NBC Universal, for one. Late last month the company said it would form the National Broadband Company, a joint venture between the network and its roughly 230 affiliates. NBBC, as the venture is known, will syndicate video from the affiliates, the NBC Universal library and other content on sites throughout the Web.

According to Mike Steib, who is overseeing the formation of NBBC, the venture will, among other things, collect and categorize clips according to their type, so NBBC can offer an entire channel of consumer news, for instance, for other sites and its own affiliates to show online.

Mr. Steib said the company was still signing up affiliates to distribute its videos, and NBBC was also determining how to derive revenue from the clips, be it from a pay-per-view approach, advertising, or both. The venture, though, is getting closer to an official introduction.

"It'll happen in a handful of months," Mr. Steib said. "I'm using a sand wedge, not a driver."

The ClipSyndicate service has not yet signed up major advertisers to show its ads, but Sean Morgan, Critical Mention's chief executive, said he did not expect any difficulty in attracting marketers. "We haven't put any advertisers on yet because we're still focused on aggregating content, but all the advertisers we're talking to say it sounds like it's going to work," he said.

Mr. Weiner, of Gartner, agreed that ClipSyndicate would be interesting to marketers. "It gives stations a viral audience that's potentially as large as what they'd get through their commercial medium," he said. "And because a significant part of the audience may be outside the local area, regional or national advertisers have a reason to be part of the mix."

That may not yet be the case with KTVX, but the station is certainly gaining a wider audience than before. According to Jason Gould, general manager of Inergize Digital Media, a unit of Clear Channel that manages the online operations of Clear Channel stations and others, the service provides "a whole new revenue stream."

The company had sought ways to generate revenue from the roughly 500 stories its affiliated stations broadcast daily — and the trove of videos from the past two years — but with little success. While some of the stories can be shown on the Web sites of other stations within Inergize's stable, "there hasn't been a mechanism for us to take them to the marketplace beyond our stations," Mr. Gould said. "So ClipSyndicate was a no-brainer to jump into."

Internet companies that show the videos are also pleased so far with the service. "This has worked beautifully for us," said Richard D. Stamberger, chief executive of SmartBrief, which distributes e-mail newsletters to roughly one million subscribers, and who recently began including videos from ClipSyndicate in those newsletters.

Subscribers have clicked on links to the videos at the same rate they click on links to text stories in the newsletters, which typically focus on a particular industry. But since marketers pay more for video ads than text ads, Mr. Stamberger said the videos would probably help SmartBrief's revenues.

"We haven't sold any ads yet but our initial conversations with advertisers have been very positive," Mr. Stamberger said. "This is right on the money in terms of hitting the market just as video is exploding."

    An Online Market Blooms for Video Clip Reruns, NYT, 22.5.2006, http://www.nytimes.com/2006/05/22/technology/22ecom.html

A Weinstein Will Invest in Exclusivity

May 22, 2006
The New York Times
By MARIA ASPAN

Most popular Internet communities, like Facebook.com or MySpace .com, measure their success by their ability to attract new members. A notable exception to this rule is aSmallWorld.net, an exclusive online community that is about to get bigger.

The Weinstein Company, the production business started by Bob and Harvey Weinstein after they left Miramax, has invested in aSmallWorld, the company will announce today. The Weinsteins, whose multimedia portfolio includes Miramax Books and a magazine publishing company, Niche Media, head a team of investors including Robert W. Pittman, former chief operating officer of AOL Time Warner. The company declined to put a dollar figure on its investment, describing it only as "significant." The Weinstein Company was attracted to aSmallWorld by the community's social networking and advertising opportunities, Harvey Weinstein said in an interview. This is the company's first investment in an online venture.

ASmallWorld, a private company founded in 2004, has approximately 130,000 members, or about half the number who join MySpace each day. On its log-in page, it describes its members as "like-minded individuals" who share the "same circle of friends, interests and schedule."

Invitations are difficult to come by: only some members have the right to invite friends to join. According to Erik Wachtmeister, the site's founder and the son of a former Swedish ambassador to the United States, a panel considers 12 to 15 variables before permitting certain users to issue invitations.

"You don't want to let just anyone invite," Mr. Wachtmeister said. Asked what those variables were, he replied that it's a "secret sauce."

Mr. Wachtmeister said he had the initial idea for the community in 1998, having lived in 10 cities. While traveling, "you see the same people over and over, gravitating toward each other," he said.

Once admitted, members have access to "trusted and select information," the site says, like nightclub or restaurant recommendations from other members. Those who abuse the system by trying to network with celebrity members can quickly find themselves out of the club.

"We keep track of people's behavior and we actually do kick people out," Mr. Wachtmeister said. Although he declined to identify celebrity members, media reports have named Quentin Tarantino, Ivanka Trump and Naomi Campbell.

The Weinstein Company's investment may affect the community's size, if not its purpose and membership. According to Mr. Weinstein, his company will be expanding aSmallWorld, while maintaining its membership restrictions and its appeal to a "smaller, more select" audience. "I think we'll become very successful with one million people," he said, "but we have to find the right one million."

    A Weinstein Will Invest in Exclusivity, NYT, 22.5.2006, http://www.nytimes.com/2006/05/22/technology/22weinstein.html

Voice Encryption May Draw U.S. Scrutiny

May 22, 2006
The New York Times
By JOHN MARKOFF

SAN FRANCISCO, May 21 — Philip R. Zimmermann wants to protect online privacy. Who could object to that?

He has found out once already. Trained as a computer scientist, he developed a program in 1991 called Pretty Good Privacy, or PGP, for scrambling and unscrambling e-mail messages. It won a following among privacy rights advocates and human rights groups working overseas — and a three-year federal criminal investigation into whether he had violated export restrictions on cryptographic software. The case was dropped in 1996, and Mr. Zimmermann, who lives in Menlo Park, Calif., started PGP Inc. to sell his software commercially.

Now he is again inviting government scrutiny. On Sunday, he released a free Windows software program, Zfone, that encrypts a computer-to-computer voice conversation so both parties can be confident that no one is listening in. It became available earlier this year to Macintosh and Linux users of the system known as voice-over-Internet protocol, or VoIP.

What sets Zfone apart from comparable systems is that it does not require a web of computers to hold the keys, or long numbers, used in most encryption schemes. Instead, it performs the key exchange inside the digital voice channel while the call is being set up, so no third party has the keys.

Zfone's introduction comes as reports continue to emerge about the government's electronic surveillance efforts. A lawsuit by the Electronic Frontier Foundation, a privacy rights group, contends that AT&T has given the National Security Agency real-time access to Internet communications.

In the wake of 9/11, there were calls for the government to institute new barriers to cryptography, to avoid its use in communications by enemies of the United States. Easily accessible cryptography for Internet calling may intensify that debate.

"I'm afraid it will put front and center an issue that had been resolved in the individual's favor in the 1990's," said James X. Dempsey, policy director for the Center for Democracy and Technology, a Washington-based public policy group.

The Federal Communications Commission has begun adopting regulations that would force Internet service providers and VoIP companies to adopt the technology that permits law enforcement officials to monitor conventional telephone calls. But for now, at least, F.C.C. regulation exempts programs that operate directly between computers, not through a hub.

"From the F.C.C.'s perspective you can't regulate point-to-point communications, which I think will let Phil off the hook," said Marc Rotenberg, director of the Electronic Privacy Information Center, an advocacy group in Washington.

Zfone may face more of a challenge in Europe, where the British government is preparing to give the police the legal authority to compel both organizations and individuals to disclose encryption keys.

But Mr. Zimmermann, 52, does not see those fearing government surveillance — or trying to evade it — as the primary market. The next phase of the Internet's spyware epidemic, he contends, will be software designed to eavesdrop on Internet telephone calls made by corporate users.

"They will have entire digital jukeboxes of covertly acquired telephone conversations, and suddenly someone in Eastern Europe is going to be very wealthy," he said.

While Mr. Zimmerman is giving away his software so far, his goal is to attract VoIP software and hardware developers to license his technology and embed it in their products.

Zfone can automatically encrypt any call between users of freely available VoIP software programs like X-Lite, Gizmo or SJphone. It can be downloaded at www.philzimmermann.com.

The system does not work with Skype, the VoIP system acquired by eBay, which uses its own encryption scheme. But at a conference last week in Cyprus, German officials said they had technology for intercepting and decrypting Skype phone calls, according to Anthony M. Rutkowski, vice president for regulatory affairs and standards for VeriSign, a company that offers security for Internet and phone operations.

Mr. Zimmermann said he had not yet tested Zfone's compatibility with Vonage, another popular VoIP service.

Mr. Zimmermann contends that the nation is better off with strong cryptography. Indeed, Zfone can be considered an asset, he said, because it allows people to have secret conversations without hiding their Internet protocol addresses, which could be traceable geographically. Those observed having a secured conversation could come under suspicion, of course. But for that reason, he argued, sophisticated criminals or terrorists are unlikely to use the technology.

"I'm sympathetic to the needs of the intelligence community to catch the bad guys," he said. "I specifically protect the content the criminals want, while simultaneously not interfering with the traffic analysis that the N.S.A. is trying to do. You could make the case that I'm being socially responsible."

    Voice Encryption May Draw U.S. Scrutiny, NYT, 22.5.2006, http://www.nytimes.com/2006/05/22/technology/22privacy.html

The Fight Against V1@gra (and Other Spam)

May 21, 2006
The New York Times
By TOM ZELLER Jr.

TO the antispam researchers at MessageLabs, an e-mail filtering company, each new wave of a recent stock-pumping spam seemed like a personal affront.

The spammers were trying to circumvent the world's junk-mail filters by embedding their messages — whether peddling something called China Digital Media for $1.71 a share, or a "Hot Pick!" company called GroFeed for just 10 cents — into images.

In some ways, it was a desperate move. The images made the messages much bulkier than simple text messages, so the spammers were using more bandwidth to churn out fewer spams. But they also knew that, to filters scanning for telltale spam words in the text of e-mail messages, a picture of the words "Hot Stox!!" is significantly different from the words themselves.

So the bulk e-mailers behind this campaign seemed to calculate that they had a good chance of slipping their stock pitches past spam defenses to land in the in-boxes of prospective customers.

It worked, but only briefly. Antispam developers at MessageLabs, one of several companies that essentially reroute their clients' e-mail traffic through proprietary spam-scrubbing servers before delivering it, quickly developed a "checksum," or fingerprint, for the images, and created a filter to block them.

Advances in spam-catching techniques mean that most computer users no longer face the paralyzing crush of junk messages that began threatening the very utility of e-mail communications just a few years ago.

But spammers have hardly given up, and as they improve and adapt their techniques, network managers must still face down the pill-pushers, get-rich-quick artists and others who use billions of unwanted e-mail messages to troll for income. "For the end user, spam isn't that much of a problem anymore," said Matt Sergeant, MessageLabs' senior antispam technologist. "But for the network, and for people like us, it definitely is."

Shortly after MessageLabs created a filter to catch the stock spams, the images they contained changed again.

They were now arriving with what looked to the naked eye like a gray border. Zooming in, however, the MessageLabs team discovered that the border was made up of thousands of randomly ordered dots. Indeed, every message in that particular spam campaign was generated with a new image of the border — each with its own random array of dots.

"That was kind of cool and kind of funny," said Mr. Sergeant, a soft-spoken British transplant who spends his days helping to douse spam fires from his home office outside Toronto.

During a recent meeting at the company's New York office, in Midtown Manhattan, Mr. Sergeant and a colleague, Nick Johnson, an antispam developer visiting from MessageLabs' headquarters in Gloucester, England, expressed both amusement and respect over the sheer creativity of the world's most prolific spammers, who continue to dump hundreds of millions of junk messages into the e-mail stream each day.

"It was almost like they knew what we were doing," Mr. Sergeant said.

SEVERAL surveys — from AOL, the Pew Internet and American Life Project and others — have indicated that the amount of spam reaching consumer inboxes has at least stabilized.

That is true for users whose networks are protected by off-site, third-party filtering services like MessageLabs', as well as those protected by network software or in-house equipment that filters messages before they hit a company's e-mail server.

If individual users also have personal spam filters installed on their computers, their in-box spam count can be reduced to a trickle.

But spam continues to account for roughly 70 percent of all e-mail messages on the Internet, despite tough antispam laws across the globe (including the Can-Spam Act in the United States), despite vigorous lawsuits against individual junk-mail senders and despite the famous prediction, by Bill Gates at the World Economic Forum in 2004, that spam would be eradicated by 2006.

The continuing defiance of spammers was demonstrated last week when one of them forced Blue Security, an antispam company based in Israel, to shut down its services. The company gave customers the power to enact mob justice on spammers by overloading them with requests to be removed from mailing lists. A spammer in Russia retaliated by knocking out Blue Security's Web site and threatening virus attacks against its customers. Blue Security said it would back off rather than be responsible for a "cyberwar."

While there are some indications that the growth rate of spam has plateaued or even slowed, experts say that spikes are always looming. That is partly because spammers can hide themselves or their operations in countries where law enforcement is lax, from Russia and Eastern Europe to China and Nigeria. Because some spammers can churn out 200 million or more messages a day, and because less than 1 percent of those need to bring responses from naïve, click-happy users to turn handsome profits, there is little incentive to stop.

"That's really just the daily battle," said Mr. Sergeant, who routinely shares intelligence on individual spammers with other antispam organizations and with the F.B.I. and other law enforcement agencies. "That 1 percent is the wall, really — it's the spammers creating something new that we just haven't seen before. And for us it's a matter of how quickly we can deal with it."

There is plenty to deal with. Most spam is still just, well, spam: low-rent pitches for stocks and penis-enlargement pills. But there are also the more immediate menaces, including attempts to trick consumers into giving up bank and credit card information — or the use of spam to deliver viruses and other malicious software.

From an industry perspective, antivirus and antispam scanning are virtually inseparable, and MessageLabs is among many companies jockeying to position themselves as full-service contractors, offering to filter, scan, scrub and archive both incoming and outgoing mail.

It's a lucrative strategy.

IDC, the research firm, estimates that the global market for "messaging security" will grow to $2.6 billion by 2009, from $675 million in 2004. The category consists mostly of antispam services, but also covers outbound filtering — something that employers now demand and all vendors include, according to Brian Burke, an IDC analyst.

IDC estimates that the larger market for "secure content management," which folds in virus protection, Web filtering and spyware protection, will grow to $11.4 billion by 2009 from $4.8 billion in 2004.

In 2005, about 60 percent of businesses were using software to combat spam, with the rest split between using managed services and antispam hardware, according to Osterman Research, which conducts market analysis on the messaging industry. But the percentage of businesses moving to managed services is expected to double, to almost 40 percent, during the next two years.

In that context, it may not be surprising that Microsoft recently acquired FrontBridge, the third-largest provider of managed e-mail services. MessageLabs and Postini, based in San Carlos, Calif., have long been the leaders in the category.

While much growth in this field will be driven by the threat of viruses and other bugs attached to messages, the wave of simple but inventive marketing spam remains a big concern — and, in many ways, is the harder thing to catch. Consider the stock spam using random dots in the borders.

"We actually developed some technology to detect borders in images and figure out the entropy — that is, to figure out if the border was random," Mr. Sergeant said. "So that was fine." Of course, shortly afterward, "they decided to stop using the borders," he added.

From there, the senders began placing a small number of barely perceptible and, again, randomly placed dots — a pink one here, a blue one there, a green one near the bottom — throughout the images. Then they shifted to multiple images, with words spelled partially in plain text and partially as images, so that the content, when viewed on a common e-mail reader like Outlook or AOL, would look like an ordinary message.

"There are loads of different kinds of obfuscation," Mr. Johnson said. "They've realized that people are looking for V1agra spelled with a '1' and st0ck with a 'zero' and that sort of thing, so they might try some sort of meaning obfuscation, like just referring to a watch as a 'wrist accessory' or something like that. So they say something like, 'Drape your wrist with this elegant accessory.'

"Any way not to say 'Rolex,' " he added, "so it's quite cryptic."

Sitting in a windowless conference room, Mr. Sergeant alternated his gaze between the conversation at hand and the streams of filtered e-mail subject lines slithering down his laptop screen.

The lines were feedback from the company's "radar" system, which allows team members to test a new "rule" or "signature" that they have devised on a slice of the incoming torrent of spam. If the rule is too broad and general, legitimate e-mail messages — dreaded "false positives" in the parlance of spam assassins — will begin showing up on the radar.

Mr. Johnson plugs into the radar himself and highlights a common obfuscation technique he calls "gappy text": words with spaces between the letters, to fool filters designed to look only for whole words. The example was in a message advertising a work-at-home opportunity out of "T u l s a , O k l a h o m a ."

"That's something that we might consider signaturing, that whole line there, with the spaces," he said, "because it's not very common behavior for someone to want to write like that."

Mr. Johnson began reading from a customer testimonial included in the same message: "I was skeptical at first. I made money. I couldn't believe it!"

Mr. Sergeant erupted in laughter.

"It's a classic joke in our office," Mr. Johnson said. "If it's advertised in spam, it must be true."

MR. JOHNSON described another trick that a spammer had recently deployed so that messages peddling Viagra would move into recipients' in-boxes.

By default, most modern e-mail software can display messages that are written with the same text formatting code used to create Web pages — known as hypertext markup language, or HTML. Like viewers of Web pages, e-mail users never actually see the underlying code, or "tags" used to make some words appear, say, bold or italicized. But spam filters scan this code, too, looking for "spammy behavior," as Mr. Johnson put it.

In this instance, a clever spam writer slipped a Viagra message past many filters by spelling the word with several I's, then using HTML code to shove all of the I's together. "Whenever you view this in your e-mail program," Mr. Johnson said, "the letter spacing is set to minus-3 pixels, so it will show all these I's on top of each other, and it will look like one I.

"That was quite an impressive one, actually," he said.

And vexing, Mr. Sergeant added. Without a special rule created by the team, it would have been virtually impossible for a machine to examine the source code of a message and determine that this was the word "Viagra."

"The word appears on screen as it should," Mr. Sergeant said. "But if you actually are examining the HTML, you just couldn't pull out a word from it. So while a computer can't figure out what the words are in the e-mail, the human eyes can."

A company like MessageLabs tries to avoid examining messages at this level. Instead, it prefers to stop much of the junk at the door, using what is called I.P. blocking. This prevents the receipt of messages from a particular Internet protocol address already identified as a spamming source.

This technique is sometimes frowned upon by Internet purists, because it can punish innocent users by blacklisting a whole range of addresses from a single host. But Mr. Sergeant said that I.P. blocking had become more refined since the early days of spam fighting. "It's very, very important to us," he said. "It's our first line of defense, really."

Still, spammers can often get around this by turning to zombie bots. These are vast networks of personal computers that have been surreptitiously infected with malicious software, permitting a spammer to use their computing power, without the owners' knowledge, to spew or relay spam, viruses, keyloggers, phony "update your bank account" messages and other dark payloads.

Zombies now deliver half to three-quarters of all spam, according to a Federal Trade Commission report to Congress in December on the state of the spam problem. Among the zombies' many advantages is an ever-shifting collection of I.P. addresses.

Another trump card was handed to spammers just over a year and a half ago, when VeriSign, the security and services company that controls the dot-com and dot-net network domains, unveiled a quicker way to update domain names.

Although a boon to people setting up their own sites, the new system decreased the time needed for a newly registered domain name to be activated, to 5 minutes from about 12 hours. That put spammers, armed with stolen credit cards and a willingness to buy and quickly abandon domain names, at a new advantage.

VeriSign updates its domain information every 12 hours. "But a spammer can register a new domain and have it live within 5 minutes," Mr. Sergeant said. "So he's got a big window where nobody has any information about his domain. They make use of that window."

MESSAGELABS' filtering database tries to discover new zombie bots by studying the behavior of e-mail messages from new addresses. Normally, for instance, a machine looking to deliver a message to another machine essentially says "hello" by passing an identifying string of code. Most legitimate mail servers will say "hello" with the same string over and over, for every message.

"When a machine communicates with us in two, three, four different ways within a small time frame," Mr. Sergeant said, "that makes the sending machine look kind of weird." That behavior can indicate "it's not a real machine, it's just one of these drone armies."

Some low-end spamming software, too, may leave characteristic fingerprints — for instance, the telltale way in which it forges the header information — that spam fighters gradually add to their cumulative antispam wisdom.

For all the algorithmic derring-do, however, sooner or later the game turns not on I.P. addresses or software fingerprints, but on the content of the message. It's the approach that MessageLabs researchers like least, but one that spammers constantly force on them.

Nigerian e-mail scams are a particular nuisance in this regard. Familiar to any e-mail user, these are the ones seeking an advance payment from the recipient to help rescue a deposed prince or to collect a percentage on some elaborately portrayed fortune. They are difficult to weed out because the senders often use Web-based e-mail services like Yahoo or Gmail, so I.P. blocking is impractical.

The language used in the e-mail messages, too, is often common enough that no particular string lends itself to safe rule-making; the risk of filtering out legitimate communications would be high.

MessageLabs has spent a year compiling a database, "Scam DNA," of 15,000 Nigerian scam messages, and used pattern analysis to build a family tree of the scams. It has found that most of the pitches are derived among a few hundred templates.

"Scam DNA basically codifies this into an algorithm," Mr. Sergeant said, "where, hopefully, we can detect this going on and find new scams based on the old scams."

But even if it works, the amount of spam it would eliminate from the overall deluge would be negligible by almost any measure, and Mr. Sergeant and his team will still be forced into encounters with "C i a l i s" and "st0x" and "Viiiiagra." The researchers are certain that the last, with multiple I's shoved together, is the handiwork of Leo Kuvayev.

Mr. Kuvayev is No. 3 on the list of the world's most prolific and notorious spammers, maintained at Spamhaus.org, a London-based watchdog group. The listing is not undeserved.

In Massachusetts last October, a Suffolk Superior Court judge, D. Lloyd MacDonald, levied $37 million in penalties on Mr. Kuvayev and six other people after deciding against them — in absentia — in a lawsuit brought by the state's attorney general, Tom Reilly.

The suit contended that the defendants, who once worked out of Newton, Mass., and Boston, used "a complicated web of Internet sites and domain names selling a variety of illegal products," including counterfeit drugs, pirated software, pornography and phony designer watches.

Spam watchers say they believe Mr. Kuvayev is now in Russia — still very much in business and employing a team of spam writers to continue poking holes in the world's filters.

"They must be pretty good HTML gurus," Mr. Sergeant said, "who must really know their stuff."

Mr. Sergeant said that just two men — Mr. Kuvayev and Alex Blood, a Ukrainian who is rated the No. 1 junk mailer by Spamhaus — hammer the world's e-mail systems with five million messages an hour. "You're talking about being responsible for something like 10 percent of all e-mail on the Internet," Mr. Sergeant said, "from just two guys."

Two guys who, along with plenty of others, may keep antispam outfits like MessageLabs in business.

"A lot of people would say, 'Why would you want to have these spammers prosecuted and why give information to the F.B.I., because surely you want there to be more spam?' " Mr. Sergeant said. "But with the volumes these guys are sending, it would actually help us more if there were less of it.

"We're just not going to kid ourselves and say we believe that spam is ever going to go away," he added. "It's always going to be a prob- lem."

    The Fight Against V1@gra (and Other Spam), NYT, 21.5.2006, http://www.nytimes.com/2006/05/21/business/yourmoney/21spam.html

Another Arrest in Webcam Pornography Case

May 16, 2006
The New York Times
By JEREMY W. PETERS

DETROIT, May 15 — A 28-year-old computer consultant was arrested here Monday for his suspected involvement in the case of a California teenager who used a Webcam to start his own online pornography business.

The consultant, Ken Gourlay of Detroit, is being held on a $500,000 cash-only bail and faces 10 felony charges, including criminal sexual conduct, contributing to the delinquency of a minor and distributing child pornography. If convicted, he faces up to 20 years in prison.

The arrest of Mr. Gourlay signals a new front in the government's response to the revelation that minors have been using Webcams to run their own child pornography Web sites, one that could have a crippling effect on this once-burgeoning business.

Justin Berry, now 19, has accused Mr. Gourlay of luring him to Michigan when he was 13, molesting him and setting up a Web site that charged a monthly fee for videos of him performing various sex acts.

In December, a front-page article in The New York Times described Mr. Berry's involvement in the underworld of Webcam child pornography, and the case has generated national interest. Last month, Congress held hearings on the issue.

Mike Cox, the Michigan attorney general, said Monday that after reading the Times article and learning that Mr. Berry had been abused in Michigan, he began investigating Mr. Gourlay.

Last week, law enforcement officials searched Mr. Gourlay's home in Detroit and seized multiple computers. One of them, state officials said, had thousands of pornographic images on it. That computer was owned by Edward Mulak II, 24, Mr. Gourlay's roommate, who was arrested on charges of possessing child pornography, they said.

"It's a parent's worst nightmare," Mr. Cox said. "An adult reaches into a home and pulls the child out."

The Times article on Mr. Berry revealed that at least hundreds of teenagers had created sites similar to his, with help from Web hosting companies that accept a lucrative cut of their revenue in exchange for access to the servers needed to operate the site. That is the service Mr. Berry said was provided to him for some of his earliest sites by Mr. Gourlay and his Web hosting company, Chain Communications.

The action by the Michigan attorney general has made clear that law enforcement officials could view a Web hosting company as being in the business of promoting and distributing child pornography. If such companies refused to provide support to child Webcam sites, most of them would probably vanish.

At the Congressional hearing, Mr. Gourlay took the Fifth Amendment and declined to comment. His lawyer, James C. Howarth, could not be reached on Monday.

Mr. Berry has identified as many as 1,500 men who gave him money and gifts to perform on camera. In January, one of the men, Gregory J. Mitchel of Virginia, pleaded guilty to four felony counts involving the production, sale, distribution and possession of child pornography.

    Another Arrest in Webcam Pornography Case, NYT, 16.5.2006, http://www.nytimes.com/2006/05/16/us/16porn.html

Death on MySpace

When 17-year-old Anna Svidersky was stabbed to death in a small-town American restaurant, it was a tragedy for those who knew her. But then friends decided to compose an online tribute, and suddenly, thousands of people were mourning a girl they had never met. By Tim Jonze

Monday May 15, 2006
Guardian
Tim Jonze


Take a glance at Anna Svidersky's profile on MySpace, the web's most popular social networking site, and you get an insight into the life of a typical American teenager, from her love of The OC to the request that you "make me smile". What it doesn't tell you about are the events of April 20, when schizophrenic David Barton Sullivan visited the McDonald's where Anna worked and brutally stabbed her to death. The story dominated the news in Anna's home town of Vancouver, Washington. Not only was the victim six days short of her 18th birthday, but Sullivan was a twice-convicted sex offender. He had left his home that night armed with a kitchen knife and the sole intention of "hurting a female".

Tragic as it was, this story was never destined to attract worldwide attention. Until, that is, Anna's friends posted the news of her murder on MySpace. Together, they composed a tribute to Anna - complete with a collage of photographs - and sent it out to all their contacts. They wanted to let people know what had happened and to keep Anna's memory alive. Soon it was circulating around the entire MySpace community, along with pleas to forward the message. Just a few days after Anna's death, the story had reached much of the online world. People started taking virtual pilgrimages to Anna's profile while others made video tributes and posted them online. Anna's death had once again showed the power of the internet to spread information across the world almost immediately: while few, if any, British news sources have covered the story, tens of thousands of British web users know about Anna. But the case also brings up some moral dilemmas. Should we be intruding on someone else's grief, even if we have been invited to? And in circulating the story of Anna's death, are we treating her with the same triviality we would afford to a funny forwarded email?

Among those who have posted a tribute to Anna is Alex Milnes, an 18-year-old music fan from Banbury in Oxfordshire. He had never heard of Anna Svidersky until he received the MySpace bulletin. Despite living 5,000 miles away from her, he felt the need to respond. "Although we hear about murders every day, somehow it seems worse when you hear about it over MySpace," he says. "Something that feels quite safe to teenagers has made people realise that life isn't all about how many [MySpace] 'friends' you have on your page."

Blake Ford is also 18 and from Florida. He claims to have been so touched by the tribute that he wrote a song for Anna and plans to sell it online for $1, with the proceeds going to her family. He told people about his song by posting a further bulletin. Within an hour, he had people responding to it from California, New York and London. Another surfer, Shelby, 17, made a video tribute to Anna and posted it on youtube.com: "Seeing all the messages made me feel so bad. Me and my friends were crying." So far, her video has received more than 2,200 hits. She's not alone. One video tribute has already been watched over a million times. It would seem, at first glance, that this is grief on a global scale. But can it really be possible to grieve over someone you've never met?

In 2004, the thinktank Civitas produced a report on the way British people had reacted to events such as Princess Diana's death and the Soham murders. They gave the mass outpouring of grief a name, "mourning sickness", and went on to suggest that people were making "phoney" emotional connections in order to feel better about themselves.

Alex agrees with this idea of a phoney connection, likening the interest in Anna to the way people "grieve" over celebrities because they "think they know the person". But by visiting Anna's page, he says, "you could find out nearly everything about her". Indeed, reading Anna's page seems to show her life exactly as it was up to the moment she died. Locked by a security password only she knew, it cannot be altered or airbrushed now that she is dead. Hence it is still full of risque comments and goofy phrases. Instead of assurances from heartbroken family members that the victim was a sweet young girl who would "do anything for anyone", we find a portrait in which Anna boasts of being "legal in six days" and chooses as a theme song a coarse little number by the band Hollywood Undead.

But being able to pore over the details of Anna's life is not without an element of creepiness. People who have never met Anna have posted tributes to her as emotional as those of Anna's closest friends. Some members of the online gaming community, meanwhile, have reportedly been using the pictures on Anna's tribute page as "avatars" to represent characters in their role-playing games.

Understandably, this has led to tensions between those who know Anna and those who think they do. "I don't want any more friend requests, or sympathy messages from people - I just want you back," wrote one of Anna's best friends, Shona. Another, Sage, posted: "I'm sorry, Anna. I'm sure you don't wanna see 100 comments that say in the first line 'I didn't know you,' and at your funeral, some of the people who spoke, their first words were, "I didn't know her, but ..." That really irritated me."

Clearly, there is a divide between those treating Anna's death with respect and those who are not. But there is a further distinction to be made, between those who are actually grieving for Anna (her closest friends) and those grieving for someone, or something, else entirely. The Civitas report claims that in making these false connections with strangers, people are actually grieving for a sadness inside themselves and attaching these feelings to a well-known face or event. Certainly, in an age where chat rooms and "virtual" friends are replacing traditional support structures such as religion and the family, the need to make emotional connections is stronger than ever, even if they are not genuine. And because the grief cannot, in this case, be genuine, a competitive element has arisen over who can grieve the most hysterically. In Anna's case, the quantifiable nature of hits and posts only magnifies this competitive element.

"I reposted the bulletin once, but a few people on my contact list have reposted it and I have noticed changes to it, like extra pictures of Anna with poems on them," says Alex. "MySpace is renowned for being an emotional, scenester place so it doesn't surprise that people are trying to show who can be the most emotional. Maybe they think it will get them more online friends."

The story looks unlikely to stop here. Condolences from all over the world continue to flood in, with 29 video tributes currently hosted on You Tube alone. There is already a 200-word entry on Anna's life at Wikipedia, complete with a picture from her high-school yearbook. For those frustrated at being unable to leave comments on her MySpace site (only her approved MySpace friends can do that), there is a tribute page set up at www.myspace.com/loving_memory_anna . On this page there is a request from Anna's friends that the "RPers" (players of role-playing games) show some respect and stop using Anna's picture in their online games. Sadly, though, control is no longer in their hands. The grim truth is that this tragedy has mutated into the latest internet buzz. And as with anything on the internet, this dangerous combination of grief, sympathy and voyeurism is starting to snowball at a frantic rate.

    Death on MySpace, G, 15.5.2006, http://technology.guardian.co.uk/news/story/0,,1775013,00.html

Media Frenzy

Can TV's and PC's Live Together Happily Ever After?

May 14, 2006
The New York Times
By RICHARD SIKLOS

HOLY Grails, swirling myths and big lies seem to be in the air these days — and we're not just talking about a certain heavily publicized movie opening this week that is based on a certain megaselling novel. Rather, consider the much-ballyhooed convergence between television and personal computers (a k a the grail), which seems to edge ever closer with every week.

Slowly but surely, it seems that TV programs and movies are finding their way onto the Internet through a growing array of distribution outlets.

Just in the last few weeks, for example, Warner Brothers announced it would make hundreds of its hit films and shows available this summer for paid download via the file-sharing site BitTorrent; Fox Entertainment has joined the other major networks on iTunes with downloadable episodes of "24" and "Prison Break"; TiVo announced a deal with the Web video outfit Brightcove that intends to give people with TiVo boxes access to Internet fare on their TV sets; and ABC and CBS have begun streaming replays of some of their most popular shows on their Web sites, offering a new advertising-supported way to tune in.

Even though no one seems to be making much money yet on these ventures and there are still chewy legal and rights issues to sort out, there is palpable excitement — a sense that the TV and movie industries are going to head off the pirates and file-sharing teens by making their products widely available online in legal ways.

In doing so, it seems the ultimate no-brainer that anyone with a fancy TV monitor and a broadband Internet connection will next be able to pluck their favorite TV programs and movies off the Web (and eventually choose to disconnect their cable or satellite provider, or, as I've written previously, at least force the cable operators to offer smaller and more appealing packages of channels).

Now, this is the kind of convergence that people could really get behind — it makes a whole lot more sense than some of the "benefits" promised earlier, like surfing Web sites on a 60-inch plasma screen or answering e-mail messages while sitting in the La-Z-Boy. All the elements are falling into place: sales of high-definition TV's that can also be used as computer monitors are soaring — they are already in 19 percent of American homes — and, according to the Consumer Electronics Association, sales of digital sets will surpass the sale of analog sets this year for the first time. Meanwhile, more than 40 percent of households in the United States have signed up for high-speed connections, and the number continues to rise.

The consumer electronics industry and technology giants like Microsoft and Intel are working double-time to concoct the next generation of gadgets that will bridge the gap between computers and televisions. Some companies, among them Apple, Hewlett-Packard and Cisco Systems, already have products that make watching Web video on TV possible, though they are cumbersome to use.

Sharp announced last month that it would soon introduce an LCD-screen TV for the Japanese market that will let viewers watch high-definition television, use the remote control to surf the Internet, and store data and TV programs on a built-in hard drive. (One studio executive said he expected these machines would be the rage by this time next year, and that Apple is believed to have the most promising version in development.)

But here is the swirling myth — or is it The Big Lie? — about convergence: It's not as close as all of that activity suggests. For various reasons, watching TV programs delivered by the Internet on regular TV looks like it will remain tantalizingly out of reach for all but the most enthusiastic gadget junkies for some time.

The point of all these new video-content deals being struck by networks and studios is, of course, to avoid making the mistakes of the music industry, which focused too much on rear-guard actions like lawsuits and not enough on figuring out new ways to give the fans what they wanted.

The music analogy only goes so far, however. The way music is promoted and sold and listened to bears scant resemblance to TV and video products. Ventures like the one announced by Warner and the big networks are not really an alternative way of receiving conventional TV, but rather an alternative to buying or renting DVD's coupled with an intriguing new market opportunity to reach viewers on their desktop or mobile devices.

David G. Sanderson, who heads the media consulting practice at Bain & Company, offers four reasons most people won't be downloading their favorite shows onto their TV's any time soon: limitations in broadband infrastructure, the degree of readiness among electronics makers to provide a product with mass appeal, the behavior of consumers and the agenda of the players in the TV ecosystem.

"If you started from scratch, you'd do it differently," Mr. Sanderson said of the fitful process of making television shows available on the Internet. "But we have an entrenched structure in how programming is brought to consumers."

Mr. Sanderson's first two points — basically whether the Internet-based network and devices are ready for prime-time — are where most of the action is and where things could change if businesses keep investing and innovating. Still, for now, there are logjams associated with delivering large quantities of video over the Web and the unresolved "net neutrality" debate over whether heavy users should pay more to telecommunications carriers for the large amount of bandwidth they use.

His second two points — about consumer behavior and the entrenched players — are actually more complex. The consumer question boils down to whether enough people want to give up access to the dozens or hundreds of channels they pay for through their cable providers to buy programs over the Internet. And that is closely related to his point about the industry structure, which is a function of the willingness of cable networks to risk giving up their guaranteed monthly subscription fees in favor of a free-wheeling Internet alternative.

"The reality is that I don't think you're going to see the current cable offering — hundreds of linear channels — replicated on the Internet," Glenn A. Britt, the chief executive of Time Warner Cable, told me recently. "One reason is the Internet isn't physically capable of handling that volume, but obviously, with a lot of money and time, that can be alleviated. But the second thing is that we actually provide a very important economic function in the TV distribution chain."

CABLE networks are not about to jeopardize the millions they receive from guaranteed subscription fees each month — and it is probably no coincidence that the versions of TV programs sold through iTunes or Google Video are inferior in picture quality to what is offered by cable companies (while the growing popularity of high-definition TV shows that viewers want higher quality). Even Sharp's new Japanese TV, the Internet Aquos, only accesses online video material from a closed-circuit service, and displays it at inferior quality.

Mr. Britt said his industry was not ignoring the enormous amount of effort being poured into providing alternative ways to get video material delivered to the TV set. But, as he put it, "it's very complicated to set up unless you have a 13-year-old son."

Those seeking true convergence may have to keep the faith for a while yet. On the other hand, those seeking grails don't tend to give up easily.

    Can TV's and PC's Live Together Happily Ever After?, NYT, 14.5.2006, http://www.nytimes.com/2006/05/14/business/yourmoney/14frenzy.html

Google jazzes up search capabilities

Updated 5/10/2006 9:40 PM ET
USA Today
By Jefferson Graham

MOUNTAIN VIEW, Calif. — It's still about search.

Internet giant Google (GOOG), which has lately been talking about new products that include finance pages, calendars and free urban Wi-Fi programs, returned Wednesday to its roots with a slew of products aimed at improving the search experience.

At a meeting with reporters from around the globe, Google introduced several new search enhancements, including a way to subscribe to health research from experts and tools that let people save portions of websites in a pop-up box that can be shared via e-mails.

The theme, says analyst Allen Weiner at research firm Gartner, was Google "moving the playing field back to its core strength — search — and all about fearing Microsoft (MSFT) as a threat."

In the past two weeks, MSN and Yahoo overhauled their search advertising programs in a bid to more effectively compete with Google. And Microsoft says it will feature desktop search in the new edition of its Windows software, Vista, expected in early 2007.

Google's share of online searches rose to 42.7% in March from 36.4% a year ago. Yahoo's and MSN's shares fell, says research firm ComScore Media Metrix.

Google co-founder Larry Page dismissed the Microsoft rivalry, saying Google "tries really hard to not be focused on what they're doing, but what we're doing." Page says 98% of what will exist in 10 years "has yet to be done, and we won't get there by looking at what other companies are doing."

Weiner doesn't buy it. "It's all about Google extending search into a desktop tool so you don't have to use an operating system," he says. The new tools:

•Google Co-op. Users can sign up at www.google.com/coop/directory to subscribe to free health information from several organizations, including the federal Centers for Disease Control, the Mayo Clinic and Kaiser Permanente. Their tips on the best health data will show up in search results. Google Co-op also offers city guide information for more than 300 cities, including London and New York. Co-op is designed to let organizations label Web pages relevant to their areas of expertise. "We're going to take the Tom Sawyer view and see how our users paint the fence," said Google Vice President Marissa Mayer.

•Desktop 4. An extension of Google's tool to search for items on your computer now comes with more than 100 "Gadgets" — little widgets that do things such as list friends' birthdays, show videos and play music.

•Google Trends. Lets users examine searches for market trends. For example, a search for "surfers" will show that most searches come from Hawaii and Australia and link to news stories about surfing.

"For the first time ever, Google is making it possible to sift through billions of search queries from around the world to see what people are thinking about," said Mayer. Trends is targeted primarily toward marketers.

•Google Notebook. Available next week, it lets people save a portion of a website to a box that can be shared with others. Google showed an example of shopping for shoes, saving a certain pair and writing a note about it, then sending it to friends. The tool works in conjunction with Desktop 4.

    Google jazzes up search capabilities, UT, 10.5.2006, http://www.usatoday.com/tech/news/2006-05-10-google-search_x.htm

Microsoft and Google Grapple for Supremacy as Stakes Escalate

May 10, 2006
The New York Times
By STEVE LOHR

The Microsoft-Google rivalry is shaping up as a titanic corporate clash for the ages.

It may not turn out that way. Markets and corporate fortunes routinely defy prediction. But it sure looks as if the two companies are on a collision course, as the realms of desktop computing and Internet services and software overlap more and more.

Microsoft, of course, is the reigning powerhouse of computing and Google is the muscular Internet challenger. On each side, the battalions are arrayed: executives, engineers, marketers, lawyers and lobbyists. The spending and competition are escalating daily. For each, it seems, the other passes what Andrew S. Grove, a founder and former chairman of Intel, calls the "silver bullet test" of strategic competition. "If you had one bullet, who would you shoot with it?"

How the Microsoft-Google confrontation plays out could shape the future of competition in computing and how people use information technology.

Do the pitched corporate battles of the past shed any light on how this one might turn out?

Business historians and management experts say the experience in two of the defining industries of the 20th century, mass-market retailing and automobiles, may well be instructive. The winners certainly scored higher in the generic virtues of business management: innovation, execution and leadership.

But perhaps even more significant, those who came out on top, judging from history, had two more specific attributes. They were the companies, according to business historians, that proved able to adapt to change instead of being prisoners of past success. And in their glory days, these corporate champions were magnets for the best and brightest people.

"One area where Microsoft and Google are really competing head-to-head now is in the war for talent," said Richard S. Tedlow, a historian and professor at the Harvard Business School. "Historically, the company that won the war for talent, won the war."

Mr. Tedlow points to Montgomery Ward as a company that lost talented managers to its rival Sears, and then lost its way. The crucial defection, Mr. Tedlow said, was Robert E. Wood, a former Army general who joined Montgomery Ward in 1919 as a general merchandise manager.

Even in the Army, Mr. Wood was a close reader of the Statistical Abstract of the United States, the Census Bureau's annual tracking of social and economic conditions. Mr. Wood became convinced that America was at the beginning of a huge population shift from rural regions to urban areas.

That meant, he understood, that the mail-order giants like Montgomery Ward and Sears needed to move from being catalog retailers serving a dispersed market to department store merchants with stores in city and suburban population centers.

Sears, as a company, grasped that fundamental change in the marketplace in a way that initially Montgomery Ward did not, Mr. Tedlow said.

In 1924, Mr. Wood left Montgomery Ward to join Sears, and he later recruited others. In 1945, Mr. Wood, then the chairman of Sears, made another smart call on economic trends. The postwar years, he decided, would bring a long expansion, as pent-up consumer demand from the war years was unleashed.

So Sears embarked on a national store-building binge. His counterpart at Montgomery Ward, Sewell Avery, made the opposite bet, keeping money in the bank to prepare the company for a postwar depression, which he was convinced was around the corner.

Over the next several years, sales at Sears doubled, while Montgomery Ward's shrank 10 percent. "Losing Robert Wood was catastrophic to Ward," Mr. Tedlow observed.

In its recruiting face-offs against Google, Microsoft insists that it fares quite well over all. But there have been some high-profile defections of leading engineers, who said they preferred Google's technological direction and corporate culture.

The most prominent was Kai-Fu Lee, a stellar computer scientist and manager. Mr. Lee not only established Microsoft's research labs in China, but he is also an expert in areas like natural language and speech-recognition technologies — important ingredients to Internet search today and to the way people will interact with computers in the future.

Last year, when Mr. Lee left Microsoft, it sued Google and Mr. Lee. Microsoft claimed, under a Washington state law, that Mr. Lee violated a noncompete clause in his employment contract and misused inside information in going to work for Google. The suit was settled last December.

"What does it say about a company when it sues when someone leaves?" Mr. Tedlow asked. "It makes Microsoft sound like a prison."

In business, forever tends to last about five years, a decade or two at most. So Sears prospered for a time and celebrated its success by building the Sears Tower in Chicago in the 1970's. Yet even from a height of 110 stories, Sears failed to see Wal-Mart coming. Wal-Mart brought the next revolution in retailing with its shrewd use of computer technology to track buying trends and orchestrate suppliers to become a hyper-efficient, low-cost merchant.

The auto industry presents a sobering history of past-success syndrome. The Model T, introduced by Henry Ford in 1908, famously made the automobile affordable, helped along by his pioneering assembly-line production, which started in 1913. Ford's laserlike focus on efficiency drove the cost of a Model T from $850 when it was introduced down to $275 by the early 1920's.

But cost and efficiency was all he focused on. The design was not updated, the color selection remained black and only black. Eventually, the single-mindedness caught up with the company. In 1925, the Ford share of the American market had fallen to 45 percent, from 57 percent two years earlier. By then, Alfred P. Sloan Jr., the managerial maestro of Detroit, was president of General Motors and its sales were surging.

"Henry Ford was so in love with his brilliant idea that he refused to change," said John Steele Gordon, a historian and author of "The Business of America" (Walker, 2001).

General Motors was well on its way to becoming the world's largest carmaker. Yet as early as the 1950's, the Japanese challenge to Detroit's auto supremacy was quietly getting under way. The architect of the Japanese ascent was a production engineer, Taiichi Ohno, who worked at Toyota. In 1950, Toyota manufactured 13,000 cars, barely a day's production for G.M.

Mr. Ohno had to devise an efficient way to manufacture a variety of cars in small production runs. He turned that adversity into an advantage, using rapid tooling changes, constant quality improvements and just-in-time parts delivery to steadily improve the cars.

Once again, the corporate giant was complacent, and late to see a fundamental shift in its industry.

"G.M. did not take Toyota and the Japanese seriously until the 1980's," said Michael A. Cusumano, a professor at the Sloan School of Management of the Massachusetts Institute of Technology and author of "The Japanese Automobile Industry" (Harvard University Press, 1986). "By then it was really too late."

History, then, suggests that past success is often an anchor holding a company back, and that Microsoft is at risk from the Google challenge. "The wind is really behind Google, and Microsoft's main tool for navigating the future is the rear view mirror," said Paul Saffo, a director of the Institute for the Future, a forecasting consultancy in Silicon Valley.

Microsoft bristles at being cast as a laggard. In a meeting last week with online advertisers and reporters, Bill Gates, the Microsoft chairman, portrayed his company as a force for healthy competition in Internet search. "We will keep them honest," Mr. Gates said of Google. And he vowed to catch up. "I think this is a rare case where we are being underestimated," he said. Microsoft certainly has plenty of money to finance any competitive foray, with $35 billion in cash, while Google has about $8 billion.

Indeed, the incumbent-challenger narrative — which portrays the incumbent as an endangered species — may not apply this time. Microsoft has adapted nimbly to big challenges before.

Apple introduced point-and-click graphical computing with the Macintosh in 1984, but Microsoft caught up and became dominant on the desktop with Windows.

In the mid-1990's, Netscape Communications posed a threat because the Internet browser might undermine the importance of Windows. Microsoft came up with its own browser and rebuffed that challenge, partly with tactics that violated antitrust laws, a federal appeals court ruled.

"Microsoft has responded every time in the past," said Mr. Cusumano, who is also the author of two books on Microsoft.

Now comes Google. It is offering or developing as free Web-based services e-mail, word processing and other programs that could replace Microsoft desktop programs and eat into Microsoft's lucrative software business. But that is by no means certain.

Google is cagey about its strategy. When Netscape was flying high, some of its executives talked of making Microsoft irrelevant — a strategic blunder, according to Silicon Valley lore.

Google's chief executive, Eric E. Schmidt, is a veteran of past battles with Microsoft, and he has no intention of making the same misstep. He speaks mainly of Google's limitless potential and ambitions, embellished by intriguing remarks like the one recently that Google is "building the systems and infrastructure of a global $100 billion company," many times its current yearly revenue. Some clues about Google's plans could emerge today, when its executives hold an annual media day at its Silicon Valley headquarters. Google now makes virtually all its money by selling advertisements linked to its enormously popular Internet search service. Microsoft and Yahoo are desperately trying to close the gap with Google, the Internet search and ad sales titan.

If Google stumbles, it will be seen as the company unable to move beyond a single stellar success.

Since the future is so often the pattern of the past with some twist, what is the expert view? "I'm a historian," said Mr. Tedlow of Harvard. "Ask me in 10 years and I'll tell you why what happened was inevitable."

    Microsoft and Google Grapple for Supremacy as Stakes Escalate, NYT, 10.5.2006, http://www.nytimes.com/2006/05/10/technology/10titans.html?hp&ex=1147320000&en=ba9c6053f9bf4c11&ei=5094&partner=homepage

Yahoo Is Unleashing a New Way to Turn Ad Clicks Into Ka-Ching

May 8, 2006
The New York Times
By SAUL HANSELL

When Yahoo finally switches on the new search-advertising software code-named Project Panama this summer, users of its search engine will hardly notice a difference. But if Yahoo's project was worth the two years and tens of millions of dollars it cost — far more money and time than it expected — users will find the text ads adjacent to the main search results just a little more interesting, luring them to click on those ads a little more often.

Those clicks should immediately turn into a lot more cash for Yahoo. It will not say how much. But Jordan Rohan, an analyst for RBC Capital Markets, estimates that if the strategy works, Yahoo will increase search-advertising revenue at least 20 percent right away — about $125 million in the fourth quarter of this year and $600 million next year.

That is a big impact from new software, and it speaks to the complex art and science of running a search engine. When hundreds of thousands of advertisers bid for the attention of hundreds of millions of searchers, little changes can have big results.

It is also a sign of how well Google, Yahoo's rival, has mastered those nuances. Mr. Rohan estimates that Google's ability to draw more advertisers and show the right ads to searchers lets it earn about 40 percent more from every search than Yahoo does.

Yahoo realized that its existing software had limitations shortly after it paid $1.6 billion in 2003 to buy Overture Services, the company that invented search advertising. But its effort to rebuild the software was delayed as it shifted its resources to creating its own Web search engine.

Daniel L. Rosensweig, Yahoo's chief operating officer, says he does not regret putting the search-advertising system behind the main search engine.

"We have been very clear that the goose that laid the golden egg is the audience," he said.

When the company turned its full attention to search-advertising software in late 2004, the task was bigger than it initially expected, partly because Yahoo wanted the system to be able to handle ads with graphics and video eventually, not just text.

But now the software is almost done. Today, Yahoo is releasing the technical specifications so that its customers can prepare for changes that will affect many millions of individual advertisements. At an analyst presentation on May 17, the company will offer more details about the introduction and financial impact of Project Panama.

In the meantime, Yahoo's existing system is straining to keep up with the search market. It is harder for advertisers and their agencies to use than Google's, and it has suffered from a series of embarrassing disruptions, leaving paying customers unable to buy ads. Yahoo also faces emerging competition from Microsoft, which has been developing its own search-advertising system.

"Yahoo has taken a lot of bumps and bruises," said Peter Hershberg, a managing partner of Reprise Media, a New York search-advertising agency. "We would get notification every day that data was not available, and that made it very challenging to manage our campaigns." He added that these problems had been cleared up in recent weeks.

Yahoo says the new system is more stable and is built for much higher volume. It hopes to make the system easier to use, both for small businesses and for giant marketers.

Most important, it is building a far more sophisticated system to determine the order in which it displays advertisements. That is crucial because users have a strong propensity to pick from among the top few ads.

When Overture began as Goto.com, an advertising-only search engine, it introduced what turned out to be two powerful innovations: Customers paid for an advertisement only when users clicked on it; and the price of an ad was set by a computerized auction. Thus, the advertiser that bid the most per click was listed first, and so on.

When Google got into the search-advertising business in 2002, it realized that Goto had made a critical mistake. Its system allowed obscure advertisers to gain a prominent position, even if they were not appealing to users and were unlikely to be clicked on. So Google found a way to predict the popularity of ads in order to put the ones that would bring in the most dollars on top.

Google's models have become quite sophisticated, trying to take into account that different ads may appeal to users in different locations at different times. Indeed, Google asserts that a supercomputer network of 100 machines evaluates more than a million variables in milliseconds to pick which to display each time someone searches.

Yahoo is building a cadre of mathematicians and economists to build similar models. But it acknowledges that it does not yet analyze as many data elements as claimed by Google.

Late last month, there was a clear sense of urgency at the headquarters of what is now called Yahoo Search Marketing in Burbank, Calif., near Los Angeles. Amid a sea of Yahoo's trademark purple cubicles, there were signs with "Panama: Are you ready?" written in big letters.

Under them was a mosaic of color-coded notations, tracking the work of 28 teams in three locations that are building the system. On other walls, more signs coordinated another effort, known as Roosevelt, a series of technological bandages meant to keep the old system running until the new one is ready.

"We are flying an airplane while rebuilding it," said David Henke, whom Yahoo hired last year as group vice president for engineering in the search-advertising group. "This is a bigger project than we expected because we are doing it in parallel with our existing systems. It required additional personnel and expertise."

Still, he said he had the complete support of Terry S. Semel, Yahoo's chief executive, and Susan L. Decker, its cost-conscious chief financial officer. When he asked earlier this year for a "gigantic" amount of money to buy a big portion of the thousands of servers and other machines that Panama requires, the approval came back in six hours.

"They said, 'Go figure what it takes and do it right,' " Mr. Henke said.

Gigantic for Yahoo, however, may well be pipsqueak compared with its free-spending competitors. Google plans to spend at least $1.5 billion this year on servers, networking equipment and the facilities to house them, and it is hiring 1,000 people each quarter, many of them engineers. Microsoft plans to spend $2 billion on search and Internet technology this year.

Ellen Siminoff, a former Yahoo executive who now runs Efficient Frontier, a search-advertising agency in Mountain View, Calif., said Yahoo had to recognize that it was in a technological arms race.

"Yahoo hires a lot of smart people, and they can do this if they want to," she said. "The big issue for them is their willingness to spend and keep up with Google's R.& D."

While the underlying Panama system has a lot of capabilities, the first version will present only a subtle difference from what Google offers. Advertisers will simply enter the keywords they want their ad to appear next to and the maximum price they are willing to pay for a click. The most significant option will be to specify a certain geographic region in which the ads will be shown, a feature Google also offers.

Microsoft, in contrast, has sought to distinguish itself by allowing advertisers to enter bids based on the sex, age and other characteristics of the ad viewer. Even though Yahoo could do the same, it says that for now such an approach is not helpful to advertisers.

"The system is built to handle many variables," said Tim Cadogan, the vice president who runs the business side of Yahoo's Web search operation. "We don't want to go overboard" and confuse customers with too many choices.

Yahoo says the main distinction from Google will be in providing information about how a given ad is displayed. Google is often criticized by advertisers as a black box: they do not really know how a given bid will affect the placement of their ads. Yahoo isn't going to tell advertisers either — as its computers will keep experimenting to get the highest ad revenue.

But as advertisers enter each bid, they will see an estimate of how many clicks they will receive each day. More important, a graph will show how many more clicks they can expect for each increased bid.

"One of the primary complaints we get is users can't explain to their bosses what they could get for spending the next $1,000," said Steve Mitgang, the Yahoo senior vice president who oversaw the development of Project Panama. "Now they can take this to their bosses to justify spending more."

    Yahoo Is Unleashing a New Way to Turn Ad Clicks Into Ka-Ching, NYT, 8.5.2006, http://www.nytimes.com/2006/05/08/technology/08yahoo.html

It's always 'OPEN HOUSE' as real estate goes online

Updated 5/7/2006 8:33 PM ET
USA Today
By Noelle Knox

For six months, Nancy Teer-Sims tried selling her parents' home in Durham, N.C., with a real estate agent. The results: few showings, no bids. So when the agent's contract expired in December, Teer-Sims dumped the agent, cut the asking price and listed the home on five websites, including eBay, Craigslist and ForSaleByOwner.com.

"By selling it ourselves, we could lower the price by $50,000," she says, because she wouldn't have to pay the standard 6% commission. In four months, she's shown the house 10 times and had three offers.

Though the offers so far were too low, she's amazed by the flood of responses: 1,400 visitors to her website (www.43beverly.com) and dozens of e-mail inquiries from people interested in the property.

"It's been remarkable, the feedback," says Teer-Sims, 49, a manager of small online companies.

Her story illustrates how the breadth of information now available on the Internet is shifting the balance of power in the real estate industry, giving home buyers and sellers more control over the deal than ever before and fueling competition among agents.

Gone are the days when real estate agents could guard the information about homes for sale in their Multiple Listing Service. Now, buyers and sellers can see all the homes for sale on 800 regional multiple listing services on the Web. They can see thousands of newly built homes for sale and apartments for rent nationwide. They can view aerial photos of homes and neighborhoods. They can get appraisals or see how much the house down the block fetched. They can shop for loans and compare mortgage rates. They can check out local schools and community features for towns across America. They can ask questions and get answers in online forums.

And all of it's free.

"The Internet has done what no consumer advocate could ever do: It has reduced the distance between the consumer and the real estate expert to the point where the consumer is so much more informed, they don't need the expert as much as they used to," says Art Raby, an agent for McColly Real Estate in Valparaiso, Ind.

The Internet is also revolutionizing the job of real estate agent — from the way agents attract clients to how they advertise and show properties. When a buyer walks into his office, "They've seen the inventory of homes for sale over the Internet, so I don't have to show as many homes, so I can sell faster and sell more," Raby says.

But he acknowledges a downside: "The consumer sees us not working as many hours for getting the commissions we used to get. So commissions are under pressure."

In 1995, just 2% of home buyers used the Internet to look for a home. Last year, 77% of home shoppers went house-hunting online, and nearly one-fourth of buyers first found the property they bought on the Internet, according to the National Association of Realtors. Traffic on real estate websites jumped 8% in the past year — double the growth rate of Internet traffic overall, according to comScore Media Metrix.

A pivotal point in the market

The rising dominance of the Internet comes at a pivotal point in the real estate market. After a five-year feeding frenzy, home sales are expected to drop at least 6% this year. Some sellers are already chopping their prices from last year's record levels. Home buyers and sellers, meantime, are seeking new ways to save money, and they're finding them on the Internet.

Armed with more information, sellers are bargaining down agents' commissions, and buyers are asking for rebates. They are turning to a growing number of brokers who offer discounted or a la carte services. And some are even cutting out the agent altogether and forging deals directly on the Internet. These factors have pushed commissions to an average of 5.1%, down from the long-standing 6%, according to Real Trends, a real estate newsletter.

"I haven't found that the Realtor does much more than I end up doing myself in terms of checking out a house first," says Todd Tierney, a 41-year-old architect who bought a home in Boston using ZipRealty.

ZipRealty is a full-service real estate firm that gives buyers a 20% rebate on their commission and offers sellers a discount of 1 percentage point. While Tierney did most of his house-hunting from San Francisco, the ZipRealty agent in Boston sent him video virtual tours and set up appointments or confirmed times of open houses for Tierney's trip to Boston.

But make no mistake: There's no shortage of buyers and sellers grateful that they used a traditional real estate agent even though they paid full price for the privilege. For most Americans, after all, a home is the most expensive purchase they'll ever make. It's exponentially more complex than booking the family vacation on Expedia.com.

Just ask Oliver Schmalholz. Last month, while he was in the midst of selling his home in Denver, an inspection turned up structural problems that had to be fixed while he was in Las Vegas buying a new home. His Re/Max agent oversaw all the repairs and kept the buyers from backing out.

"I don't think a discount broker would spend all this time, working until midnight to save the deal," says Schmalholz, 33, who owns a software development company. "This is one of the biggest investments for people out there; going with a discount broker is like buying cheap tires for your car."

Home buyers use an agent — and the Internet

And, in fact, 81% of home buyers who used the Internet to look for a home also used a real estate agent. And last year, only 13% of homes were sold directly by the owner, without an agent, down from 19% in 1991, in part because the documentation is more onerous now, according to the NAR.

Nevertheless, the Internet is shaking up the real estate industry, and many agents, such as Bud Kleppe, say it's forced changes in his business model.

Kleppe, an agent for Coldwell Banker in St. Paul, says 70% of his business comes from his website now. The downside, though, is that 2.6 million licensed real estate agents nationwide can compete more easily with each other. And that is dragging down commissions.

Many agents now resort to paying for leads (contact information for potential buyers or sellers) gathered by Internet sites like HouseValues.com, RealEstate.com and e-Agent. Sites such as HomeGain.com even take a piece of the broker's commission once the deal closes.

The gravest threat of all to Realtors is probably the rise of discount brokers, who dangle rebates, or charge low flat fees or reduced commissions. Realtors have helped persuade about a dozen states to pass laws limiting the ability of real estate agents to give rebates to home buyers or to offer a la carte services at low prices to home sellers. The Justice Department, in trying to protect competition, has pressured some states, such as Idaho, to reverse plans to pass such laws.

State regulators say their laws are designed to protect home sellers who don't understand the potential hazards of hiring a limited-service agent. Some brokers, for example, will charge a flat $295 to put a seller's house on the Multiple Listing Service, but they won't provide any other support in closing the deal, such as complying with lead-based paint disclosures or ensuring that advertising meets fair housing laws.

"Apparently, there have been a lot of situations where the seller was trying to save as much money as possible but somewhere in the process got in over their heads," says Craig Cheatham, chief executive for the Association of Real Estate License Law Officials, which represents state real estate regulators.

But Betty Mahmoody says she's sold four houses with just a yard sign and a real estate lawyer to handle the closing. She recently listed her home on Lake Huron in Michigan in January on ForSaleByOwner.com for $1,225,000. "I've heard too many horror stories about Realtors," says Mahmoody, 60, an author who was called at random by a journalist looking at listings. "If someone's calling on the house and wants to see the house, I know if those calls are being answered or not. If they are to a Realtor, I don't know that."

There are now about 50,000 homes listed on ForSaleByOwner.com. The success rate for sellers on the site (which has a marketing relationship with USATODAY.com) is about 65%, according to the company.

'What does a real estate agent do?'

And there are plenty of experts, such as Steven Levitt, economics professor at the University of Chicago, who think the Internet is fast eroding the value of traditional real estate agents.

"What does a real estate agent do for a homeowner?" Levitt says. "One is the actual labor of showing the house, but you wouldn't actually pay that much money to show a home. What you're actually paying for is knowledge of how the real estate industry works — what your property is worth and the state of the market — and finding you buyers, because you have to have an agent to list on the MLS."

The Internet lets home buyers and sellers do almost all of that themselves. And that means there will be less need for traditional real estate agents, says Levitt, co-author of the best-seller Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.

"I predict there will be a shakeout in real estate," he says. "I would not be surprised if there are one-third less of the traditional real estate agents a decade from now than there are today."

Back in Durham, N.C., Teer-Sims' sister, Pam Whilden, also has decided to put her home for sale on the Internet after having listed it with a Realtor for the past two years with barely a nibble. She said she feels comfortable going it alone because she can get help from her brother, who's in real estate development.

"We didn't want to drop the price too much because we think we're asking a fair price," says Whilden, a 57-year-old homemaker. "But if you can cut out the commission, you can drop it $30,000 and still get what you were going to get in the first place, after the commission."

    It's always 'OPEN HOUSE' as real estate goes online, UT, 7.5.2006, http://www.usatoday.com/tech/news/2006-05-07-real-estate-online_x.htm

Napster's back to basics: Free tunes

Posted 5/1/2006 12:01 AM ET
USA TODAY
By Jefferson Graham

LOS ANGELES — All the songs on Napster are free again.

In a bid to gain traction against Apple's dominant iTunes online music store, Napster over the weekend shifted to an advertising-supported model. Visitors can listen to any of the 2 million tunes in its catalog without having to fork over a credit card or download the Napster software application.

But there is a catch. You can only listen to a song five times. After that, you have to either buy it for 99 cents or sign up for a monthly subscription.

Still, "This is the closest we have ever come to the original vision of the Napster service that swept the world in 1999 — except now, it's legal," says Napster CEO Chris Gorog.

Napster has 600,000 subscribers. It offers unlimited online listening to songs for $9.95 a month, or $14.95 for a version that lets you transfer songs to certain portable devices.

The service is compatible with digital music devices that include the SanDisk Sansa and Samsung Z10, but not Apple's iconic iPod, which has a 77.6% market share, according to researcher NPD Group.

Napster, the original unauthorized music-swapping site, was born in a college dorm before the record labels persuaded the courts to shut it down. The new Napster, launched in 2003, has lost more than $73 million over the last two years, according to equity firm American Technology Research.

The company, now based in Los Angeles, spent heavily in 2005 on an advertising campaign that included a Super Bowl ad. That helped increase sales "by 100%," Gorog says.

Now Gorog says the boom in online advertising can pay off for Napster, which averages 2 million visitors a month to its website. Walt Disney and Guitar Center have signed up as sponsors; more will be announced this week.

"Napster clearly had to find something different," says American Technology Research analyst P.J. McNealy. "But until the device market for non-iPods picks up, Napster faces an uphill battle."

To pull off the ad-supported music model, Gorog needed the approval of the record labels, which will get a cut of the ad revenue.

"Ad-supported music is something we've been encouraging all the services to try," says Larry Kenswil, president of Universal Music's eLabs unit.

Napster competes with RealNetworks' Rhapsody service, among others. Rhapsody also has a free preview, letting users sample 25 songs a month at no charge. Real says it has 1.4 million subscribers for its music properties.

David Card, an analyst at JupiterResearch, says Napster's ad-supported model gives users a better feel for the service and will encourage them to become subscribers. "It's a really good offering," he says.

Napster hasn't found more acceptance from its subscription model "because it requires explanation and a change in consumer behavior," he says. "This promotion will help people understand subscriptions."

    Napster's back to basics: Free tunes, UT, 1.5.2006, http://www.usatoday.com/tech/products/services/2006-04-30-napster-free_x.htm

New Microsoft Browser Raises Google's Hackles

May 1, 2006
The New York Times
By STEVE LOHR

With a $10 billion advertising market at stake, Google, the fast-rising Internet star, is raising objections to the way that it says Microsoft, the incumbent powerhouse of computing, is wielding control over Internet searching in its new Web browser.

Google, which only recently began beefing up its lobbying efforts in Washington, says it expressed concerns about competition in the Web search business in recent talks with the Justice Department and the European Commission, both of which have brought previous antitrust actions against Microsoft.

The new browser includes a search box in the upper-right corner that is typically set up to send users to Microsoft's MSN search service. Google contends that this puts Microsoft in a position to unfairly grab Web traffic and advertising dollars from its competitors.

The move, Google claims, limits consumer choice and is reminiscent of the tactics that got Microsoft into antitrust trouble in the late 1990's.

"The market favors open choice for search, and companies should compete for users based on the quality of their search services," said Marissa Mayer, the vice president for search products at Google. "We don't think it's right for Microsoft to just set the default to MSN. We believe users should choose."

Microsoft replies that Google is misreading its intentions and actions. It says the default settings in the browser, Internet Explorer 7, are easy to change. And it says the product was designed with consumers and many partners in mind — even though it might not be to the liking of Google, the leading search engine.

"Whatever behavior happened in the past, the guiding principle we had is that the user is in control," said Dean Hachamovitch, general manager of the Internet Explorer group.

Companies often talk with antitrust officials, and the talks do not imply that an investigation is imminent. But they do indicate that Google is pursuing every option in its escalating rivalry with Microsoft, which has already led to some public battles.

Last December, Google outbid Microsoft to remain the primary search service on America Online, paying $1 billion and taking a 5 percent stake in AOL. Last year, Microsoft sued Google to stop a star computer scientist and manager at Microsoft, Kai-Fu Lee, from working on search technology at Google. The suit was settled, and Mr. Lee runs Google's operations in China.

The browser that set off the latest dispute has been in development for some time, but Microsoft first made it available to the public for downloading last week in a test version. It is the first new release of Microsoft's browser in five years. A final version is expected to be released this summer and will be included in Microsoft's new operating system, Windows Vista, which is scheduled for release next January.

The focus of Google's concern is a slender box in the corner of the browser window that allows users to start a search directly instead of first going to the Web site of a search engine like Google, Yahoo or MSN. Typing a query and hitting "Enter" immediately brings up a page of results from a designated search engine.

That slice of on-screen real estate has the potential to be enormously valuable, and Microsoft is the landlord. Internet Explorer 7 is the first Microsoft browser to have a built-in search box, while other browsers like Firefox, Opera and Safari have had them for some time. Google estimates that the boxes, when available, are the starting point for 30 to 50 percent of a user's searches, making them a crucial gateway to the lucrative and fast-growing market for advertisements that appear next to search results.

Microsoft has lost some ground in the browser market in the last year, mainly to Firefox, which is a Google ally. But Microsoft still holds more than 80 percent of the market. And Internet Explorer 7 is expected to be extremely popular because it is an improvement over Microsoft's previous browser, and because Microsoft will promote downloads of it and include it in Windows Vista.

That gives Microsoft the potential to use the browser to steer substantial traffic, and business, to MSN and away from rivals. MSN handled 11 percent of searches in the United States in March, down slightly from a year earlier, according to Nielsen/Net Ratings, a market research firm. That put it well behind Google, which had a 49 percent share, and Yahoo, with 22 percent.

Microsoft insists it has no intention of deploying its browser as a weapon in the search wars. But Google suspects otherwise.

In meetings beginning last year, Google told Microsoft of its objections to the company's plans to set MSN as the default search engine in Internet Explorer 7, according to Ms. Mayer of Google. Yahoo raised similar objections in a meeting with Microsoft last year, according to a Yahoo employee who was briefed on the conversation. Yahoo declined to comment last week beyond a statement: "We would be concerned about any company's attempts to limit user choice or change user preferences without their knowledge, and believe others would share that concern."

With its objections unresolved, Google took the matter to antitrust authorities in Europe and the United States during the last month. It is not clear what, if anything, will come of the talks or how far Google is willing to push the issue.

In Europe, where Microsoft is challenging an antitrust decision against the company for its past behavior, the European Commission has already made inquiries about Microsoft's plans for Vista. Though it is now distributing Internet Explorer 7 separately, Microsoft has long maintained that its browser is part of its Windows operating system.

Google has informed the European antitrust authorities of its worry that "Microsoft's approach to setting search defaults in Internet Explorer 7 benefits Microsoft while taking away choice from users," said Steve Langdon, a spokesman for Google.

Google would not say specifically what it has discussed with American antitrust officials. "We have spoken to the Justice Department generally about our business and the importance of preserving competition in the search market," Mr. Langdon said.

A Justice Department spokeswoman declined to comment.

The best way to handle the search box, Google asserts, would be to give users a choice when they first start up Internet Explorer 7. It says that could be done by asking the user to either type in the name of their favorite search engine or choose from a handful of the most popular services, using a simple drop-down menu next to the search box.

The Firefox and Opera browsers come with Google set as the default, but Ms. Mayer said Google would support unfettered choice on those as well.

Microsoft replies that giving users an open-ended choice could add complexity and confusion to the browser set-up process, while offering a few options would be arbitrarily limiting.

Instead, those wanting to pick a new search-box option in the new browser need to click through a menu with options like "Get Search Providers," which links to a Web page with six search engines including Google and 16 "topic search" sites, from Amazon to MTV to Wal-Mart.

Mr. Hachamovitch, who led Microsoft's browser team, said MSN was not always the default search in Internet Explorer 7. When downloaded, the new browser inherits the settings from the old Microsoft browser, version 6. But the search default in that program was based on a feature called AutoSearch that Google says was not widely used.

Mr. Hachamovitch said Microsoft's user research and early reviews indicate that it is easy to change the default setting. "People seem to be O.K. with what we're doing," he said.

Google counters that claim with a study it sponsored that was conducted by Tec-Ed, a research firm. It found that only a third of users could master the four-click process to change the default.

Whether Microsoft's treatment of the search box will have an impact on the search market is uncertain. From an antitrust perspective, harm to competition is the litmus test, not just swinging a sharp elbow or two. There are many ways people get to search engines other than through a search box — for example, by typing google.com in the browser or making it their home page.

"Assume that everything Google says is true; the question then is whether Microsoft's conduct is really going to have a serious effect on Google," said Andrew I. Gavil, a law professor at Howard University. "Obviously, Google thinks that it will."

Google is now a rich, powerful company in its own right, far larger than the browser pioneer Netscape Communications was when Microsoft set out to dominate the market it had created in the 1990's. In 2001, after a lengthy trial, a federal appeals court held that Microsoft had repeatedly violated antitrust laws as it tried to stifle the challenge from Netscape. Later, Microsoft reached a settlement with the Justice Department that freed personal computer makers from some restrictions Microsoft had placed on their use of software and services that compete with its own products.

When Internet Explorer 7 begins to be loaded on new machines next year, computer makers like Dell and Hewlett-Packard will be free to determine what search engines and other sites they feature in the browser's Web guide and search box.

That promises to be valuable screen real estate indeed, especially the coveted spot as the preferred search engine, which the computer makers are likely to sell to the highest bidder. Google and Yahoo have deep pockets, but no one can match Microsoft's spending power. "People will be bidding aggressively to get in that space," said Mr. Hachamovitch of Microsoft. "And that's a good thing."

John Markoff contributed reporting for this article.

    New Microsoft Browser Raises Google's Hackles, NYT, 1.5.2006, http://www.nytimes.com/2006/05/01/technology/01google.html

Web Sites Set Up to Celebrate Life Recall Lives Lost

April 27, 2006
The New York Times
By WARREN ST. JOHN

Like many other 23-year-olds, Deborah Lee Walker loved the beach, discovering bands, making new friends and keeping up with old ones, often through the social networking site MySpace.com, where she listed her heroes as "my family, and anyone serving in the military — thank you!"

So only hours after she died in an automobile accident near Valdosta, Ga., early on the morning of Feb. 27, her father, John Walker, logged onto her MySpace page with the intention of alerting her many friends to the news. To his surprise, there were already 20 to 30 comments on the page lamenting his daughter's death. Eight weeks later, the comments are still coming.

"Hey Lee! It's been a LONG time," a friend named Stacey wrote recently. "I know that you will be able to read this from Heaven, where I'm sure you are in charge of the parties. Please rest in peace and know that it will never be the same here without you!"

Just as the Web has changed long-established rituals of romance and socializing, personal Web pages on social networking sites that include MySpace, Xanga.com and Facebook.com are altering the rituals of mourning. Such sites have enrolled millions of users in recent years, especially the young, who use them to expand their personal connections and to tell the wider world about their lives.

Inevitably, some of these young people have died — prematurely, in accidents, suicides, murders and from medical problems — and as a result, many of their personal Web pages have suddenly changed from lighthearted daily dairies about bands or last night's parties into online shrines where grief is shared in real time.

The pages offer often wrenching views of young lives interrupted, and in the process have created a dilemma for bereaved parents, who find themselves torn between the comfort derived from having access to their children's private lives and staying in contact with their friends, and the unease of grieving in a public forum witnessed by anyone, including the ill-intentioned.

"The upside is definitely that we still have some connection with her and her friends," said Bob Shorkey, a graphic artist in North Carolina whose 24-year-old stepdaughter, Katie Knudson, was killed on Feb. 23 in a drive-by shooting in Fort Myers, Fla. "But because it's public, your life is opened up to everyone out there, and that's definitely the downside."

It's impossible to know how many people with pages on social networking sites have died; 74 million people have registered with MySpace alone, according to the company, which said it does not delete pages for inactivity. But a glib and sometimes macabre site called MyDeathSpace.com has documented at least 116 people with profiles on MySpace who have died. There are additions to the list nearly every day.

Last Thursday, for example, a 17-year-old from Vancouver, Wash., named Anna Svidersky was stabbed to death while working at a McDonald's there. As word of the crime spread among her extended network of friends on MySpace, her page was filled with posts from distraught friends and affected strangers. A separate page set up by Ms. Svidersky's friends after her death received about 1,200 comments in its first three days.

"Anna, you were a great girl and someone very special," one person wrote. "I enjoyed having you at our shows and running into you at the mall. You will be missed greatly ... rest in peace."

Tom Anderson, the president of MySpace, said in an e-mail message that out of concern for privacy, the company did not allow people to assume control of the MySpace accounts of users after their deaths.

"MySpace handles each incident on a case-by-case basis when notified, and will work with families to respect their wishes," Mr. Anderson wrote, adding that at the request of survivors the company would take down pages of deceased users.

Friends of MySpace users who have died said they had been comforted by the messages left by others and by the belief or hope that their dead friends might somehow be reading from another realm. And indeed many of the posts are written as though the recipient were still alive.

"I still believe that even though she's not the one on her MySpace page, that's a way I can reach out to her," said Jenna Finke, 23, a close friend of Ms. Walker, the young woman who died in Georgia. "Her really close friends go on there every day. It means a lot to know people aren't forgetting about her."

More formal online obituary services have been available for a number of years. An Illinois company called Legacy.com has deals with many newspapers, including The New York Times, to create online guest books for obituaries the papers publish on the Web, and offers multimedia memorials called Living Tributes starting at $29. But Web pages on social networking sites are more personal, the online equivalent of someone's room, and maintaining them has its complications. Some are frustratingly mundane.

Amanda Presswood, whose 23-year-old friend Michael Olsen was killed in a fire in Galesburg, Ill., on Jan. 23, said none of his friends or family members knew or could guess the password to his MySpace account, which he signed onto the day before he died. That made it impossible to accept some new messages.

"There's a lot of pictures on there that people haven't seen," Ms. Presswood said. "His parents have been coming to me for help because they know I know about the Internet. They even asked if I could hack it so I could keep the page going."

The Walkers correctly guessed the password to their daughter's page, and used it to alert her friends to details of her memorial service. They also used it to access photographs and stories about their daughter they had missed out on.

"It's a little weird to say as a parent, but the site has been a source for us to get to know her better," Mr. Walker said. "We didn't understand the breadth and scope of the network she had built as an individual, and we got to see that through MySpace. It helped us to understand the impact she's had on other people."

At the same time, Ms. Walker's mother, Julie, wrote in an e-mail message, the family was overwhelmed by unsolicited e-mail messages from strangers offering platitudes and seeking to advise them on how to handle their grief. The family found such offerings unwelcome, however well intentioned.

"The grief of our own friends and family is almost more than we can bear on top of our own, and we don't need anyone else's on our shoulders," Mrs. Walker wrote.

Mr. Shorkey said he and his wife remained in touch with their daughter's friends through MySpace. And they visit her Web page daily.

"Some days it makes me feel she's still there," he said. "And some days it reminds me I can never have that contact again."

    Web Sites Set Up to Celebrate Life Recall Lives Lost, NYT, 27.4.2006, http://www.nytimes.com/2006/04/27/technology/27myspace.html?hp&ex=1146196800&en=084b178f05f18bd0&ei=5094&partner=homepage

Malicious-software spreaders get sneakier, more prevalent

Posted 4/23/2006 10:25 PM ET
USA TODAY
By Byron Acohido and Jon Swartz

SEATTLE — At the height of his powers, Jeanson James Ancheta felt unstoppable.

From his home in Downey, Calif., the then-19-year-old high school dropout controlled thousands of compromised PCs, or "bots," that helped him earn enough cash in 2004 and 2005 to drive a souped-up 1993 BMW and spend $600 a week on new clothes and car parts.

He once bragged to a protégé that hacking Internet-connected PCs was "easy, like slicing cheese," court records show.

But Ancheta got caught. In the first case of its kind, he pleaded guilty in January to federal charges of hijacking hundreds of thousands of computers and selling access to others to spread spam and launch Web attacks.

In separate cases, federal authorities last August also assisted in the arrest of Farid Essebar, 18, of Morocco, and last month indicted Christopher Maxwell, 19, of Vacaville, Calif., on suspicion of similar activities.

The arrests underscore an ominous shift in the struggle to keep the Internet secure: Cybercrime undergirded by networks of bots — PCs infected with malicious software that allows them to be controlled by an attacker — is soaring.

Without you realizing it, attackers are secretly trying to penetrate your PC to tap small bits of computing power to do evil things. They've already compromised some 47 million PC's sitting in living rooms, in your kids' bedrooms, even on the desk in your office.

Bot networks have become so ubiquitous that they've also given rise to a new breed of low-level bot masters, typified by Ancheta, Essebar and Maxwell.

Tim Cranton, director of Microsoft's Internet Safety Enforcement Team, calls bot networks "the tool of choice for those intent on using the Internet to carry out crimes."

Budding cyberthieves use basic programs and generally stick to quick-cash schemes. Brazen and inexperienced, they can inadvertently cause chaos: Essebar is facing prosecution in Morocco on charges of releasing the Zotob worm that crippled systems in banks and media companies around the world; Maxwell awaits a May 15 trial for allegedly spreading bots that disrupted operations at Seattle's Northwest Hospital.

More elite bot herders, who partner with crime groups to supply computer power for data theft and other cyberfraud, have proved to be highly elusive. But the neophytes tend to be sloppy about hiding their tracks. The investigations leading to the arrests of Ancheta, Essebar and Maxwell have given authorities their most detailed look yet at how bots enable cybercrime.

Estimating the number of bots is difficult, but top researchers who participate in meetings of high-tech's Messaging Anti-Abuse Working Group often use a 7% infection rate as a discussion point. That means as many as 47 million of the 681 million PCs connected to the Internet worldwide may be under the control of a bot network.

Security giant McAfee detected 28,000 distinct bot networks active last year, more than triple the amount in 2004. And a February survey of 123 tech executives, conducted by security firm nCircle, pegged annual losses to U.S. businesses because of computer-related crimes at $197 billion.

Law enforcement officials say the ground floor is populated by perhaps hundreds of bot herders, most of them young men. Mostly, they assemble networks of compromised PCs to make quick cash by spreading adware — those pop-up advertisements for banking, dating, porn and gambling websites that clutter the Internet. They get paid for installing adware on each PC they infect.

"The low-level guys ... can inflict a lot of collateral damage," says Steve Martinez, deputy assistant director of the FBI's Cyber Division.

Ancheta and his attorney declined to be interviewed, and efforts to reach Essebar with help from the FBI were unsuccessful. Steven Bauer, Maxwell's attorney, said his client was a "fairly small player" who began spreading bots "almost as a youthful prank."

The stories of these three young men, pieced together from court records and interviews with regulators, security experts and independent investigators, illustrate the mind-set of the growing fraternity of hackers and cyberthieves born after 1985. They also provide a glimpse of Cybercrime Inc.'s most versatile and profitable tool.

Ancheta: Trading candy

School records show that Ancheta transferred out of Downey High School, in a suburb near Los Angeles, in December 2001 and later attended an alternative program for students with academic or behavioral problems. Eventually, he earned a high school equivalency certificate. Ancheta worked at an Internet cafe and expressed an interest in joining the military reserves, his aunt, Sharon Gregorio, told the Associated Press.

Instead, in June 2004, court records show, he discovered rxbot, a potent — but quite common — computer worm, malicious computer code designed to spread widely across the Internet.

Ancheta likely gravitated to it because it is easy to customize, says Nicholas Albright, founder of Shadowserver.org, a watchdog group. Novices often start by tweaking worms and trading bots. "I see high school kids doing it all the time," says Albright. "They trade bot nets like candy."

Ancheta proved more enterprising than most. He infected thousands of PCs and started a business — #botz4sale — on a private Internet chat area. From June to September 2004, he made about $3,000 on more than 30 sales of up to 10,000 bots at a time, according to court records.

By late 2004, he started a new venture, court records show. He signed up with two Internet marketing companies, LoudCash of Bellevue, Wash., and GammaCash Entertainment of Montreal, to distribute ads on commission.

But instead of setting up a website and asking visitors for permission to install ads — a common, legal practice — he used his bots to install adware on vulnerable Internet-connected PCs, court records show. Typically, payment for each piece of adware installed ranges from 20 cents to 70 cents.

Working at home, Ancheta nurtured his growing bot empire during a workday that usually began shortly after 1 p.m. and stretched non-stop until 5 a.m., a source with direct knowledge of the case says. He hired an assistant, an admiring juvenile from Boca Raton, Fla., nicknamed SoBe, court records show. Chatting via AOL's free instant-messaging service, Ancheta taught him how to spread PC infections and manage adware installations.

Checks ranging as high as $7,996 began rolling in from the two marketing firms. In six months, Ancheta and his helper pulled in nearly $60,000, court records show.

During one online chat with SoBe about installing adware, Ancheta, who awaits sentencing May 1, advised his helper: "It's immoral, but the money makes it right."

Sean Sundwall, a spokesman for Bellevue, Wash.-based 180solutions, LoudCash's parent company, said Ancheta distributed its adware in only a small number of incidents listed in the indictment. GammaCash had no comment.

Maxwell: Infecting a hospital

At about the same time — in early 2005 — Christopher Maxwell and two co-conspirators were allegedly hitting their stride running a similar operation. From his parents' home in Vacaville, Calif., Maxwell, then an 18-year-old community college student, conspired with two minors in other states to spread bots and install adware, earning $100,000 from July 2004 to July 2005, according to a federal indictment.

They ran into a problem in January 2005 when a copy of the bot they were using inadvertently found its way onto a vulnerable PC at Seattle's Northwest Hospital. Once inside the hospital's network, it swiftly infected 150 of the hospital's 1,100 PCs and would have compromised many more. But the simultaneous scanning of 150 PCs looking for other machines to infect overwhelmed the local network, according to an account in court records.

Computers in the intensive care unit shut down. Lab tests and administrative tasks were interrupted, forcing the hospital into manual procedures.

Over the next few months, special agent David Farquhar, a member of the FBI's Northwest Cyber Crime Task Force, traced the infection to a NetZero Internet account using a phone number at Maxwell's parents' home, leading to Maxwell's indictment on Feb. 9. He pleaded not guilty.

Essebar: Birth of a worm

As authorities closed in on Ancheta and Maxwell last summer, 18-year-old Farid Essebar was allegedly just getting started in the bots marketplace. The FBI says the skinny, Russian-born resident of Morocco operated under the nickname Diabl0 (pronounced Diablo but spelled with a zero). Diabl0 began attracting notice as one of many copycat hackers tweaking the ubiquitous Mytob e-mail worm. E-mail worms compromise a PC in much the same way as a bot, but the victim must help, by clicking on an e-mail attachment to start the infection.

Diabl0 created a very distinctive version of Mytob designed to lower the security settings on infected PCs, install adware and report back to Diabl0 for more instructions. Last June, David Taylor, an information security specialist at the University of Pennsylvania, spotted Diabl0 on the Internet as he was about to issue such instructions. Taylor engaged the hacker in a text chat.

Diabl0 boasted about using Mytob to get paid for installing adware. "I really thought that he was immature," Taylor recalls. "He was asking me what did I think about his new bot, with all these smiley faces. Maybe he didn't realize what he was doing was so bad."

In early August, Diabl0 capitalized on a golden opportunity when Microsoft issued its monthly set of patches for newly discovered security holes in Windows. As usual, independent researchers immediately began to analyze the patches as part of a process to develop better security tools. Cybercrooks closely monitor the public websites where results of this kind of research get posted.

Diabl0 latched onto one of the test tools and turned it into a self-propagating worm, dubbed Zotob, says Charles Renert,director of research at security firm Determina. Much like Mytob, Zotob prepared the infected PC to receive adware. But Zotob did one better: It could sweep across the Internet, infecting PCs with no user action required.

Diabl0 designed Zotob to quietly seek out certain Windows computer servers equipped with the latest compilation of upgrades, called a service pack. But he failed to account for thousands of Windows servers still running outdated service packs, says Peter Allor, director of intelligence at Internet Security Systems.

By the start of the next workweek, Zotob variants began snaking into older servers at the Canadian bank CIBC, and at ABC News, The New York Times and CNN. The servers began rebooting repeatedly, disrupting business and drawing serious attention to the new worm. "Zotob had a quality-assurance problem," says Allor. Diabl0 had neglected to ensure Zotob would run smoothly on servers running the earlier service packs, he says.

Within two weeks, Microsoft's Internet Safety Enforcement Team, a group of 65 investigators, paralegals and lawyers, identified Essebar as Diabl0 and pinpointed his base of operations. Microsoft's team also flushed out a suspected accomplice, Atilla Ekici, 21, nicknamed Coder.

Microsoft alerted the FBI, which led to the Aug. 25 arrests by local authorities of Essebar in Morocco and Ekici in Turkey.

The FBI holds evidence that Ekici paid Essebar with stolen credit card numbers to create the Mytob variants and Zotob, Louis Reigel, assistant director of the FBI's Cyber Division told reporters.

While Ancheta operated as a sole proprietor, and Maxwell was part of a three-man shop, Essebar and Ekici functioned more like freelancers, says Allor. They appeared to be part of a loose "confederation of folks who have unique abilities," says Allor.

"They come together with others who have unique abilities, and from time to time they switch off who they work with."

Despite their notoriety, Essebar, Ancheta and Maxwell represent mere flickers in the Internet underworld. More elite hackers collaborating with organized crime groups take pains to cover their tracks — and rarely get caught.

"Those toward the lower levels of this strata are the ones that tend to get noticed and arrested pretty quickly," says Martin Overton, a security specialist at IBM.

Acohido reported from Seattle, Swartz from San Francisco.

______

SOME 'SCRIPT KIDDIES' GET MORE ATTENTION THAN OTHERS

SAN FRANCISCO — It used to be that kids collected comic books and baseball cards. In the digital age, some youngsters amuse themselves by seeing how many Internet-connected computers they can infect for fun or profit.

Known as "script kiddies," these young people typically have no formal training. But they are comfortable at a keyboard and adept at self-learning. Noodling at their computers while munching on junk food, they search out and tweak malicious computer code, called scripts, created by others, according to computer-security experts and law enforcement officials involved in the prosecution of teenage hackers.

Instead of riding bikes or playing ball, script kiddies immerse themselves in a digital world steeped in an ethic that holds all things in cyberspace to be fair game for clever manipulation.

Most seek kudos from peers who admire those who can infect the most PCs. But from there it's a small step to rationalize using hacking skills to make a quick buck.

"We talk about safe sex, avoiding drugs and alcohol. But we don't talk about computer ethics," says Paul Luehr, a former federal computer-crimes prosecutor.

Script kiddies who rose above their peers to earn wider infamy include:

Kim Vanvaeck, 19 when arrested in 2004. The Belgian female, author of a computer virus that scrambled MP3 files and caused quotes from TV's Buffy the Vampire Slayer to pop up on PC screens, was arrested outside Brusselsand charged with computer data sabotage. The case was dropped.

Vanvaeck began tweaking viruses at 14 but maintained she never actually released any of her creations on the Web. "When people make guns, can you blame them when somebody else kills with them?" she told TechTV.com in a 2002 interview. "I only write them. I don't release them."

Sven Jaschan, 17 when arrested in 2004. The German author of the Sasser worm, which caused millions of Windows-based PCs to crash and reboot, was sentenced to 21 months of probation.

He received only 30 hours of community service and was later hired as a consultant at a computer-security company, Securepoint, in Germany.

Jaschan started writing computer viruses in early 2004 after he learned about the MyDoome-mail virus and how it had infected millions of Windows-based PCs.

Working in the basement with his stepfather, a PC repairman, the precocious Jaschan wrote the Netsky e-mail virus, which cleaned up MyDoom infections but was itself invasive, according to a 2004 interview Jaschan did with Germany'sStern magazine.

Jaschan progressed to creating the destructive Sasser worm, which spread much faster than Netsky because it required no action by the PC user.

Jeffrey Lee "Teekid" Parson, 18 when arrested in 2003. A high school senior from Hopkins, Minn., Parson was one of many copycat hackers who tweaked the invasive MSBlaster worm in 2003. His version infected 48,000 PCs and caused $1.2 million in damage, prosecutors said.

But Parson failed to cover his tracks well. A link in his coding pointed to a website where he stored other viruses alongside lyrics to his favorite songs by Judas Priest and Megadeth.

U.S. District Judge Marsha Pechman, who sentenced Parson in January 2005, said Parson was a lonely teenager who holed up in his room and created his "own reality."

Parson is currently serving an 18-month sentence in Duluth (Minn.) Federal Prison Camp. His projected release is Aug. 14. His attorney, Nancy Tenney, describes him as shy and said he declined an interview.

Parson was the only hacker arrested in connection with MSBlaster, which infected more than 20 million PCs.

By Jon Swartz and Byron Acohido, USA TODAY




WHAT BOTS DO

Infected PCs that await commands, bots are being used for:

Spamming. Bots deliver 70% of nuisance e-mail ads.

Phishing. Bots push out e-mail scams that lure victims into divulging log-ons and passwords.

Denial-of-service attacks. Bots flood targeted websites with nuisance requests, shutting them down. To stop such attacks, website operators are coerced into making extortion payments.

Self-propagation. Bots scour the Internet for other PCs to infect; they implant password breakers and packet sniffers that continually probe for routes to drill deeper into corporate systems.

Direct theft. Bots implant keystroke loggers and man-in-the-middle programs that record when the PC user types in account log-on information, then transmit the data back to the bot master.

    Malicious-software spreaders get sneakier, more prevalent, NYT, 24.4.2006, http://www.usatoday.com/tech/news/computersecurity/infotheft/2006-04-23-bot-herders_x.htm

Google Posts 60% Gain in Earnings

April 21, 2006
The New York Times
By SAUL HANSELL

Google returned to favor among investors yesterday as its profit for the first quarter increased 60 percent, well above expectations.

Three months ago, the company disappointed investors, even though its profit grew 82 percent, and its stock sagged. This time, Google's ascent was enough to satisfy.

"Investors, surprisingly, acted rationally this quarter and had low expectations," said Safa Rashtchy, an analyst at Piper Jaffray & Company. Google's stock rose about 8 percent in after-hours trading after the announcement, recouping its losses since the last earnings report.

Pointing to particulars behind its successful quarter, the company said its share of the search market continued to grow around the world, as did the money it earned from advertising for each search result displayed.

Eric E. Schmidt, Google's chief executive, said the market share increase might be related to the use of some of the company's new products, like Google Video, Google Earth and Google Maps, as well as the introduction of Google News in several countries.

These services attract people to Google's site, where they may also conduct searches, he said in an interview. "All of a sudden Google is top of mind again, over and over again."

Google continued to make substantial capital investments, mainly in computer servers, networking equipment and space for its data centers. It spent $345 million on these items in the first quarter, more than double the level of last year. Yahoo, its closest rival, spent $142 million on capital expenses in the first quarter.

Google has an enormous volume of Web site information, video and e-mail on its servers, Mr. Schmidt said. "Those machines are full. We have a huge machine crisis."

Jordan Rohan, an analyst for RBC Capital Markets, called Google's capital spending "unfathomably high," noting that it spent the same percentage of its revenue on equipment as a company in the telephone business, an industry traditionally seen as far more capital-intensive than the Internet.

He said investors would tolerate this high spending level as long as Google's results continued to be so strong.

"If Google's market share continues to increase, and its position as the central hub of the Internet is reinforced, an extra $1 billion is a worthwhile investment," Mr. Rohan said. "The day market share peaks, we have a problem."

Investors saw little problem in the latest numbers. Google earned $592 million in the first quarter, compared with $369 million in the year-earlier period.

Excluding charges for stock-based compensation and payments to the plaintiffs' lawyers in the settlement of a class-action lawsuit, earnings were $2.29 a share, well ahead of the $1.97 that analysts had anticipated.

Gross revenue was $2.25 billion, up 79 percent. Analysts prefer to look at Google's revenue after deducting the payments it makes to services like America Online, which display its advertisements and keep most of the money from them. Using this measure, Google's revenue was $1.53 billion, compared with the $1.44 billion that analysts had estimated.

The company's stock, which ended regular trading at $415, up $4.50, rose after hours to $448.31 It reached a high of $475.11 in January and was at $432.66 before its last earnings report, then fell back as far as $337.06 in March.

Google saw faster growth on the Web sites it owns, which are far more profitable because it does not have to share advertising money. Google's sites posted revenue of $1.3 billion, up 97 percent.

Revenue from partner sites was $928 million, up 59 percent. Google kept 22 percent of the revenue for ads shown on partner sites, compared with 21 percent a year ago.

Revenue is growing faster overseas. Revenue from outside the United States was 42 percent of total revenue, compared with 39 percent a year ago. The company said that it noted particular growth in Britain, France and elsewhere in Northern Europe.

Mr. Rohan said that in the first quarter, Google's search revenue in the United States grew 10 percent from the fourth quarter of 2005, about the same growth as Yahoo. Google has long grown substantially faster than Yahoo, and it is still increasing its share of user searches, he said. That means Yahoo is starting to catch up on technology to generate more advertising revenue for each search, he said.

Google added $825 million to its cash hoard, giving it $8.4 billion in cash at the end of the quarter. In April, it raised another $2.1 billion by selling shares to the public and spent $1 billion to buy 5 percent of AOL.

The company also continued to hire at a breakneck pace. It added 1,110 workers in the quarter for a total of 6,790 full-time employees.

In a conference call with investors, Mr. Schmidt highlighted several areas for future growth.

One was advertising from local businesses on the company's main search service, as well on its local search and maps products. The delivery of such advertising is based on an inference of the user's location from the search query or Internet protocol address.

"Locally targeted ads are an increasingly meaningful contributor to revenue, and much more is coming," Mr. Schmidt told the investors.

Mr. Rashtchy, the Piper Jaffray analyst, estimated that 10 percent of Google's advertising was local.

Mr. Schmidt also said the company saw great opportunity in developing services for mobile phones. It has developed a system called a transcoder that will reformat Web pages for display on the small screens of cellphones.

The company has started delivering advertising on its mobile service in Japan and it is negotiating with wireless carriers to put advertising on its services in other countries as well, Mr. Schmidt said in an interview.

    Google Posts 60% Gain in Earnings, NYT, 21.4.2006, http://www.nytimes.com/2006/04/21/technology/21google.html

High hopes grow for big, new wireless networks

Posted 4/20/2006 9:35 PM ET
USA TODAY
By Michelle Kessler

SAN FRANCISCO — Officials in San Francisco have high hopes for the giant wireless Internet network that soon will span this hilly city.
Mayor Gavin Newsom has said that the Wi-Fi network, being built through a partnership with Internet service provider EarthLink and search giant Google, will help eliminate the "digital divide" by providing free Web access to nearly every home and business.

Residents who already have high-speed Internet access at home may benefit, too, by using the free service to connect when they're out at a local park, friend's house or anywhere else around town. Visitors will find it easier to do business in the city, because they can always hop online to check their e-mail.

The service will make San Francisco more connected to the global economy — and a better place to live, work and visit, Newsom said when announcing the deal.

Philadelphia; Portland, Ore.; and Anaheim, Calif., each have similar plans for big Wi-Fi networks.

Yet all it takes is a look back at Wi-Fi's pioneers to discover that big wireless Internet projects often don't live up to lofty expectations.

That doesn't necessarily mean they're failures. Indeed, many become useful in unexpected ways.

Take Pittsburgh. In 2003, the Pittsburgh Cultural Trust, a civic group, unveiled an ambitious plan to help revive the city's struggling downtown by building a Wi-Fi network there with Internet service provider Telerama Internet.

But the flood of businessmen and women, students and other Wi-Fi users never appeared. Today, there are only about six public Wi-Fi hotspots, or antennas, in the downtown area, says Robert Pell, Telerama's director of operations. (A hotspot usually provides coverage to a single building or, if outdoors, a city block.)

The main hotspot — in the Benedum Center for the Performing Arts — is used mainly by theater workers, says Veronica Corpuz, spokeswoman for the Cultural Trust.

That wasn't the original plan, but Wi-Fi has become a crucial tool, Corpuz says. Workers can now access the Web from deep inside the theater — making it easier to set up and take down shows, she says.

It's a typical tale. The tech industry is notorious for overhyping new technologies, and Wi-Fi received more than its share, says wireless analyst Phillip Redman at researcher Gartner.

The vision of Wi-Fi as a tool for businesses and a limited number of tech-savvy consumers "has really come true," he says. "But if you think about things like Wi-Fi services, public hotspots, Wi-Fi taking over the cellular (phone) world ... it's been a letdown," he says.

Rushing in

Wi-Fi made its public debut during the tough period after the dot-com bust of 2001. Tech companies were desperate for something — anything — that would drive business. Wi-Fi, with its promise of anywhere, anytime Internet connectivity, seemed the catalyst the industry craved.

Giants such as Intel and IBM plunged millions into Wi-Fi projects. Dozens of start-ups, with goofy names such as Proxim Wireless, Joltage Networks and Boingo Wireless, popped up to enter the promising market. One young company, Tropos Networks, crowed in a 2003 press release, "Wi-Fi's real potential is true broadband wireless data access with anytime, anywhere availability in coverage areas similar to those of cellular telephone service."

Three years later, Wi-Fi still falls far short of those promises. Coverage is limited, and "We're still waiting for these large-scale deployments that everyone has been talking about," says wireless analyst Gemma Tedesco at researcher In-Stat.

Perhaps that's because early Wi-Fi deployments often did not work out as planned, she says.

•Firefighters, police and other officials in Nevada, Mo., are big fans of the town's Wi-Fi network, which helps them do their jobs while moving through the community of 8,600 people.

But that wasn't the reason the network was built in 2003. At the time, no traditional broadband, such as cable modem or digital subscriber line (DSL) service, was available in town. Officials built the Wi-Fi network, through a partnership with service provider NeighborLink Broadband, to provide access to citizens.

About a year later, SBC (now AT&T) began offering traditional broadband service. Nevada (pronounced Ne-vay-duh) won't release subscriber numbers, but City Manager Craig Hubler says it significantly cut into sales.

Still, the network remains popular enough that Nevada is currently retooling its offering to make it easier for small businesses in town to resell the service.

"It's really exciting for the community to have access to this technology," says Mayor Brian Leonard, who also teaches at the local high school and coaches the golf team.

•Incoming dentistry students at the University of Medicine and Dentistry of New Jersey receive a laptop as part of their tuition. Combined with the school's Wi-Fi network, it lets them access the Internet from almost anywhere on campus. When the network was installed in 2003, "Wireless was still a very new technology," says Dean Cecile Feldman. "Now we look at it as basic infrastructure we need to supply."

But crucial course material is stored directly on laptops, rather than just being placed on the Web, so students don't have to worry if their Internet connection drops or is slow, Feldman says. "There are speed issues," she says.

Furthermore, the school has turned off Wi-Fi access in some lecture halls, because "People were surfing the Internet instead of paying attention," she says.

Going mainstream

It takes time for any new technology — no matter how exciting — to go mainstream, Gartner's Redman says.

And Wi-Fi has a particularly long learning curve, because "Wireless is as much an art as a science," says wireless analyst Julie Ask at JupiterResearch.

A Wi-Fi signal can travel farther than a block under ideal conditions. But buildings, trees, cars and other wireless networks can interfere. Even emissions from microwave ovens and cordless phones can cause a Wi-Fi signal to go wrong. With so many variables, designing a Wi-Fi system is always part luck, Ask says.

Additionally, Wi-Fi can be tough for consumers to use. The Wi-Fi software on many laptops is packed with jargon-laden technical terms such as "WEP key" and "LAN settings." (Both terms refer to software settings that a consumer might need to tweak to connect to a Wi-Fi network.)

As these drawbacks have hindered Wi-Fi's growth, the industry has undergone painful changes. Many players have merged or gone out of business. One prominent failure was Cometa Networks, a onetime powerhouse backed by tech giants Intel, IBM and AT&T. Joltage, too, shut down, and Proxim was acquired by another company. (It still operates under the Proxim name.) Boingo is still in business.

By other measures, Wi-Fi has already been a success.

A shift to laptops

In June 2005, the number of laptops sold at U.S. retail stores surpassed for the first time the number of desktops sold, says researcher NPD. Laptops became more appealing once they could connect to the Internet outside the office, says tech analyst Stephen Baker at NPD.

Strong laptop sales in turn helped propel the overall PC industry to 15.5% growth in 2005, Gartner says.

Non-tech businesses are benefiting from Wi-Fi, too. Starbucks, which offers Wi-Fi from carrier T-Mobile in 90% of its U.S. stores, says the technology sells coffee. A typical Starbucks customer stays in the store for about 20 minutes, but most Wi-Fi users linger for more than an hour, says spokesman Nick Davis. And while Starbucks' business typically tapers off after 9 a.m., Wi-Fi users are keeping stores busy well into the afternoon, he says.

Early adopter Schlotzsky's deli has kept Wi-Fi in about 50 of its stores, despite a painful restructuring and corporate cutbacks. There, too, customers using Wi-Fi visit at non-peak hours and stay longer, says spokesman Rob Nylund. "And they often make an extra trip (to the counter) for dessert," he says.

Improvements ahead

Expect Wi-Fi to get even better as the technology improves.

The earliest commonly used Wi-Fi standard, known in the industry as 802.11b, transfers data at a maximum rate of 11 megabits per second. That's fast enough for basic Internet surfing but not for very-high-bandwidth media files.

Newer Wi-Fi standards, including 802.11g, can transfer data fast enough to stream a movie to a TV set without wires. New products are springing up to take advantage of the technology. Philips, Sharp and others have developed TVs that connect to media center PCs wirelessly, for example.

That's one reason Wi-Fi deployments remain popular. Even Pittsburgh is considering building another big downtown network.

Officials in Portland, Ore., are finally moving forward with a Wi-Fi network after talking about it since 2003, says Matt Lampe, the city's chief technical officer.

Newer Wi-Fi technologies will make the network speedier and more stable, Lampe says. And a more mature Wi-Fi industry will make it easier for the city to strike up partnerships. Officials are working through paperwork and finalizing deals. Lampe expects a pilot to be in place by late summer.

Lampe acknowledges that many early Wi-Fi projects didn't turn out as expected. But he's confident that his network will provide much-needed Internet access to small businesses, mobile professionals and even some homes.

"There's a lot of buzz, a lot of interest," he says. "We see a lot of potential."

    High hopes grow for big, new wireless networks, UT, 20.4.2006, http://www.usatoday.com/tech/wireless/2006-04-20-big-wi-fi-networks_x.htm

Attorney general describes online kid porn

Updated 4/20/2006 10:40 PM ET
USA Today

WASHINGTON (AP) — Attorney General Alberto Gonzales used strikingly graphic language Thursday to focus attention on online child pornography and said Internet services companies are not doing enough to combat the problem.

"It is graphic, but if we do not talk candidly, then it is easy for people to turn away and worry about other matters," Gonzales said in a speech at the National Center for Missing and Exploited Children in Alexandria, Va.

Acknowledging that his descriptions could make people uncomfortable, Gonzales said he wanted to make sure people knew what was going on.

"I have seen pictures of older men forcing naked young girls to have anal sex. There are videos on the Internet of very young daughters forced to have intercourse and oral sex with their fathers. Viewing this was shocking and it makes my stomach turn," said Gonzales, who was accompanied by his wife, Rebecca.

It was their second visit to the center, created in 1984 as a clearinghouse for information about missing and exploited children.

Ernie Allen, the center's president, said many Americans continue to hold mistaken impressions of the issue. "We hear all the time that this is really just adult porn, 20-year-olds in pigtails made to look like they're 15," Allen said. "This is about children being sexually victimized. They're young children and they're getting younger."

Without identifying companies, Gonzales said some investigations have been hampered by the failure of Internet service providers to retain certain records long enough to help authorities identify purveyors of child pornography. He did not propose a remedy Thursday.

But he did support tripling the criminal fines for companies that fail to report apparent violations of child pornography laws — to $150,000 for the first instance and $300,000 for subsequent failures.

The Justice Department has never written regulations establishing standards on how to report illegal activities or mandating how long records must be kept.

Kate Dean, director of the United States Internet Service Provider Association, said AOL, Earthlink, BellSouth, Verizon and other association members "currently have robust policies in place to ensure that law enforcement can obtain the information they need to prosecute child pornographers."

Dean said the companies would welcome a discussion with Gonzales on the issue.

The Internet companies last year made 34,939 reports to the missing children center, which forwards them to law enforcement authorities, said Michelle Collins, director of the center's exploited children unit.

Last week alone, there were 938 reports, Collins said.

"Several people a week are being arrested somewhere in the country because of information provided by an electronic service provider," she said.

The Justice Department was criticized recently by a victim of child pornography, who said investigators were acting too slowly on information he provided on 1,500 pedophiles. Justin Berry testified to Congress in early April that he starred in his own webcam child pornography business for five years.

"I believed that the government would protect the children being abused. I believed they would act quickly," Berry, now 19, told the House Energy and Commerce Committee. "I was wrong."

Gonzales and other officials have declined to discuss Berry's case and resulting investigations, but they have pointed to a threefold increase in federal prosecutions of child pornography and abuse cases nationally over the past decade.

    Attorney general describes online kid porn, UT, 20.4.2006, http://www.usatoday.com/news/washington/2006-04-20-gonzales-child-porn_x.htm

Suspected shooter found sex offenders' homes on website

Updated 4/18/2006 5:43 AM ET
USA TODAY
By Emily Bazar

The killings of two convicted child molesters in Maine prompted authorities to briefly remove the state's online sex-offender registry and revived concerns that such websites may encourage vigilante-style justice.

The Maine Sex Offender Registry's online search was taken down Sunday morning after two convicted sex offenders were shot and killed in their towns about 25 miles apart, said Stephen McCausland, spokesman for the Maine Department of Public Safety.

Stephen Marshall, identified by Maine State Police as the only suspect in the shooting, killed himself Sunday night as police boarded the bus he had taken to Boston.

Marshall had logged onto the site sometime before the two men were shot several times, McCausland said. While on the site, Marshall also sought information on 32 other sex offenders.

The site provides photos, names, ages, addresses and conviction histories of about 2,200 registered sex offenders in the state.

"In order to get an individual profile, you have to register," McCausland said. He said Marshall had signed up to get access to the data.

Joseph Gray, 57, of Milo, was shot about 3 a.m. Sunday while sitting on his living room couch. He was convicted in Massachusetts of sexually assaulting a child. About five hours later, William Elliott, 24, of Corinth, was killed when he answered the door. He was convicted of sexual abuse of a minor in Maine.

Marshall, a Canadian from Nova Scotia, had been visiting his father in Maine, McCausland said. Police identified him from a license plate spotted at the scene of the second shooting and traced him to Boston.

"There's no known connection between the three men," McCausland said. "We have a lot more questions than we have answers."

Maine restored its sex-offender website Monday afternoon.

Most states post their sexual-offender registries online, says Charles Onley, a research associate for the Center for Sex Offender Management, a project of the U.S. Department of Justice.

Early on, he says, critics of the online registries warned that readily available details about sex offenders could spur widespread vigilante-style killings. That did not happen, he says.

However, registered sex offenders have been affected in other ways: Neighbors have badgered them and put signs on their lawns. Governments have passed laws preventing sex offenders from living within a certain distance of schools, playgrounds and other places frequented by children.

"The drift has basically been to tighten everything up, making it tougher on sex offenders," Onley says.

He says he knows of only one other case of lethal vigilantism linked to a website: In August, Michael Mullen killed two sex offenders in Bellingham, Wash., after finding their addresses on a sex-offender website.

Bellingham police briefly shut down the city's sex-offender website but put it back online shortly afterward and made no changes to its content.

"The value to the community far outweighs the risk," says Don Pierce, executive director of the Washington Association of Sheriffs and Police Chiefs.

Fred Berlin, an associate professor of psychiatry at the Johns Hopkins University School of Medicine, says online registries may create unforeseen problems.

Most sex offenders and their families, he says, want a new start. But the killings in Washington and Maine, coupled with the more pervasive harassment of registered sexual offenders in their own neighborhoods, may make them angry and bitter.

"They want to be able to be employed. They don't want to be disenfranchised from their neighbors," he says. "They and their family don't want to be stigmatized."

Jake Goldenflame, a registered sex offender in San Francisco and author of Overcoming Sexual Terrorism, agrees.

He supports registries because they provide important information to the public and remind sex offenders of their past. But if sex offenders continue to be murdered, he says, others will be less likely to register, and some officials may choose to remove the sites.

"Anybody who chooses to use these websites as a vehicle to take vengeance against us is killing these websites, too," he says. "You kill us, you're killing the websites."

Contributing: Kasie Hunt, USA TODAY

    Suspected shooter found sex offenders' homes on website, UT, 18.4.2006, http://www.usatoday.com/news/nation/2006-04-16-maine-shootings_x.htm

A Sinister Web Entraps Victims of Cyberstalkers

April 17, 2006
The New York Times
By TOM ZELLER Jr.

Claire E. Miller, a 44-year-old publishing executive in Manhattan, recently stripped her nameplate from the tenant directory at the entrance to her Kips Bay apartment building, where she has lived for more than 11 years. She has also asked the landlord to disconnect the buzzer and is in the process of changing her phone number.

Drastic measures, all, for an otherwise cheerful and outgoing person. But Ms. Miller has been unnerved by a sudden and, since last September, steady onslaught of unsolicited and lusty phone calls, e-mail messages and even late-night visits from strange men — typically seeking delivery on dark promises made to them online by someone, somewhere, using her name.

"I wouldn't even try to guess at the motivation behind this," Ms. Miller said.

She is being harassed — cyberstalked, by modern definition. The term has by now found its way into dozens of state legislatures, police reports and talk-show lineups, joining other unsavory byproducts of the Internet age.

State legislatures took notice around 1999 and began passing laws that make cyberstalking a crime. Three months ago, President Bush signed federal anti-cyberstalking legislation. But cases like Ms. Miller's make it clear that the problem is not easily legislated away and show how devastating it can be to individuals caught in its web.

One profile posted at the "adult personals" site iwantu.com included Ms. Miller's full name, address and phone number, along with a solicitation for eager suitors to call or drop by her home. "My name is Claire E. Miller," the ad began. It concluded: "I can make you very happy and satisfied. In my den of love pad."

It is the online equivalent of scrawling "for a good time, call Jane Doe" on a bathroom wall, but the reach of the Internet has made such pranks — if they are only that — far more sinister. And the problem is only likely to grow, fueled by the availability of personal data online and the huge growth in social networking and dating sites, which are attracting investment from big companies.

"Cyberstalking is the hidden horror of the Internet," said Parry Aftab, an attorney and executive director of WiredSafety.org, a network of 9,000 volunteers who patrol the Web and assist victims of cyberstalking, child pornography and other online ills. "Nobody talks about it. They think they have to live with it."

Ms. Miller suspects that her perpetrator is a stranger who may have found her personal information while snooping around in the AOL e-mail account of an old high school friend. But late at night, in the topsy-turvy churn of an anxious brain, all kinds of people — old lovers, acquaintances — become possible culprits.

"That's when the self-doubt and fear comes in," Ms. Miller said.

There are no statistics on how often this particular breed of online impersonation takes place, but Jayne A. Hitchcock, the director of Working to Halt Online Abuse, an organization that assists victims of Internet harassment, says it is common enough.

"I think I've seen everything," Ms. Hitchcock said. Participants in online fantasy football leagues, angered by some nuance of the competition, silently turn on and anonymously harass one another, and in eBay auctions, either the seller or the buyer turns stalker, she said. They channel that "Internet road rage," Ms. Hitchcock said, into a variety of anonymous vendettas.

After receiving informal requests for information about cyberstalking from the F.B.I. and other law enforcement agencies, Ms. Hitchcock's group began tracking demographic details in 2000. In February, the group — which she says handles an average of 50 new cases each week — released a five-year analysis of data on the victims and, to the extent possible, the stalkers. The data is sketchy; victims volunteered to fill out a questionnaire, and harasser data is, in most cases, provided by the harassed. But there are some insights. For example, increasing numbers of men appear to be applying for help, and overt threats of offline harm occurred in about a quarter of the cases last year.

In about half the cases, victim and perpetrator appear to be strangers. For the rest, it can be deeply, disturbingly personal.

Earlier this month, a Suffolk County police officer, Michael Valentine, was indicted on 197 counts of stalking, unauthorized use of a computer and other charges after hacking into the Yahoo e-mail account of a woman he had briefly dated and posing as her in online communications.

The Suffolk County District Attorney's office also charges that Mr. Valentine, of Lake Grove, accessed the woman's personal profile on the dating site Match.com, sending electronic "winks" and other communications to 70 different men on the site. At least two showed up at the woman's home for dates.

That case, and Ms. Miller's, echo that of Gary S. Dellapenta, of Los Angeles, a former security guard who spent the summer of 1998 trolling chat rooms and personals sites posing as his ex-girlfriend. He posted rape fantasies under her name and, providing her home address, begged strangers to deliver on them.

Six men arrived at the former girlfriend's door before Mr. Dellapenta was eventually tracked down. He was sentenced in 1999 to six years in prison under California's then-new cyberstalking law.

J. Reid Meloy, a forensic psychologist and the author of several books on criminal personalities, said that the universe of cyberstalkers runs the gamut, from "jokesters and pranksters to people who have clear criminal intent." He called this particular brand of harassment — in which the perpetrator deploys third parties, wittingly or not, to haunt the victim — "stalking by proxy."

"With any new technology that comes along, you have the shadow of criminality that follows," Mr. Meloy said, although he added that the Internet, with all its distance and anonymity, provided a unique vehicle for the unleashing of hidden furies.

"It's a much more veiled, shielded, disinhibited way of communicating," Mr. Meloy said, "and much more raw in the expression of aggression."

Mari J. Frank, an attorney and privacy consultant who specializes in cases of identity theft, called Ms. Miller's situation "identity theft for revenge."

"I speak about it all the time," Ms. Frank said, adding that the rise of social networking sites like MySpace and Facebook, where young people often naïvely divulge too much information to a world of potential stalkers, has made the situation worse. "Even teens are becoming the victims of cyber ID theft and cyberstalking," she said.

About 45 states now have laws similar to California's. And the new federal law — tucked into the Violence Against Women and Department of Justice Reauthorization Act — updated telephone harassment law to include computer communications.

Some advocates of civil liberty have complained about what they see as overly broad language of the federal update, which prohibits not only anonymous communications intended to threaten, abuse and harass, but also those intended to "annoy" — a term that might characterize a wide range of anonymous Internet banter that falls far short of cyberstalking.

Others, though, have argued that such banter would be protected by the First Amendment, and only cyberstalkers have anything to fear.

That is, of course, if they can be found.

Ms. Miller filed an initial complaint with the New York City police department in October, but said she was not contacted after that. Using a number provided by a friend, she called a detective with the department's units on computer crimes last week, and is now working with investigators there. (A deputy chief, Michael Collins, a police spokesman, said a clerical error in the processing of Ms. Miller's initial complaint apparently delayed her case.)

Ms. Miller has also found two dating sites where her name has been used — imatchup.com and iwantu.com — and had the profiles either removed or hidden.

According to Ms. Hitchcock, the director of Working to Halt Online Abuse, federal cyberstalking legislation can provide needed leverage in pursuing what are often complicated cases. Perpetrator and victim might reside in different states, for instance, and the evidence might be in the hands of Internet companies all over the country, or the world. The law also gives the F.B.I. and other federal law enforcement agencies greater purview over cyberstalking.

But getting that far, Ms. Hitchcock said, is a long road.

Using a Web site usually involves leaving tracks in the form of an I.P. address, which can be traced back to an Internet service provider and perhaps the computer of a stalker. Under most circumstances, a subpoena or a search warrant is required to obtain that information from an online service, so filing a police report is crucial. After that, contacting an organization like WiredSafety.org or Working to Halt Online Abuse, at haltabuse.org, can help. They work with both victims and law enforcement to help move cases forward.

Ms. Miller has taken all these steps — and worked diligently on her own.

Late last month Ms. Miller asked the support staff of iwantu.com, which has offices in Seattle and Canada, Costa Rica and Britain, for data that would reveal the Internet service provider of the person who set up the account there.

On April 3, the company put its position succinctly in an e-mail message to Ms. Miller: "Please note that unfortunately, we cannot supply I.P. addresses. Sorry."

That is precisely what they should have done, said Mark Brooks, an online personals industry analyst and the editor of Online Personals Watch, an industry newsletter. "They can't possibly give that out to another user," said Mr. Brooks, who is a former executive of dating and social networking sites like Cupid.com and Friendster. "It might be a stalker calling to get that information."

Executives for iwantu.com did not return phone calls or e-mail messages seeking comment, and the contact number provided on the imatchup.com Web site for the media relations representative and "Romance Director," Dan Levine, connected to the customer service department instead. A representative reached last weekend said he was not sure why that number was listed, and suggested sending an e-mail message or a letter.

These are delicate issues for an industry that is in the throes of a debate about client safety and security. Several states are considering legislation that would require online personals services to disclose whether they conduct background checks on their members.

According to Mr. Brooks, most members of the industry are sensitive to issues of online safety, but argue that background checks — which must rely on third-party commercial data brokers with spotty information — are expensive and by no means foolproof.

And yet one service, True.com, has quickly become one of the most popular personals sites by conducting background checks on anyone seeking to make a connection. Its staff promises to prosecute those who misrepresent themselves on the site — a concept that Ms. Miller might endorse. She said she planned to pursue her tormenter until he is found.

"I do feel that the Internet is a wonderful tool," she said. "I just want to make sure it's kept safe for everyone."

    A Sinister Web Entraps Victims of Cyberstalkers, NYT, 17.4.2006, http://www.nytimes.com/2006/04/17/technology/17stalk.html?hp&ex=1145332800&en=352ad6b337a3884a&ei=5094&partner=homepage

Doug Marlette        The Tallahassee Democrat, FL        Cagle        13.4.2006
http://cagle.msnbc.com/politicalcartoons/PCcartoons/marlette.asp

Google Chief Rejects Putting Pressure on China

April 13, 2006
The New York Times
By JIM YARDLEY

BEIJING, April 12 — Google's chief executive, Eric E. Schmidt, whose company has been sharply criticized for complying with Chinese censorship, said on Wednesday that the company had not lobbied to change the censorship laws and, for now, had no plans to do so.

"I think it's arrogant for us to walk into a country where we are just beginning operations and tell that country how to run itself," Mr. Schmidt told reporters from foreign news organizations.

Mr. Schmidt is visiting China this week to promote Google's new Chinese search engine and to meet with officials of government ministries. He announced the opening of a research and development center in Beijing's high-technology district and also introduced a Chinese-language brand name for the company's domestic search engine — Gu Ge, which roughly translates as "a harvesting song."

But in briefing sessions that involved both Chinese and foreign reporters, Mr. Schmidt faced questions about the censorship controversy that has involved Google, Microsoft, Yahoo and Cisco Systems.

At a Congressional hearing in February, executives from the four companies were criticized as collaborating with the Chinese government to silence dissidents. Google's Chinese search engine, introduced in January, blocks subjects restricted by the government, including searches for "Tibet" and "democracy."

On Wednesday, Mr. Schmidt defended the decision to cooperate with the censors, saying that accepting the restrictions of Chinese law were unavoidable for Google to enter the Chinese market. "We had a choice to enter the country and follow the law," Mr. Schmidt told the foreign reporters. "Or we had a choice not to enter the country."

Earlier, during a broader news conference including Chinese journalists, he said, "We believe the decision that we made to follow the law in China was absolutely the right one."

Mr. Schmidt said Google's China strategy had been hotly debated inside the company. He called its final choice a difficult but principled decision.

Google's regular, unfiltered search engine is still available in China, although it is significantly slowed by the Chinese censors. And the filtered search engine does notify a user when information has been censored.

In addition, Google has not introduced e-mail or blogging to avoid being told to turn over personal information on cyberdissidents to officials. Yahoo has been denounced for providing information that has helped the Chinese authorities convict such dissidents.

Many critics contend that giants like Google should put pressure on China to change; some industry executives respond that they have little leverage to do so.

Mr. Schmidt said that while the company had not ruled out lobbying with the Chinese on the matter, it had no immediate plans to push for a loosening of restrictions.

Google is still negotiating to receive the full complement of government licenses to operate in the country. Mr. Schmidt declined to discuss which licensing hurdles remain.

China already has more than 111 million Internet users, the second-highest number in the world, after the United States, and this is growing quickly. Mr. Schmidt said he expected China to become one of Google's most important markets, even though it still accounted for a small slice of overall revenue. He said the same was true when Google entered other foreign markets, including those in Europe, where revenue has jumped as users became familiar with the company's services.

Mr. Schmidt said he expected the new research center in Beijing to become one of Google's leading innovators. He noted that Chinese universities could provide a rich talent pool of software engineers and said that the new center would have a work force of more than 150 by this summer. Eventually, he said, the number of employees would reach into the thousands.

_____
 

Displeasure Over Share Structure

By Bloomberg News

SAN FRANCISCO, April 12 — A pension fund investor wants Google to give equal voting rights to all shareholders, saying its current ownership structure reduces management accountability.

The investor, the Bricklayers and Trowel Trades International Pension Fund, which owns 4,735 shares, wants to eliminate a class of stock that gives the founders, Larry Page and Sergey Brin, and the chief executive, Mr. Schmidt, 10 times the voting rights of other shareholders.

"This disproportionate voting power presents a significant danger to shareholders," the fund said in a proposal included in Google's proxy statement filed Wednesday with the Securities and Exchange Commission. "Dual-class voting stocks like our company's reduce accountability for corporate officers and insiders."

Google has urged shareholders to reject the proposal.

    Google Chief Rejects Putting Pressure on China, NYT, 13.4.2006, http://www.nytimes.com/2006/04/13/business/worldbusiness/13google.html?hp&ex=1144987200&en=80172a601f6f35b9&ei=5094&partner=homepage

Google debuts Chinese-language brand name, defends cooperation with censors

Updated 4/12/2006 9:07 AM ET
USA Today

BEIJING (AP) — Google CEO Eric Schmidt on Wednesday defended the search engine's cooperation with Chinese censorship as he announced the creation of a Beijing research center and unveiled a Chinese-language brand name.

Google is trying to raise its profile in China after waiting until January to launch its Chinese-language site Google.cn. Activists have criticized the company for blocking searches for material about Taiwan, Tibet, democracy and other sensitive issues on the site.

"We believe that the decision that we made to follow the law in China was absolutely the right one," Schmidt said at a news conference.

He said Google had to accept restrictions in order to serve China, which has the world's second-largest population of Internet users after the United States, with more than 111 million people online.

Schmidt also announced the creation of a research center in Beijing that he said should have 150 employees by mid-2006 and "eventually thousands of people." He said the center is meant to create products for markets worldwide, though he said planning was still in such an early stage that he didn't know what they might be.

Schmidt was speaking at a ceremony to announce Google's Chinese-language brand name — "Gu Ge," or "Valley Song," which the company says draws on Chinese rural traditions to describe a fruitful and rewarding experience.

Talking to reporters later, Schmidt said Google's managers were stung by criticism that they accepted Chinese censorship, but said they haven't lobbied Beijing to change its rules.

"I think it's arrogant for us to walk into a country where we are just beginning to operate and tell that country how to operate," he said.

Asked whether Google might try to persuade Beijing to change its restrictions, Schmidt said he didn't rule anything out, but said it hasn't tried to change such limits elsewhere. He noted that Google's site in Germany is barred from linking to Nazi-oriented material.

"There are many cases where certain information is not available due to local law or local custom," he said.

Schmidt said China accounts for only a small portion of Google's revenues because the company has only recently obtained a license to allow it to carry local advertising. But he said the company expects China to be an important part of its future business.

One possible Google project in China would be to make Chinese books available online in digital form or to use translation software to produce English-language editions, Schmidt said.

He said the Beijing technical center could quickly become Google's biggest outside the United States, surpassing its European lab in Zurich, Switzerland.

Chinese universities "are now churning out a very large number of very, very good programmers," he said. "So we are moving quickly now to hire the best and the brightest."

    Google debuts Chinese-language brand name, defends cooperation with censors, UT, 12.4.2006, http://www.usatoday.com/tech/world/2006-04-12-google-china_x.htm

Advertising

Soon, Catch 'Lost' Online, a Day Later
 

April 11, 2006
The New York Times
By JULIE BOSMAN

For the Walt Disney Company, plans to make television shows available free online are a way to bolster revenue by selling two sets of advertising — TV commercials and online ads — for a single show.

For advertisers, the online offerings represent an opportunity to capture the attention of particularly Web-savvy consumers who do not have the luxury of fast-forwarding through the ads as they can on a digital video recorder.

Yesterday, Disney announced details of the plan. Beginning in May, the company will begin a two-month trial that will make four popular shows from its ABC network — "Desperate Housewives," "Lost," "Commander in Chief" and "Alias" — available for free viewing online the day after they are broadcast. The plan was first reported in The Wall Street Journal.

Unilever is among the advertisers that bought ads for the initial test run. Noreen Simmons, Unilever's director of strategic media planning, said she expected that consumers who were watching shows in streaming video online would be more alert than if they were watching the same content on television.

"It's going to be a different viewing experience," Ms. Simmons said. "Rather than people sitting back in their chairs watching TV, this is going to be a lean-forward experience."

A string of other companies — including Cingular, Ford, Toyota, Procter & Gamble and Universal Pictures — have also purchased ads, a spokeswoman for Disney said. Jon Winsell, the director of online media strategy for ID Society, an interactive marketing agency in New York, said people who were willing to log on to a computer to watch a missed episode might be loyal enough to tolerate the unskippable commercial breaks.

"When you're talking about 'Desperate Housewives' or 'Lost,' you're talking about a rabid fan base, so they're probably willing to put up with a little more," Mr. Winsell said. Some advertisers are looking at the Web site as a way to find consumers wherever they are taking in content. Mark Simmons, the national manager of advertising strategy and media for Toyota, said the company viewed Disney's new offering primarily as an experiment.

"We wanted to basically test this and learn what we can," Mr. Simmons said. "I think the measurement will be in how many people view these Webisodes."

The plan is the first time a broadcast network will give away full-length hit prime-time TV shows on the Internet. It is also an indication of the pressure networks are feeling from popular video-on-demand services, which are offered by cable operators, among others, and allow viewers to see TV shows and movies when they want. In addition to the four ABC shows, the Web site, www.abc.com, will carry content from three of Disney's cable channels, the Disney Channel, Soapnet and ABC Family.

At a panel discussion yesterday in Atlanta at the National Show, a cable conference put on by the National Cable and Telecommunications Association, Anne Sweeney, president of the Disney-ABC Television Group, said she thought of the plan as "a learning opportunity."

"None of us live in the world of one business model," she said, referring to the other panelists, who included Brian L. Roberts, the chairman and chief executive of Comcast, and Richard D. Parsons, the chairman of Time Warner.

Mr. Roberts, referring to Ms. Sweeney of Disney, said, "People say television will be free on the Internet. I can't believe that's HBO's model, CNBC's model or Anne's model. The idea is to make the pie bigger."

At a news conference after the panel discussion, Mr. Parsons of Time Warner said he was not concerned about the possibility of Disney content cannibalizing video-on-demand from cable companies.

"It's the same way video-on-demand is going," Mr. Parsons said. "You have to have a full suite of video. The notion that someone is going to hollow out the business, I don't see that happening."

Indeed, one analyst suggested that the new model was more old-school than revolutionary.

"They are going back to the traditional way that people have watched television for years: free with ads," said Richard Greenfield, an analyst at Pali Research. "It's reverting back to what consumers are most comfortable with."

Like other media companies, Disney is trying to rally attention in an out-of-favor sector, said Michael Nathanson, a media analyst at Sanford C. Bernstein & Company.

"A lot of companies are trying experiments like these, not just Disney," Mr. Nathanson said. "But no one knows what the business model is and whether it will pay off."

Laura M. Holson and Ken Belson contributed reporting for this article.

    Soon, Catch 'Lost' Online, a Day Later, NYT, 11.4.2006, http://www.nytimes.com/2006/04/11/business/media/11adco.html

Kids with cancer bond online

Updated 4/10/2006 7:58 PM ET
USA TODAY
By Liz Szabo

More than 10 million Americans are cancer survivors. That number is expected to grow as the population ages, as improved therapies help people live longer and as screenings identify the disease earlier. In this occasional series, USA TODAY examines how a cancer diagnosis changes people's lives and outlooks.

Cancer has consumed 2½ years of Simone Weinstein's young life.

It took her hair, her eyebrows and her eyelashes.

At times, cancer has even taken away her friends.

Simone, 16, often has been afraid to see or even call them. Chemotherapy makes her nauseous, and she's terrified of throwing up in front of other kids. A lifesaving medication called prednisone causes turbulent mood swings that make it hard to control her temper. Rather than risk snapping at people who care about her, Simone often chooses to be alone.

"I was so afraid of doing something gross in front of people," says Simone, of Walnut Creek, Calif., who is scheduled to finish treatment this spring.

Yet Simone is never afraid to talk to Lauren Sharp of Versailles, Mo. The girls, who have both been treated for acute lymphoblastic leukemia, met at a website for teen cancer patients called Group Loop.

They are among thousands of patients with cancer and other serious illnesses who use technology to cope. Some patients create blogs. Others record their stories through podcasts that can be downloaded onto iPods. Many follow online discussion boards.

One of the best-known sites, the Cancer Survivors Network of the American Cancer Society, has 72,000 members, most of whom are adults.

The Internet has special appeal for adolescent patients, says Jennifer Ford, an assistant attending psychologist at New York's Memorial Sloan-Kettering Cancer Center. Young cancer patients have grown up with technology, and many already have their own websites and blogs. Other popular sites, she says, include teenswithcancer.org and planetcancer.org, which is geared toward young adults.

Girls seem especially drawn to these sites; they make up about two-thirds of the users at Group Loop, says Mitch Golant, the site's vice president for research and development. Women generally are more likely than men to use support groups, he says.

Online communities can be especially important for teens because their disease is so rare, Ford says. The 12,400 patients under 20 who are diagnosed with cancer each year make up less than 1% of the 1.4 million new annual cases of the disease, the American Cancer Society says. Loneliness is a common problem for these young patients, many of whom, like Simone, sometimes isolate themselves.

Sometimes, after a visit with classmates, Simone says, "I would just collapse from the pressure of holding it all in."

Battling cancer is grueling at any age, but Ford says the disease can be particularly tough on teens. At this age, even healthy children worry about their bodies, their looks and fitting in.

The last thing that teens want is to be taken away from home and set apart from everyone else.

Lauren, 16, was the only child with cancer in her hometown in Missouri. She wishes she had known about Group Loop when she was in treatment. She was 11 when she began treatment, which made her swell up and gain weight. At school, Lauren hid her puffy cheeks by walking through the hallways with her hands in front of her face.

Lauren says she understands the agony of patients still going through therapy.

Now, in their hours online and on the phone, Lauren and Simone air their resentment of medications that punish patients in order to cure them. They can speak freely without the fear of boring anyone, without anyone staring.

Like Lauren, Simone is sensitive about her appearance. On a discussion board last year, she wrote of being ashamed of her "big, fat hideous cheeks." Yet Simone also has found courage to poke fun at herself, choosing "chpmnkcheekz" as her screen name.

"When I talk to Lauren, I don't have to explain," says Simone, who discovered the website shortly after being diagnosed. "Whenever I am sad or depressed, I always feel like she can help."

The two girls, who have been friends for two years, met in person last summer at Simone's house. They plan to meet at Lauren's home in a few months.

It's important for teens to have their own support systems, Ford says, because teens' concerns are so different from those of other patients. Unlike adults, teens rarely worry about death, she says. They focus more on immediate threats: appearance or missed opportunities, such as going to the prom.

Teens also have close ties to familiar places, such as their schools and neighborhoods, Ford says. They suffer when they are plucked out of that environment, especially if sent hundreds of miles away to a specialty pediatric hospital, a common practice.

Connected by cellphone

Emily Bye, who was treated for bone cancer at 17, often spent five days at a time in the hospital.

Every day felt the same, she says, until time no longer seemed to matter. The hospital charged high fees for the Internet and forbid the use of cellphones — a hardship for a generation accustomed to sending dozens of text messages a day.

To Emily's teen classmates, even the vocabulary of cancer — platelets, catheters and sarcomas — seemed foreign. "I felt like I wasn't normal," says Emily, now a 19-year-old sophomore at Virginia's James Madison University.

She heard about Group Loop during treatment, but didn't become a regular member at the site, which doesn't charge a fee, until she left the hospital and finished therapy.

"I found there were other people out there like me," she says. "I felt normal in that way. It was nice to know that they had gone through the same thing."

Some hospitals make a special effort to help patients stay in touch.

Memorial Sloan-Kettering allows cellphones and text paging and even provides laptops and high-speed Internet connections. Kids can use teleconference facilities to follow along with their classes at home, says Nina Pickett, administrator of the hospital's pediatrics department.

One of the hospital's patients, 15-year-old Anthony Scilingo, says he's never far from his laptop. He carries his cellphone in one of the many pockets of his cargo pants.

Yet Anthony, who is undergoing chemo for bone cancer, spends much of his day waiting to talk. His old friends in Edison, N.J., don't get out of school, and back online, until 4 p.m.

A natural distance

Ford notes that the Internet fills another crucial need for kids with cancer: It gives them a place to complain about their parents.

Adolescent cancer patients sometimes lose the opportunity to become independent, Ford says. Kids usually spend their teen years staking out an identity distinct from their parents and bonding with their peers.

Cancer, however, makes teenagers dependent on their parents, sometimes for the most basic and embarrassing of needs, such as getting dressed.

Many parents end up sleeping in their child's hospital room. websites for teen cancer patients can give kids a place to put a little healthy distance between themselves and their caregivers, Ford says.

Yet she cautions against spending too much time on the Web. Chatting online can't replace face-to-face interactions with peers, Ford says. Kids who spend too much time at the computer may become even more isolated.

And in the end, no technology can make cancer easy.

Emily says her online buddies understand cancer, but they don't know her as well as her longtime friends.

She also is reluctant to really bond with other young patients. One of her online friends has relapsed. A friend with cancer died of an infection.

"It's hard to get close to people because you know they all have cancer and that something could happen to them," she says. "As much as we talk, I sort of restrain myself."

_____

FAMILIES FIND A LIFELINE

A number of hospitals recognize the power of online support, making it easy for patients and their families to connect through the Internet or even create their own blogs.

Tony Scilingo of Edison, N.J., had never used the Internet before his son was diagnosed with bone cancer. But he now files Web updates about his son's progress every week, thanks to a site called caringbridge.org.

Scilingo learned about the site, which was designed with families in mind, from New York's Memorial Sloan-Kettering Cancer Center. Scilingo says the site spares him from having to repeat the same news to dozens of well-wishers. It also allows him to keep up with his tech-savvy 15-year-old son, Anthony.

"He's teaching me how to copy and paste," Scilingo says.

Karen Grant of Methuen, Mass., has been teaching senior citizen patients about podcasts. Grant, 31, has survived mesothelioma, a rare and deadly lung cancer typically found in older people who were exposed to asbestos. She volunteers at the International Mesothelioma Program at Brigham and Women's Hospital in Boston.

The hospital has recorded video testimonials from survivors on its website. She says the online videos reach patients who may never meet another person with mesothelioma. Grant passes out iPods in the hospital so that anxious patients can listen to the testimonials.

"As tough as it is, I try to help them have a smile on their face and relax and know it's OK," Grant says.

Lori Todaro says she pours her heart into her son's site at carepages.com. She found it through The Children's Inn at the National Institutes of Health, where her 7-year-old son, Nino, is being treated for a rare disease called periodic fever syndrome.

"It was so helpful to be able to go back to the inn and just dump everything on those pages," says Todaro, who travels to the NIH every four weeks from her home in Carlisle, Pa. "I was able to just leave my worries and my tears there, because I couldn't be down for Nino."

By Liz Szabo

    Kids with cancer bond online, UT, 10.4.2006, http://www.usatoday.com/news/health/2006-04-10-teen-cancer-web_x.htm

 

Child Sex as Internet Fare, Through Eyes of a Victim

April 5, 2006
The New York Times
By JOSHUA BROCKMAN

WASHINGTON, April 4 — The sexual exploitation of children on the Internet is a $20 billion industry that continues to expand in the United States and abroad, overwhelming attempts by the authorities to curb its growth, witnesses said at a Congressional hearing on Tuesday.

The witnesses, who testified at a hearing of the Oversight and Investigations Subcommittee, part of the House Committee on Energy and Commerce, said that sexual predators were preying on victims as young as 18 months by using instant messaging and Web cameras to meet, lure and digitally stalk children and to share pornography.

Internet technologies have the capacity to drive a wedge between children and their families, they said.

"Online predators befriend adolescents," said Dr. Sharon Cooper, a pediatrician at the University of North Carolina at Chapel Hill, who was one of the witnesses. "They become closer to them than some family members are."

Dr. Cooper compared the new forms of online exploitation, which involve constant surveillance of subjects, to security cameras in convenience stores. "We're seeing real-time sexual exploitation of children." She cautioned that predators were using online child pornography not just for sexual gratification, but as "a plan for action."

The lead witness at the hearings was Justin Berry, who was molested as a teenager by people he had met online, and then went on to run a pornographic Web site for five years, featuring images of himself.

Mr. Berry was the subject of a front-page article in The New York Times in December by an investigative reporter, Kurt Eichenwald. The article detailed Mr. Berry's experiences and his efforts to assist in the prosecution of some of the 1,500 people who had paid him to perform on camera.

Mr. Eichenwald spent six months on the investigation and was subpoenaed to testify before the committee. He sat alongside Mr. Berry, 19, who delivered his remarks in a measured tone to the committee.

"There are hundreds of kids in the United States alone who are right now wrapped up in this horror," Mr. Berry said in his testimony. "Within each of your Congressional districts, I guarantee there are children who have used their Webcams to appear naked online, and I guarantee you there are also children in your district on the Internet right now being contacted and seduced by online sexual predators."

Child exploitation investigators in the Justice Department came under fire from lawmakers at the hearings, who questioned whether officials had responded too slowly to leads provided by Mr. Berry. These included clients' names and credit card numbers, which could presumably help investigators identify children entangled in the online pornography industry. The department denied that contention.

"The Department of Justice uses every resource available to quickly protect and remove children who are being exploited from dangerous situations, and to prosecute those responsible for their abuse," a spokesman, Bryan Sierra, said.

The hearing was the first of several on this topic. On Thursday, the committee is to address law enforcement efforts. A representative from the Justice Department is expected to testify.

"Justin Berry stepped forward at a time the government did not know he existed," Mr. Eichenwald said. "He is, to experts' knowledge, the first such teenage witness to ever turn over this kind of vast evidence to the government."

Still, he added, "important data offered to the government by Justin has, even at this late date, not been collected and has only been reviewed by me."

At issue is how to handle the companies involved in these crimes, from Internet service providers to credit card companies to banks.

"At a minimum what we can do is follow the money," said Ernie Allen, president of the National Center for Missing and Exploited Children. "If we take away the profitability, it is going to be very difficult for these sites to maintain themselves."

U.S. Official Is Arrested

MIAMI, April 4 (AP) — The deputy press secretary for the Department of Homeland Security was arrested on Tuesday and accused of using the Internet to seduce someone he thought was a teenage girl, the authorities said.

According to the sheriff's office in Polk County, Fla., where the charges were issued, the official, Brian J. Doyle, 55, of Silver Spring, Md., had a sexually explicit conversation with a person he believed was a 14-year-old girl whose profile he had seen on the Internet. In reality, the sheriff's office said, Mr. Doyle was talking with an undercover sheriff's detective.

    Child Sex as Internet Fare, Through Eyes of a Victim, NYT, 5.4.2006, http://www.nytimes.com/2006/04/05/washington/05porn.html

Media Frenzy

Death by Smiley Face: When Rivals Disdain Profit

April 2, 2006
The New York Times
By RICHARD SIKLOS

THE tectonic changes facing media companies are by now the topic of an often-recited sermon. Put briefly, digital technology is placing control over much information squarely in the hands of consumers and creating all kinds of opportunities for new entrants who can push the revolution forward.

Understandably, attention in this race is focused on the companies that are, as the management consultants like to say, transferring value from conventional outlets to new disruptors that deliver personalized media more efficiently and hence with greater profitability. In other words, to the victor go the spoils.

The obvious standouts are Google and Yahoo with their aggregation software, prominent brands and ability to layer advertisements all over the Internet and perhaps beyond; or Apple Computer with its iTunes and iPod and their utter dominance over portable music.

Consider Monster Worldwide, the online employment advertising company, where the numbers tell the story: Monster, the owner of the www.monster.com site, has a stock market value of $6.2 billion, some 40 percent greater than the amount for which Knight Ridder, the newspaper chain owner, is being sold. But Monster has only one-third of Knight Ridder's $3 billion in annual revenue.

There is another breed of rival lurking online for traditional media, and it is perhaps the most vexing yet: call it purpose-driven media, with a shout-out to Rick Warren, the author of "A Purpose-Driven Life," for borrowing his catchphrase.

These are new-media ventures that leave the competition scratching their heads because they don't really aim to compete in the first place; their creators are merely taking advantage of the economics of the online medium to do something that they feel good about. They would certainly like to cover their costs and maybe make a buck or two, but really, they're not in it for the money. By purely commercial measures, they are illogical. If your name were, say, Rupert or Sumner, they would represent the kind of terror that might keep you up at night: death by smiley face.

Probably the best-known practitioner is Craigslist.org, the online listing site. Although it is routinely described as a competitor with — and the bane of — newspaper classified ads, the site is mostly a free listings service that acts as a community resource. When the company contemplates imposing fees for using its site in a particular city, as it has recently in New York, it does so cautiously and thoughtfully, as a means to weed out real estate brokers who are abusing the site by posting their ads over and over.

The twist about Craigslist and its ilk is that their egalitarianism could make them very valuable someday — although Craigslist's founder, Craig Newmark, has proclaimed no interest in cashing in. EBay, no doubt sensing the commercial potential, bought a 25 percent stake from a former employee last year. Other examples are the "for sale by owner" Web sites that have cropped up across the country, in which people can sell their homes at a cost that is a small fraction of the usual broker's fee.

And let's not forget that Google began life as one of these ventures: it was only a handful of years ago that one of Google's founders quaintly decried the evils of advertising before figuring out a do-gooder way (as they saw it) to sell boatloads of it.

Now Google, with its market valuation of more than $100 billion, has drawn the ire of the newspaper and book publishing industries, among others, which argue that its supposedly benevolent search robots have been usurping their intellectual property.

Purpose-driven media, by the way, are even more common in the software world. The shining example is the Firefox browser that is available free for download and has emerged as a credible rival to Microsoft's Internet Explorer. And, for icing on the cake, Firefox makes money for its not-for-profit owners because Google pays to be its search engine.

Another example of genius ideas from people who don't seek Internet riches is Chowhound.com. This nine-year-old site features community-generated restaurant review boards in various cities and steadfastly refuses to accept restaurant advertising. Rather than continue to grovel for donations and make a few dollars selling Chowhound books, the founders sold the company last month to CNET Networks, a Web business known for its reviews of technology products, for an undisclosed amount. Unlike Chowhound, whose independence and spirit it has vowed to maintain while helping to spiff up the site, CNET.com is chockablock with ads.

A fascinating new entrant in the field is LaLa.com, a music-swapping site introduced last month. Depending on where you are sitting, the LaLa concept is either brilliant (if you are a music fan with a lot of CD's you don't listen to, or if you are an artist) or terrifying (if you are a retailer of new or used music, or perhaps even a music label).

Here again, the founders are not in it just for profit. Rather, their idea is that despite all the cool new digital music services, well over 90 percent of the music industry sales are still in the CD format; most people still have CD's and artists don't gain any benefit from the sale of used discs. Many music lovers, the founders contend, feel disenfranchised by the way music is sold.

So LaLa is essentially a CD-swapping site that matches people who want one another's old CD's. It charges them a mere $1 a disc and provides the postage-paid envelopes to send them in for 49 cents apiece. Out of each dollar, the company voluntarily pays 20 cents to the performer on the recording; there is no more a legal obligation to do so than there is to pay General Motors a cut every time a used Chevy changes hands.

Bill Nguyen, the man behind several Silicon Valley start-ups, who is one of LaLa's founders, said that the service might work just as well at a cost of $4 a CD — still a quite a bit cheaper than a typical used CD on eBay or in an East Village record shop — but that making money wasn't the point.

Like those of other purpose-driven ventures, the company's costs are relatively low: it has only 17 employees at its offices in Palo Alto, Calif. So far, the site has been operating by e-mail invitation only because Mr. Nguyen and his partners want to build a strong base of music lovers, and not just people looking for cheap CD's. Mr. Nguyen maintains that the site already has 1.8 million album titles available for swapping. By comparison, Amazon has more than one million different CD's available for purchase, according to a spokeswoman for the company.

MR. NGUYEN expects to open the site to the broader public by the summer. And no matter how successful the site becomes, he vows that it will not carry ads for the music industry or for anyone else — except some links to charities. Nor will the company sell singles, although it will sell physical and download versions of entire new albums.

He also asks that LaLa members "do the right thing," as he sees it, and erase from their hard drives and iPods any copies of songs from CD's they have traded. "We did a lot of weird things that didn't make sense," Mr. Nguyen said proudly.

Or, maybe they do. After all, the company did manage to attract $9 million in financing from the venture capital firms Bain Capital and Ignition Partners. Obviously, these investors believe that there is money to be made in communal efficiency, just as CNET must believe in its purchase of Chowhound or eBay in its investment in Craigslist.

Maybe the lesson for media companies is to keep your friends close but to keep these friendly menaces even closer. As far as Mr. Nguyen is concerned, pursuing his labor of love is enough reward in and of itself. "We just dig music," he said. "Karma plays a role, man."

    Death by Smiley Face: When Rivals Disdain Profit, NYT, 2.4.2006, http://www.nytimes.com/2006/04/02/business/yourmoney/02frenzy.html

Internet Injects Sweeping Change Into U.S. Politics

April 2, 2006
The New York Times
By ADAM NAGOURNEY

WASHINGTON, March 31 — The transformation of American politics by the Internet is accelerating with the approach of the 2006 Congressional and 2008 White House elections, producing far-reaching changes in the way campaigns approach advertising, fund-raising, the mobilizing of supporters and even the spreading of negative information.

Democrats and Republicans are sharply increasing their use of e-mail, interactive Web sites, candidate and party blogs, and text messaging to raise money, organize get-out-the-vote efforts and assemble crowds for rallies. The Internet, they say, appears to be far more efficient, and less costly, than the traditional tools of politics, notably door knocking and telephone banks.

Analysts say the campaign television advertisement, already diminishing in influence with the proliferation of cable stations, faces new challenges as campaigns experiment with technology that allows direct messaging to more specific audiences and through unconventional means.

Those include podcasts featuring a daily downloaded message from a candidate and so-called viral attack videos, designed to set off peer-to-peer distribution by e-mail chains, without being associated with any candidate or campaign.

Campaigns are now studying popular Internet social networks, like Friendster and Facebook, as ways to reach groups of potential supporters with similar political views or cultural interests.

President Bush's media consultant, Mark McKinnon, said television advertising, while still crucial to campaigns, had become markedly less influential in persuading voters than it was even two years ago.

"I feel like a woolly mammoth," Mr. McKinnon said.

What the parties and the candidates are undergoing now is in many ways similar to what has happened in other sectors of the nation — including the music industry, newspapers and retailing — as they try to adjust to, and take advantage of, the Internet as its influence spreads across American society. To a considerable extent, they are responding to, and playing catch up with, bloggers who have demonstrated the power of their forums to harness the energy on both sides of the ideological divide.

Certainly, the Internet was a significant factor in 2004, particularly with the early success in fund-raising and organizing by Howard Dean, a Democratic presidential contender. But officials in both parties say the extent to which the parties have now recognized and rely on the Internet has increased at a staggering rate over the past two years.

The percentage of Americans who went online for election news jumped from 13 percent in the 2002 election cycle to 29 percent in 2004, according to a survey by the Pew Research Center after the last presidential election. A Pew survey released earlier this month found that 50 million Americans go to the Internet for news every day, up from 27 million people in March 2002, a reflection of the fact that the Internet is now available to 70 percent of Americans.

This means, aides said, rethinking every assumption about running a campaign: how to reach different segments of voters, how to get voters to the polls, how to raise money, and the best way to have a candidate interact with the public.

In 2004, John Edwards, a former Democratic senator from North Carolina and his party's vice presidential candidate, spent much of his time talking to voters in living rooms in New Hampshire and Iowa; now he is putting aside hours every week to videotape responses to videotaped questions, the entire exchange posted on his blog.

"The effect of the Internet on politics will be every bit as transformational as television was," said Ken Mehlman, the Republican national chairman. "If you want to get your message out, the old way of paying someone to make a TV ad is insufficient: You need your message out through the Internet, through e-mail, through talk radio."

Michael Cornfield, a political science professor at George Washington University who studies politics and the Internet, said campaigns were actually late in coming to the game.

"Politicians are having a hard time reconciling themselves to a medium where they can't control the message," Professor Cornfield said. "Politics is lagging, but politics is not going to be immune to the digital revolution."

If there was any resistance, it is rapidly melting away.

Mark Warner, the former Democratic governor of Virginia, began preparing for a potential 2008 presidential campaign by hiring a blogging pioneer, Jerome Armstrong, a noteworthy addition to the usual first wave of presidential campaign hiring of political consultants and fund-raisers.

Mr. Warner is now one of at least three potential presidential candidates — the others are the party's 2004 presidential and vice presidential candidates, Senator John Kerry of Massachusetts and Mr. Edwards — who are routinely posting what aides say are their own writings on campaign blogs or on public blogs like the Daily Kos, the nation's largest political blog.

Analysts said that the Internet appeared to be a particularly potent way to appeal to new, young voters, a subject of particular interest to both parties in these politically turbulent times. In the 2004 campaign, 80 percent of people ages 18 to 34 who contributed to Mr. Kerry's campaign made their contributions online, said Carol Darr, director of the Institute for Politics, Democracy and the Internet at George Washington University.

Not incidentally, as it becomes more integrated in American politics, the Internet is being pressed into service for the less seemly side of campaigns.

Both parties have set up Web sites to discredit opponents. In Tennessee, Republicans spotlighted what they described as the lavish spending habits of Representative Harold E. Ford Jr. with a site called www.fancyford.com. That site drew 100,000 hits the first weekend, and extensive coverage in the Tennessee press, which is typically the real goal of creating sites like this. And this weekend, the Republicans launched a new attack site, www.bobsbaggage.com, that is aimed at Senator Robert Menendez of New Jersey and focused on ethics accusations against him.

For their part, Democrats have set up decoy Web sites to post documents with damaging information about Republicans. They described this means of distribution as far more efficient than the more traditional slip of a document to a newspaper reporter.

A senior party official, who was granted anonymity in exchange for describing a clandestine effort, said the party created a site, now defunct, called D.C. Inside Scoop to, among other things, distribute a document written by Senator Mel Martinez, Republican of Florida, discussing the political benefits of the Terri Schiavo case. A second such site, capitolbuzz.blogspot.com, spread more mischievous information: the purported sighting of Senator Rick Santorum, a Pennsylvania Republican, parking in a spot reserved for the handicapped.

On the left in particular, bloggers have emerged as something of a police force guarding against disloyalty among Democrats, as Steve Elmendorf, a Democratic consultant, learned after he told The Washington Post that bloggers and online donors "are not representative of the majority you need to win elections."

A Daily Kos blogger wrote: "Not one dime, ladies and gentlemen, to anything connected with Steve Elmendorf. Anyone stupid enough to actually give a quote like that deserves to have every single one of his funding sources dry up."

Asked about the episode, Mr. Elmendorf insisted that the posting had not hurt his business, but added, "Since I got attacked on them, I read blogs a lot more and I find them very useful."

One of the big challenges to the campaigns is not only adjusting to the changes of the past two years but also anticipating the kind of technological changes that may be on hand by the next presidential campaign. Among those most cited is the ability of campaigns to beam video advertisements to cellphones.

"All these consultants are still trying to make sense of what blogs are, and I think by 2008 they are going to have a pretty good idea: They are going to be like, 'We're hot and we're hip and we're bloggin',' " said Markos Moulitsas, the founder of the Daily Kos. "But by 2008, the blogs are going to be so institutionalized, it's not going to be funny."

Bloggers, for all the benefits they may bring to both parties, have proved to be a complicating political influence for Democrats. They have tugged the party consistently to the left, particularly on issues like the war, and have been openly critical of such moderate Democrats as Senator Joseph I. Lieberman of Connecticut.

Still, Democrats have been enthusiastic about the potential of this technology to get the party back on track, with many Democratic leaders arguing that the Internet is today for Democrats what talk radio was for Republicans 10 years ago.

"This new media becomes much more important to us because conservatives have been more dominant in traditional media," said Simon Rosenberg, the president of the centrist New Democratic Network. "This stuff becomes really critical for us."

For all the attention being paid to Internet technology, there remain limitations to its reach. Internet use declines markedly among Americans over 65, who tend to be the nation's most reliable voters. Until recently, it tended to be more heavily used by middle- and upper-income people.

And while the Internet is efficient at reaching supporters, who tend to visit and linger at political sites, it has proved to be much less effective at swaying voters who are not interested in politics.

"The holy grail that everybody is looking for right now is how can you use the Internet for persuasion," said Mr. Armstrong, the Warner campaign Internet adviser.

In this age of multitasking, voters are not as captive to a Web site as they may be to a 30-second television advertisement or a campaign mailing. That was a critical lesson of the collapse of Mr. Dean's presidential campaign, after he initially enjoyed great Internet success in raising money and drawing crowds.

"It's very easy to look at something and just click delete," said Carl Forti, a spokesman for the National Republican Congressional Committee. "At least if they are taking out a piece of mail, you know they are taking it out and looking at it on the way to the garbage can."

    Internet Injects Sweeping Change Into U.S. Politics, NYT, 2.4.2006, http://www.nytimes.com/2006/04/02/washington/02campaign.html?hp&ex=1144040400&en=084f5d4d5902cc23&ei=5094&partner=homepage


 

Jazmyn Johnson, 9, recently helped her mother, Barbara,
use their high-speed DSL Internet connection at their home in Duluth, Ga.

Erik S. Lesser The New York Times        March 31, 2006

Blacks Turn to Internet Highway, and Digital Divide Starts to Close        NYT

31.3.2006
http://www.nytimes.com/2006/03/31/us/31divide.html
 

Blacks Turn to Internet Highway,

and Digital Divide Starts to Close

March 31, 2006
The New York Times
By MICHEL MARRIOTT

African-Americans are steadily gaining access to and ease with the Internet, signaling a remarkable closing of the "digital divide" that many experts had worried would be a crippling disadvantage in achieving success.

Civil rights leaders, educators and national policy makers warned for years that the Internet was bypassing blacks and some Hispanics as whites and Asian-Americans were rapidly increasing their use of it.

But the falling price of laptops, more computers in public schools and libraries and the newest generation of cellphones and hand-held devices that connect to the Internet have all contributed to closing the divide, Internet experts say.

Another powerful influence in attracting blacks and other minorities to the Internet has been the explosive evolution of the Internet itself, once mostly a tool used by researchers, which has become a cultural crossroad of work, play and social interaction.

Studies and mounting anecdotal evidence now suggest that blacks, even some of those at the lower end of the economic scale, are making significant gains. As a result, organizations that serve African-Americans, as well as companies seeking their business, are increasingly turning to the Internet to reach out to them.

"What digital divide?" Magic Johnson, the basketball legend, asked rhetorically in an interview about his new Internet campaign deal with the Ford Motor Company's Lincoln Mercury division to use the Internet to promote cars to black prospective buyers.

The sharpest growth in Internet access and use is among young people. But blacks and other members of minorities of various ages are also merging onto the digital information highway as never before.

According to a Pew national survey of people 18 and older, completed in February, 74 percent of whites go online, 61 percent of African-Americans do and 80 percent of English-speaking Hispanic-Americans report using the Internet. The survey did not look at non-English-speaking Hispanics, who some experts believe are not gaining access to the Internet in large numbers.

In a similar Pew survey in 1998, just 42 percent of white American adults said they used the Internet while only 23 percent of African-American adults did so. Forty percent of English-speaking Hispanic-Americans said they used the Internet.

Despite the dissolving gap, some groups like the Intel Computer Clubhouse Network, which introduces digital technologies to young people, say the digital divide is still vast in more subtle ways. Instant messaging and downloading music is one thing, said Marlon Orozco, program manager at the network's Boston clubhouse, but he would like to see black and Hispanic teenagers use the Internet in more challenging ways, like building virtual communities or promoting their businesses.

Vicky Rideout, vice president of the Henry J. Kaiser Family Foundation, which has studied Internet use by race, ethnicity and age, cautioned that a new dimension of the digital divide might be opening because groups that were newer to the Internet tended to use less-advanced hardware and had slower connection speeds.

"The type and meaningful quality of access is, in some ways, a more challenging divide that remains," Ms. Rideout said. "This has an impact on things like homework."

In addition, Internet access solely at institutions can put students at a disadvantage. Schools and other institutions seldom operate round the clock, seven days a week, which is especially an issue for students, said Andy Carvin, coordinator for the Digital Divide Network, an international group that seeks to close the gap.

But not everyone agrees that minorities tend toward less-advanced use of the Internet. Pippa Norris, a lecturer on comparative politics at Harvard who has written extensively about the digital divide, said members of minorities had been shown to use the Internet to search for jobs and to connect to a wide variety of educational opportunities.

"The simple assumption that the Internet is a luxury is being disputed by this group," Ms. Norris said.

The divide was considered so dire a decade ago that scholars, philanthropists and even President Bill Clinton in his 1996 State of the Union address fretted over just what the gap would mean in lost educational and employment opportunities for young people who were not wired.

In an effort to help erase the divide, the federal government has provided low-cost connections for schools, libraries, hospitals and health clinics, allocated money to expand in-home access to computers and the Internet for low-income families and given tax incentives to companies donating computer and technical training and for sponsoring community learning centers.

As a result of such efforts, "most kids, almost all kids, have a place in which they can go online and have gone online," said Ms. Rideout of the Kaiser foundation.

Jason Jordan of Boston is one of the young people closing the divide. Jason, 17, who is black, is getting a used computer from an older brother. He said he had wanted a computer for years, since "I heard about a lot that I was missing."

Jason said he had access to the Internet at school, where he is pursuing a general equivalency diploma, but looked forward to having his own computer and Web access at his home in the Dorchester section of Boston. "I can work in my own place and don't have to worry about the time I'm online," he said.

Like Jason, almost 9 out of 10 of the 21 million Americans ages 12 to 17 use the Internet, according to a report issued in July by the Pew Internet and American Life Project. Of them, 87 percent of white teenagers say they use the Internet, while 77 percent of black teenagers and 89 percent of Hispanic teenagers say they have access to it, the report said.

The gap in access among young Americans is less pronounced than among their parents' generation, said Susannah Fox, associate director of the Pew project. "Age continues to be a strong predictor for Internet use," Ms. Fox said.

While, overall Internet use among blacks still significantly trails use among whites, the shrinking divide is most vividly reflected in the online experience of people like Billy and Barbara Johnson. Less than two years ago, the Johnsons, who are black, plugged into the Internet in their upscale suburban home near Atlanta for the first time. Mrs. Johnson, a 52-year-old mother of four and homemaker, said she felt she had little choice because her school-age children needed to use the Internet for research.

And then there is e-mail. "No one really wants to take the time anymore to pick up the phone and keep in touch," lamented Mrs. Johnson, who said that so much of the communications with her children's school was done through e-mail correspondence. "I felt like I was pretty much forced into it."

Even so, Mrs. Johnson said her husband, an assistant coach for the Atlanta Falcons, still chided her when she neglected to check her e-mail at least every day.

Ms. Norris and other experts on Internet use see progress on the horizon. They note that the declining cost of laptop and other computers, and efforts, like those in Philadelphia, to provide low-cost wireless Internet access, are likely to increase online access for groups that have been slow to connect.

Philanthropic efforts have also helped to give more people Internet access. For example, the Bill and Melinda Gates Foundation has awarded $250 million since 1997 for American public libraries to create Internet access for the public. Martha Choe, the foundation's director of global libraries, said some 47,000 computers had been bought for 11,000 libraries. Today, Ms. Choe said, most libraries in the United States have public Internet access.

Education levels remain a major indicator of who is among the 137 million Americans using the Internet and who is not, said Ms. Fox.

There is also a strong correlation, experts say, between household income and Internet access.

With so many more members of minorities online, some Web sites are trying to capitalize on their new access. For example, the New York/New Jersey region of the State of the African American Male, a national initiative to improve conditions for black men, is encouraging men to use digital equipment to "empower themselves" to better their lives. The site, which includes studies, public policy reports and other information about issues related to black men, promotes using digital cameras, mobile phones and iPods, but mainly computers, to organize through the Internet, said Walter Fields, vice president for government relations for the Community Service Society, an antipoverty organization, and a coordinator of the black-male initiative. Users are encouraged to submit articles, write blogs and upload pertinent photographs and video clips.

"What we're doing is playing against the popular notion of a digital divide," Mr. Fields said. "I always felt that it was a misnomer."

    Blacks Turn to Internet Highway, and Digital Divide Starts to Close, NYT, 31.3.2006, http://www.nytimes.com/2006/03/31/us/31divide.html?hp&ex=1143781200&en=ead60b6a64ccf2ea&ei=5094&partner=homepage

Google, Once a Maverick, Joins Lobbying Herd

March 28, 2006
The New York Times
By KATE PHILLIPS

WASHINGTON, March 27 — For a company that takes pride in being the quintessential outsider, Google is moving quickly into the ultimate insider's game: lobbying.

Started less than a decade ago in a Stanford dorm room, Google has evolved into a multibillion-dollar business, its search engine ubiquitous on the Internet. Its sprawling growth, fueled by a public stock offering in August 2004 that created a market behemoth, has now thrust it into the glare of Washington.

As lawmakers and regulators begin eyeing its ventures in China and other countries and as its Web surfers worry about the privacy of their online searches, Google is making adjustments that do not fit neatly with its maverick image.

It has begun ramping up its lobbying and legislative operations after largely ignoring Washington for years, in a scramble to match bases long established here by competitors like Yahoo and Microsoft, as well as the deeply entrenched telecommunication companies.

Google has hired politically connected lobbying firms and consultants with ties to Republican leaders like the party chairman, Ken Mehlman; Speaker J. Dennis Hastert; and Senator John McCain; and advisers say the company may set up a fund-raising arm for political donations to candidates. And in a town where Republicans hold the levers of power, Google has begun stockpiling pieces of the party's machine.

To some, Google is a novice arriving late to the table. To others, the company's embedding on K Street, which serves as home to many of Washington's top lobbyists, represents a new and not necessarily welcome sign of sophistication.

"It's sad," said Esther Dyson, editor of the technology newsletter Release 1.0 and former chairwoman of Icann, a nonprofit group that plays a role in Internet administration. "The kids are growing up. They've lost youth and innocence. Now they have to start being grown-ups and playing at least to some extent by grown-up rules."

In doing so, Google provides another example of how Internet companies, no matter how unconventional their roots or nonconformist their corporate cultures, increasingly find themselves wrestling with the same forces in Washington that more traditional industries have long faced. Google's executives consider the moves necessary as they achieve a prominence that allows them to elbow their own interests onto the political stage.

"We've staked out an agenda that really is about promoting the open Internet as a revolutionary platform for communication," said Alan Davidson, brought on board less than a year ago as the company's policy counsel to set up offices in the Penn Quarter area of Washington. "It's been the growth of Google as a company and as a presence in the industry that has prompted our engagement in Washington."

Even as they emphasize policy over politics to raise their profile, Google executives and advisers are also fully aware that they are embracing the lobbying world at a time when it has been rocked by the Jack Abramoff scandal of influence peddling. Some advisers say the company may wait until after Congress decides whether or how to overhaul lobbying laws before it wades more deeply into fund-raising and politics.

With its stock price closing on Monday near $370 a share and its vaulting onto the Standard & Poor's 500 stock index this week, the company also cannot afford to be caught flat-footed by regulatory agencies or its competitors.

"They are brilliant engineers," said Lauren Maddox, a principal in the bipartisan lobbying firm Podesta Mattoon that was hired by Google last year. "They are not politicians."

In signing on Podesta Mattoon and other consultants, Google is spreading its lobbying dollars on both sides of the political aisle, increasing its spending on outside firms this year to well beyond $500,000, officials said, although that does not include its own new office complex or payments to some of the consulting groups being added on. (By comparison, the giant Microsoft spent almost $9 million last year in lobbying, and Yahoo spent more than $1 million for just part of last year, according to partial-year filings compiled by PoliticalMoneyLine, an independent campaign finance Internet site.)

Podesta Mattoon is led by Anthony Podesta, a Democrat, and Daniel Mattoon, a Republican and longtime friend of Speaker Hastert, an Illinois Republican. The speaker's son Joshua also works at the firm, along with Ms. Maddox, a former top aide to Newt Gingrich.

Adding to its arsenal is the DCI Group, a firm with top-flight corporate clients and strong ties to Mr. Mehlman and Karl Rove, President Bush's senior political adviser. DCI, Google officials say, will help it establish links to Republicans, as well as promote its book search project, an effort to make the full text of books searchable online, among publishers and authors.

At the helm of that operation is Stuart Roy, senior vice president of DCI and a former aide to Representative Tom DeLay, Republican of Texas. Mr. Roy also counts as a client Progress for America, the conservative group that successfully rallied grass-roots support for Mr. Bush's Supreme Court nominees.

Ms. Maddox said Google's emerging army of advisers would help it fight fires along several policy lines, including copyright law, access to the Internet and privacy issues like its successful court fight this month to narrow a Justice Department subpoena over disclosure of its users' searches.

"We have a team of Republicans and Democrats who are helping them sort out these issues," Ms. Maddox said, an effort that recognizes that the "policy process is an extension of the market battlefield."

The big Internet companies, including Google, are bracing for an uphill struggle with lawmakers and the titans of the telephone and cable industries over whether fees should be charged for heavy data traffic, like video streaming over broadband width.

"Our belief is that this is going to be an issue of great concern for consumers," Mr. Davidson said. "The telephone companies have been lobbying these committees for generations. Our industry is very young."

Google's political awakening was nowhere more evident than on Capitol Hill last month, when it, Microsoft, Cisco Systems and Yahoo were slammed by Republicans and Democrats alike over business dealings in China. Elliot Schrage, vice president for global communications and public affairs at Google, was lashed repeatedly with the company's motto, "Don't Be Evil," as House members accused the corporations of abetting China's government in censoring Internet communications and imperiling the safety of Chinese Internet surfers.

It is an issue that Google and others know will not go away soon. Representative Christopher H. Smith, Republican of New Jersey, and other legislators are demanding that Internet companies be more sensitive when dealing with foreign countries.

"I think they are just going to lobby to spread this yarn that by being there, they're going to spread democracy," said Mr. Smith, who presided at the hearing. "This dictatorship can go on for generations if it's not unchecked."

Mr. Davidson said companies were trying to address the prickly subject. "I think we all said in our testimony that we were serious about trying to work out standards for engaging in countries where these kinds of censorship issues come up," he said.

By some accounts, China may be so radioactive that even a longstanding relationship with Congress would not have tempered that hostile reception. But "the lack of a presence is what they recognized needed to get remedied fast," said Harry W. Clark, managing partner of the Stanwich Group, who has just been hired as a management consultant for Google. A veteran adviser to Internet corporations, Mr. Clark is a tightly connected Republican who worked in the Bush administration and who is now doing volunteer work for Senator McCain, an Arizona Republican.

Google's recruitment of heavy hitters in the nation's capital has not stopped. While it had already retained the firms of Public Policy Partners and Capital Tax Solutions, the headhunter Russell Reynolds Associates is in the midst of a search to fill a senior position alongside Mr. Davidson. Mr. Clark also predicted that Google would name a political director, probably a Republican.

Because some Republicans still view the company as Democratic-leaning, citing the 2004 election analyses that showed nearly all its employees' contributions went to Democrats, the company will be careful, Mr. Clark said, to spread its wealth around.

"The folks I've talked to," he added, "everybody recognizes that the employee contributions were weighted heavily toward Democrats, and they're waiting to see a course correction."

And despite the climate of indictments and investigations that pervades K Street right now, industry experts say Google has no choice but to get into the arena.

Rhett Dawson, president of the Information Technology Industry Council, admonished that lobbying was not "a dirty word." Google, Mr. Dawson noted, "is quickly going through a maturation phase that a lot of companies have gone through that shows it pays to pay attention to Washington or it can hurt you in ways that don't reflect well on you."

He added, "It doesn't have to be a system that makes you embarrassed to talk to your mother about."

    Google, Once a Maverick, Joins Lobbying Herd, NYT, 28.3.2006, http://www.nytimes.com/2006/03/28/politics/28google.html?hp&ex=1143522000&en=a42616ed1d4aaf20&ei=5094&partner=homepage

Google avoids surrendering search requests

Posted 3/17/2006 10:59 PM
USA Today

SAN FRANCISCO (AP) — A federal judge on Friday ordered Google Inc. to give the Bush administration a peek inside its search engine, but rebuffed the government's demand for a list of people's search requests — potentially sensitive information that the company had fought to protect.

In his 21-page ruling, U.S. District Judge James Ware told Google to provide the U.S. Justice Department with the addresses of 50,000 randomly selected websites indexed by its search engine by April 3.

The government plans to use the data for a study in another case in Pennsylvania, where the Bush administration is trying to revive a law meant to shield children from online pornography.

Ware, though, decided Google won't have to disclose what people have been looking for on its widely used search engine, handing a significant victory to the company and privacy rights advocates.

"This is a clear victory for our users," Nicole Wong, Google's associate general counsel said in a statement Friday.

Attempts to reach a spokesman for the Justice Department late Friday weren't immediately successful.

The government had asked for the contents of 5,000 randomly selected search requests, dramatically scaling back its initial demands after Google's vehement protests gained widespread attention.

When the Justice Department first turned to Ware for help in January, the government wanted an entire week's worth of Google search requests — a list that would encompass queries posed by millions of people.

    Google avoids surrendering search requests, UT, 17.3.2006, http://www.usatoday.com/tech/news/internetprivacy/2006-03-17-google-justice_x.htm

Judge Lets U.S. Have Google Info

March 15, 2006
The New York Times
By KATIE HAFNER

SAN JOSE, Calif., March 14 — After the Justice Department drastically reduced its request for information from Google, a federal judge said on Tuesday that he intended to approve at least part of that request.

The government first subpoenaed Web data from Google last August, as part of its defense of an online pornography law.

At a hearing in Federal District Court here, Judge James Ware said that in supporting the government's more limited request, he would nonetheless pay attention to Google's concerns about its trade secrets and the privacy of its users.

The government is now requesting a sample of 50,000 Web site addresses in Google's index instead of a million, which it was demanding until recently. And it is asking for just 5,000 search queries, compared with an earlier demand for an entire week of queries, which could amount to billions of search terms.

A Justice Department lawyer said at the hearing that the government would review just 10,000 Web sites and 1,000 search queries out of those turned over.

It intends to use the data in a study to measure the effectiveness of software that filters out pornographic Web sites. The government says it is not seeking information that would "personally identify" individuals.

"It is my intent to grant some relief to the government," Judge Ware said, "given the narrowing that has taken place with the request and its willingness to compensate Google for whatever burden that imposes."

He said, however, that he was well aware that the request for individual search terms from Google had raised privacy concerns. He appeared to be less troubled about the release of Web site addresses.

He said he was particularly concerned about perceptions by the public that Web searches could be subject to government scrutiny, "so I'll pay particular attention to that part of it." The judge said that he would issue a full decision shortly, but did not give a date.

Google stock closed at $351.16, up $14.10, or 4.2 percent.

Three of Google's competitors in Internet search technology — the America Online unit of Time Warner, Yahoo and MSN, Microsoft's online service — have complied with subpoenas in the case. None of those companies have indicated how much data was turned over to the government.

Albert Gidari, a lawyer representing Google at the hearing, said in an interview afterward that he had been surprised by the large reduction in the number of Web site addresses, or U.R.L.'s, and search queries the government was requesting.

The revised request appeared in a footnote to a declaration filed with the court on Feb. 24 by Philip B. Stark, a statistician the Justice Department had hired to study search engine data.

The reduced data request had not come up in direct discussions between Google and the Justice Department. But it appears that Google's well-publicized resistance forced the department to modify its position.

The new request substantially mitigates Google's concerns over trade secrets, Mr. Gidari said, adding that "99.99 percent of Google is unexposed, and this teeny sliver will tell them nothing."

"This would have been a very different case if the government walked in the door and said, 'We need 50,000 U.R.L.'s and a thousand searches,' " Mr. Gidari said. "It's doubtful we would have been in court. We got to where we wanted."

The Web data study is part of a continuing lawsuit in which the government is defending the Child Online Protection Act, a 1998 law under which it is a crime to make "material that is harmful to minors" commercially available on the Web. The lawsuit was brought by the American Civil Liberties Union, among others.

The act has faced repeated legal challenges. Opponents contend that filtering software could protect minors effectively enough to make the law unnecessary.

Two years ago, the Supreme Court upheld an injunction blocking the law's enforcement and returned the case to a district court for further examination of Internet-filtering technology that might be another way to achieve the law's aims. At a trial scheduled to begin in October, the government will try to prove that filters are ineffective.

"Given the slight amount of information now sought by the government, Google's burden arguments seem less persuasive than they might be," said Susan P. Crawford, a professor at the Cardozo School of Law at Yeshiva University.

At one point in the hearing, Judge Ware asked Joel McElvain, the lawyer for the government, why the Justice Department needed the Google data when it already had information from three other companies. Mr. McElvain said that although the government had enough information to do its study, it "would be substantially improved if we had the data from Google" because Google commands nearly half the search market.

Judge Ware appeared to sympathize with Google's concern that it could become entangled in the underlying lawsuit over the Child Online Protection Act, although it is not a party to the suit.

The judge also sought specific assurance from Mr. McElvain that the government would not use information contained in search queries for other investigations.

If a search query appeared to suggest a connection between a particular person and Osama bin Laden, the judge asked him, "are you telling me the government would ignore that and not use it?" Mr. McElvain assured him that the government would not.

Mr. McElvain said at the hearing that the government would pay Google for the effort needed to put the information together.

"We're very encouraged," said Nicole Wong, associate general counsel at Google. "At a minimum we have come a long way from the government's initial subpoena. If it had started this way, it would have been a very different discussion."

Still, Ms. Crawford said that even the relatively small amount of data demanded posed a troubling prospect. "The government has been able to commandeer private parties to assist it in its research, and the next request may be far broader," she said.

Aden J. Fine, a lawyer for the American Civil Liberties Union, was more optimistic.

"The mere fact that Google has stood up to the government is a positive thing," Mr. Fine said. "The government cannot simply demand that third parties give information without providing a sufficient justification for why they need it, and that's the theme that will hopefully resonate from this hearing, whichever way the judge rules."

    Judge Lets U.S. Have Google Info, NYT, 15.3.2006, http://www.nytimes.com/2006/03/15/technology/15google.html

Google, Justice Dept. face off on search/privacy issue

Posted 3/13/2006 8:45 PM Updated 3/13/2006 10:14 PM
USA TODAY
By Jon Swartz

SAN FRANCISCO — Google and the Justice Department will square off in federal court Tuesday in a seminal Internet privacy case that could touch millions of Americans.

The Bush administration is demanding the results of millions of searches on Google during a random week to buttress an online child-protection law blocked by the U.S. Supreme Court. Its reasoning: Internet filters don't properly shield kids from viewing pornography. (Survey: Do you think Google should hand over its search results to the Bush administration?)

Google has resisted, citing competitive and privacy concerns, in a dispute that has escalated in a series of legal maneuvers since January. The American Civil Liberties Union says it will urge the court to reject the government's bid at a hearing in San Jose, Calif. A ruling could come on Tuesday.

Privacy advocates are worried Internet search engines could become tools for government snooping and spawn a wave of subpoenas by individuals against search engine companies.

More significantly, the case undercuts the basic Internet tenet of anonymity, says Evan Hendricks, editor of newsletter Privacy Times. If the government has its way, he says, the Internet could be used as a digital microscope to seek out people. A Justice Department spokesman had no comment.

In an 18-page court filing Feb. 24, Justice lawyers argued privacy rights would not be trampled because the information requested would not identify individuals or be traceable.

The brief includes a declaration by Philip Stark, a researcher and statistics professor at the University of California at Berkeley, who says the government specifically asked that Google remove any identifying information from the search requests.

AOL, Yahoo  and Microsoft MSN are cooperating with the government. They say that their assistance is limited and that the privacy of their users has not been violated.

But as the largest and most influential search engine, Google has significantly more at stake. "This case will make it clear how much information is collected and stored on Google searches," says Paul Schiff Berman, an expert in cyberlaw at the University of Connecticut School of Law.

Berman and other legal experts say the consequences could be far-reaching for U.S. residents on several levels. The government might delve into the vast stores of Web-browsing data to look for individuals who are national security risks or engaged in criminal activity. Divorce lawyers also could subpoena search-engine providers for e-mail and browsing records to investigate the fidelity of a spouse.

"It creates a logistical problem for Google by putting it in the position of being an extension of law enforcement," Berman says. "Of course, because Google is mining data for commercial purposes, it could put an end to its troubles if it stopped collecting data."

    Google, Justice Dept. face off on search/privacy issue, UT, 13.3.2006, http://www.usatoday.com/tech/news/internetprivacy/2006-03-13-google-justice-case_x.htm

Google agrees to pay $90 mln in "click fraud" suit

Wed Mar 8, 2006 11:28 PM ET
Reuters
By Eric Auchard

SAN DIEGO (Reuters) - Google Inc. said on Wednesday it had agreed to pay up to $90 million to settle its part of an industrywide lawsuit alleging Web search companies overcharge some advertisers by billing them for false customer leads.

Google's proposed class action settlement stems from a suit filed a year ago by several plaintiffs, including Lane's Gifts and Collectibles, in an Arkansas state court. It covers abuse of Google's pay-per-click advertising system by outside parties.

The deal aims to resolve all outstanding claims against Google for so-called "click fraud" dating back to 2002, a spokesman said, but similar claims against the Mountain View, California-based company are outstanding in other courts.

At issue is "click fraud," the abuse of search advertising systems for the purpose of driving up advertiser fees.

It involves a malicious party repeatedly clicking on an advertising link -- either manually or using robots -- and so generating a commission payment with each click.

Plantiffs argue Google and other search providers indirectly benefit from click fraud by doing too little to thwart it.

The $90 million would involve legal fees and credits -- rather than any cash payments -- to any of its advertisers who apply to be part of the class settlement, once the judge certifies the agreement, Google spokesman Steve Langdon said.

Also named in the original lawsuit were the search businesses of Yahoo Inc., and lesser players Walt Disney Co., Lycos Inc., LookSmart Ltd. and Findwhat.com Inc., which is now known as MIVA Inc..

A spokeswoman for Yahoo said her company was prepared to continue to defend itself against the legal action. A spokesman for Disney could not immediately be reached.

Google's proposed settlement deal would also cover Google ad search partners including America Online and Ask.com who were also originally named in the suit, which alleged that click fraud was a widespread Internet industry practice.

The case covers all advertisers using Google's pay-per-click advertising system from February 2002 through the date when the judge certifies the settlement. The final settlement hearing is expected to take place in coming weeks.

PAY-PER-CLICK

Google counts thousands of advertisers on its system but declines to disclose any actual numbers. The vast majority of Google's revenues, around 97 percent, are the result of pay-per-click ads.

Critics have said the threat of click fraud is the single greatest risk to Google's advertising-dependent business model. But the company has downplayed the risk, saying only a small percentage of the clicks on its search ads are fraudulent.

Google is the most popular provider of Web search. It makes money largely by selling small text based ads along the edges of search results pages on Google or on many partner sites who run Google ads on their own Web pages.

In a statement on Google's Web site, Nicole Wong, associate general counsel, said the company would extend the deadline so all advertising customers over the past four years can apply for reimbursement for ad clicks they believe were invalid.

Under its existing policy, advertisers had 60 days to recoup any such losses. Instead, Google would offer credits regardless of when the click fraud occurred, Wong said. The credits can be used by advertisers to buy new ads from Google.

"We do not know how many will apply and receive credits, but under the agreement, the total amount of credits, plus attorneys fees, will not exceed $90 million," Wong said.

Google has reported more than $7 billion in revenue during its first five quarters as a public company and has generated billions of dollars more since the system was first launched four years ago.

Yahoo spokeswoman Gaude Paez said nothing had changed as far as her company's willingness to pursue the case.

"We stand firmly by our proprietary click protection and look forward to vigorously defending our position in court," she said.

    Google agrees to pay $90 mln in "click fraud" suit, R, 8.3.2006, http://today.reuters.com/business/newsarticle.aspx?type=ousiv&storyID=2006-03-09T042929Z_01_N08534695_RTRIDST_0_BUSINESSPRO-GOOGLE-CLICKFRAUD-DC.XML

Andy Singer, NO EXIT        Cagle        2.3.2006
http://cagle.msnbc.com/
politicalcartoons/PCcartoons/singer.asp

Cyberthieves Silently Copy as You Type

February 27, 2006
The New York Times
By TOM ZELLER Jr.

Most people who use e-mail now know enough to be on guard against "phishing" messages that pretend to be from a bank or business but are actually attempts to steal passwords and other personal information.

But there is evidence that among global cybercriminals, phishing may already be passé.

In some countries, like Brazil, it has been eclipsed by an even more virulent form of electronic con — the use of keylogging programs that silently copy the keystrokes of computer users and send that information to the crooks. These programs are often hidden inside other software and then infect the machine, putting them in the category of malicious programs known as Trojan horses, or just Trojans.

Two weeks ago, Brazilian federal police descended on the northern city of Campina Grande and several surrounding states, and arrested 55 people — at least 9 of them minors — for seeding the computers of unwitting Brazilians with keyloggers that recorded their typing whenever they visited their banks online. The tiny programs then sent the stolen user names and passwords back to members of the gang.

The fraud ring stole about $4.7 million from 200 different accounts at six banks since it began operations last May, according to the Brazilian police. A similar ring, broken up by Russian authorities earlier this month, used keylogging software planted in e-mail messages and hidden in Web sites to draw over $1.1 million from personal bank accounts in France.

These criminals aim to infect the inner workings of computers in much the same way that mischief-making virus writers do. The twist here is that the keylogging programs exploit security flaws and monitor the path that carries data from the keyboard to other parts of the computer. This is a more invasive approach than phishing, which relies on deception rather than infection, tricking people into giving their information to a fake Web site.

The monitoring programs are often hidden inside ordinary software downloads, e-mail attachments or files shared over peer-to-peer networks. They can even be embedded in Web pages, taking advantage of browser features that allow programs to run automatically.

"These Trojans are very selective," said Cristine Hoepers, general manager of Brazil's Computer Emergency Response Team, which runs under the auspices of the country's public-private Internet Steering Committee. "They monitor the Web access the victims make, and start recording information only when the user enters the sites of interest to the fraudster." She added: "In Brazil, we are rarely seeing traditional phishing."

According to data compiled by computer security companies in 2005, the use of "crimeware" like keyloggers to steal user names and passwords — and ultimately cash — has soared. The crimes often cross international borders, and they put Internet users everywhere at risk.

"It's the wave of the future," said Peter Cassidy, the secretary general of the Anti-Phishing Working Group, a consortium of industry and law enforcement partners that fights online fraud and identity theft. "All this stuff is becoming more and more automated and more and more opaque."

Mr. Cassidy's group found that the number of Web sites known to be hiding this kind of malicious code nearly doubled between November and December, rising to more than 1,900. The antivirus company Symantec has reported that half of the malicious software it tracks is designed not to damage computers but to gather personal data. Over the course of 2005, iDefense, a unit of Verisign that provides information on computer security to government and industry clients, counted over 6,000 different keylogger variants — a 65 percent increase over 2004. About one-third of all malicious code tracked by the company now contains some keylogging component, according to Ken Dunham, the company's rapid-response director.

And the SANS Institute, a group that trains and certifies computer security professionals, estimated that at a single moment last fall, as many as 9.9 million machines in the United States were infected with keyloggers of one kind or another, putting as much as $24 billion in bank account assets — and probably much more — literally at the fingertips of fraudsters. John Bambenek, the SANS researcher who made the estimate, suggested that the infection rate was probably much higher.

In most cases, a keylogger or similar program, once installed, will simply wait for certain Web sites to be visited — a banking site, for instance, or a credit card account online — or for certain keywords to be entered — "SSN," for example — and then spring to life.

Keystrokes are saved to a file, Web forms are copied — even snapshots of a user's screen can be silently recorded. The information is then sent back to a Web site or some waiting server where a thief, or a different piece of software, sifts through the data for useful nuggets.

The Federal Deposit Insurance Corporation, responding to the growing threat of cybercrime to the financial industry, stiffened its guidelines for Internet banking in October, effectively ordering banks to do more than ask for a simple user name and password. But it stopped short of requiring, for instance, the use of electronic devices that generate numeric passcodes every 60 seconds, which many experts say would help foil much online fraud, including the use of keyloggers.

Technology for grabbing text and screen images is not new — or particularly sophisticated. Keyloggers are even sold commercially, as tools for keeping an eye on what children are doing online, or what a spouse might be doing in online chat rooms.And while most experts agree that data-swiping software is spreading rapidly, there are some who say the problem has been exaggerated.

"I get concerned that we're scaring people off the Internet," said Alex Eckelberry, the president of Sun-Belt Software, a maker of antispyware software based in Clearwater, Fla. Mr. Eckelberry believes that the infection rate is probably far lower than most estimates indicate, in part because the trend is hard to measure and so many computers are already protected.

"There's a lot of hyperbole out there," he said, adding that his company has identified only about 30 keyloggers over the last six months, most being variations on a piece of code known as Winldra.exe.

That code proudly bears the copyright signature of its creators, "Smash and Sars," who also happen to be the proprietors of a Russian site, RATSystems.org, which is well-known among traders at online swap meets like theftservices.com and carders.ws/forum that traffic in confidential personal data — or the means to steal it.

"Smash is one of the revolutionaries," said one member of a trading site, who insisted on anonymity because the sites are often watched by law enforcement. "If you're entry-level and want a keylogger, that's who you're going to go to," he said, adding, "It's a simple, cheap way to make money."

In fact, keylogging's simplicity may be why it is suddenly so popular among thieves. "Phishing takes a lot of time and effort," said David Thomas, the chief of the computer intrusion division at the Federal Bureau of Investigation. "This type of software is a much more efficient way to get what they're after."

The programming, too, is often trivial. "These can be developed by a 12-year-old hacker," said Eugene Kaspersky, a co-founder of Kaspersky Labs, an international computer security and antivirus company based in Moscow.

Being wary of unfamiliar Web links sent via e-mail is a first-line of defense, according to experts, as is avoiding questionable downloads and keeping up to date with Windows patches and antivirus updates.

It is worth noting, however, that in a test of major antivirus programs conducted by Ms. Hoepers's group in Brazil last fall, the very best detected only 88 percent of the known keyloggers flourishing there. In this country, victims of fraudulent money transfers are typically limited to $50 in liability under the Federal Reserve's Regulation E, so long as they report the crime quickly enough — within two days. If they report it within 60 days, their liability is capped at $500.

One Florida man has had trouble getting that kind of protection. In a closely watched case, Joe Lopez, the owner of a small computer supply company in Miami, sued Bank of America after cybercrooks were able to use a keylogging Trojan planted on his business computers to swipe bank account information and transfer $90,000 to Latvia.

Bank of America says it does not need to cover the loss because Mr. Lopez was a business customer — and because it is not the bank's fault that he did not practice good computer hygiene. Mr. Lopez claims he did, and that in any case, Bank of America should have done more to warn him of the risks of computer crime. That risk is one that Mr. Kaspersky believes is in danger of getting out of hand.

"I'm afraid that if the number of criminals grows with this same speed, the antivirus companies will not be able to create adequate protection," said Mr. Kaspersky, who added that the time has come for increased investment in law enforcement and far better cross-border cooperation among investigators, who are overwhelmed by the global nature of cybercrime.

"There are more criminals on the Internet street than policemen," he said.

    Cyberthieves Silently Copy as You Type, NYT, 27.2.2006, http://www.nytimes.com/2006/02/27/technology/27hack.html?hp&ex=1141016400&en=767b2797184835f7&ei=5094&partner=homepage

Protecting Yourself From Keylogging Thieves

February 27, 2006
The New York Times
By TOM ZELLER Jr.

The network security firm Sophos estimates that an unprotected computer has a 40 percent chance of being infected by a malicious worm within 10 minutes of being connected to the Internet. After an hour, the odds rise to 94 percent.

That's reason enough to keep up to date with operating system patches, invest in a solid antivirus program and use a basic firewall. But even with those measures in place, malicious code — including a keylogger — can sometimes find its way onto your computer.

"There are plenty of ways to get around all of those things," said Ken Dunham, director of the rapid response team at iDefense, a unit of VeriSign that focuses on computer security information.

Most major commercial antivirus software will seek out keylogging Trojan horses, as will most of the leading antispyware packages — although they may not catch them all. Some products, like Spyware Doctor from PC Tools and SpySweeper from WebRoot Software, pay particular attention to keylogging Trojans and cost about $30.

StrikeForce Technologies, based in Edison, N.J., is developing an anti-keylogging toolbar for the Internet Explorer Web browser, called WebSecure, that promises to encrypt text from the moment it leaves the computer keyboard and send it directly to the browser. It is scheduled for release in June.

"With keyloggers, you've literally got someone sitting over your shoulder watching everything that you do," said George Waller, the executive vice president of StrikeForce. "It's no wonder why they're so popular."

The CERT Coordination Center at Carnegie Mellon University in Pittsburgh also recently posted some simple — and free — ways to tweak various Web browsers to help prevent hidden code on Web pages from invading a computer — a common tactic used by purveyors of keyloggers. The information is at cert.org/tech_tips/securing_browser/.

And for those who feel safe because they use a non- Microsoft browser? Be on guard.

"Internet Explorer used to be targeted most frequently, and a lot of people have been switching away from it," said Rob Murawski, an Internet security analyst with CERT. "But the attackers follow these trends, of course."

    Protecting Yourself From Keylogging Thieves, NYT, 27.2.2006, http://www.nytimes.com/2006/02/27/technology/27hackside.html

Justice Dept. Rejects Google's Privacy Issues

February 26, 2006
By THE ASSOCIATED PRESS
The New York Times

SAN FRANCISCO, Feb. 25 (AP) — Google Inc.'s concerns that a Bush administration demand to examine millions of its users' Internet search requests would violate privacy rights are unwarranted, the Justice Department said Friday in a court filing.

The 18-page brief argued that because the information provided would not identify or be traceable to specific users, privacy rights would not be violated.

The brief was the Justice Department's reply to arguments filed by Google last week. Google has rebuffed the government's demand to review a week of its search requests.

The department believes that the information will help revive an online child protection law that the Supreme Court has blocked. By showing the wide variety of Web sites that people find through search engines, the government hopes to prove that Internet filters are not strong enough to prevent children from viewing pornography and other inappropriate material online.

The filing included a declaration by Philip B. Stark, a statistics professor at the University of California, Berkeley, who rejected the privacy concerns, noting the government specifically requested that Google remove any identifying information.

    Justice Dept. Rejects Google's Privacy Issues, NYT, 26.2.2006, http://www.nytimes.com/2006/02/26/national/26google.html

Google rips Justice Department in court papers

Posted 2/17/2006 9:06 PM Updated 2/17/2006 9:14 PM
USA Today
By Michael Liedtke, The Associated Press

SAN FRANCISCO — Google criticized the Bush administration's demand to examine millions of its users' Internet search requests as a misguided fishing expedition that threatens to ruin the company's credibility and reveal its closely guarded secrets.

The Mountain View, Calif.-based company delivered its indignant critique Friday in a 25-page brief that marked its initial legal response to the U.S. Justice Department's attempt to force the online search engine leader to comply with a 6-month-old subpoena.

The Justice Department has until Feb. 24 to respond to the papers that Google filed Friday. A hearing for oral arguments is scheduled March 13 before U.S. District Judge James Ware in San Jose, Calif.

The case has attracted widespread attention because the Justice Department's demand to peek under the hood of the Internet's most popular search engine has underscored the potential for online databases becoming tools for government surveillance.

Hoping to revive an online child protection law that has been blocked by the U.S. Supreme Court, the Justice Department wants a random list of the search requests made by the millions of people who visit Google during any week.

The government believes the search requests will help prove that Internet filters aren't strong enough to prevent children from accessing online pornography and other potentially offensive websites.

Yahoo, Microsoft's MSN and Time Warner's America Online already have provided some of the search engine information sought by the Justice Department. All three companies say they complied without relinquishing their users' private information.

But Google has steadfastly refused to hand over the requested information, a defiant stance that the company reaffirmed in a brief that depicts the Bush administration as heavy-handed snoops and technological rubes.

In one particularly scathing section, Google's lawyers ridiculed the government's belief that a list of search requests would help it understand the behavior of Web surfers.

"This statement is so uninformed as to be nonsensical," the lawyers wrote.

Although the Justice Department says it doesn't want any of the personal information, Google contends its cooperation would set off privacy alarms and scare away some of the traffic that has driven its success.

"If users believe that the text of their search queries into Google's search engine may become public knowledge, it only logically follows that they will be less likely to use the service," Google's lawyers wrote.

The American Civil Liberties Union, which is opposing the Bush administration's effort to revive the online child protection law, also filed a brief Friday in support of Google.

"This subpoena is the latest example of government overreaching, in which the government apparently believes it can demand that private entities turn over all sorts of information about their customers just because the government asserts that it needs the information," the ACLU's lawyers wrote.

Google also said it doubts the government would be available to shield the requested information from public scrutiny. The company maintains the data sought by the government could provide its rivals and website operators with valuable insights about how its search engine works.

As it battles the Justice Department, Google is cooperating with China's Communist government by censoring some of the search results that the company produces in a country that restricts free speech.

That odd juxtaposition has caused civil rights activists to applaud Google for defying the U.S. government while the champions of human rights and free speech jeer the company for bending to China's will.

    Google rips Justice Department in court papers, UT, 17.2.2006, http://www.usatoday.com/tech/news/techpolicy/2006-02-17-google-court-papers_x.htm

Increasingly, Internet's Data Trail Leads to Court

February 4, 2006
The New York Times
By SAUL HANSELL

Who is sending threatening e-mail to a teenager? Who is saying disparaging things about a company on an Internet message board? Who is communicating online with a suspected drug dealer?

These questions, and many more like them, are asked every day of the companies that provide Internet service and run Web sites. And even though these companies promise to protect the privacy of their users, they routinely hand over the most intimate information in response to legal demands from criminal investigators and lawyers fighting civil cases.

Such data led directly to a suspect in a school bombing threat; it has also been used by the authorities to track child pornographers and computer intruders, and has become a tool in civil cases on matters from trade secrets to music piracy. In St. Louis, records of a suspect's online searches for maps proved his undoing in a serial-killing case that had gone unsolved for a decade.

In short, just as technology is prompting Internet companies to collect more information and keep it longer than before, prosecutors and civil lawyers are more readily using that information.

When it comes to e-mail and Internet service records, "the average citizen would be shocked to find out how adept your average law enforcement officer is at finding information," said Paul Ohm, who recently left the Justice Department's computer crime and intellectual property section.

The issue has come to the fore because of a Justice Department request to four major Internet companies for data about their users' search queries. While America Online, Yahoo and Microsoft complied with the request, Google is resisting it. That case does not involve information that can be linked to individuals, but it has cast new light on what privacy, if any, Internet users can expect for the data trail they leave online.

The answer, in many cases, is clouded by ambiguities in the law that governs electronic communication like telephone calls and e-mail. In many cases, the law requires law enforcement officials to meet a higher standard to read a person's e-mail than to get copies of his financial or medical records.

Requests for information have become so common that most big Internet companies, as well as telephone companies, have a formal process for what is often called subpoena management. Most of the information sought about users is basic, but very personal: their names, where they live, when they were last online — and, if a court issues a search warrant, what they are writing and reading in their e-mail. (Not surprisingly, the interpretation of voluminous computer records can be error-prone, and instances of mistaken identity have also come to light.)

AOL, for example, has more than a dozen people, including several former prosecutors, handling the nearly 1,000 requests it receives each month for information in criminal and civil cases. The most common requests in criminal cases relate to children — threats, abductions and pornography. Next come cases of identity theft, then computer hacking. But with more than 20 million customers, AOL has been called on to help in nearly every sort of legal action.

In recent years, "we found ourselves involved in every imaginable classification of traditional crimes, from murder to the whole scope of criminal behavior, because AOL was used to communicate or there is some trace evidence," said Christopher Bubb, assistant general counsel at AOL.

Investigators have found new ways to identify people who visit Web sites anonymously or use a false identity. Many Web sites keep a log of all user activity, and they record the Internet Protocol address of each user. I.P. addresses are assigned in blocks to Internet service providers, who use them to route information to the computers of their users. If an investigator determines the I.P. address used by a suspect, he can subpoena the Internet provider for the identity of the user associated with that address at a particular date and time.

For example, in investigating a bomb threat at a Canadian high school in 2002, Mr. Ohm approached the operator of a message board in California on which the threats were placed. He asked to review the log monitoring each user's activities, which showed the Internet Protocol address of the person who left the threatening message. Mr. Ohm used that address in turn to determine the suspect's Internet service provider, who identified a teenager who had posted the message. (As a minor, he was not prosecuted.)

While Internet evidence has been used to solve some crimes, there have also been examples of mistakes in the process. Last year, Manchester Technologies, a company in Hauppauge, N.Y., sued Ronald Kuhlman Jr. and Kim Loviglio, claiming they had posted messages on a Web site that defamed its chief executive.

Manchester had identified Mr. Kuhlman and Ms. Loviglio based on information provided by Cablevision, their Internet provider, which incorrectly associated their account with the Internet Protocol address used to make the postings. Manchester dropped its suit against Mr. Kuhlman and Ms. Loviglio, who in turn sued Cablevision. That case was settled for undisclosed terms, their lawyer, Mark Murray, said.

The 1996 law that governs privacy for telephones, Internet use and faxes — the Electronic Communications Privacy Act — provides varying degrees of protection for online information. It generally requires a court order for investigators to read e-mail, although the law is inconsistent on this, treating unopened items differently from those previously read. The standard to compel an Internet service provider to provide identifying information about an Internet user is lower — in general, an investigator needs a subpoena, which can be signed by a prosecutor, not a judge. (And the USA Patriot Act allows some of these procedures to be waived when lives are at risk.) By comparison, domestic first-class mail requires a search warrant to be opened.

In cases in which investigators want to intercept Internet communication as it occurs, they must get the same authorization needed for a telephone wiretap, which requires continuing court monitoring. In 2004, there were 49 cases of computer or fax transmissions being monitored under these procedures, according to federal statistics (which exclude national security cases).

Mr. Ohm, now an associate professor at the University of Colorado Law School, said those statistics undercounted the instances of such monitoring, especially cases in which an Internet company was tracing attacks on its own system.

"The Wiretap Act has enough loopholes built into it that you can often do a wiretap without having to get a court order," he said.

The law for civil cases, like divorces or employment disputes, is also a bit unclear. Litigants can generally subpoena the identifying information of a user behind an e-mail account or an I.P. address.

AOL says that only 30 of the 1,000 monthly requests it receives are for civil cases, and that it initially rejects about 90 percent of those, arguing that they are overly broad or that the litigants lack proper jurisdiction. About half of those rejected are resubmitted, on narrower grounds. Generally, AOL gives its members notice when their information is sought in civil cases. If the member objects, the issue is referred back to the court. (In criminal cases, there is often no notice, or notice is given after the information has been given to investigators.)

"Subpoenas come in all the time that ask for everything," said Kelly Skoloda, an AOL lawyer. "We engage in an active dialogue to determine what they want and what we can give in compliance with our privacy policies."

AOL and most other Internet providers take the view that the content of e-mail messages cannot be turned over to lawyers in civil suits. The most significant exception is that e-mail can be turned over with the consent of the account owner, and litigants often persuade judges to order their opponents to authorize the disclosure of e-mail.

A gray area that has recently gained prominence involves the pages that users read online and the terms of their searches.

Yahoo, Google and the new free AOL.com site, for example, maintain records of user surfing behavior. Google also keeps a log file that associates every search made on its site with the I.P. address of the searcher. And Yahoo uses similar information to sell advertising; car companies, for example, place display advertising shown only to people who have entered auto-related terms in Yahoo's search engine.

It is unclear what standard is required to force Internet companies to turn over this search information to criminal investigators and perhaps civil litigants.

"The big story is the privacy law that protects your e-mail does not protect your Google search terms," said Orin S. Kerr, a professor at the George Washington University Law School and a former lawyer in the computer crime section of the Justice Department.

Other lawyers argue that the law that provides protection for e-mail content, or even the Fourth Amendment protection against unreasonable searches, could be applied to data about Web searching, but the issue has not been tested in court.

The break in the St. Louis murders came in 2002, when a reporter received an anonymous letter with a map generated by Microsoft's MSN service — marked with the location where a body could be found.

The F.B.I. subpoenaed Microsoft for records of anyone who had searched for maps of that area in the days before the letter was sent. Microsoft discovered that only one user had searched for precisely that area and provided the user's Internet Protocol address. That address, in turn was provided by a unit of WorldCom, which identified the user as Maury Troy Travis, a 36-year-old waiter. (Mr. Travis was arrested and hanged himself in jail without ever admitting guilt.)

While requests for search data have been few, computer experts expect them to increase.

"It is rare that those links will be a slam-dunk that will make a case," said John Curran, a former cybercrime investigator for the F.B.I. "But when you are putting together a larger case, you are trying to connect the dots, and it is the little things that actually help."

    Increasingly, Internet's Data Trail Leads to Court, NYT, 4.2.2006, http://www.nytimes.com/2006/02/04/technology/04privacy.html?hp&ex=1139115600&en=e86a719a6750998c&ei=5094&partner=homepage

Seeing Fakes, Angry Traders Confront EBay

January 29, 2006
The New York Times
By KATIE HAFNER

SAN FRANCISCO, Jan. 28 — A year ago Jacqui Rogers, a retiree in southern Oregon who dabbles in vintage costume jewelry, went on eBay and bought 10 butterfly brooches made by Weiss, a well-known maker of high-quality costume jewelry in the 1950's and 1960's.

At first, Ms. Rogers thought she had snagged a great deal. But when the jewelry arrived from a seller in Rhode Island, her well-trained eye told her that all of the pieces were knockoffs.

Even though Ms. Rogers received a refund after she confronted the seller, eBay refused to remove hundreds of listings for identical "Weiss" pieces. It said it had no responsibility for the fakes because it was nothing more than a marketplace that links buyers and sellers.

That very stance — the heart of eBay's business model — is now being challenged by eBay users like Ms. Rogers who notify other unsuspecting buyers of fakes on the site. And it is being tested by a jewelry seller with far greater resources than Ms. Rogers: Tiffany & Company, which has sued eBay for facilitating the trade of counterfeit Tiffany items on the site.

If Tiffany wins its case, not only would other lawsuits follow, but eBay's very business model would be threatened because it would be nearly impossible for the company to police a site that now has 180 million members and 60 million items for sale at any one time.

Of course, fakes are sold everywhere, but the anonymity and reach of the Internet makes it perfect for selling knockoffs. And eBay, the biggest online marketplace, is the center of a new universe of counterfeit with virtually no policing.

EBay, based in San Jose, Calif., argues that it has no obligation to investigate counterfeiting claims unless the complaint comes from a "rights owner," a party holding a trademark or copyright. A mere buyer who believes an item is a fake has almost no recourse.

"We never take possession of the goods sold through eBay, and we don't have any expertise," said Hani Durzy, an eBay spokesman. "We're not clothing experts. We're not car experts, and we're not jewelry experts. We're experts at building a marketplace and bringing buyers and sellers together."

Company officials say they do everything they can to stop fraud. The company says only a minute share of the items being sold at any given time — 6,000 or so — are fraudulent. But that estimate reflects only cases that are determined by eBay to be confirmed cases of fraud, like when an item is never delivered.

Experienced eBay users say that the fraud goes well beyond eBay's official numbers, and that counterfeiters easily pass off fakes in hundreds of categories.

"EBay makes a lot of money from a lot of small unhappy transactions," said Ina Steiner, the editor and publisher of AuctionBytes.com, an online newsletter. "If you've lost a few thousand dollars, you might go the extra mile to recover it. But if you've lost $50 or $20 you may never be able to prove your case, and in the meantime eBay has gotten the listing fee and the closing fee on that transaction."

The Tiffany lawsuit, in addition to accusing eBay of facilitating counterfeiting, also contends that it "charges hundreds of thousands of dollars in fees" for counterfeit sales.

In 2004, Tiffany secretly purchased about 200 items from eBay in its investigation of how the company was dealing with the thousands of pieces of counterfeit Tiffany jewelry. The jeweler found that three out of four pieces were fakes.

The case will go to trial by the end of this year, said James B. Swire, an attorney with Arnold & Porter, a law firm representing Tiffany. The legal question — whether eBay is a facilitator of fraud — is a critical issue that could affect not only eBay's future but Internet commerce generally, said Thomas Hemnes, a lawyer in Boston who specializes in intellectual property.

"If eBay lost, or even if they settled and word got out that they settled, it would mean they would have to begin policing things sold over eBay, which would directly affect their business model," Mr. Hemnes said. "The cost implied is tremendous."

But eBay members like Ms. Rogers have little desire to wait for court decisions; they say that the uncontrolled flood of fakes is driving down the value of the authentic goods.

For the past few months, Ms. Rogers and three women she met on eBay who are also costume jewelry buffs have banded together to track the swindlers they say are operating in their jewelry sector. "People have faith that eBay will take care of them, but it doesn't," Ms. Rogers said. "EBay has done nothing."

Carrie Pollack, who sells jewelry from her home in Sudbury, Mass., and is part of Ms. Rogers's group, said an authentic Weiss brooch of good quality could command $150. But she said the profusion of counterfeits had confused the market and diluted the value of such a pin to as little as $30.

"It's a situation that's facing all of us in the jewelry world, and I suspect other decorative arts as well," said Joyce Jonas, an antique jewelry specialist in New York. "It's totally out of control."

Over the past few months Ms. Rogers and her team have reported to eBay more than a thousand jewelry listings they believe to be fakes; only a few listings have been removed.

The women say that by watching the listings they have uncovered a ring of a half-dozen or so counterfeiters, most of them living in Rhode Island within a few miles of one other. They say the sellers supply one another with fake jewelry, conceal the fact that they are buying from one another to boost their seller status, and regularly dole out positive feedback to each other to fool potential buyers.

Ms. Pollack was unaware of the abundance of counterfeit pieces on eBay when she paid $360 for what she thought were genuine pieces of Weiss jewelry. She demanded a refund from the seller, who refused.

Ms. Pollack said it wasn't until she filed a formal complaint with PayPal, eBay's online payment system, that the seller offered to refund her money. Since then, she has sent eBay officials a raft of evidence pointing out the presence of the counterfeits, including an independent appraisal from Gary L. Smith, a gemologist in Montoursville, Pa., who declared the five brooches Ms. Pollack sent him to be unmistakable fakes.

This reporter, too, sent a butterfly brooch with "Weiss" stamped on the back, purchased for $12.99 recently from one of the alleged counterfeiters, to Mr. Smith. He determined that there was nothing vintage about it — certainly not the very new glue used to hold in the glass stones. (In a subsequent phone conversation, the seller, Garnet Justice, who lives in Leesburg, Ind., said she had "no idea" whether the pin was authentic, and offered a full refund.)

Antoinette Matlins, another gemologist, also purchased five vintage pieces from the sellers tracked by Ms. Rogers's group to determine their authenticity. She found them to be cheap knockoffs worth less than 10 percent of their sale prices.

But she was not surprised. Whether online or off, she said, "fraud is rampant in any venue where you are looking for a steal."

EBay's feedback system that allows buyers to post negative reviews of bad sellers is supposed to protect customers like Ms. Pollack. Yet all of the alleged counterfeiters had consistently positive ratings.

Ms. Steiner of AuctionBytes.com said this situation was not uncommon. Buyers and sellers are often reluctant to leave bad reviews, lest their own reputations suffer.

EBay does not allow members to contact other potential buyers to warn them of possible fraud. Otherwise, said Mr. Durzy, it would be too easy for someone to try to ruin the reputation of a legitimate rival.

Ms. Rogers said she had no qualms about breaking the rules by contacting buyers about fakes she spots. In November, she even put up a listing that advertised a fake Christmas tree brooch from Eisenberg Ice, a vintage costume jewelry maker, just to make people aware of the fraud.

"The reason I am doing this is because eBay won't," the listing read. "Let's stop this madness — these fakes are pushing down the price of authentic jewelry."

"The frustrating part is that eBay just stands back and lets these people make thousands and thousands of dollars" while taking a fee for each transaction, Ms. Rogers said. (The company's profits rose 36 percent in the last quarter from the year before, to $279.2 million.)

After the spectacular case in 2000 when a fake Richard Diebenkorn painting was nearly sold for $135,000 on eBay, the company put in place a handful of safeguards, like the PayPal buyer protection plan, an improved system for spotting eBay policy violations, and improved detection of fraud in general. But when it comes to counterfeit goods, the problem has gotten worse.

Artwork is particularly vulnerable to counterfeiting. "The majority of things that appear on eBay are fakes," said Joel Garzoli, an art gallery owner in San Rafael, Calif.

Mr. Durzy argued that "if we began to automatically pull listings for things reported to us as fake, we could be pulling listings that are legitimate." He added that the company had to rely on trademark owners to "tell us something is counterfeit." Yet trademark owners like Tiffany say they have gotten no relief.

Ms. Rogers and her team say their efforts may be working. The number of bids on the fake vintage jewelry pieces has dropped sharply since they went into action, they say. Nonetheless, the seller who sold Ms. Pollack the knockoff is still in business and recently put up for sale a "beautiful Weiss brooch with lots of sparkle and shine." Starting bid: $9.99.

    Seeing Fakes, Angry Traders Confront EBay, NYT, 29.1.2006, http://www.nytimes.com/2006/01/29/technology/29ebay.html

In 200 Years of Family Letters, a Nation's Story

January 29, 2006
The New York Times
By KIRK JOHNSON

BOULDER, Colo., Jan. 27 — To most college students, instant messages, or I.M.'s, are about as ephemeral as the topics they typically address. One flicker and gone.

Ethan Cowan, a 20-year-old cinema studies major, saves his I.M.'s on his computer to read again later. But in his family, that is no surprise.

Mr. Cowan comes from a long line of savers — really, really dedicated savers.

"It's in the genes," said his mother, Linda Cowan.

Beginning more than 200 years ago, Mr. Cowan's family has kept the messages — people called them letters in those days — written to one another, as well as correspondence with eminent outsiders like Ralph Waldo Emerson, sermons given by preachers in the family and multipart essays sent home while traveling.

The collection, at least 75,000 documents totaling hundreds of thousands of pages filling 200 boxes, is one of the largest private family troves that has turned up in recent years, genealogy experts say. It has been stored in attics, sheds and storage lockers over the years, and most recently in the Cowans' home here in Boulder, where they were interviewed on a recent morning. Its contents cover the scandalous (a relative jailed for embezzlement), the intriguing (a runaway slave seeking refuge in the North) and the historic (the settling of Chicago).

Now the current owner of the collection, Mr. Cowan's grandmother, Mary Leslie Wolff, who is 82, is negotiating to donate the papers — called the Ames Family Historical Collection, for her father's branch of the tree — to a historical society somewhere back East, where the family began. Ms. Wolff declined to say where the collection might go because discussions were continuing.

Historians and librarians say the collection is probably as remarkable for its intellectual vigor as for its age and size. It is essentially a dialogue of history: one well-educated, middle-class family's long conversation, and its interaction with the issues that defined the early nation and its westward tide, including the abolitionist movement before the Civil War, the early rise of feminism and the discoveries of geology that were shaking religious assumptions about the age of the earth. The family's writers talked all of it through, often at length. Letters of 10 to 12 pages were common.

"Whenever anyone finds a record like this that speaks to one family in depth, it's a gold mine," said David S. Ouimette, who manages the genealogy collection for the Family History Library, run by the Mormon Church in Salt Lake City.

"And it sounds like they weren't just observing the events of the day, they were participants," added Mr. Ouimette, who has not seen the collection. "That's what puts flesh on the bones."

One series of letters, for example, talks about a runaway slave named Mary Walker who took shelter with an abolitionist branch of the family in Philadelphia, the Leslies, during a visit by her master in the 1850's. Ms. Walker, after being hidden for a time, was eventually sent farther north to live with Leslie relatives in Massachusetts.

But the story did not end there. As the Civil War tore the country apart, the letters show an effort to reunite Ms. Walker with her family in North Carolina. A friend who was an officer in Gen. William Tecumseh Sherman's army, then advancing south, was asked to look out for Ms. Walker's children, and he apparently succeeded, because they ultimately made their way north to join her.

Another series of letters offers a vivid early glimpse of the still-raw settlement of Chicago by a family member who had journeyed west from Philadelphia in 1836 to Missouri to see some land he had bought. The land was not much to speak of, wrote the author, Peter Leslie — Ms. Wolff's great-great grandfather — in a letter to his children. But when he arrived at what he called "Chicago on Lake Michigan," Mr. Leslie immediately knew a rising force when he saw it.

"The town has more natural advantages than any place I have yet seen and is destined to be the N. York of the West," he wrote in a letter describing the construction and the bustle of the new city, then a few years old. Hotels were springing up, land fever was in the air and ambition was everywhere.

"The people of the West have a town-making mania," he wrote. "This one must succeed."

Ms. Cowan, Ms. Wolff's daughter, said she had recently been working through the letters of Mr. Leslie's son, J. Peter Leslie, who was a geologist in Philadelphia later in the 19th century. Many of those letters, she said, read like a novel: you start one, and you just have to find out what happens next.

"Right now there's a relative in jail for embezzlement," she said. "He ran off to Canada, then his conscience got the better of him and he came back and gave himself up."

Why this family saved the things that many others threw away or lost remains a mystery, Ms. Wolff said. An early progenitor in Massachusetts apparently got the ball rolling in the 1700's; that branch's attic-size collection was donated to the Massachusetts Historical Society many years ago.

Beginning in Massachusetts and Philadelphia, where the first immigrants of the family settled after arriving from Scotland, the letters piled up as the clan, like so many others of the day, gradually moved west — to Minnesota in the 1850's, then Colorado a century later.

"I think a lot of people have the urge, but at some point they just give up and throw it out," Ms. Wolff said.

Ms. Cowan spoke up. "These people didn't — they didn't throw out anything."

In today's era of the instantaneous and disposable, even the paper on which the letters were written can seem alien — so durable, at least through the 1850's vintage, that neither coal dust from furnace-room storage nor glue from an ancestor's zealous scrapbook-making apparently harmed it.

Even some of the subjects that gripped people back then can seem new again with time, like poetry. Family members transcribed poems they loved, or perhaps wrote themselves, into a book that Ms. Cowan said nobody had tried to go through yet.

"We don't even know what's in it," she said.

Mr. Cowan, a junior at Oberlin College in Ohio who said he thought of becoming an author someday, looked up sharply at the mention of unread 19th-century poetry.

"Whoa, can I check that out?" he asked.

    In 200 Years of Family Letters, a Nation's Story, NYT, 29.1.2006, http://www.nytimes.com/2006/01/29/national/29letter.html?hp&ex=1138597200&en=75f4dcde0cb8d3ea&ei=5094&partner=homepage

Virginia Man Pleads Guilty in Online Pornography Case

January 29, 2006
The New York Times
By KURT EICHENWALD

A Virginia man arrested in a national investigation of child pornography on the Internet pleaded guilty to multiple charges involving the sexual exploitation of boys and the operation of illegal Web sites, the Justice Department said Friday.

The man, Gregory J. Mitchel, 38, was an administrator of several illegal Web sites and admitted in his plea to producing and distributing child pornography through the Internet. In that role, the Justice Department said, Mr. Mitchel filmed boys engaging in sex acts and received money from Web site subscribers who paid monthly fees for viewing live and recorded videos.

Mr. Mitchel was arrested after being implicated by Justin Berry, a 19-year-old who was featured in a December article in The New York Times about teenagers who operate for-pay pornography sites that show images of themselves transmitted by Webcams. Mr. Mitchel has since begun naming other adult men who were actively involved in the sexual exploitation of children, court records show.

Mr. Berry, who beginning at 13 was enticed by adults he met online into performing sex acts in front of his Webcam, operated pornography sites featuring his own image for five years. In discussions with a Times reporter in July, Mr. Berry agreed to abandon his business and tell law enforcement about adult men who he knew were sexually exploiting and abusing children. Mr. Berry was granted immunity and is now a federal witness.

In interviews with The Times and the government, Mr. Berry said Mr. Mitchel had molested him over several years and had begun sexually exploiting as many as six other children.

At the time of his arrest, Mr. Mitchel was days away from escorting an under-age boy to a Las Vegas hotel, according to records of his online conversations. Law enforcement officials said they had recovered more than 600 pornographic images of children on Mr. Mitchel's computers, which were seized at the time of his arrest in September.

Through evidence provided to the government, Mr. Berry has identified as many as 1,500 adult men who gave him money and gifts over several years for his sexual performances on camera. Mr. Mitchel was among a number of adults identified by Mr. Berry as having assisted minors in the establishment, operation and marketing of illegal Webcam pornography sites.

In a hearing on Friday in Federal District Court in Roanoke, Va., Mr. Mitchel pleaded guilty to four felonies involving the production, sale, distribution and possession of child pornography. As part of a plea agreement, two related charges involving the receipt and advertising of child pornography were dropped. Because of a previous conviction on a child pornography charge, Mr. Mitchel faces a minimum sentence of 25 years in prison.

Mr. Mitchel first encountered Mr. Berry as a member of one of the teenager's pornographic Web sites and began communicating with him through online instant messaging. Soon after, Mr. Mitchel traveled to Mexico to meet Mr. Berry, then 16, and molested him, officials said.

More than a year later, Mr. Berry tried to abandon his illegal business, but Mr. Mitchel had preserved many of the teenagers' pornographic videos and images, posting them on new sites he established. For months, Mr. Mitchel encouraged Mr. Berry to return to the pornography business and posted periodic updates about his efforts on a Yahoo message board he set up for the teenager's fans.

Early last year, Mr. Berry, who by then was abusing both cocaine and marijuana, agreed to become business partners with Mr. Mitchel on a new site called justinsfriends.com that the older man had registered. The site, which charged members $29.95 a month for password-protected access, went fully active in early June.

Over the weeks that followed, numerous pornographic videos of Mr. Berry and other young men and boys were posted on it. But less than a month after the site went up, Mr. Berry left the business and reported Mr. Mitchel to the authorities.

    Virginia Man Pleads Guilty in Online Pornography Case, NYT, 29.1.2006, http://www.nytimes.com/2006/01/29/national/29kids.html?ex=1144382400&en=6ea88abf59ef0129&ei=5070

Software

Privacy for People Who Don't Show Their Navels

January 25, 2006
The New York Times
By JONATHAN D. GLATER

IT may be easy to forget that there are people who want to remain anonymous on the Web while the online world is full of those who happily post pictures of themselves and their navels for all to see. But interest in software that allows people to send e-mail messages that cannot be traced to their source or to maintain anonymous blogs has quietly increased over the last few years, say experts who monitor Internet security and privacy.

"People in the world are more interested in anonymity now than they were in the 1990's," when the popularity of the Internet first surged, said Chris Palmer, technology manager at the Electronic Frontier Foundation, a nonprofit group in San Francisco dedicated to protecting issues like free speech on the Web.

Increasingly, consumers appear to be downloading free anonymity software like Tor, which makes it harder to trace visits to Web sites, online posts, instant messages and other communication forms back to their authors. Sales are also up at companies like Anonymizer.com, which among other things sells software that protects anonymity.

"I get the feeling it's going up," said Roger Dingledine, Tor's project leader. "But one of the features I've been adding recently," he said, enhances anonymity protection by making it harder to count downloads of the software. Still, the number of servers forming layers in the Tor network has risen to 300 from 50 in the last year, Mr. Dingledine added.

A few reasons exist for the surge, which is hard to measure - it is nearly impossible to track how many people have made themselves invisible online. People who want to continue to swap music via the Internet but fear lawsuits brought by the recording industry want to hide their identity. Some people wish to describe personal experiences that could land them in jail. And some Web authors share their thoughts about repressive regimes and face government reprisal if they are caught.

"The more equipment is acquired and produced by a repressive regime, the more important anonymity is," said Julien Pain, who heads the Internet freedom desk for Reporters Without Borders, an advocacy group that supports press freedom. The group has produced a guide, www.rsf.org/rubrique.php3?id_rubrique=542, for bloggers trying to protect their identities.

"We realized that bloggers were being arrested everywhere in the world," Mr. Pain said. One blogger in Nepal, for example, may risk arrest with every time he comments on the country's monarchy, he said.

"The problem is, you have on one side states with a lot of money," he said. "On the other side, you have small businesses" and nongovernmental organizations. Law enforcement or other government agencies have tremendous legal and technological resources to discover the identities and locations of people communicating online, though consumer software can make the task more difficult.

Despite the increased interest in anonymity, software companies have moved away from marketing products that protect identities, said Chris Jay Hoofnagle, senior counsel and director of the Electronic Privacy Information Center's office in San Francisco, a public research group that focuses on privacy and free speech issues.

"When I came into this field, it was on the heels of the failure of a number of companies that tried very hard to create privacy enhancing technologies," Mr. Hoofnagle said.

Now, though, people are more concerned about defenses that block unwanted e-mail messages and hackers seeking to steal bank accounts, credit card numbers or whole identities, said Alex Fowler, co-head of the national privacy practice at PricewaterhouseCoopers.

"The visibility and awareness of these issues goes much deeper into the general public than it did even five or six years ago," Mr. Fowler said.

Despite increased interest in anonymity and security, some providers of online anonymity protection have not been able to turn their products into successful businesses. People who want to communicate anonymously may not want anyone to know that they have obtained software to do so, and some of the available software is free, including the Java Anonymous Proxy (anon.inf.tu-dresden.de/index_en.html).

Tor, first financed by the United States Department of Defense, received support from the Electronic Frontier Foundation for a year, but the money has run out, and Mr. Dingledine is working on the project unpaid and is looking for sponsors.

Tor uses "onion routing," in which layers of servers separate computer users from the Web sites they visit to hide a user's location. The software is easily installed and operates in the background, simply adding icons in Windows.

To make sure it is working, users can visit a site like www.showmyip.com and verify that their Internet Protocol address has changed. If it has, the software is working. The software may slow browsing, because Web pages must be transmitted through various servers around the world to get to your computer.

Software bundled with Tor, called Privoxy, prevents your computer from automatically sending certain personal information to Web sites. It does not block sites from finding existing cookies on the computer, so those sites will still know you are you (but not where you are because of Tor), but it does delete new cookies after rebooting.

Some companies that focused several years ago on anonymity now focus on security, and rather than trying to sell sophisticated software to consumers, they sell to Internet service providers like Verizon and EarthLink, who in turn can promise customers protection from spam and hacker attacks.

"Privacy is a concern, it just isn't mass market," said Hamnett Hill, president and chief executive of Radialpoint, a Montreal company that provides security services for Internet customers of BellSouth, Adelphia and other companies. "One of the big enlightenments that we had at a certain point is that people don't want to buy security software. They want peace of mind."

Radialpoint used to offer software to protect identity. The idea was not enough to carry the business, which is why the company no longer focuses on such products. Of course, there still are businesses that sell software that provides anonymity protection. For example, there is Anonymizer.com and GhostSurf, which is sold by Tenebril (www.tenebril.com). And some companies sell services to protect privacy in a way that is only tangentially related to the Internet. PrivateTel, for example, offers to provide temporary phone numbers for people who, say, post personal ads.

"The need to have a conversation and to complete the actual telephone call and remain anonymous is what is the driving force," said Dan Kaluzny, the company's chief executive.

More people who use the Internet know that if they disclose any personal information online, they may receive a flood of unwanted marketing calls and e-mail messages as a result, he said.

    Privacy for People Who Don't Show Their Navels, NYT, 25.1.2006, http://www.nytimes.com/2006/01/25/technology/techspecial2/25privacy.html?_r=1

Internet Users Thinking Twice Before a Search

January 25, 2006
The New York Times
By KATIE HAFNER

Kathryn Hanson, a former telecommunications engineer who lives in Oakland, Calif., was looking at BBC News online last week when she came across an item about a British politician who had resigned over a reported affair with a "rent boy."

It was the first time Ms. Hanson had seen the term, so, in search of a definition, she typed it into Google. As Ms. Hanson scrolled through the results, she saw that several of the sites were available only to people over 18. She suddenly had a frightening thought. Would Google have to inform the government that she was looking for a rent boy - a young male prostitute?

Ms. Hanson, 45, immediately told her boyfriend what she had done. "I told him I'd Googled 'rent boy,' just in case I got whisked off to some Navy prison in the dead of night," she said.

Ms. Hanson's reaction arose from last week's reports that as part of its effort to uphold an online pornography law, the Justice Department had asked a federal judge to compel Google to turn over records on millions of its users' search queries. Google is resisting the request, but three of its competitors - Yahoo, MSN and America Online - have turned over similar information.

The government and the cooperating companies say the search queries cannot be traced to their source, and therefore no personal information about users is being given up. But the government's move is one of several recent episodes that have caused some people to think twice about the information they type into a search engine, or the opinions they express in an e-mail message.

The government has been more aggressive recently in its efforts to obtain data on Internet activity, invoking the fight against terrorism and the prosecution of online crime. A surveillance program in which the National Security Agency intercepted certain international phone calls and e-mail in the United States without court-approved warrants prompted an outcry among civil libertarians. And under the antiterrorism USA Patriot Act, the Justice Department has demanded records on library patrons' Internet use.

Those actions have put some Internet users on edge, as they confront the complications and contradictions of online life.

Jim Kowats, 34, a television producer who lives in Washington, has been growing increasingly concerned about the government's data collection efforts. "I'm not a conspiracy theorist, I just feel like it's one step away from ... what's the next step?" Mr. Kowats said. "The government's going to start looking into all this other stuff."

Until last year, Mr. Kowats worked at the Discovery Channel, and a few years ago, in the course of putting together a documentary on circumcision, he and his colleagues were doing much of the research online. "When you're researching something like that and you look up the word 'circumcision,' you're going to end up with all kinds of pictures of naked children," he said. "And that can be misconstrued."

"There're so many things you can accidentally fall into when you're surfing on the Internet," he said. "I mean, you can type in almost anything and you're going to end up with something you didn't expect."

Privacy is an elusive concept, and when it comes to what is considered acceptable, people tend to draw the line at different points on the privacy spectrum.

Ming-Wai Farrell, 25, who works for a legal industry trade association in Washington, is one of those who draw the line somewhere in the middle. They are willing to part with personal information as long as they get something in return - the convenience of online banking, for example, or useful information from a search engine - and as long as they know what is to be done with the information.

Yet these same people are sometimes appalled when they learn of wholesale data gathering. Ms. Farrell said she would not be able to live without online banking, electronic bill paying or Google, but she would consider revising her Web activity if she had to question every search term, online donation or purchase.

"It's scary to think that it may just be a matter of time before Googling will invite an F.B.I. agent to tap your phone or interrogate you," Ms. Farrell said.

Mike Winkleman, 27, a law student who lives in Miami and, like Ms. Farrell, belongs to the generation of people who came of age with the Internet, said he would like to think that the erosion of his privacy was for "a good cause, like national security or preventing child porn," he said. "But I can't help but feel that for each inch I give, a mile will be taken."

But Josh Cohen, a financial adviser in Chicago, identifies more closely with a subset of Internet users who see the loss of at least some privacy as the price they pay for being on the Web. Mr. Cohen, 34, said he was willing to accept that tradeoff in the pursuit of national security.

"We as U.S. citizens have got to start making concessions," he said. "In order for the government to catch people that prey on children, or fight the war on terror, they are going to need the help of the search engines."

Mr. Cohen said he doubted there would be much compromising of his individual privacy because the amount of data collected by the government was so voluminous. "My rationale tells me that with close to 300 million people in the U.S., and about 45 to 50 percent of households having Internet access, that I don't need to be too concerned with my search engine behavior," he said.

Susan P. Crawford, a professor at the Cardozo School of Law in New York, agreed that the sheer volume of information obtained by the government was likely to dilute privacy threats.

"More experienced Internet users would understand that in the mountain of search-related data available in response to a subpoena, it is very unlikely that anything referring to them personally would be revealed," Professor Crawford said.

She likened one's online activity to walking down the street. "We walk down the street all the time and we can be seen there," she said. "We also move around online, and can be 'seen' to some extent there as well. But we continue to go for walks."

Nevertheless, last week's court motion is giving some people pause. Sheryl Decker, 47, an information technology manager in Seattle, said she was now thinking twice about what she said in her personal e-mail correspondence. "I have been known to send very unflattering things about our government and our president," Ms. Decker said. "I still do, but I am careful about using certain phrases that I once wouldn't have given a second thought."

Ms. Decker's caution is being echoed by others. Genny Ballard, 36, a professor of Spanish at Centre College in Danville, Ky., said she had grown more conscious about what she typed into the Google search box. "Each time I put something in, I think about how it could be reconstructed to mean that I have more than an academic curiosity," Ms. Ballard said.

To be sure, Google is citing a number of reasons for resisting the government's subpoena, including concern about trade secrets and the burden of compliance. While it does not directly assert that surrendering the data would expose personal information, it has told the government that "one can envision scenarios where queries alone could reveal identifying information about a specific Google user, which is another outcome that Google cannot accept."

Ms. Hanson, who did the "rent boy" search, said that although she was aware that personal information was not being required in the Google case, she remained uneasy.

She pointed to a continuing interest she has in the Palestinian elections. "If I followed my curiosity and did some Web research, going to Web sites of the parties involved, I would honestly wonder whether someone in my government would someday see my name on a list of people who went to 'terrorist' Web sites," she said.

Mr. Kowats, the television producer, shares that fear. "Where does it stop?" he said. "What about file sharing? Scalping tickets? Or traveling to Cuba? What if you look up abortion? Who says you can't look up those things? What are the limits? It's the little chipping away. It's a slippery slope."

David Bernstein and Michael Falcone contributed reporting for this article.

    Internet Users Thinking Twice Before a Search, NYT, 25.1.2006, http://www.nytimes.com/2006/01/25/national/25privacy.html?hp&ex=1138165200&en=53ada0c511b528d5&ei=5094&partner=homepage

Reports: Sex.com appeals, sells for $12M

Posted 1/24/2006 10:13 AM
Reuters
USA Today

SAN FRANCISCO (Reuters) — Sex.com, long coveted as potentially one of the most lucrative sites on the Web because of its catchy name, has been sold for about $12 million in cash and stock, a source familiar with the deal told Reuters on Monday.

Escom, a group of anonymous buyers, said in a statement it had acquired the Web address Sex.com from Gary Kremen, chief executive of Grant Media and the founder of Match.com. Terms of the transaction were not disclosed.

Sex.com is seen as one of the most recognizable and therefore financially most promising Web domain names but does not currently have much content.

The new owners said in the statement that they plan to transform Sex.com into "the market-leading adult entertainment destination," which they said would include "adult dating opportunities," sex and relationship advice, erotica, video-on-demand and live chat.

XBiz.com, an adult entertainment trade site, first reported the sale of Sex.com last week and said Escom had agreed to pay $14 million.

But the source said the value of the deal was closer to $12 million and involved cash and stock, as well as requirements that the business meet certain performance targets.

The sale ranks as one of the most expensive Web domain name transfers ever and outpaces the $7.5 million paid for business.com in 1999 at the peak of the dotcom boom.

Kremen — the founder of Match.com, the matchmaking site now owned by IAC/InterActiveCorp — regained control of Sex.com after a legal battle dating back to 1997 and subsequent struggles over management and ownership interests.

The site makes money selling banner ads pointing to online pornography sites. Sex.com does not even rank among the top 1,000 adult entertainment sites among U.S. Internet users, according to data by Web measurement firm Hitwise.

Kremen plans to continue as an adviser to the site.

    Reports: Sex.com appeals, sells for $12M, R, 24.1.2006, http://www.usatoday.com/tech/news/2006-01-24-sexcom_x.htm

Like This? You'll Hate That. (Not All Web Recommendations Are Welcome.)

January 23, 2006
The New York Times
By LAURIE J. FLYNN

SAN FRANCISCO, Jan. 22 - On Amazon.com, a customer interested in buying the novel "The Life of Pi" is also shown "The Kite Runner" because other Amazon customers - presumably with similar tastes - also purchased that book. That's just one approach among many in the science of recommendation software.

Web technology capable of compiling vast amounts of customer data now makes it possible for online stores to recommend items tailored to a specific shopper's interests. Companies are finding that getting those personalized recommendations right - or even close - can mean significantly higher sales.

For consumers, a recommendation system can either represent a vaguely annoying invasion of privacy or a big help in bringing order to a sea of choices.

"It's like if your music is in Tower Records and no one knows it, you're nowhere," said Tim Westergren, a founder of Pandora, an online music site, and of the Music Genome Project. "On the Internet, it's that times 100."

But spewing out recommendations is not entirely without risk. Earlier this month, Walmart.com issued a public apology and took down its entire cross-selling recommendation system when customers who looked at a boxed set of movies that included "Martin Luther King: I Have a Dream" and "Unforgivable Blackness: The Rise and Fall of Jack Johnson" were told they might also appreciate a "Planet of the Apes" DVD collection, as well as "Ace Ventura: Pet Detective" and other irrelevant titles.

The company said that the problem was created last year when the Web site set out to promote African-American films for Martin Luther King's Birthday. It linked a set of four African-American films to a group of 263 popular movies also boxed into sets, hoping that the links would give the four films more exposure.

"Unfortunately," said Mona Williams, a Wal-Mart spokeswoman, in a statement, "some of the inadvertent combinations were very offensive."

Wal-Mart's trouble stemmed not from the aggressive use of advanced cross-selling technology, but from the near lack of it. Companies with more nuanced strategies have avoided embarrassing linkages.

At NetFlix, the online DVD rental company, for example, roughly two-thirds of the films rented were recommended to subscribers by the site - movies the customers might never have thought to consider otherwise, the company says. As a result, between 70 and 80 percent of NetFlix rentals come from the company's back catalog of 38,000 films rather than recent releases.

"The movies we recommend generate more satisfaction than the ones they choose from the new releases page," said Neil Hunt, NetFlix's chief product officer. "It increases customer loyalty to the site."

Mr. Hunt said NetFlix's recommendation system collected more than two million ratings forms from subscribers daily to add to its huge database of users' likes and dislikes. The system assigns different ratings to a movie depending on a particular subscriber's tastes. For example, "Pretty Woman" might get a four- or five-star rating if other people who share a customer's taste in movies rated it highly, while the same film might not appear on another customer's screen at all, presumably because other viewers with that customer's tastes did not rate it highly.

"The most reliable prediction for how much a customer will like a movie is what they thought of other movies," Mr. Hunt said. The company credits the system's ability to make automated yet accurate recommendations as a major factor in its growth from 600,000 subscribers in 2002 to nearly 4 million today.

Similarly, Apple's iTunes online music store features a system of recommending new music as a way of increasing customers' attachment to the site and, presumably, their purchases. Recommendation engines, which grew out of the technology used to serve up personalized ads on Web sites, now typically involve some level of "collaborative filtering" to tailor data automatically to individuals or groups of users.

Some engines use information provided directly by the shopper, while others rely more on assumptions, like offering a matching shirt to a shopper interested in purchasing a tie. And some sites are now taking personalization to another level by improving not only the collection of data but the presentation of it.

Liveplasma.com, an online site for music and, more recently, movies, graphically "maps" shoppers' potential interests. A search for music by Coldplay, for example, brings up a graphical representation of what previous customers of Coldplay music have purchased, presented in clusters of circles of various sizes.

The bigger the circle, the greater the popularity of that band. The circles are clustered into orbits representing groups of customers with similar preferences.

"This is a way of showing recommendations that are vastly more useful than textual links," said Whit Andrews, a research vice president at Gartner Inc., a market research company in Stamford, Conn.

Another development under way is matching customer tastes across Web businesses, using knowledge of a customer's tastes in music to try to sell them books, for example. "To date, that's been largely uncharted territory," Mr. Andrews said, though not for lack of trying. Web sites have long tried to develop systems for cross-selling among companies that protect customer privacy but also allow sharing of data.

While large online stores are having success through recommendations, smaller Web sites are having a more difficult time using the technology to their advantage. Developing a system for cross-selling is expensive, and perhaps most important, requires amassing a huge amount of customer data to be effective, said Patty Freeman Evans, a Jupiter Research analyst.

As a result, according to Ms. Evans, fewer than one-quarter of online shoppers make unplanned purchases when they are online, a far smaller percentage than customers at actual stores.

Walmart.com's DVD sales site now has no automated recommendation system at all. The music section of Walmart.com, however, uses a system closer to that of Amazon, where customers are given recommendations based on music they've purchased in the past. The company is also looking at using that technology for the DVD section, along with movie reviews and guides that are automatically linked to customer searches.

Carter Cast, president of Walmart.com, says personalized recommendations are one of the company's "important priorities" for its Web store. "It's convenient and helpful for customers, and it does help generate sales," Mr. Cast said, referring to the personalization feature on Walmart.com's music section.

Certainly, Apple's iTunes store has benefited from its ability to recommend songs and artists. In fact, its newest feature, called MiniStore, is able to make recommendations based on songs in users' playlists, no matter where they came from.

When someone is using the MiniStore and selects a song on the playlist, Apple will automatically collect that information. The feature, however, has been criticized by privacy advocates who say it allows Apple to snoop on customers. Under pressure, Apple decided last week to make the feature an option that customers get only on request.

    Like This? You'll Hate That. (Not All Web Recommendations Are Welcome.), NYT, 23.1.2006, http://www.nytimes.com/2006/01/23/technology/23recommend.html


 

Media Frenzy

This Time, the Revolution Will Be Televised

January 22, 2006
The New York Times
By RICHARD SIKLOS

CONVERGENCE is back, but it is not what it used to be. Following its release after about five years in the halfway house for overblown business ideas, it has been swiftly rehabilitated in the form of various online-offline business ventures.

This time around, though, some fairly radical wrinkles on the theme are in the works. One notable example is Google's deal last week to acquire dMarc Broadcasting for up to $1.24 billion.

DMarc uses software to help place ads on radio, and it could conceivably do the same for Google's armada of Web ads. The deal, along with other experiments by Google to reproduce its advertisers' notices in newspapers and other print outlets, suggests that Convergence 2.0 is moving in interesting and previously undeveloped directions.

Here are two more:

What would it mean if TV shows viewed or downloaded over the Internet could be watched only by people in certain geographic areas, mimicking the network affiliate model of over-the-air television? And what if it were as easy and inexpensive for local pizza parlors to buy cable television spots as it is for them to put ads on the Internet through portals like Google and Yahoo? The ideas are being developed by small, under-the-radar outfits - the first by a company called Decisionmark and the second by a brand-new business, Spot Runner.

Decisionmark, a private company with 35 employees, sells software for television broadcasters. One of its businesses is providing a system to the satellite broadcasters DirecTV and EchoStar Communications, allowing them to determine which local TV signals to make available to subscribers.

Under federal law, a subscriber to EchoStar's Dish Network in Decisionmark's hometown, Cedar Rapids, Iowa, for example, can receive network affiliates only from that area, because, after all, those stations own the regional rights to the networks' programming, sell advertisements against them and promote them within their own programs, such as local newscasts.

Jack Perry, the chief executive of Decisionmark, has come up with a way to limit the geographic reach of broadcast signals online, too. It is roughly similar to the way satellite companies determine where you live: by credit card billing address, although Mr. Perry adds that he can also limit a computer's access to a signal based on its Internet Protocol, or IP, address.

Mr. Perry's notion has been getting a serious hearing from television station owners who are concerned that they are being cut out of deals like ABC's sale of instant reruns of hit shows like "Lost" through iTunes and CBS's sale of "CSI: Crime Scene Investigation" through Google Video.

After all, in the complex ecosystem of television, it is the local affiliates - many independently owned - that drum up much of the interest in new network shows. Jim F. Goodmon, the president and chief executive of the Capitol Broadcasting Company in Raleigh, N.C., which operates five network affiliates, told me that he sees the Internet as just another method for picking up his signal, alongside rabbit ears, cable and satellite. Why not follow the viewers online, he said, so long as each station's programming stays in its own territory?

"The next thing that we're all buzzing about is this concept of selling programming to people over the Internet," said Mr. Goodmon, whose flagship station, WRAL, is the CBS affiliate in Raleigh. "If CBS wants to sell 'CSI,' we would like to be able to sell it for them - in partnership with them - on our Web site. I think we're in the best position to sell and promote that material on behalf of the network."

On the face of it, it's difficult to argue with that commercial logic. But even if limiting the geographic reach of content on the Internet is technologically feasible, it is ideologically contrary to one of the Web's defining principles: that it is a ubiquitous, low-cost, global distribution platform.

New gizmos like Slingbox and Sony's LocationFree are designed to allow you to tap into your hometown television signals from anywhere in the world - and a product like Decisionmark's could theoretically frustrate them, too.

The big question is whether television industry constituents - networks, affiliates, programmers, writers, even advertisers - are better served by preserving the industry's current pecking order or by pursuing a more fundamental revamping of its business model to satisfy the "anytime, anywhere" demands of digital consumers. Expect this debate to come to a head if downloads of hit shows take off and local affiliates start losing viewers and advertisers as a result.

Whereas Decisionmark's product is designed to extend a so-called old-media market online, Spot Runner's clever premise is roughly the opposite: it uses the Web to take some of what has made the Internet the fastest-growing advertising medium and extend it back to the world of television, the biggest advertising medium.

It's also a sign of the re-energized convergence craze that you have almost certainly never heard of Spot Runner: the company is officially less than two weeks old, but has been quietly incubated with $10 million in venture capital and is the brainchild of two Internet veterans, Nick Grouf and David Waxman. (The two were co-founders of PeoplePC and the Firefly Network; PeoplePC was later acquired by Earthlink, and Firefly was acquired by Microsoft.)

Spot Runner proposes a way to buy spot advertising on local cable systems for as little as $500 per television marketing campaign - making it competitive not only with the likes of Yahoo's offerings but also with local newspapers and the Yellow Pages and similar directories.

Perhaps most important, it takes the impetus to produce ads off of local cable companies and puts it on any small business with a Web hookup. Mimicking the way local ads are sold by services like Yahoo's Overture or Google's AdWords, small-business owners can go to www.spotrunner.com, type in what they want to spend, whom they want to reach and what they want to say.

Spot Runner acts as ad agency and media buyer: it has an inventory of commercial templates for 4,000 types of small businesses, each with several choices of off-the-shelf video clips, and it can place them into blocks of local cable time it controls.

If you are, say, a dry cleaner in Manhattan, the company has six prepared 30-second spots from which to choose; all it has to do is add your shop's details. One example from the Web site describes itself as: "A short documentary on the history of laundry. This is a fun ad showing old images of people slaving over their laundry. But now there's you."

It may not be Madison Avenue quality, but it puts you on the tube. And once a business signs up to use a particular ad in a market, it has exclusive use of it for the duration of the campaign. Spot Runner charges $350 to create and place the ad, and Mr. Grouf says the cost of time in some markets is less than small-business owners may think - as little as a few dollars a spot.

WE felt that the world of the Internet could be harnessed and serve local advertisers in a very efficient way," he said. "This really puts television advertising in the hands of everyone." If he is right, "Will You Marry Me, Freckle?" ads could run alongside more familiar fare from carmakers, pharmaceutical companies and restaurant chains.

By extension, these same ads could be placed on the Internet as local video-based advertising takes flight there, too.

These are, of course, just two embryonic examples among many - and in buying dMarc, Google has shown where it is placing its bets. Figuring out the winners and losers is undoubtedly no easier than it was the first time convergence redrew the media map. But it is certainly no less interesting.

    This Time, the Revolution Will Be Televised, NYT, 22.1.2006, http://www.nytimes.com/2006/01/22/business/yourmoney/22frenzy.html

Bob Englehart

Hartford, Connecticut -- The Hartford Courant        Cagle        20.1.2006
http://cagle.msnbc.com/politicalcartoons/PCcartoons/englehart.asp

Focus: Interview

Google's queen of big ideas

As the internet powerhouse takes on the White House over freedom of information, its public face, Marissa Mayer, tells where the £68bn firm is going - and how a self-confessed geek relaxes

Sunday January 22, 2006
David Smith in Las Vegas
Observer

A year ago, Marissa Mayer revealed herself as the public face of Google, the world's biggest internet search engine, to a packed lecture hall. Later, in a blog posted by audience members, it didn't take long for a theme to emerge. One wrote: 'She's hot.' Another opined: 'Yes, she's a honey too.' A third said: 'She looks like Scarlett Johansson.'
It can't be fun being a woman in Silicon Valley, surrounded by geeks who don't get out much. 'But I'm a geek, so I don't notice,' Mayer, 30, told The Observer. 'This is an example of what I do at my weekends: I decided I wanted to do a mesh of LEDs [and] ping-pong balls on my walls so I could do a changing, moving art display. The great thing about being in Silicon Valley is you can Google this stuff, and damn, sure enough, there's somebody who actually built one: you can mail them back and forth, they can give you the parts, they can teach you how to do it. That's the kind of person I am. I feel like I'm just one of a great ecosystem of people who do really cool and strange things.'

This weekend Google announced that it would not comply with requests from the White House to release records of millions of users' searches to the Justice Department. The Bush administration wanted the information to help crack down on child pornography online.

Google's stance was welcomed by civil liberties groups. But Mayer made it clear in an interview before the announcement that any organisation keeps records of those who use it. 'Just like in the real world, it's hard to undo an action,' she said. 'The same is true on the internet. So we do need users to be aware there are records and ramifications.'

Legend has it that Mayer was reluctant when, aged 23 and at Stanford University in California, she was advised to see two men on the fourth floor of the computer science building who were exploring new ways to analyse the web. 'I knew about the Stanford PhD types,' she has said. 'They love to rollerblade. They eat pizza for breakfast. They don't shower much. And they don't say "sorry" when they bump into you in the hallway.'

But Mayer did call on the pair: Larry Page and Sergey Brin, whose Google search engine went on to conquer the world, thanks in no small part to her jumping aboard in 1999. She was roughly employee number 20 and the first female engineer, and has since had hands-on responsibility for the innovations and user-friendliness that have made the company the fastest-growing in history, worth £68bn - more than Coca-Cola, General Motors or McDonald's.

Mayer now has the title of vice-president for search products and user experience, and works from 9am to midnight, a schedule that seems to preclude a boyfriend or pet. Yet she still finds time to write a blog responding to queries from Google's loyal users, one of whom regularly sends emails warning that the number of words on the famously sparse homepage is creeping too far beyond 50. She organises office outings to the cinema, having written her own software to cope with the increase in staff to more than 4,000, and has been seen giving out tickets by hand while carrying a laptop.

Ideas are invited from everyone at Google, and Mayer decides which will go before Page and Brin. Her glass-walled office at the 'GooglePlex', the firm's HQ California HQ, is reportedly opposite the engineers' coffee-break area, and she is grateful when engineers drop by late at night to share their thoughts. What is the next big idea? Mayer outlined some possibilities this month at the Consumer Electronics Show in Las Vegas, where Google launched an online video store and a free-to-download software pack.

'The presentation of results is really limited today: 10 weblinks,' she said. 'When you ask Google how to make a cake, [showing you] a video is a great answer. That's one reason we're interested in video search. If you say to Google, "the episode of Survivor I missed last night", you don't want a weblink, what you really want is that video.

'Google does a great job with text, but when it comes to voice, sound or images we really need to start pushing on those technologies ... and providing even more high quality, more relevant answers.'

Google's aspirations may one day make the computer keyboard antiquated. Mayer, who has had patents filed on her work in artificial intelligence, added: 'What we will see are more modes and mediums. How can you use Google from a phone? Is there a headset that reads your business card and runs a Google search and starts streaming the results into my eye where I can see them and you can't? Maybe it's voice in your car, so you can talk to it and have it read back results. Those things are really intriguing.'

Mayer has been a high achiever from the start. Growing up in Wausau, Wisconsin, she starred in the school debating team, captained the cheerleaders, practised ballet for years and wanted to be a doctor. As a 'persnickety little kid' she spent an afternoon fiercely arguing with friends whether a baseball diamond has 88 or 90 feet between bases (Google says 90). She turned down a job teaching computer science to join Google, but has since taught introductory computer programming classes at Stanford.

'I watch my mother: she just gets so overwhelmed sometimes with the computer. But you give someone a tool and it makes it that much more empowering. That's also the thing that excited me about teaching computer science: you can teach people for two or three weeks and they can suddenly write their own screensaver and their own browser. That sort of empowerment is what really moves innovation forward.'

Such optimism was seldom heard five years ago when the dotcom boom went bust. This time, thanks to fast broadband connections and fewer crazy schemes, maturer dotcoms such as Google seem unstoppable. Mayer said: 'The easiest way to think about 1999 is probably from the dating perspective, of being a single person in Silicon Valley. In '99 everybody you talked to was the chief executive of their new dotcom. Sergey realised that to get himself a date he needed to distinguish himself from being the founder of a losing-money dotcom - he was going to have to be the founder of a making-money dotcom.

'It feels a lot more centralised than it did in 1999, when I met the founder of the dotcom that shipped pet food after selling it online. I thought to myself: petfood's heavy. Why would you pay the shipping cost? Now the businesses usually kind of make sense to me.'

Google is succeeding in its mission to organise all the world's information, putting it on collision course with American book publishers and now the US government. Mayer is apparently ready for the fight. Type her name into Google's image search engine and there are pictures of Marissa the sweet-as-apple-pie schoolgirl and Marissa at her 30th birthday bash, looking slightly the worse for wear. This is clearly a woman who spares no one - not even herself.

Google: The Facts

· It's named after the mathematical term 'googol', a 1 with 100 zeros after it.

· Co-founders: Larry Page and Sergey Brin, each worth an estimated £6bn.

· It carries out up to 1 billion searches per week of more than 8bn web pages.

· Google.com is one of the five most popular sites on the internet.

· Company's estimated worth: £68bn.

· Webster's New Millennium Dictionary of English defines Googling as 'to search for information about a specific person through the Google search engine'.

· 'Janet Jackson' was the most Googled 'news story' in 2005.

    Google's queen of big ideas, O, 22.1.2006, http://observer.guardian.co.uk/focus/story/0,,1692168,00.html