Week in review: Avast, ye pirates

In a highly watched legal ruling, a court in Sweden on Friday found all four defendants in the high-profile Pirate Bay case guilty of having made copyright-protected files accessible for illegal file sharing.

The defendants were each sentenced to a year in jail and also ordered to pay a total of 30 million Swedish kronor ($3.6 million) in damages to copyright holders, among them a number of American media giants.

The four men--Peter Sunde, Gottfrid Svartholm Warg, Fredrik Neij, and Carl Lundström--were found guilty of having made 33 copyright-protected files accessible for illegal file sharing via the Piratebay.org Web site.

"The crime has been committed in a commercial and organized form," Judge Tomas Norström said in a Web broadcast from a press conference in Stockholm. Warg and Neij are the founders of The Pirate Bay. Sunde is a programmer and a spokesman there, and Lundstr?m offered technical services to the site in 2005.

Pictured, from left, are Pirate Bay defendants Peter Sunde, Fredrik Neij, and Gottfrid Svartholm Warg. Carl Lundström is not pictured.

(Credit: Pontus Alexander/Fabian Landgren)

Copyright holders cheered the verdict, as the large penalty will likely discourage illegal file sharers, according to those in the music business. While the legal process still has a long way to go in the United States, Rick Carnes, president of the Songwriters' Guild of America, said he and everybody else "put out of business by cyberlooting" were smiling after the verdict.

Of course, even though the verdict has been handed down, legal actions are far from done.

"The prosecutor leads 1-0 after the first round, but this will, of course, be appealed," said Per E. Samuelsson, defense lawyer for Lundström, according to the Swedish newspaper Dagens Nyheter.

Meanwhile in the media word, controversy brewed this week when Amazon.com delisted from its sales ranking system gay and lesbian book titles that it deemed "adult."

When one author of novels with gay characters noticed that many books were suddenly deranked, he made inquiries into the matter and received the following response from an Amazon representative:

In consideration of our entire customer base, we exclude "adult" material from appearing in some searches and best-seller lists. Since these lists are generated using sales ranks, adult materials must also be excluded from that feature.

An online petition against the move attracted thousands of signatures and pointed out that the policy appears to be biased against books with gay, lesbian, and transgendered characters.

Of course, being delisted from the rankings doesn't mean that the book giant has stopped selling the title; it just means that the title won't show up with a public-sales ranking or in the best-seller lists--often a factor in how shoppers make their purchases.

One blogger claimed that he did it to cause an outrage among the gay community, a claim that was dismissed by Amazon representatives, who characterized the episode as "a glitch in our system, and it's being fixed."

However, an unnamed Amazon employee confirmed the report of manual error. "Amazon managers found that an employee who happened to work in France had filled out a field incorrectly, and more than 50,000 items got flipped over to be flagged as 'adult,'" the employee said.

Meanwhile, Amazon has reportedly blocked the use of the controversial behavioral-advertising system Phorm on its British site. The move comes as the European Commission takes action against the United Kingdom, alleging that the country failed to adequately comply with data protection laws in Europe.

Phorm's technology is designed to allow its customers to observe a user's behavior while online, such as Web sites visited or keywords entered, and then serve up relevant advertisements based on that behavior. The controversy over Phorm's technology revolves largely around privacy issues.

Google on the go
Buoyed by continued growth in search and by cost cuts, Google reported better-than-expected profitability for the first quarter of 2009. Google's net income increased 8 percent annually to $1.42 billion. Revenue increased 6 percent to $5.51 billion, but excluding commissions paid to advertisers (called traffic acquisition costs), revenue increased 10 percent to $4.07 billion.

Google's revenue growth rate has been slowing, but for the first time since it went public, the company's quarter-to-quarter revenue declined. (Click to enlarge.)

(Credit: Google)

But everything is most definitely not coming up roses. Google's revenue, after ascending steadily quarter after quarter, peaked in the fourth quarter and declined 3 percent in the first quarter. Google's business is still relatively strong, and it's been hit by the recession less than many in the tech world, but it's been hit nonetheless.

In short, people are buying less, and advertisers consequently are advertising less. As an Efficient Frontier study released earlier this week showed, advertisers are getting more conservative by bidding for search terms where there is a proven return on investment. Google Chief Economist Hal Varian's "Wal-Mart effect," in which people under financial pressure would steer more of their purchasing behavior through search engines in an attempt to get the best deals, has its limits.

Meanwhile, Google-owned YouTube has struck deals with a host of entertainment companies, including Sony Pictures, CBS (parent company of CNET News), Metro-Goldwyn-Mayer, Lions Gate Entertainment, Starz, and the BBC, to acquire "thousands" of TV episodes and hundreds of films. The new content will be available only in the United States.

YouTube executives also said during a conference call that they have redesigned part of the Web site to create separate areas for professionally made content. On the site's front door will be two new tabs. Movies from Sony Pictures will only trickle on to YouTube, at least initially. YouTube has agreed to display the films using a video player from Crackle, Sony Pictures' own video site. The studio will control all the advertising for the films, and Crackle will also get credit for the traffic.

So far, YouTube has been a free, advertising-supported service, but Google plans to build payment mechanisms into its video-sharing site. The change in tactics will mark a new era for Google's attempt to make money from YouTube. The service is tremendously popular, but also tremendously expensive to operate, and Google has been working hard for months to come up with a more successful financial formula for sharing video.

On the line
The founders of Skype have reportedly been trying to repurchase the Internet phone service. Niklas Zennstrom and Janus Friis sold their company to eBay four years ago for $2.6 billion. The two men have been meeting with private-equity firms and gathering their own funds to finance the deal.

eBay has acknowledged that Skype has few synergies with its core businesses. And eBay's chief executive has publicly stated that he's willing to sell it for the right price.

Zennstrom and Friis are reportedly encountering turbulence in striking a deal with eBay to buy back the Internet phone service, despite the financial backing from a group of large private-equity firms. KKR, Warburg Pincus, Elevation Partners, and Providence are reportedly teaming up with the Skype founders. But eBay and the founders' group reportedly face a wide gap on price, and a deal involving the private-equity firms appears unlikely.

Those efforts may be for naught, as eBay announced plans to spin off Skype with an IPO in the first half of next year. While eBay plans to launch a Skype IPO in the first half of next year, the company noted that its exact timing will be based on market conditions.

Last year, Skype generated $551 million in revenues, up 44 percent over the previous year. The number of Skype's registered users has increased to 405 million at the end of last year, up 47 percent from the previous year.

Meanwhile, Time Warner Cable has put the brakes on a trial that was testing its new "consumption-based billing" system for its broadband service. Chief Executive Glenn Britt said in a statement that there has been "a great deal of misunderstanding" by consumers and lawmakers who have criticized the plan.

Time Warner had quietly been testing its metered billing service in Beaumont, Texas, since last year. But last week, the nation's second-largest cable provider said it was planning to expand the test of the bandwidth caps to other cities, including Austin, San Antonio, Rochester, N.Y., and Greensboro, N.C.

The way the plan worked is that Time Warner would cap data downloads and uploads at 10 gigabytes to 60 gigabytes a month, with prices ranging from $25 to $65 per month, depending on the region. The company also planned to introduce a new plan that would have offered 100GB of downloads for $75 a month. Additional downloads would be charged $1 a gigabyte, with a cap of $75 on the extra fee, essentially making an unlimited plan cost $150 per month.

Also of note
CNN took control of the leading Twitter account as a race against Ashton Kutcher and Britney Spears to be the first with 1 million Twitter followers came to a close (Kutcher won)...Facebook is encouraging users to vote on whether proposed terms of service culled from user feedback should replace the existing terms of service...The man who co-wrote "Never Gonna Give You Up," the 1980s song revitalized by the Rickrolling phenomenon on YouTube last year, is accusing Google of exploiting him.

[andacar]

Let's be clear about what has happened here. The pirate bay guys came up with a very hypocritical and disingenuous way to avoid copyright law by technically not having content as such but facilitating its theft. They got busted for it. That, and their endless circus of thumbing their noses at some parts of the law while loudly trumpeting their rights under others, strikes me as the sort of thing you?d expect from tech dorks with few social skills and a massive opinion of themselves. I write music, illustrate and animate for a living, and it?s desperately important for me to be able to make money on what I do. I keep hearing about the ?new ways? to make money on the web in the age of freely downloadable everything. But I have yet to hear anything concrete, other than some kind of vague system by which people will sort of pay for stuff, maybe, if they want to, eventually, maybe? I?d like to wearily remind everybody that if we adopted Richard Stallman?s view here, and that making money on any kind of media was immoral, we?d all be out of work in a flash, and there would be no content of any kind to steal on the Pirate Bay. No concerts, no recording industry, no movie industry, nothing. Unfortunately the ?I want it now, free and screw everybody else? mentality is the norm now, so I suppose this will fall on deaf ears. Just remember that in any profession, you get what you pay for.

[tm_anon]

It might help to be a little less antagonistic when you wish to explain something.

The pirate bay guys came up with a non-hypocritical way of defending themselves. Since their site is used for the dissemination of goods (software and media, not all of which is unlawful) then it is simply a form of distribution. Should terrestrial radio or television stations be sued by the same organizations for providing free access to these sames shows? Should Cable providers be sued because they're profiting from the dissemination of television?

The Pirate Bay is just a way to distribute. It points the way to what you're looking for just like television providers point the way to what you're looking for and just like radio points the way to what you're looking for. The only difference, with the Pirate Bay, you download it instead of recording it direct.

Instead of bashing new technologies, why not use them? There are artists who use Torrent technologies for dissemination of their recorded products. It gets those who downloaded the songs interested in hearing more, even going to a Live show.

Being in the industry, I'd think you might've realized that the only way the Artists ever make any money is by going on tour. If the fans don't want to buy your music because of how the RIAA is representing you, then how will they ever hear what you're doing? How will they ever get to the point where they're excited about your music to the point of going to those concerts so that you can make money?

Get off your high horse and try to think for yourself. If you want to make money in professions like that, don't you need fans first?

There's a reason the free sample set up is used so much, it works.

[baconstang]

tm_anon's argument is lame, and shows he has no clue as to paths of revenue. Radio, TV, cable and satellite all generate money through ad sales and PAY for content. If you want the content, you must pay for it, or accept exposure to the commercials that generate the revenue. Maybe a 5 second commercial inserted after every chorus, like the television model?

A detailed map to your house with keys to your door are not kept online for all to see, even though that posting doesn't actually take your things, it just 'points the way'.

Not every form of content can be taken on tour, nor should that decision be made by spoiled jerks who are too cheap to pay for other's labors. Why should the burden to devise new revenue streams be placed on artists? Shouldn't those that have sidestepped the existing methods be the ones coming up with 'the new way' ?

If you can't afford a subscription service or a buck-a-song, then listen to the radio, or read a book.

[d3vildog69]

Drop the house analogy dude.. its retarded.

[pithenumber]

the thing is
illegally downloaded software and movies are superior to those that are bought legally and are crippled by draconian DRM

SecuROM say anything?
what about paying more for a movie and being treated as a bad guy more than ever (blu ray)
here's a biggie: WGA (kill the entire thing MS, its pointless, anyone can crack past it or just refuse to dl the WGA tool)

[Fil0403]

Here's a hint: WGA - live with it idiot, it's so pointless that you're complaining about it (probably because it frustrates you that it works), if anyone can crack past it or just refuse do download the WGA tool (which disables you from downloading SPs, so go ahead) then stop complaining (either because MS forces you to download it or because it doesn't, you idiots are never happy with anything that comes from Redmond).

[krootdude]

Hmm... actually i think that Torrent sites are very good for musicians in some cases. They get people interested in music. Let people open their horizons to new music and at no cost-risk whatsoever. "Free" music has made me come to love bands and spend a lot of money on the hard-copies of their music as well as go see them live. In fact if i like the music I am forced to buy it, because the quality of the download is so ****** anyway.

I try - I like - I buy a lot ^^ --> simple recipe to get folks hooked to your music ;)

[balonga]

The article is taking for granted that the court decision will stay firm. Wrong.

It is not the case because the victims (yes, the defendants are victims like we all are in this kind of cases) will appeal. If we are confident in justice we are confident that this decision will be reversed.

As Peter Sonde said ?This is just a theatre for the media.?. The media are making waves with this wrong court judgement to make people think that file sharing is illegal and we have just to obey what Bill Gates and others want and pay them for whatever they want to give us.

You dont have to think too long about it to see that what is at stake here is simply freedom and nothing else.

[Fil0403]

I love the ingenious way Bill Gates was inserted in the conversation. I find it amazing how for any single problem in the world someone can always make a relation between it and Microsoft and/or Bill Gates and/or Steve Balmer. Nobody (often not even the author of the [ignorant] comment) really understands very well the reason or the (often absent) argument; what matters is to state that, somehow, that problem is their fault and they suck. I also love the implicit (genius) idea that a person/company that creates/develops/manufacturers a given product deciding the money we people have to pay for it is ridiculous (I guess it should be people deciding how much to pay for what others created, now that makes perfect sense).

[magnumquick]

I believe, if the artists of all types wanted the rewards for their hard work, they would dump the middle man who according to many artists, are ripping them (artist) off and join together to sell their works directly to those who want it. It seems to me that the artists who are crying about pirates are the ones that expect people to by their CD'(s) which are full of lousy songs with one or two good ones. It's kinda like cable TV, charge a high price for a lot of channels but only have a handfull of decent channels to watch, can you imagine if cable companies charged by the channel, they would go out of business.

[Fil0403]

OK, let's not be hipocrits here: it's obvious that the main intent of The Pirate Bay is to be a search engine for pirated material (as even the name indicates), in this case in the form of torrents. But it also is true that it is simply a search engine, a "middle-man", and AFAIK there's nothing illegal about that. AFAIK it doesn't host any pirated material. The way people use it and what people use it for is not their problem. As such, the same way I think post offices (as another kind of "middle-man") shouldn't be fined or closed for people using them to send drugs over the mail, I disagree with this decision for people using The Pirate Bay to download pirated material. If they want to fine someone, fine the people who provide that pirated material, not the people that show you where it is (or else we can also say goodbye to Google or the Internet, as many people usem them too to find and download pirated material).

Just my 2 cents anyway.