Digital Media

Oh, Wikipedia. Have you really become just another political organization?

I only ask because some clever people with nothing better to do have dedicated their bright gray matter to poring through Wikipedia's pages and drawing conclusions. The members of the Augmented Cognition Research Group at the Palo Alto Research Center could probably solve health care over a nonfat latte and a blueberry scone. Instead, they have examined who makes edits on Wikipedia and whose edits are reversed.

It makes for the same kind of dispiriting reading that you might once have expected from a Politburo travel brochure. You see, it appears that a hierarchy has emerged at Wiki Central, one that seems to have a significant influence in what is published and, indeed, what is removed.

These days, there are between 650,000 and 810,00 active editors of the world's most beloved unofficial encyclopedia, figures that suggest Wikipedia activity has plateaued rather than grown. And this has been accompanied by a jostling for authority that reminds one only of, well, Congress. You know, the place where senior senators seem to be able to get away with, well, I was going to say "murder," but that would be inappropriate until proven.

Has Jimmy Wales become Nancy Pelosi?

(Credit: CC KerryJ.com/Flickr)

The researchers seem convinced that editors who make more than 100 edits per month are less likely to have their entries reversed than those who contribute fewer. The group that contributes more than 1,000 edits per month (when was the last time these people saw the sky?) are enthusiastic about acting as the factual bible-writers of our time, to say the least. Between 2005 and 2008, their average number of edits has increased from 1,740 to 2,095.

The boys from Palo Alto seem to believe that those in the editing oligarchy rarely have their contributions deleted, or reverted, as seems to be the parlance. However, those who occasionally take a step away from their normal lives to make an entry are far more likely to have their contributions incised.

The researchers, led by Ed H. Chi, concluded: "We consider this as evidence of growing resistance from the Wikipedia community to new content, especially when the edits come from occasional editors."

It seems, from the Palo Altans' brightly colored graphs, that elite editors only have their work questioned 1 percent of the time, whereas occasional editors can now expect a 15 percent deletion rate.

Oh, Lordy. It's just like the Senate, isn't it? The bigwigs know best, control the most important committees, and generally swan around in limos with the finest companions of the day and night. All the while, the junior senators toil for influence, beg for their voices to be heard, and dream of becoming senior senators.

The Guardian newspaper offered this plaintive quote from a frustrated junior editor, Aaron Schwarz: "There's no place on Wikipedia that says: 'Want to become a Wikipedia editor? Here's how you do it.' Instead, you basically have to really become part of that community and pick it up through osmosis and have the tradition passed down to you."

Oh, why can't people find a more beautiful way to organize themselves? This is the only knowledge our children will ever have. I mean, we don't really expect any of them to read books on a Kindle, do we?

WebLoyalty ad (top half) presented to Buy.com customers during the transaction process. (Call-outs by WebLoyalty)

(Credit: WebLoyalty)

Update: 11:20 a.m. Friday, July 24, 2009: To include comments from Orbitz.

Thousands of Web shoppers have complained that "mystery charges" are showing up on their credit card statements and have accused those who operate so-called Web loyalty programs of duping them into signing up.

As a result, the U.S. Senate Commerce Committee is investigating Vertrue, WebLoyalty, and Affinion--companies who make "cash-back" and coupon offers to consumers and charge those who enroll in their loyalty programs.

If you think that anyone who unwittingly signs up to one of these programs must be an e-commerce rookie and that it couldn't happen to someone as savvy as you, take care that your overconfidence doesn't cost you. Josh Lowensohn, a 26-year-old CNET reporter and longtime Web shopper, this week found that a credit card he rarely uses was billed $12 in each of the past eight months by WebLoyalty.

Last November, after almost completing a purchase at Buy.com, Lowensohn was presented with an advertisement that asked him for his e-mail address. (See top half of ad above and bottom half at the end of this story.) He couldn't quickly find a way to get past the page and said he remembers thinking he would type in one of his rarely used e-mail addresses just so he could complete his transaction. Lowensohn was confident he couldn't lose anything because the advertiser didn't have his credit card information.

But WebLoyalty didn't need Lowensohn to charge his credit card. WebLoyalty CEO Rick Fernandes said Buy.com--for a fee--enabled his company to charge Lowensohn.

Web loyalty to whom?
A 10-minute Google search turns up thousands of stories similar to Lowensohn's.

Apparently, many consumers are unaware that for years now, e-tailers such as Buy.com, Orbitz, Fandango, and hundreds of others have given Web loyalty programs, also known as post-transaction marketers, access to their customers' credit cards. Some online shoppers don't realize that when they enter their e-mail addresses into these ads, they are opting into the programs and authorizing the charges.

The retailers maintain they've done nothing wrong and say it's all disclosed in their terms of service agreements. But to those who say they were duped into joining these programs, their Web store has violated a trust.

Representatives from Buy.com, Orbtiz and Fandango say they are doing their customers a favor.

"Consumers find this of value otherwise we wouldn't have it on the site," said Brian Hoyt, an Orbitz spokesman. "We're not in the business of misleading consumers."

Hoyt said that in the past month Orbitz received maybe 30 complaints about WebLoyalty and the percentage of complaints is less than one percent. Buy.com also said the number of complaints is small.

"We have a longstanding relationship with WebLoyalty because we think they provide value to our customers," said Jeff Wisot, vice president of marketing at Buy.com. "They are a company that has millions of customers who are happy with them and they provide valuable discounts and other services to their customers."

What he didn't say is that WebLoyalty pays Buy.com and other retailers for the right to market to their customers. Adam Sarner, a marketing analyst for research firm Gartner, said he is skeptical that these kinds of relationships between marketers and retailers are good for consumers.

"If you demonstrate value and a benefit for both sides," Sarner said, "customers shouldn't be complaining about being tricked into accepting your offer. Obviously, companies that bury terms in fine print or get (credit card information from someone other than the customer) already know consumers don't want their products."

Complaints, lawsuits, investigations
A spokeswoman for the U.S. Senate Commerce Committee told CNET on Wednesday that what started as a preliminary inquiry into WebLoyalty, Vertrue, and Affinion is now a "full-blown" investigation. She said: "It's becoming clearer and clearer that consumers can be at risk for these mystery charges when they shop online."

Fernandes and a spokesman for Vertrue say their practices are legal and even surpass the law's expectations. "There has never been a determination anywhere that (Vertrue's) marketing has failed to comply with the law," said George Thomas, a company spokesman. "I think after a full and fair review by the committee it will find...the practices employed by the company are specifically permitted by (Federal Trade Commission) rules."

Be that as it may, any retailer that knows how to do a Google search could have a tough time explaining to customers why it chose to associate with firms dogged by so much controversy.

Class action lawsuits have been filed against both Vertrue and WebLoyalty. In Vertrue's case, a complaint filed last year in Massachusetts alleges "consumers almost never legitimately join any of Vertrue (or its brand) Adaptive Marketing's various membership programs." In 2006, a complaint was filed that accused WebLoyalty of perpetrating a "coupon click-fraud scheme" that involved the "deceptive sale" of discount products and the "unauthorized transfer of private credit and debit card information." Fandango was also named in the suit.

That case was settled out of court for an undisclosed amount and some people who claim they were misled by WebLoyalty may be entitled to some money, according to a Web site that appears to be created to handle claims.

In February, about a half dozen British retailers, including HMV, the country's biggest chain, either "severed or suspended ties" with WebLoyalty, after receiving "a wave of complaints," according to a report in The Independent, a British publication.

Back here in the States, the Better Business Bureau has received thousands of complaints about WebLoyalty and Vertrue. WebLoyalty has a "C+" rating from the bureau and Vertrue has an "F."

WebLoyalty and Vertrue assert the complaints come from a tiny fraction of their overall customers.

Happy customers
In Lowensohn's case, he was presented with a coupon worth $10 off his next purchase. Fernandes said Lowensohn was informed three times on the page that he would be billed after 30 days and was shown a graphic that underscored the terms. Following that, Lowensohn was sent a dozen e-mails that notified him he would be getting billed.

This is how Lowensohn saw it: the page with the offer appeared during the buying process when all he wanted to do was to confirm his transaction, he said. The page was stuffed with fine print and it wasn't apparent to him how to move past the page without keying in his e-mail address.

As for the e-mails WebLoyalty sent him, Lowensohn, like millions of other Internet users, tries to avoid spam by providing advertisers with an e-mail address he rarely uses or checks. He never saw WebLoyalty's e-mails. He also never knew that Buy.com had cut a deal to turn over his credit card information to marketers.

"In the terms and conditions," wrote Buy.com's Wisot, "it's very clear that (customer) credit card information is going to be transferred over to WebLoyalty."

A check of Buy.com's terms of use and privacy policies didn't turn up WebLoyalty by name. But there is this: "Except as limited below, we reserve the right to use or disclose your personally identifiable information for business reasons in whatever manner desired."

That appears to leave Buy.com plenty of room to do as it pleases with customers' personal information.

In the end, WebLoyalty says it gives unhappy customers their money back when they ask. The company has agreed to refund most of Lowensohn's $96. Before he gets it all he must submit an affidavit and the company must OK it after a review. Fernandes said his company's refund policy is "easy."

It's safe to say that many people don't check their statements carefully. What happens to people who go for years without catching charges? They would presumably be paying the balance on their credit card charges as well as interest.

Sarner, from Gartner, said that even if the Web loyalty programs affect only a small percentage of an online store's customers, it's bad for consumers as well as the retailer:

"What good is it going to do for your brand if these people hate you."

Bottom half of WebLoyalty ad presented to Buy.com customers during the transaction process. (Call-outs by WebLoyalty)

(Credit: WebLoyalty)

In response to the reopening of an investigation into inadvertent file sharing with peer-to-peer software, an executive for Lime Wire told Congress in a letter on Friday that the new version of the program is "the most secure file-sharing software available."

The main investigative committee in the U.S. House of Representatives reopened a probe of Lime Wire and other peer-to-peer file-sharing companies last week, citing data breaches blamed on the technology.

In February, a security firm alleged that information about President Obama's helicopter was breached via P2P. There have also been reports of inadvertent exposure of consumer financial data and medical records over peer-to-peer, according to the Committee on Oversight and Government Reform.

In a letter sent Friday to the Committee and congressional members, Mark Gorton, the chairman of Lime Wire parent Lime Group, said LimeWire 5, released on December 8, was designed to eliminate inadvertent file sharing in response to privacy concerns.

LimeWire 5 by default does not share documents, it automatically un-shares documents a user may have shared using an older version of the software, and by default will not share documents regardless of whether they exist in a folder that has been shared or whether a user shared the document in an older version, said Gorton's letter, a copy of which was obtained by CNET News.

"In short, there is absolutely no way to access a LimeWire 5 user's documents unless that user affirmatively elects to make them available," he wrote. "LimeWire 5 does not share any file of any type without explicit permission from the user."

Meanwhile, the company has no specific information about the reports of data breaches that the Committee had mentioned, Gorton said.

The Committee initially launched its probe into inadvertent file-sharing with P2P in mid-2007 and had called Gorton and others to testify.

Meanwhile, another congressional subcommittee is planning to hold a hearing on P2P technology. The House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection has scheduled a hearing for Monday at 2 p.m. EDT on the "Informed P2P User Act," introduced by California Rep. Mary Bono Mack, a Republican, her office said.

Scheduled to testify at the hearing are the Federal Trade Commission, the Business Software Alliance, the Center for Democracy & Technology, the Electronic Privacy Information Center, the Distributed Computing Industry Association, Tiversa, and the Progress and Freedom Foundation.

Lime Group's letter assures Congress that its new peer-to-peer software eliminates inadvertent file-sharing.

(Credit: Lime Group)

Technology companies are supposed to be wide-eyed novices on Capitol Hill. I've read that they don't spread enough money around or aren't hip to the ways of Washington.

Regardless of whether that's true, this weekend saw Pandora, a struggling music service, whip up enough support among fans of Web radio to help persuade the House of Representatives to unanimously pass the Webcaster Settlement Act on Saturday, according to multiple people associated with the bill. The proposed legislation is designed to give Internet radio stations added time to negotiate a settlement with the music industry on reduced royalty rates.

Lower rates are vital to the survival of Internet radio stations, according to Tim Westergren, Pandora's founder, who pleaded with the public on Friday to call their congressional representatives and demand they support the bill. Webcasters and the music industry are close to reaching an agreement, but if the legislation fails to pass it could push the discussions back months and deliver a financial death blow to some services, Westergren said.

According to one Washington lobbyist, phone calls from the public were one of the factors that helped the legislation pass in the House and now have it headed for a Senate vote within the next two days without any major parties gunning for it.

Two other factors, however, likely played larger roles in getting the bill through the House: the lobbying efforts made by National Public Radio and some 12th-hour deal making to appease traditional radio broadcasters, who were trying to kill the legislation, according to sources.

"You know," said a fatigued Westergren, "it was a nerve-racking day."

In crunch time, Howard Berman came through
Saturday started with lobbyists for the National Association of Broadcasters "making a huge press in the House, blasting every (Congressional representative's) office" with appeals to kill the legislation, according to a lobbyist with knowledge of the events.

NPR, the publicly and privately funded nonprofit organization created by Congress in 1970, has plenty of friends in Washington. The group, which produces Webcasts and supports the bill, e-mailed members of Congress on Saturday, explaining how much it needed the legislation and that a deal on a new royalty rate couldn't be struck without it, sources said.

The real deciding factor came when Rep. Howard Berman (D-Calif.) met with members of the NAB. They told him that they feared their Web competitors would get a deal done first. Under the terms of the legislation, SoundExchange, the body that collects royalties and is part of the Recording Industry Association of America, has until Dec. 15 to negotiate a new rate. The NAB apparently was worried that the deadline didn't give the organization enough time to strike its own royalty agreement.

"Berman said 'Fine, we'll extend the date until Feb. 15, which gives you two more months to talk,'" said one music-industry source with knowledge of the discussions. "There isn't anything in the act that prevents traditional broadcasters from reaching their own royalty rate."

That did the trick, according to the source. Dennis Wharton, an NAB spokesman confirmed Saturday night that the NAB met with Berman and that the deadline was extended. He said the trade organization has dropped its opposition in both houses of Congress.

This means that unless something unforeseen happens, the Webcaster Settlement Act should pass, according to insiders.

Then what? Internet radio stations must still reach an agreement with the artists and labels about how much to pay them for streaming their music over the Web. Sources on both sides say they are closer than ever before to a number, and should the Webcasting bill pass in the Senate, they predicted that a deal could be reached as early as next month.

Update at 7:28 p.m. PDT: Quotes have been added from the National Association of Broadcasters on why it no longer opposes the bill.

Web radio stations live to fight another day.

The House of Representatives has unanimously passed a bill that Web radio stations have painted as life or death for their services.

The Webcaster Settlement Act, which would allow Internet radio stations to negotiate with the music industry for a royalty rate lower than what Congress mandated last year, passed the House by a voice vote on Saturday.

Proponents of the bill had predicted a close vote.

Tim Westergren

(Credit: CNET News)

Tim Westergren, founder of Net music service Pandora, said he was elated about triumphing in the House, which came after traditional radio broadcasters .

Dennis Wharton, a spokesman for the National Association of Broadcasters, said Saturday night that Rep. Howard Berman (D-Calif.) had met with representatives of the group and addressed some of their concerns.

As a result, the NAB dropped its opposition in the House and will not oppose the bill when it moves to the Senate for a vote, either Sunday or Monday (I've written a story about the bill's chances in the Senate and how the NAB was persuaded to drop it's opposition).

"The bill having passed unanimously in the House certainly gives it momentum heading into the Senate," Wharton said.

Webcasters are fighting for the right to negotiate with the music industry to reduce the royalty rates they must pay to stream music over the Web. Any deal must be approved by the federal government.

Congress is expected to adjourn on Monday, and the Webcaster Settlement Act enables Internet radio stations to reach an agreement with the music industry while Congress is out of session.

Westergren, who has emerged as a de facto spokesman for the bill, said some Web radio stations can't afford a long delay in the talks. Right now, the law requires them to pay the older royalty rate, which Webcasters say will soon drive them out of business.

"It would be a killer blow," Westergren said. "If we don't get it passed now, it would mean waiting for a whole new Congress and administration and lots of uncertainty."

As for the legislation's chances in the Senate, Westergren said he's cautiously optimistic.

"I've become gun shy because I've been burned so many times before," he said. "We're waiting to see what happens and consulting with our friends (in Congress)."

Update at 5:50 p.m. PDT: The House actually did weigh in on the bill on Saturday, passing it unanimously by a voice vote.

Proponents of Web radio stations are predicting a very close vote in Congress on a bill that they paint as life or death.

The House of Representatives is set to vote Sunday on the Webcaster Settlement Act, which would allow Web radio stations to negotiate with the music industry for a royalty rate lower than what Congress mandated last year.

Companies like Pandora are seeking a reduced rate and say that they simply cannot afford to keep operating with the higher rate.

The bill was scheduled to go to the House floor Saturday morning but was postponed twice. Meanwhile, the National Association of Broadcasters, which opposes the bill, was also using the extra time to sway lawmakers.

Because the bill is being considered under a suspension of rules, it will require a two-thirds majority to pass.

Asked which way Congress was leaning, Pandora founder Tim Westergren said it is too close to call.

"NAB is gunning full bore to kill the bill," Westergren said. "It's become a straight up battle between NAB lobbying might and constituents. Calls from listeners have been raining in since last night. (It's) touch and go."

UPDATE Friday, 3:25 p.m PT: To include Pandora's letter to fans

Time is running out on a bill that could pave the way for Pandora and other Webcasters to pay reduced royalty rates, as traditional radio broadcasters are now trying to kill the legislation.

As Congress readies to adjourn, representatives of the National Association of Broadcasters are lobbying lawmakers to stop legislation that would allow anyone streaming music over the Web, such as National Public Radio and Pandora, to continue negotiating with SoundExchange, the body that collects statutory rates for the music industry.

SoundExchange and the Digital Media Association (DiMA), which represents Web radio stations, have been at odds over the fees required to stream music, but the two sides are "optimistic that a deal can be reached," said Tim Westergren, founder of music service Pandora. He has long said the music service won't survive unless royalties rates come down.

The bill, introduced late on Thursday, would allow negotiations between Web radio stations and the music industry to continue and reach a settlement while Congress is adjourned. The two sides need the government's OK before reaching a settlement because they're after a statutory license. Such a license gives Web radio stations the right to stream any copyright songs they want, but also requires them to pay a negotiated rate.

Without the legislation, the talks could come to a halt and the deal could fall through, Westergren said. The bill is scheduled to be voted on the House floor Friday. Congress is expected to adjourn no later than noon on Monday.

Westergren said the NAB's efforts to kill the bill is nothing more than an attempt to stifle the burgeoning Web radio sector, which many in terrestrial radio see as a competitor.

"This bill doesn't effect the NAB at all," Westergren said. "This bill is designed to give us the time to resolve what it looks we're close to getting resolved. The NAB is trying to suffocate the first viable alternative to broadcast radio and is reaching out of their industry to kill another."

Responding to Westergren's comments an NAB spokesman issued this statement: "NAB has concerns related to Congress attempting to fast-track a bill introduced less than 24 hours ago that could have serious implications for broadcasters, Webcasters, and consumers of music. NAB spent more than a year trying to work out an equitable agreement on webcasting rates, only to be stonewalled by SoundExchange and the record labels. We will continue to work with policymakers on a solution that is fair to all parties."

Westergren said that there is nothing in the Webcasting bill that would block traditional broadcasters from reaching their own rate agreement.

Friday afternoon, Westergren issued a letter to fans asking that they call their congressman to voice their support. He signed off: "Thanks for helping Pandora survive."

With Congress due to adjourn Friday, lawmakers worked late Thursday evening to resolve a couple of high profile digital-entertainment issues.

A "Webcasting" bill was introduced in Congress on Thursday that would allow SoundExchange, the body that collects royalties on behalf of the music industry, to reach a settlement on royalty rates with the Digital Media Association (DiMA) after Congress adjourns.

SoundExchange and DiMA, which represents Web radio stations such as Pandora, have been at odds over the fees charged to stream music. Sources close to the talks say the introduction of the bill signals the two sides are close to cutting a deal. "They wouldn't be seeking the government's blessing unless they were close," said one person with knowledge of the talks.

The two sides need the government's OK to reach an agreement because they're after a statutory license. Such a license gives Web radio stations the right to stream any copyright songs they want, but also requires them to pay a negotiated rate.

The bill would give the two sides until mid-December to cut a deal. Pandora and other Webcasters fiercely object to a decision by the Copyright Royalty Board--a three-judge panel that sets rates for copyright statutory licenses--to double the current $.0008 price per stream by 2010.

The board also set a $500-a-year fee for each channel a Webcaster broadcasts.

Earlier this week, DiMA and the recording industry agreed to a deal that called for interactive music and limited download sites to pay 10.5 percent of annual revenue as a royalty rate. Interactive music sites are those that enable users to choose the music they want to listen to (such as iMeem). Limited downloads sites are those that deliver music to users as long as they continue to pay a fee. Music subscription services such as Napster and Rhapsody offer limited downloads.

Another tech-related issue Congress acted on Thursday was the Enforcement of Intellectual Property Rights Act, which passed the Senate Judiciary Committee in a 14-4 vote earlier this month.

President George Bush indicated he might veto the proposed legislation on Tuesday. In a letter to the Senate Judiciary Committee this week, the Bush administration said it would oppose authorizing the U.S. Department of Justice to bring civil suits against file sharers. Since then, that part of the bill has been removed and it is once again working its way through the Senate.

Music insiders say they are confident the bill will pass the Senate by early Friday and return to the House where it already passed once by a wide margin.