Digital Media

The music industry will attempt to seize money paid to acquire the Pirate Bay, according to a high-level music industry source and a spokesman for the International Federation of the Phonographic Industry (IFPI), the trade group representing the music industry worldwide.

Pirate Bay co-founder Peter Sunde shows 'I owe you' note to the music industry following a judge's order that the site's founders pay the equivalent of $3.6 million.

(Credit: Mats Lewan/CNET )

Global Gaming Factory, a Swedish software company, made big news two weeks ago by announcing that it would acquire the Pirate Bay, the popular outlaw file-sharing site, for $7.8 million. Since then the company has been touting a new business model and even hiring executives, such as Wayne Rosso, the former Grokster president, to legally obtain content from film and music industries.

What remains to be seen is how that sale might be affected by attempts by the music industry to collect the $3.6 million damages that a court in Sweden awarded it in April. The court found the four operators of the Pirate Bay--Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi, and Carl Lundström--guilty of copyright violations and sentenced each to a year in jail. The court also ordered them to pay 30 million Swedish kronor ($3.6 million).

Alex Jacob, a spokesman for the IFPI, said that the group has always intended to collect the damages award, but now, should the sale go through, music execs know that the original Pirate Bay operators have access to the money.

Whether these attempts to seize part of the proceeds could hold up a sale remain unclear. The first thing to remember is that the sale isn't yet done.

According to a press release, Global Gaming's offer is to pay half of the $7.8 million in cash and the other half in the company's stock. To finance the deal, Global Gaming must issue new shares and to do that it needs the blessing of investors and board of directors. Any acquisition isn't expected to be finalized before August, the company said.

On the other side, the Pirate Bay's founders have said that they haven't owned the company for years.

"We never had any interest in earning money from the Pirate Bay," Peter Sunde told Dagens Nyheter, a Swedish newspaper. "We haven't owned TPB since the search and seizure in 2006... Those who will get the money, friends in a foreign company, have agreed as a condition to put the money in a foundation for future internet projects."

The legal adviser for Global Gaming has said that the Pirate Bay is owned by a company in the Seychelles called Reservella.

Jacob, from the IFPI, says it makes no difference who owns the Pirate Bay. He said: "The judge found the four operators guilty and ordered them to pay the damages."

That's who the IFPI will try to get the money from.

CNET News intern Mats Lewan contributed to this report.

How do I calculate the size of meatballs?--O'Brien asks.

(Credit: 'The Tonight Show' with Conan O'Brien)

"How do I calculate the size of meatballs?" That was the title of one of the seminal Intel science projects that late-night comedian Conan O'Brien covered in a segment last night on NBC's "The Tonight Show."

O'Brien was at the Intel International Science and Engineering Fair, billed as the world's largest pre-college science fair. Intel is one of the sponsors of the "The Tonight Show with Conan O'Brien," which launched recently with the retirement (from that show) of Jay Leno.

"Even though Intel is one of the world's largest corporations and they could crush me like a fly, they were nice enough to let me go visit their science fair in Reno, Nev.," O'Brien said.

"1,500 dweebs, nerds, and Poindexters," O'Brien said, describing the high school kids attending the event.

Conan O'Brien interviews science fair participants

(Credit: The Tonight Show with Conan O'Brien)

A project of note was a "See Through Camera Jammer." "So if someone has a see-through camera, your device stops them from seeing through people's clothing?" O'Brien asked. "Why would you make this?" The response from the high school kid who did the project: "Because it's illegal." And Conan responded: "But I paid a lot of money for that thing."

He ended the segment with a visit to the meatball size-measuring project. "Of course, not everyone here is a genius. 'How do I calculate the size of meatballs?' This was a $13 million study commissioned by Chef Boyardee," he joked.

The link to "The Tonight Show" replay is here. Note that the Intel segment begins at about the 6:30 marker into the show.

Two companies that teamed up to create displays for the Sony Reader and Amazon.com Kindle e-book readers are officially joining forces.

Taiwain-based Prime View International (PVI), a leading display maker, said Monday it plans to acquire e-paper manufacturer E Ink for $215 million.

PVI creates displays for digital devices, including cameras, TVs, GPS systems, and e-readers. The company has its own e-paper unit and is a top worldwide supplier of flexible display panels. Cambridge, Mass.-based E Ink makes digital ink technology that goes into cell phones, e-readers, and other portable devices.

PVI and E Ink have already had a relationship. PVI has been one of E Ink's biggest customers, having switched from LCDs to electronic ink for its display panels. Electronic ink offers higher resolution and chews up less power than traditional LCD panels. The two worked together to create the displays for Amazon's Kindle and Sony's Reader.

The combined company hopes to capitalize on the growing e-reader market.

"Combining E Ink and PVI creates a single public company that is dedicated to electronic paper," said Russ Wilcox, E Ink's co-founder, president, and CEO. "With a common ownership structure, we can get closer to customers around the world, streamline the supply chain, and speed up new product development."

The surging demand for e-paper is likely to continue. A recent report from Forrester Research predicts a boom in e-readers in the U.S. over the next few years. A report from market researcher In-Stat predicts that worldwide e-reader shipments will jump to 30 million by 2013.

Since its inception in 1997, E Ink has depended on cash infusions from other companies to stay afloat and keep growing, including from Intel, Motorola, and Philips. Over the years, E Ink has received $150 million in financing, with its investors waiting for the e-book market to pay off.

With its acquisition by PVI, E Ink may finally have the resources to take bigger strides. Referring to PCI, Wilcox said, "They've been at it for years, they feel the growth, and they've decided to focus their company on electronic paper. With their resources, we're going to be able to accelerate our research and development and expand capacity more quickly."

The acquisition is subject to approval by shareholders of both companies. Under the plan, E Ink will become a wholly owned subsidiary of PVI, keep its headquarters and staff in Cambridge, and expand its research and development on e-paper. E Ink also plans to add another 20 workers to its 120-member staff.

Updated at 1:25 p.m. PDT.

Google-owned video-sharing site YouTube is silencing music videos in the U.K. after negotiations with the country's Performing Right Society (PRS for Music), which collects licensing fees for artists and labels, failed.

"Our previous license from PRS for Music has expired, and we've been unable so far to come to an agreement to renew it on terms that are economically sustainable for us," a statement from YouTube read. "There are two obstacles in these negotiations: prohibitive licensing fees and lack of transparency. We value the creativity of musicians and songwriters and have worked hard with rights-holders to generate significant online revenue for them and to respect copyright. But PRS is now asking us to pay many, many times more for our license than before."

The YouTube statement continued: "The costs are simply prohibitive for us--under PRS' proposed terms we would lose significant amounts of money with every playback. In addition, PRS is unwilling to tell us what songs are included in the license they can provide so that we can identify those works on YouTube--that's like asking a consumer to buy a blank CD without knowing what musicians are on it."

But a statement from PRS for Music claimed that Google doesn't want to pay enough for licensing fees.

"PRS for Music is outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the U.K.," read a statement from the industry group, which noted that Google rakes in billions of dollars in revenue. "Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing."

A report from the BBC suggests that the change will take effect later on Monday.

Royalty fees in the U.K. reportedly caused streaming music service Pandora to pull out of the country (along with other non-U.S. markets) two years ago, and many smaller players in digital media are currently feeling the pain. PRS for Music has also targeted small businesses in the U.K. for playing radios publicly, which the group says is a form of piracy.

Since it only pertains to music videos, this won't affect, say, Queen Elizabeth's royal YouTube channel. But U.S. digital media companies, particularly when it comes to music, have repeatedly encountered rough seas abroad.

One of the most high-profile has been Apple's iTunes, which several years ago came under scrutiny from one European government after another, typically concerning digital rights management restrictions in its iTunes Store. But music videos have been contentious both in and outside the U.S., with labels apparently unclear as to whether the best strategy would be to ink deals with YouTube--where they have less control--or go at it on their own. Much of the controversy comes from the fact that the music industry says it just doesn't profit much from having its videos on YouTube.

Sources told CNET News earlier this month that YouTube was working with Universal Music Group to create a standalone site "closely linked" to YouTube, a shadowy project that has been described as a Hulu for music videos. And Viacom has created its own hub, MTVMusic.com. It's complicated enough in the U.S.; bringing overseas players and viewers into account opens many new cans of worms.

AOL's advertising product, Platform-A, is continuing its overseas expansion with Tuesday's launch of a French edition. In the past few weeks, AOL has launched Platform-A in the U.K. and Germany as well.

Platform-A already reaches 24 million people in France, AOL said in a release Tuesday. The technology serves ads on all AOL-owned sites as well as third-party participants in the Advertising.com network.

"Global advertisers are demanding online performance, and that's why Platform-A is aggressively extending its reach in both the United States and Europe so that marketers can generate results more quickly and measurably than ever before," said Platform-A president Lynda Clarizio, who replaced the outgoing Curt Viebranz in March. "No other online advertising business can offer the reach, relevance, and richness of Platform-A, and we're focused on rapidly extending our global reach as we near the end of 2008."

With digital ad dollars hanging in uncertainty in the U.S., many would-be leaders are looking overseas for growth: upstart Silicon Valley media company Glam has made several international moves by acquiring existing ad networks.

AOL plans more European launches for Platform-A before the end of 2008.

There's more rumbling in Europe about Apple's iTunes Store, and this time, it comes from Norway, where, according to Reuters, a consumer agency has announced plans for legal action against Apple and what it says is unfair copyright restriction.

"I want (Apple) to make their services interoperable so that you can play music bought on iTunes on other devices, including mobile phones," Norwegian consumer ombudsman Bjørn Erik Thon told Reuters on Tuesday. Consumer agencies in Norway have been making this complaint for .

Songs purchased from the iTunes Store, except for a limited "iTunes Plus" selection, can be played only on handheld devices from Apple, in addition to Macs and PCs. Other music-enabled cell phones and music players, like Microsoft's Zune, are incompatible.

Early last year, the Norwegian government declared iTunes illegal for the same reason, and provided an October 1, 2007 deadline--a year to the day later, the threatened shutdown hasn't taken place.

Numerous other European government groups have taken action against iTunes, a phenomenon that has been virtually invisible in the United States until this point--though that's changing, as this week, there has been a stateside showdown between Apple and the Copyright Royalty Board.

A French attempt to behead iTunes' digital rights management, or DRM, failed in 2006. Similar efforts from countries such as Sweden and Denmark also made little headway.