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Tech Industry

Week in review: Blame that tune

Some powerful people have a bad feeling about online music--and that's making the tech sector nervous.

Some powerful people have a bad feeling about online music--and that's making other folks in the tech industry nervous.

A controversial bill in the Senate aimed at quelling online file swapping has raised tensions between tech companies and the record industry. The bill, sponsored by Sen. Orrin Hatch, R-Utah, and dubbed the "Induce Act," was introduced earlier this year, in large part as a response to court rulings that have said that file-sharing software companies were not liable for copyright infringement by their customers. The Senate Judiciary committee had been scheduled to vote on a version of the bill Thursday, but eventually tabled the vote.

Hatch and the Recording Industry Association of America have said they want to focus heavily on behavior, rather than on specific technology. They say that the file-swapping companies are "inducing" illegal behavior on the part of their customers and should be held liable for that action.

Technology companies and consumer advocates say this threatens to expose to liability a wide variety of companies--from Web browser makers to iPod maker Apple Computer.

Apple and the ubiquitous little iPod music player also came under attack from Microsoft CEO Steve Ballmer. At the heart of his criticism of Apple was DRM (digital rights management) technology, which aims to help content providers such as record labels and movie studios control their intellectual property--or at least ensure all royalties are paid and copyrights observed.

"We've had DRM in Windows for years," Ballmer said. "The most common format of music on an iPod is stolen."

However, Microsoft and Apple were both noticeably absent from a consortium of technology companies hoping to create a common antipiracy language, ending the Babel of copy-proofing technologies that has rendered much digital content and hardware incompatible. The Coral Consortium will initially draw on support from giants such as Hewlett-Packard, Matsushita Electric Industrial, Philips Electronics, Samsung Electronics, Sony and Twentieth Century Fox, along with DRM company InterTrust Technologies.

The problem the group is tackling is one that's familiar to anyone who owns an iPod and has been unable to play music purchased from an online music store operated by Napster, Microsoft or another Apple rival. DRM software that protects content such as music, movies and video games is proprietary, and many different companies now produce incompatible varieties.

The battle against online piracy may encounter static from an updated version of StreamCast Networks' Morpheus file-swapping software, which showcases new search technology that could dramatically strengthen peer-to-peer networks. Morpheus developers are looking to recapture their one-time leading role in the file-trading world with a network technology called Neonet, written by a pair of former Harvard students.

Dubbed "distributed hash tables," Neonet's technology transforms the way that searches happen on peer-to-peer networks, potentially making it more efficient to search a much larger number of computers and more easily surface rare files. Similar technology is also used by eDonkey, a competitor that is on the verge of overtaking Kazaa as the most widely used peer-to-peer service in the world.

Radio shocker
The radio world got a wake-up call this week when shock jock Howard Stern announced that he would be jumping to satellite radio, leaving broadcast radio--and its regulatory headaches--behind. Stern and Sirius Satellite Radio said that they have negotiated a five-year, multimillion-dollar deal to air Stern's show on the satellite radio provider, starting Jan. 1, 2006.

Stern is currently working for Infinity Broadcasting. He ranks No. 1 in 46 large markets across the country, including New York and Los Angeles.

In April, radio giant Clear Channel Communications dumped Stern from its stations, after the Federal Communications Commission proposed a nearly $500,000 fine over remarks stemming from a Stern broadcast. Satellite radio isn't subject to the same stringent regulations as broadcast radio.

Industry analysts hailed the move as a major turning point for Sirius and for satellite radio in general, which has struggled to attract subscribers and stay ahead of mounting debts. "We're going to mark today as a moment of sea change," said Jeff Jarvis, a media executive and author of the BuzzMachine blog. "This is going to be the breakthrough for satellite radio to become large enough to be a viable business."

Stern cited FCC issues as one of his main motivations for jumping ship. "I have decided that satellite radio offers me more potential than terrestrial radio," he said. "I can't do the same show I did a year ago because of FCC pressure."

The result could be a mirror of the current split between restricted broadcast TV and no-holds-barred cable networks, which have steadily gained in influence during the past two decades.

Liars club?
A trial in Delaware over PeopleSoft's "poison pill" takeover defense is providing an excellent venue for a behind-the-scenes look at the back-alley tactics employed in a high-stakes takeover. A PeopleSoft board member testified that former CEO Craig Conway was fired in part because of his reckless exaggeration to Wall Street analysts when informing them last year that Oracle's offer to buy the company was no longer a disruptive influence.

Oracle's lawyers played a five-minute videotape of the deposition, in which Conway acknowledged being less than honest during the conversation with analysts in September 2003. At the end of the video, after repeated questioning, Conway admitted that his remarks "weren't true."

The view on the other side of the table isn't much better. Three days before Oracle publicly announced its intention to buy PeopleSoft, the deal was already viewed as a way to sow seeds of doubt in the minds of PeopleSoft customers.

Mark Jarvis, who was Oracle's chief marketing officer at the time, suggested in an internal June 3, 2003, e-mail that the company "use this news in order to create FUD with prospects and customers alike." FUD is a common term in the computer industry that describes a campaign to spread misinformation or exaggerations.

PeopleSoft has argued that Oracle is not serious about completing the $7.7 billion acquisition and instead has wielded the offer to cast doubt on the future of the world's second-largest provider of enterprise application software and encourage customers to consider rival products. As soon as the Oracle offer was public, PeopleSoft has claimed in court filings, its salespeople "encountered palpable resistance among previously enthusiastic prospects" because of fears that some products would be discontinued.

Browser brawl
The Web browser wars may have been reignited, according to browser pioneer Marc Andreessen. This time, it's not Andreessen's former company, Netscape Communications, that's taking on Microsoft's Internet Explorer. It's the increasingly popular smaller products such as Apple Computer's Safari and the open-source Firefox.

"It may turn out that there's a one-two punch with Firefox and Safari," Andreessen said Wednesday at the Web 2.0 conference in San Francisco. "Microsoft is certainly going to respond competitively."

Claiming browser development has been at a standstill since 1998, Andreessen said the recent emergence of competitive software will force Microsoft to pay more attention to developing new features in IE.

And that would be just fine with developers of third-party browser applications. Microsoft's minimal attention to its browser used to be a boon for some developers. But now those vendors are concerned that IE's widely noted stagnation may be proving as much a liability as an opportunity. The reason: Frustration with IE may be driving potential users to alternative browsers, especially Firefox.

That apparent trend has software developers including portal giant Yahoo and search king Google shifting away from an IE-only universe to a multibrowser strategy. Such plans may signal a turning point in the browser wars, indicating that the open-source development movement is succeeding in its efforts to thwart Microsoft's turning the Web into a one-browser shop.

But don't count on Google joining the browser battle. Google board member and investor John Doerr said that despite speculation, the search giant would not enter the Web browser market, but he predicted others would.

"Browsers are going to come back...We'll see a lot of innovation," Doerr said. He added that as new browsers come onto the market, Google's application protocol interfaces and advertising network will be there to plug into and support them.

Also of note
Network services giant AT&T is evaluating different operating systems, including Linux and Mac OS X, as alternatives to Windows for internal use...The next version of Microsoft's Windows XP Media Center Edition will support multiple tuners, meaning that consumers will be able to watch one channel while recording another, or record two stations at once...Sony's Vaio Type X, which is available only in Japan, is a home server that contains four 250GB hard drives: two for PC files and two others for audiovisual materials such as stored TV programs and music.