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Week in review: Sony's sour note

Sony BMG finds itself singing the blues this week, after copy protection on many of its CDs struck a sour note on fans' PCs.

Sony BMG Music Entertainment finds itself singing the blues this week, after copy protection on many of its CDs struck a sour note on fans' PCs.

The record label will recall millions of CDs that, if played in a consumer's PC disc drive, will expose the computer to serious security risks. Anyone who has purchased one of the CDs, which include southern rockers Van Zant, Neil Diamond's latest album and more than 18 others, can exchange the purchase. The company added that it would release details of its CD exchange program "shortly."

Sony's software, installed when playing one of the record label's recent copy-protected CDs in a computer, hides itself on hard drives using a powerful programming tool called a "rootkit." But the tool leaves the door open behind it, allowing other software--including viruses--to be deeply hidden behind the rootkit cloak.

Sony reported that over the past eight months, it shipped more than 4.7 million CDs with the so-called XCP copy protection. More than 2.1 million of those discs have been sold.

News of Sony's copy protection problems incensed some CNET readers. "These companies will do anything to stop people from copying their CDs...including making people so afraid to even use a CD, for fear of it destroying their PCs, that no one will buy a copy-protected disc again," wrote Philip Brooks in's TalkBack forum. "Who do they think they are benefiting? It would seem to me that this fiasco will only encourage music pirates. Bravo, Sony!"

Sony BMG took another blow when a security company said it has found malicious attacks based on software designed to defuse the record label's "rootkit" problems. Websense's security labs reported that it has discovered several Web sites designed to exploit security flaws in a rootkit uninstaller program issued by Sony BMG.

Websense has uncovered only a couple of Web sites set up to attack flaws in the initial uninstall program, and the damage they cause appears to be minimal so far. One of them, hosted in the United States, simply restarts infected computers.

Microsoft plans to update its security tools to detect and remove part of those copy protection tools after determining that the "rootkit" can pose a security risk to Windows PCs.

To protect Windows users, Microsoft plans to update Windows AntiSpyware and the Malicious Software Removal Tool, as well as the online scanner on Windows Live Safety Center, to detect and remove the Sony BMG software.

Fight over the Net
The battle for control of the Net ended peacefully before the fight even began, but some are still unhappy with the outcome.

The Bush administration and its critics at a United Nations summit in Tunis, Tunisia, inked a broad agreement on global Internet management that endorses the creation of an "Internet Governance Forum." The forum is meant to be a central point for global discussions of everything from computer security and online crime to spam and other "misuses of the Internet." It will meet for the first time in 2006 under the auspices of the United Nations.

What the agreement does not do is require the United States to relinquish its unique influence over the Internet's operations. The statement takes "no action regarding existing institutions," said David Gross, the ambassador leading the U.S. delegation. "It created no new international organizations."

But because it's not clear which organization will be in charge of organizing the forum, a new round of back-room negotiating and political jockeying is already under way. The top two contenders: the International Telecommunication Union, a U.N. body, and the Internet Society, which counts online pioneers from the United States and Europe on its board of directors and is located in Reston, Va.

The ITU doesn't have any day-to-day responsibility over the Internet, and Western businesses and the U.S. government would like to keep it that way. In addition, a power struggle over the creation of the Internet Governance Forum is developing with the Internet Society, meaning that the ITU's management of the forum is not guaranteed. Whichever group is in charge of organizing can set the tone for the forum, craft the rules and influence the final result.

CNET spoke about these topics with Robert Shaw, the ITU's Internet strategy and policy adviser.

The summit itself got off to a rocky start in the eyes of some human rights activists. Just days before the United Nations-sponsored World Summit on the Information Society began, watchdog groups reported clashes with authorities and violence toward at least one journalist in the North African city of about 10 million people.

The groups called the country unfit to host the international summit because of its track record on censorship. The Tunisian government has earned notoriety for jailing journalists and bloggers accused of reporting false information.

Microsoft and the money
Even a company as large and powerful as Microsoft has money on its mind. So why would it consider giving away some of its most popular titles?

As Microsoft readies a host of new ad-supported online services to battle rivals, the software maker has been mulling a plan to offer free, ad-supported versions of some of its desktop products. Although no specific plans have been announced, executives within Microsoft are examining whether it makes sense to release ad-supported versions of products such as Works, Money or even the Windows operating system itself, according to internal documents seen by CNET

"As Web advertising grows and consumer revenues shrink, we need to consider creating ad-supported versions of our software," two Microsoft researchers and an MSN employee wrote in a paper presented to company executives earlier this year. The document was prepared for one of Microsoft's twice-yearly Thinkweek exercises, in which Chairman Bill Gates and other top executives gather to consider potential new avenues for the company to follow.

The document also sheds light on Microsoft's concerns over the erosion of revenue from shrink-wrapped software, particularly in the consumer market. Although Office and Windows continue to produce vast revenue and profit for Microsoft, some of the company's other well-known consumer titles are generating only a trickle of business.

According to the document, Microsoft gets only about $2 for each copy of Works that is bundled on new computers. The standard version of Money isn't even a break-even proposition, and the company has had to heavily discount its OneNote application in order to get computer makers to include it.

Microsoft predicts that things won't improve from here, either. In the paper, Microsoft said worldwide sales of full packaged software--which includes Works, the Encarta encyclopedia, digital-imaging software and Money--dropped by 7 percent in fiscal year 2004. In addition, the company said it is seeing similar trends for fiscal 2005.

Microsoft hopes that big iron will be more profitable. The company announced its foray into the world of supercomputing, though its first operating system for computer clusters remains in beta testing. Speaking at a supercomputing conference in Seattle, Gates announced that the company has reached the Beta 2 stage for its Windows Compute Cluster Server 2003. The product consists of a cluster-optimized version of Windows Server 2003 as well as software for job scheduling and other tasks. It is scheduled for release in final form in the first half of next year.

Separately, Microsoft also announced that the Compute Cluster Server and several other upcoming server software releases will work only with 64-bit processors. Such chips, which include Intel's 64-bit Xeons and Advanced Micro Devices' Opteron, are becoming the norm on servers, and 64-bit processors are making their way onto desktop machines.

Xbox marks the spot
Microsoft will be the first of the three major companies to launch a new console when the Xbox 360 hits store shelves in North America on Tuesday. Sony's PlayStation 3 and Nintendo's Revolution are expected sometime later in 2006.

Microsoft this week formally unveiled the lineup of titles that will be ready for the launch. Calling the lineup the "strongest launch in the history of video game consoles," Microsoft said there would be 18 games ready for the release.

Among them are many of the latest iterations in proven franchises, including Electronic Arts' "Madden NFL '06," "NBA Live '06" and "Need for Speed Most Wanted," as well as Activision's "Call of Duty 2" and "Tony Hawk's American Wasteland."

But contrary to some rumors in the industry, Microsoft does not appear poised to release "Halo 3," a move that would have been nearly impossible to pull off just a little more than a year after the hit "Halo 2" appeared.

MTV plans to devote an entire week of programming to games and game culture in anticipation of the release. Starting Sunday night, the cable channel said it will air game-focused coverage, as will its sister channels and Web sites, including MTV2, MTVU, MTVU Uber and MTV Overdrive. The video game-theme programming, dubbed GameORZ Week, acknowledges the degree to which game culture is integrated into the mainstream, especially among the MTV market of 18- to 24-year-olds.

Also of note
Google's mysterious Google Base service went live, allowing people to post any kind of information they want for free and to provide labels to describe it so others can easily find it...A growing number of impatient developers are building their own cell phones part by part...A group of open-source developers says it has changed the name of a podcast application after pressure from Apple Computer's lawyers...Microsoft released the first test version of Office 12, the next incarnation of its ubiquitous desktop suite.