It will likely be a few months before Adobe rolls out 10.1 to everyone, but the impact of this move will likely be felt both in the short and long terms.  Short term, hardware decoded Flash video could be a real boost tonettop PC’s and netbooks, allowing them to really become cheap and easy media playback devices.  In the longer view, however, Flash’s innovation here could really cement its central role as they delivery avenue for video of all kinds over the Internet, dealing serious blows to both Microsoft’s Quicksilver, but also any other competitors still out there.  Unknown is what Flash video’s dominance will mean for the file-sharing and downloading communities.  Will video pirates move away from downloading entire shows via Bittorrent to instead watch free streaming episodes on Hulu -like services if quality differences disappear?  Will more cable customers ditch their TV services in favor of going completely for over-the-top video?  Such suppositions may be quite speculative at this point, but with the changes to Flash on the horizon, they are becoming more plausible every day.

UK Business Secretary Lord Mandelson and his Department for Business, Innovation and Skills (BIS) has apparently been quite successful in lobbying for legislation to implement its “evolved” measures for tackling illegal file-sharing.

So successful in fact, that a “three-strikes,” i.e. two warning letters followed by Internet disconnection, graduated response system has been dropped to a mere two. That means accused illegal file-sharers will get a single warning before being locked out of the so-called information superhighway.

The govt says it will warn people at first, but if it proves insufficient it will begin disconnecting people beginning in the spring of 2011.

“It is good news for fans of British music that government is now introducing legislation to tackle illegal downloading,” said Geoff Taylor, chief executive the British Phonographic Industry (BPI). “The creative sector in the UK needs new measures implemented urgently that address this problem for now and the future if the UK is to lead Europe in giving consumers innovative and high quality digital entertainment.”

Mandelson feels that the current timetable, which stands at 2-3 yrs for a 70% reduction using a combination of notifications and technical measures, would take an “unacceptable amount of time to complete in a situation that calls for urgent action.”

The Open Rights Group, a UK-based group of people who aims to preserve digital rights and freedoms, has roundly criticized the proposal, and notes that copyright infringement accusations can only be made against a connection and not an individual.

“Appeals mechanisms may be appropriate when it is clear that evidence is robust, and the punishment is clear: but with this proposal neither is true,” it says. “Evidence cannot show who may have infringed copyright, only what connection was used. And the punishment could have an enormous range of effects, from being disruptive to removing someone’s ability to earn a living.”

It adds that “three-strikes” is not a silver bullet to end piracy, and that a better plan is to encourage copyright holders to meet consumer demands. It cites South Korea as an example of what “three-strikes” really means.

After becoming the first country to threaten accused file-sharers with Internet disconnection this past July, copyright holders are still finding that rampant piracy exists. They’ve now decided to ratchet up the battle even further by warning all P2P sites to install filters preventing users from uploading copyrighted material by the end of the year or face “stern legal measures.”

Even that will be an effort in futility and file-sharers will simply turn to alternatives as they always have and always will.

Stay tuned.

jared@zeropaid.com

Hulu, the ubiquitous free streaming video on demand site, has announced that it’s teamed up with Big 4 music label EMI to begin offering free streaming of music videos and concert footage with select artists.

“We think Hulu is an excellent, high-quality environment and a great place to connect with fans. We look forward to making more content available from other artists as well,” said Ronn Werre, President, EMI Music Services and COO, EMI Music North America. “We’re delighted to add Hulu to the growing number of platforms EMI is working with to give fans more of what they’re looking for.”

So far the new EMI section of the site only contains Norah Jones, but it promises to add more artists as time goes on.

It decided to add her first in order to celebrate the release of her latest album The Fall.

It’s an interesting move for EMI considering it has so many other outlets to deliver content to music fans. Some have suggested that EMI is doing all it can to stay afloat and spur interest in its more popular artists as its debt reportedly grows unwieldy. Terra Firma, the UK-based private equity firm which owns the record label, has been unable to restructure EMI’s debt.

Stay tuned.

jared@zeropaid.com

Music labels have been the most vocal critic of file-sharing, doing everything they can to discredit the litany of studies proving the beneficial effects of P2P on artists.

One of the more recent was the International Federation of the Phonographic Industry (IFPI) stand against a UK Digital Music Survey which found that two-thirds of those who illegally download music spent an average of £75 ($123 USD) a year on music versus £44 ($72 USD) by those that don’t.

As proof it offered figures that show a steady decline in sales of recorded music.

Therein lies the rub. For according to a study completed by Will Page, the Chief Economist for PRS for Music, a UK-based royalty collecting group, back in July, the decline in sales of recorded music has mirrored a likewise increase in live performance revenue earned by artists.

In other words, as record labels are making less, artists are making more.

In fact, according to a detailed examination of the figures produced by Page it appears that sometime next year for the first time ever the money artists make performing in concert will surpass what the record labels make selling recorded music. In other words, the inmates will arguably  soon run the prison.

It’s a welcome turn of events, for it means that at last artists will be able to receive the bulk of the reward for their hard work and determination instead of record labels, who have a long history of maximizing profits at their expense.

Over the past 5 years artists have also seen a rise in revenue earned from recorded music, again despite the decline in revenue earned from recorded music by labels.

So it seems the real harm of P2P all along has been to record labels and not artists, and the figures come from none other than the music industry itself!

It’s part of the increasing number of studies that have proven the harm to music artists is greatly exaggerated if not nonexistent, and all of  which the music industry tries so hard to discredit.

My personal favorite is the “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada.” Commissioned by Industry Canada, a ministry of the Canadian federal government, back in 2007, it includes some of the most extensive surveying ever done on the music purchasing habits of the Canadian population.

“Our review of existing econometric studies suggests that P2P file-sharing tends to decrease music purchasing,” says the study. “However, we find the opposite, namely that P2P file-sharing tends to increase rather than decrease music purchasing.”

Researchers found that for every 12 illegally downloaded songs using P2P, music purchases increase by 0.44 CDs. Trying to discredit an official Canadian govt study is a pretty tall order, perhaps that’s why they usually do so in general terms and not specifically.

If that wasn’t enough there’s the “Consumer Culture in Times of Crisis.” ConductEd by the BI Norwegian School of Management, the largest business school in Norway and the second largest in all of Europe, the study looked at almost 2,000 online music users over the age of 15, and asked file-sharers to prove their legal music purchases rather then simply rely on their honesty.

It concludes that those who download music illegally also purchase the most number of legal digital downloads. In fact, the study reports that file-sharers actually buy 10 times as much music as they download for free.

“The most surprising thing is that the proportion of paid downloads is so high,” said BI researcherAudun Molde. “The results suggest that they are buying twice as much music as they get for free, and also those who state that they download for free actually are the greatest consumers of paid music online.”

An EMI record label did leap into the fray with this study, lamenting that even though P2P may stimulate music consumption record labels are still, nonetheless losing money.  For him it means one thing, that lost revenue from illegal downloading far surpasses any supposed benefit they allege.

The International Federation of the Phonographic Industry (IFPI) even went to great lengths to discredit the more recent Digital Music survey conducted for Demos, a UK-based think tank.

According to the survey, two-thirds of those who illegally download music spent an average of £75 ($123 USD) a year on music versus £44 ($72 USD) by those that don’t.

It also says they are more “active music buyers,” with 8 in 10 having purchased music, be it physical or digital, is the past 12 months.

Mark Mulligan, one of the study’s authors, said: “The people who file-share are the ones who are interested in music. They use file-sharing as a discovery mechanism. We have a generation of young people who don’t have any concept of music as a paid-for commodity. You need to have it at a price point you won’t notice.”

The IFPI, rather than digest the numbers, responded with the usual argument that no matter what anybody says the music industry is still losing money.

“The net effect of illegal file-sharing in the UK and elsewhere has been to reduce legitimate sales,” it says. “This is why spending on recorded music has fallen every year since illegal file-sharing began to become widespread.”

This is true, consumer spending on recorded music is down 6% since 2007 alone, but it belies what Page concludes in the first study I mentioned, that total music industry revenues are up 4.7% over the same time period.

The money’s there, for artists especially, it’s just taking different forms as the industry evolves from analog to digital.

I’d suggest that the biggest reason why recorded music sales are down is the fact that consumers can cherry pick their selections. A formerly $20 dollar physical album has been reduced to a single 99 cents digital track. That has to be frustrating for the music industry and really has no solution unless you want to raise prices and push people back into illegal file-sharing.

Now if only artists like Lily Allen would take note that artists are making more money in the P2P age after claimin back in September that file-sharing has been a “disaster” for emerging artists.

It’s especially important the UK govt takes note as it contemplates a proposal to disconnect illegal file-sharers from the Internet.

Stay tuned.

jared@zeropaid.com

Finally somebody in Congress has realized that there is a real problem when govt employees install P2P software on the same PC that contains sensitive information.

U.S. Representative Edolphus “Ed” Towns (D-NY), Chairman of the House Oversight and Government Reform Committee, has introduced the “Secure Federal File Sharing Act.” The bill will restrict the use P2P software by federal employees and contractors, requiring official approval before its use.

It was a number of high profile data breaches that led to the bill’s introduction.

Last year it was the financial information belonging to Supreme Court Justice Stephen Breyer along with the names, dates of birth, and Social Security numbers of 2,000 others.

Back in March it was the entire blueprints, engineering upgrades, and avionic schematics’ of President Obama’s helicopter, “Marine One”;

More recently, it was the highly confidential “Committee on Standards Weekly Summary Report” that detailed ongoing ethics panel investigations of some 33 lawmakers and several staff members.

“We can no longer ignore the threat to sensitive government information that insecure peer-to-peer networks pose,” said Chairman Towns. “Voluntary self-regulations have failed so now is the time for Congress to act.”

House rules already require that “employees must protect the confidentiality of sensitive information from disclosure to unauthorized individuals or groups,” but many apparently don’t realize this can happen when using improperly configured Direct Connect P2P programs.

It occurs as the House is still considering the Informed P2P User Act (HR 1319) that would “prevent the inadvertent disclosure of information on a computer through the use of certain `peer-to-peer’ file sharing software without first providing notice and obtaining consent from the owner or authorized user of the computer.”

That bill requires file-sharing programs to provide “clear and conspicuous notice of which files are to be made available to another computer.” It would also make it illegal to prevent the authorized user of a computer to block the installation of a P2P file-sharing program, disable or remove the program.

“The time has come to put the proper file sharing restrictions in place. I believe my legislation will help prevent these types of inadvertent security breaches from occurring in the future, and I look forward to working with my colleagues to pass this essential legislation,” added Chairman Towns.

I can only say that it’s about darn time.

The problem has never been P2P, it’s been a clear case of operator error.

Stay tuned.

jared@zeropaid.com

Swedish BitTorrent tracker site The Pirate Bay has taken content distribution to the next level with the introduction of site-wide magnet links that let you download a torrent directly into your BitTorrent client, instead of your browser.

The main purpose of magnet links is to give people an alternative way of getting the torrent file should websites hosting torrents like The Pirate Bay go down, and already supported by most BitTorrent clients like uTorrent and Vuze, which get all relevant data via the Distributed Hash Table (DHT) network.

They identify a file not by location or name, but by the content’s hash value.

“This is what we consider to be the future,” it says on its blog. “Faster and more stability for the users because there is no central point to rely upon.”

With this introduction The Pirate Bay now feels that trackers are no longer needed and will, in fact, no longer run one.

“Now that the decentralized system for finding peers is so well developed, TPB has decided that there is no need to run a tracker anymore, so it will remain down! It’s the end of an era, but the era is no longer up2date. We have put a server in a museum already, and now the tracking can be put there as well,” it adds.

The real benefit to the BitTorrent community is that it means torrents will no longer be subject to the whims of a single server for storage and distribution, and therefore safe from copyright holder groups looking to down tracker sites in their fight against illegal file-sharing.

The game of whac-a-mole continues.

Stay tuned.

jared@zeropaid.com

But is the issue alone one of resolution and visual quality?  If there had been a pristine version of Star Trek available at the same time, or even prior to its official theatrical release, would that have appreciably decreased box office revenue?  I spoke with someone affiliated with the X-Men Origins: Wolverine movie that “suffered” from the leak of an almost finished work print just prior to theatrical release and he was adamant that the leak had had a profoundly negative impact on the film’s box office (although personally I would ascribe that more to negative word of mouth about a pretty crappy movie than to the specific effects of piracy).

Nonetheless, there are cases where the theatrical release of a film has to “compete with free” in the form of a high quality, even high definition copy of the film being available online.  Numerous foreign films are released into theaters, and even as DVD’s or Blu -Rays around the world prior to their official appearance in the U.S.  Are these films, admittedly not on the same scale expectations wise from blockbusters like Star Trek or Wolverine, yet still able to perform reasonably well financially?  Are they able to attract movie-goers when those same consumers could so easily obtain a copy of the film via Bittorrent, Usenet or Direct Download, even at full 1080p resolution?

This past Friday saw the U.S. release of the film Pirate Radio, also known as The Boat That Rocked when it first came out in its native Great Britain earlier in the year.  During the seven month delay in its arrival on these shores both DVD and Blu -Ray versions of the film came out in non-American markets, ensuring that even U.S. viewers would have access via the Internet to copies.  In fact, a cam version debuted on Piratebay soon after theatrical release, with DVD and Blu-Ray rips appearing in mid-August, eminently available to anybody around the world with an Internet connection.

Given all these “free” alternatives, how did Pirate Radio do in its first weekend in the U.S. market?  While its gross intake was relatively modest, at just under $3 million for an 11th place finish, more importantly, Pirate Radio did very well on a per-theater average, taking in $3,293 per theater, which actually puts it in third place among films in wide-release for the weekend.  While it is impossible to know with any real certainty what impact downloads of the DVD or Blu -Ray rips may have had on Pirate Radio’s box office, the film appears to have done pretty well, especially considering its foreign origin, subject matter and rather middling reviews (57% on the Rotten Tomato scale).

Somehow the forces behind the movie found a way to “compete with free” and position it to be profitable in the U.S., even before its inevitable DVD andBlu -Ray releases here.  Maybe the existence of free versions on the Internet did less to drive down demand for the film, but instead fostered awareness and interest in the movie above and beyond what the producers were able to do via PR and advertising.

Perhaps hinting a sign of things to come, Verizon Communications will reportedly begin forwarding notices of copyright infringement to its customers at the behest of both the MPAA and RIAA.

The moves is part of an unspecified “test” that will begin this Thursday, the test probably meaning to determine whether the benefits of helping protect copyrighted – and vis a vis possible future content distribution partnerships – outweigh the costs of angering customers.

“We recognize the importance of copyright and the need to enforce those copyrights,” a Verizon spokesman told CNet. “Without that enforcement, intellectual property won’t be generated at all. At the same time, it’s important for our customers to be assured that they won’t have their privacy rights trampled.”

The letters will be of the standard fare, warning customers they downloaded copyrighted material illegally which they must delete, and to refrain from the practice in the future.

It’s an about face for Verizon who once fought the RIAA all the way to the Supreme Court to protect the privacy and free speech of its customers.

Verizon has apparently decided to keep quiet about its deal with the MPAA, but an NBC Universal rep was more than happy to comment.

“We are happy to be working with the ISP community to raise awareness about inappropriate online activity,” it told CNet. “The notice from NBCU that accompanies the ISP’s letter includes a link through which consumers can learn about legitimate content online, and provides a number to call if consumers feel they have been contacted in error. We note, however, that virtually no users have contested the accuracy of the notices.”

So why the new partnerships?

I believe it’s simply looking to create and protect a new revenue stream as more and more people turn to the Internet for entertainment. The Internet is the future of content distribution and ISPs like Verizon are eager to partner with copyright holder groups like the RIAA and MPAA, who are also eager in kind, to create secure content delivery services they can monetize.

It’s a sure sign of things to come, and is precisely why network neutrality is so important, especially considering the lack of regional competition. As ISPs transition from providing a dumb “series of tubes” to services with competing online interests, there will be a real incentive for it block applications and services in order to protect its economic interests.

Stay tuned.

jared@zeropaid.com

Back in early August, Sweden’s Stockholm District Court ordered Black Internet, The Pirate Bay’s largest bandwidth provider, to cut off service to the site until it exhausts the remaining appeals of its conviction for copyright infringement or face fines of 500,000 kronor ($70,630 USD).

“There are laws and rules in society and they should be followed,” said its CEO, Victor Moller, at the time. “What we think about this and how we shall act in the future remains undecided.”

The move resulted in a mere 3hrs of partial downtime as it switched ISPs, a trivial result that the site’s 4 co-founders later openly mocked in a blog posting.

Some oven took it upon themselves to sabotage Black Internet’s network infrastructure in retaliation.

Several weeks later the ISP had a change of heart, deciding to appeal the case after realizing it was headed down a slippery slope of censorship, and being forced to determine what sites customers can or cannot visit.

Möller added: “This is a very important question for all ISPs and we can’t just lay down. The district court made a very controversial decision. The entire ISP business needs some clarity in this matter. A door has been opened and we don’t know what’s behind it.”

He even said that that he planned to join forces with other ISPs who also think it’s wrong for the court to order ISPs to block file-sharing sites like the Pirate Bay.

Now the Court of Appeal has agreed to take up the important case.

“This is such a fundamentally important issue as far as operators’ (ISP) responsibility goes,” Möller told SR.se (Google Translation). “It’s not important whether we can deliver bandwidth to The Pirate Bay or not – it is about the principle.”

Stay tuned.

jared@zeropaid.com

[Hat Tip]

Starting today, UK-based mobile phone provider 3 will begin throttling network P2P traffic during peak hours, which a spokesman says is generally between 6pm and midnight.

“In busy areas, at busy times customers using mobile broadband can experience a slower service,” it told ZDNet UK. “We’re taking steps that improve the web-browsing, email and streaming experience on our network by making sure that the real-time experience gets the priority it deserves.”

“In order to improve the service for the majority of our customers we are actively managing the amount of bandwidth made available for P2P file sharing at peak times in busy areas.”

It had also originally planned to limit the number of simultaneous video streaming, but apparently decided to back off that proposal, and limit their new traffic management solution to P2P.

The plan makes 3 the only mobile phone provider to throttle P2P in the UK, though its four main rivals – O2, Vodafone, Orange and T-Mobile – refuse to say whether they intend to in the future.

Stay tuned.

jared@zeropaid.com