Ads in online shows work better than ads on TV

A year’s worth of research from Simmons, a media consultancy, shows that Internet video watchers are 47 percent
more engaged by the advertising they watched than were traditional TV viewers, according to MediaPost. The same
study found that viewers were 25 percent more engaged in the content on the shows as well.
That’s excellent news for networks like NBC, which has been making aggressive moves to put its shows online (though
not through iTunes) in advertising-supported streaming and downloadable formats. The network appears more
interested in mimicking the traditional free, ad-supported model of television than it does in pushing paid downloads,
and the Simmons study may vindicate that decision (even if NBC’s strategy confuses some viewers in the process).
The study results will also provide fodder for both writers and producers in the ongoing Hollywood writers’ strike, which
has largely centered on the residuals formula for Internet-provided content. With online video proving so (potentially)
lucrative, both sides may have extra incentive to dig in their heels so as not to leave too much cash on the table for the
other side to snap up.
And all of this is happening at a time when online ad money continues to flow from the great Madison Avenue Money
Spigot. Back in November, the Internet Advertising Bureau reported that Internet ad revenue topped $5.2 billion in the
third quarter of 2007, up a full 25 percent over a year before. Combine that with consumers who actually pay attention
to ads, and you have an adman’s paradise in the making. How long will it be until the serpent of consumer
overstimulation does to the new medium what it has already done to television ads?

Ipod under NO copy right Act

Apparently, the only legal use for the iPod would be the transfer of originally authored music not under any copyright protection. Law enforcement officials in the country have publicly stated they are not currently enforcing the law regarding transfers of music from CDs.

Copying music from a CD onto Apple’s (Nasdaq: AAPL) iPod or a computer hard drive in Australia is effectively breaking the country’s copyright laws, which do not have the “fair use” clauses as in the United States and Europe, according to numerous media reports.

This would include the transfer of legally purchased music onto the iPod, which has about 100,000 users in Australia.

Still, even with so many Australian iPod users, aussies cannot purchase music from the iTunes Music Store in the United States due to requirements that the credit card used for purchasing be billed to a U.S. address. That credit card requirement bars them from the only source of music that can be put directly onto an iPod.

Music purchased from Australian online music sites, such as Telestra, which supports Windows Media Player 9 digital rights management, meet the Australian legal standard because it is being sold under the authority of the copyright holder. However, the .wma format used for that music would have to be downloaded to a computer first and then changed to an iPod-usable format, and only then could it be transferred to the iPod — a transfer that is illegal under aussie law.

<!–////–> <!–////–>

MP3 Standard

One of the benefits of owning an iPod in a region without access to online music purchases is its support for the MP3 standard. That allows music buyers to rip legally purchased CDs onto a PC or Macintosh and transfer to the mobile player for digital listening.

Apple has not said whether it is pursuing the opening of an Australian iTunes Music Store, which would make music legally available for the iPod.

Apparently, the only legal use for the iPod would be the transfer of originally authored music not under any copyright protection. Law enforcement officials in the country have publicly stated they are not currently enforcing the law regarding transfers of music from CDs.

Two Mountains to Climb

Apple now faces two challenges in its bid to maintain leadership in digital music, and they both point back to interoperability and licensing. To date, Apple has not allowed other stores access to its digital rights management (DRM) technology, FairPlay, nor have they elected to support other DRM standards on the iPod.

In a much publicized move last week, RealNetworks (Nasdaq: RNWK) released Harmony Technology, which provides a gateway to playing music purchased from non-Apple online music stores on the iPod.

Apple countered with a veiled threat of legal action under the Digital Millennium Copyright Act (DMCA) and the possibility of a software update to disable Harmony Technology from working on its iPods.

Independent Compatibility Development

RealNetworks has taken the stance that it has not violated the DMCA and issued a statement last Thursday promoting its cause.

“In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software,” the company said.

It added: “Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility. There is ample and clear precedent for this activity, for instance, the first IBM (NYSE: IBM) compatible PCs from Compaq.”

Consumers Demanding Options

Recent Gartner (NYSE: IT) research shows that regardless of the outcome of corporate battles over proprietary standards, consumers want options.

In the report, Global Music Services Face Local Laws and Expectations, G2 senior analyst and report author Michael McGuire wrote, “If a significant number of consumers expect that digital content purchased over the Internet can be shared among family members and friends without infringing copyright laws and contractual agreements, this might directly affect the success of the online business model.”

McGuire also points out in the report that while a First Sale Doctrine does exist in the United States, one does not exist for digital media. The First Sale Doctrine addresses such uses as when consumers grow tired of music and sell it to used-record stores, or public libraries allowing the public to borrow copyrighted works.

Inside Digital Media analyst Phil Leigh has appraised the worldwide market for recorded music in the neighborhood of $35 billion. Leigh said this is too big a market to ignore, as a portion of it transitions to the digital realm.

Comcast Sued Over BitTorrent Blocking – UPDATED

A California man filed suit in state court Tuesday against internet service provider Comcast, arguing that the company’s secret use of technology to limit peer-to-peer applications such as BitTorrent violates federal computer fraud laws, their user contracts and anti-fraudulent advertising statutes.Plaintiff Jon Hart, represented by the Lexington Law Group, argues that Comcast’s promises of providing internet connections that let users “Download at Crazy Fast Speeds” are false and misleading since Comcast limits downloads by transmitting “unauthorized hidden messages to the computers of customers” who use peer-to-peer file sharing software. Hart wants the court to force Comcast to stop interfering with the traffic.

He also wants the court to certify the suit as a class action and force Comcast to pay damages to himself and all other Comcast internet subscribers in California

The suit (.pdf), which also claims the BitTorrent blocking is an unfair business practice, was filed in California Superior Court in Alameda County.

Defendants have disseminated and continues to disseminate advertising, that they know or should reasonably know is false and misleading. This conduct includes, but is not limited to, promoting and advertising the fast speeds that apply to the Service without limitation, when, in fact, Defendants severely limit the speed of the Service for certain applications.

It further includes Defendant’s misrepresentations that their customers will enjoy “unfettered access” to all internet applications, when, in fact, Defendants not only fetter certain applications, but completely block them. Defendants know or reasonably should know that this advertising is false and misleading.

In the suit, Hart says he upgraded to Comcast’s Performance Plus service in September specifically to use the “blocked applications,” and that nothing in the 22-page terms of agreement with Comcast indicated that the company throttles traffic.

Though Comcast has yet to see the suit, Comcast spokesman Charlie Douglas pointed THREAT LEVEL to the company’s FAQs about its traffic shaping and issued the following statement

Comcast does not, has not, and will not block any websites or online applications, including peer-to-peer services. Our customers use the Internet for downloading and uploading files, watching movies and videos, streaming music, sharing digital photos, accessing numerous peer-to-peer sites, VOIP applications like Vonage, and thousands of other applications online.

We have a responsibility to provide all of our customers with a good Internet experience and we use the latest technologies to manage our network so that they can continue to enjoy these applications.

Comcast refuses to plainly explain what it does to control BitTorrent traffic, but independent analyses have shown that Comcast is severely throttling internet traffic that is using the popular file sharing protocol BitTorrent by sending fake “I’m finished” messages to users’ BitTorrent programs. Those fake packets are also alleged to affect users of the mainstream business application Lotus Notes. The lawsuit charges those fake packets violate the federal Computer Fraud and Abuse Act.

The BitTorrent protocol is used for sharing large files — from pirated films to open-source OSs — by having downloaders also serve as uploaders, even when they have only downloaded a portion of the file. Though almost nothing is publicly known about aggregate internet traffic, BitTorrent protocol traffic is often estimated to constitute 35% to 40% of internet traffic.

ISP discrimination against certain kinds of traffic also violates established Federal Communications Commission policies on Net Neutrality, the suit argues.

Comcast has yet to be served with the suit, according to Lexington Law Group attorney Mark Todzo. The firm is waiting to get an official copy of the suit back from the court and expects to serve Comcast later this week.

Comcast will then have 30 days to answer the complaint or seek dismissal of the suit.

The case is Hart v. Comcast.

UPDATE: Comcast was working on an answer to THREAT LEVEL’s questions when the story was posted, and their response was added as soon as the company got back to us.

Comcast Using Malicious Hacker Technique Against Own Customers, New Report Says

One of the nation’s largest telecommunications companies is using a controversial technique to cripple certain kinds of Internet traffic traveling across its networks, says a new report from the digital rigthts  group the Electronic Frontier Foundation in San Francisco.

“Comcast is essentially deploying against their own customers techniques more typically used by malicious hackers (this is doubtless how Comcast would characterize other parties that forged traffic to make it appear that it came from Comcast or its subscribers,)” write the authors of the new report. “In other words, Comcast is essentially behaving like a telephone  operator that interrupts a phone conversation, impersonating the voice of one party to tell the other that this call is over, I’m hanging up.”

The nine-page investigation was conducted by  EFF staff technologists Peter Eckersley, Seth Schoen and  senior  intellectual property attorney Fred von Lohmann.

The investigators say that their tests confirmed an earlier one conducted by the Associated Press that showed that Comcast is interfering with BitTorrent traffic. BitTorrent is a protocol  used to efficiently distribute the online transmission of large files, and some entertainment companies have partnered with its creators to distribute its content online.

Comcast has said that it doesn’t block BitTorrent, or any kind of content.

When asked about the new report, spokesman Charlie Douglas said that the company had no comment. And he directed Wired News to a past statement issued by the company that said that the company merely delays certain kinds of peer-to-peer traffic at peak congested times, rather than blocking it.

But the investigators’ report says that it is Comcast’s approach to managing the traffic that is most problematic.

The authors say that Comcast is forging Internet traffic and injecting it into its customers’ file-sharing applications’ stream of traffic to choke their transmissions.

The effect for the end user is that they may end up thinking that it is the software that they’re using that’s failing, note the report’s authors.

Comcast does tell customers that it retains the right to manage the traffic to make sure that  everything runs smoothly.

But the EFF’s investigators note that Comcast’s approach is discriminatory because it targets only certain kinds of applications  –  in this case, file-sharing applications.  This kind of targeting undermines a fundamental ethos that has so far driven the success of innovators on the Internet — an open system that requires no permission from anyone to experiment online, they say.

“Comcast’s recent moves threaten to create a situation in which innovators may need to obtain permission and assistance from an ISP in order to guarantee that their protocols will operate correctly,” write the authors. “By arbitrarily using RST packets in a manner at odds with TCP/IP standards, Comcast threatens to Balkanize the open standards that are the foundation of the Internet.”

The report may have far-reaching consequences since it presents detailed evidence of an ISP actively interfering  with its customers’ traffic in an apparently arbitrary fashion.

The report says, for example, that its tests showed “no evidence that Comcast was targeting their jamming efforts at customers based on their individual consumption of bandwidth,” and that there are  more above-board ways of managing their traffic.

Various parties may use the report to boost their cases both against Comcast, and to push forward new rules to ensure that telecommunications companies do not discriminate online.

Both the Bush administration and telecom companies have argued that there isn’t any evidence of discriminatory actions to justify such rules.

Lawmakers have re-introduced legislation on the subject this year in the Senate, and a House bill sponsored by Massachusetts Democrat Ed Markey is expected to be dropped before the end of the year. In addition, a complaint against Comcast over the issue has been lodged at the FCC, and a California consumer has launched a lawsuit against the cable company in the wake of the AP story.

“Certainly the FCC ought to thoroughly investigate this, and based on that investigation take the appropriate steps,” said Markham Erickson, executive director of the Open Internet Coalition. “It also argues for ex ante rules that prevents this from happening in the first place.”

“In some ways, the EFF’s paper raises an additional set of questions — they only looked at Comcast — what about the other ISPs, … what other communications are being blocked and dropped?” he asked.

Comcast has 12.4 million high-speed Internet subscribers.