Web Broadcasters Continue Talks
Web broadcasters continued negotiations with the music industry over higher online music royalties even after the July 15 deadline to put the rates into place. Many online radio broadcasters have complained that the new royalty rates are too high and would force some of them to go off the air. Previously, online radio stations paid a percentage of their revenue as a royalty. Under the new rules, larger Webcasters, such as Yahoo! Music and AOL Music, will pay rates that start at .08 cents a song, per listener and per play; smaller Webcasters for now would continue to pay a percentage of revenue. As the royalty increase took effect over the weekend, many Internet broadcasters continued to play music. Some said they have begun to pay the higher rates. Yahoo was among the broadcasters that said they would start paying the higher rates now while they continued negotiations with SoundExchange, a body that represents artists and music labels. AOL said it had already paid the higher rates for May; June and July rates are still pending. SoundExchange doesn't appear to be attempting to collect the higher royalties yet. It has reached out to continue talks with small Webcasters. The Digital Music Association, which represents many larger Webcasters, said it was trying to set up talks for later this week.

Microsoft copy protection cracked again
Microsoft is once again on the defensive against hackers after the launch of a new program that gives average PC users tools to unlock copy-protected digital music and movies. The latest version of the FairUse4M program, which can crack Microsoft's digital rights management system for Windows Media audio and video files, was published online late Friday. In the past year, Microsoft plugged holes exploited by two earlier versions of the program and filed a federal lawsuit against its anonymous authors. Microsoft dropped the lawsuit after failing to identify them. The third version of FairUse4M has a simple drag-and-drop interface. PC users can turn the protected music files they bought online — either a la carte or as part of a subscription service like Napster — and turn them into DRM-free tunes that can be copied and shared at will, or turned into MP3 files that can play on any type of digital music player. "We knew at the start that no digital rights management technology is going to be impervious to circumvention," said Jonathan Usher, a director in Microsoft's consumer media technology group, in a phone interview. Usher said Microsoft employs a full-time team to combat such breaches, and that the Windows Media DRM system was designed to be quickly modified to shut down this type of attack. He did not say how many songs have been stripped of copy protection, or how long it will take for Microsoft to combat the hack again. But the music industry is aware of the nature of Microsoft's technology, he said, and added that he does not expect record labels to lose patience with the process.

SunRocket Halts Service
Internet phone service provider SunRocket, which had as many as 200,000 customers nationwide, has ceased operations without warning. The closely held company's Web site was still up, but SunRocket's customer service line offered callers a brief recording: "We are no longer taking customer service or sales calls. Goodbye." Some people identifying themselves as SunRocket customers on Internet discussion boards were complaining about outages Monday, while others said their service was working. The company has been known to have periodic outages in the past. A message left at SunRocket's Vienna, Va., headquarters was not returned. SunRocket, which started in 1994, was one of the first companies to offer Internet phone technology, and reported about 200,000 customers as of April, second only to Vonage as a stand-alone VoIP provider. The move by SunRocket was reported earlier by The New York Times. It was confirmed by Martin Pinchinson, a spokesman for Sherwood Partners, who said in an email that the financial consulting company was handling SunRocket's liquidation. SunRocket laid off almost 200 employees at its Springfield, Mo., call center Monday, The Springfield News-Leader reported. The company also laid off what its chief marketing officer called "a significant number" of employees July 3, five days after the firings of two top executives, Chief Technology Officer Mark Fedor and Chief Information Officer Robert Kramer. The company's chief financial officer, David Samuels, resigned July 2.

T-Mobile forced to connect Truphone numbers
T-Mobile will be forced to connect calls to Truphone numbers, by court injunction granted yesterday. However, the spat between the companies is far from over as T-Mobile will be paying a rate which makes Truphone's business unsustainable. T-Mobile has been refusing to connect calls made to Truphone numbers starting 079788 as Truphone has asked for a termination fee based on the calls being routed to a mobile phone, even if the call is actually sent over its VoIP network. If the Truphone user isn't connected to VoIP, that reflects the real cost of the call, as it is forwarded to the mobile network. But if the user is connected to VoIP, there is no termination fee to pay and Truphone takes the fee as profit. T-Mobile claims that Truphone is operating as a fixed-line provider, so it will only pay a fixed-line termination fee, which would see Truphone lose money when calls are forwarded over the mobile networks. The injunction forces T-Mobile to start connecting calls, but only at the reduced rate - leaving Truphone out of pocket until it can force (or convince) T-Mobile to accept its higher rate. It'll be filing papers on Friday to start the process, claiming that T-Mobile is abusing its monopoly position regarding access to its customers. Ofcom, the telecommunications regulator, is trying to avoid getting involved in the spat claiming that it's a commercial dispute. According to Ofcom, only BT is obliged to connect to every phone number. Other operators are at liberty to pick and choose to whom they route calls - though that's rarely happened. Proving abuse of monopoly won't be easy for Truphone, but losing this case would fatally undermine its business model. Other operators will be watching with interest to see how the arguments are played out, and the eventual ruling, which will have an enormous impact on telecommunications services in the UK whatever the courts decide.

Strict copyright laws do not always benefit authors
A stricter, more author-friendly copyright regime does not guarantee higher pay for authors, according to a new study which surveyed the earnings of 25,000 writers. In fact, it found that copyright law could exacerbate risk for authors. Writers in Germany earned less than those in the UK, despite the fact the country's copyright regime is more beneficial to authors, according to a study by the Centre for Intellectual Property Policy and Management at Bournemouth Law School. "There are some real surprises. A legal framework that is ostensibly more author friendly, Germany, does not deliver wealthier authors," said Martin Kretschmer, joint director of the centre. In 2004 to 2005, UK authors earned around 50% more than their German counterparts. UK authors earned an average of £12,330, while the Germans earned an average of £8,280. The survey was based on professional authors, meaning those who allocate more than half of their time to writing. Pay for authors is very far from consistent, though, because much of the money paid overall is earned by a small number of extremely successful writers. That pay imbalance is more pronounced in the UK than in Germany, the study found. It revealed that the top 10% of authors earn 60% of all the money earned in the UK, but just 41% of that in Germany. The bottom 10% in the UK earn just eight% of the money paid, but they earn 12% in Germany. "This may reflect a more regulated environment for copyright contracts in Germany. It may also reflect the globalised nature of English language markets," said Kretschmer. The research was conducted by the centre on behalf of the Authors' Licensing and Collecting Society (ALCS), the UK's collection and authors' rights agency.

Film Ads Get Watched, Not Skipped
Good news for film studios: Even television viewers with the ability to skip commercials are watching ads for movies. That's one conclusion from TiVo, which on Monday made results of its StopWatch commercial ratings service public for the first time since launching it six months ago. StopWatch is a Nielsen-like product that measures audiences for commercials on a second-by-second basis, so that clients may determine the number of people in DVR (digital video recorder) households that are watching ads live or recorded or not at all, preferring to fast-forward them entirely or in part. The service also counts households where commercials are rewound and viewed multiple times. In some cases, according to the data, commercials score higher ratings than do the shows they are on. That can be because TiVo counts each commercial viewing separately, even if it's viewed over and over in the same household, and because Nielsen ratings for shows are based on an average, which could be skewed lower if viewership drops off. On March 27, for example, DreamWorks scored a 21.1 rating for its "Disturbia" commercial that aired during Fox drama "House," which scored only a 20.2 rating. Movie ads in general scored well. The top commercials in late March through late April viewed by TiVo users who were watching shows -- and commercials -- that had been recorded were "Disturbia" (No. 1), Universal's "Georgia Rule" (No. 8), Sony's "Perfect Stranger" (No. 9) and "Spider-Man 3" (No. 10). The following period's top 10 included "Surf's Up," "Knocked Up," "Fantastic Four: Rise of the Silver Surfer" and "License to Wed." TiVo uses a panel consisting of random samples from 20,000 homes. TiVo has 4.3 million subscribers.

Israeli Funding Heats Up
Israeli startups raised $842 million in the first six months of 2007, the highest level in five years. In its quarterly report issued Monday, the Israel Venture Capital Research Center said that the figure represents a 10% increase over last year. “Figures in the first half of the year indicate that 2007 may set a five-year record with high tech investments reaching $1.7 billion,” said Zeev Holtzman, chairman of IVC Research and of Giza Venture Capital. He added that despite the global competition in technology-focused investments, mainly from Asian countries, Israeli high tech companies continue to appeal to foreign investors. The most popular sectors in the first half of the year were communications, life sciences, software, and Internet, which represented 26%, 20%, 14%, and 13% of investments, respectively. Israeli venture funds invested $364 million in local startups during the first half of the year, a 10% increase over the corresponding period in 2006. The Israeli venture fund share was 44%, with the remainder of the funds coming from foreign venture funds and other Israeli investors. In the second quarter of the year 118 startups raised $436 million from local and foreign venture investors. The IVC report noted that the average financing round was $3.7 million, up from the previous quarter.

China begins clampdown on Internet gaming
Online gaming addicts in China this week find themselves the target of an offensive by the authorities to wean them off their habit. The China National Children's Centre estimated that 13% of the country's Internet users under the age of 18 are web junkies. As many as 2.3 million minors may be affected by this disturbing affliction, it said. Now, eight Chinese ministries including the propaganda ministry, have banded together to put the squeeze on gaming, laying down strict guidelines as to how much time web-heads can stay online. Meanwhile, gaming junkies are being sent to eight government-funded "rehabilitation camps" being set up around the country, in a response to claims that over wibbling can lead to criminal behaviour. Most inmates are sent involuntarily to the camps by parents worried about their boggle-eyed, sullen and occasionally-twitching offspring. No new Internet cafes may be set up in the country before the end of the year, while those already open have to install what local media calls "anti-addiction software" on connected computers. The authorities believe that any more than three hours gaming per day can begin to frazzle your brain. Five hours or more is positively unhealthy. Internet cafes not limiting their gamers to within the guidelines will be shut down. There are even reports that games sold in the country will have to be tweaked to shut themselves down when they are played too much.

Melting DVD players recalled in Japan
Almost half a million DVD players manufactured in China have been recalled in Japan after reports that some had emitted thick smoke and begun to melt. Most of the products at risk were sold under the Axion brand. The built-in LCD screens could become deformed by overheating, as well as harmful smoke, there was a risk of fire. Almost 550 units have malfunctioned so far, and initial investigations showed that a short circuit caused by a soldering problem in the LCD display panel's backlight module was to blame. The Axion brand name seems to be associated with Shanghai Far Year Technology, a subsidiary of Taiwan-headquartered Action Electronics Co. The products were manufactured in China, estimated that 460,000 units are affected by the recall notice. Japanese press reports estimated that the value of the products could be as high as $114m.

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