Bringing search ads to file sharers

What would happen if you introduced one of the most lucrative business models on the Internet -- search-related advertising -- to the file-sharing networks that power much of the Net's underground economy? We're about to find out. Today, Brand Asset Digital launches a public version of P2Pwords, a service that lets advertisers deliver keyword-triggered pitches through peer-to-peer networks.

As with Google's AdWords, P2Pwords enables advertisers to target promotional messages to users based on what they're looking for. Brand Asset Digital's task is trickier than Google's because it inserts those messages into the search results delivered by other companies' programs (e.g., LimeWire). It does so with techniques similar to the ones anti-piracy firms use to prevent people from downloading bootlegged songs, movies and games. Yet AdWords and P2Pwords share a simple but powerful concept: pitches are more likely to work if they're shown to people hunting for something like the product being advertised. The approach has been so effective for Google, AdWords has practically become a license to print money.

This conceptual similiarity won't necessarily vault Brand Asset Digital co-founders Tim Hogan and Joey Patuleia into Larry Page and Sergey Brin's tax bracket. Many advertisers have shunned the most popular file-sharing networks because, let's face it, people use them mainly to download bootlegged songs, videos and games. Also, Brand Asset Digital isn't trying to reach users of BitTorrent, one of the most popular file-sharing programs. Nevertheless, the opportunity presented by P2Pwords is so large, it may be hard for advertisers to resist -- particularly if they're promoting something designed for younger users. Just compare Web searches to the activity on file-sharing networks. According to comScore, Web search engines answer queries about 400 million times per day. Those searches generate more than $20 billion a year in advertising.  But by data security firm Tiversa's count, file-sharers search for content on p2p networks about 1.5 billion times daily. That's almost four times the volume of Web searches.

Patuleia argues that no matter how you feel about what people are doing on p2p networks, it makes no sense to ignore such an enormous, content-hungry audience.

Another file-sharer faces costly day of reckoning

A federal judge has ordered a Kazaa user in Arizona, Jeffrey Howell, to pay the major record companies $40,850 for infringing copyrights on 54 songs. It's not a sum of Jammie Thomas proportions, but it's still gotta hurt.

Unlike Thomas, Howell never got the chance to present his case to a jury. Instead, U.S. District Judge Neil V. Wake declared victory for the labels after experts for RIAA reported that Howell had erased his hard drive. Howell, who admitted having Kazaa on his PC (to download porn, he said), blamed the software for autonomously placing songs into his shared folder without his knowledge. He told the judge that he'd wiped his drive to stop Kazaa before it could infringe again, but Wake concluded that Howell's actions weren't quite so innocent.

The award award represents the smallest amount provided by statute ($750 per song, plus $350 for the cost of filing suit), compared to the $9,250 per track that a Minnesota jury assessed Thomas. Both amounts pale next to the $30,000 that U.S. District Judge Florence-Marie Cooper ordered TorrentSpy to pay in another case that ended after the defendant was found to have destroyed crucial evidence.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

FCC slams Comcast for blocking Internet traffic, vows to police ISPs

A sharply divided Federal Communications Commission this morning slammed Comcast for blocking Internet access to some customers. It accused the cable company of failing to tell its subscribers about the practice, lying when confronted by regulators and trying to cripple online video sites that compete with its on-demand service.

Despite the allegations, the FCC decided not to fine Comcast. But the 3-2 FCC vote sets a new precedent in the volatile battle over Internet traffic flow, known as net neutrality.

In concluding that Comcast violated principles that the FCC put in place three years ago to guarantee access to any lawful online applications, the commission fired a warning shot to all Internet service providers that it would not tolerate discriminatory behavior. FCC Chairman Kevin J. Martin (pictured at right above), a Republican, sided with the two Democratic commissioners in rebuking Comcast, which argued it was using "reasonable network management" to try to prevent congestion caused by peer-to-peer users sharing large video files.

Martin said the FCC vote would "send a message to the industry that bad actors will end up being punished." He said:   

By applying the framework that we are adopting today, the commission will remain vigilant in protecting consumers' access to content on the Internet. Subscribers should be able to go where they want, when they want, and generally use the Internet in any legal means. When providers engage in practices truly designed to manage congestion, not cripple a potential competitive threat, they should not be afraid to disclose their practices to consumers.

The FCC gave Comcast 30 days to ...

Saving 'The Dark Knight' from online pirates

Building buzz for "The Dark Knight" was easy. The tough part for Warner Bros. was keeping the film off the Internet before it was released in theaters.

Reporter Dawn Chmielewski takes you behind an unprecedented anti-piracy effort by Warner Bros. to keep the latest Batman film from being bootlegged, which the studio feared would have cut into box-office sales. As she notes, "The success of an anti-piracy campaign is measured in the number of hours it buys before the digital dam breaks." To that end, Warner Bros. employed a strategy that included staggered delivery of film reels, spot checks of theaters and even distribution of night-vision goggles to keep would-be film pirates at bay.

It seems to have worked. She writes:

Warner Bros. executives said the extra vigilance paid off, helping to prevent camcorded copies of the reported $180-million film from reaching Internet file-sharing sites for about 38 hours. Although that doesn't sound like much progress, it was enough time to keep bootleg DVDs off the streets as the film racked up a record-breaking $158.4 million on opening weekend. The movie has now taken in more than $300 million.

Read the full story for more details about the effort and to learn how "The Hulk" provided inspiration for the bootleg-fighting campaign.

-- Chris Gaither

Photo: Heath Ledger as the Joker in "The Dark Knight." Credit: Warner Bros.

Shawn Fanning sells third brainchild to EA

( OOPS: This post previously said TechCrunch reported the deal two weeks ago. It was actually almost a month ago.)

Shawn Fanning, best known as the founder of pioneering file-sharing service Napster, has finally earned some money.

Electronic Arts said tonight it had acquired his latest company, ThreeSF, and its video-game service Rupture. A person familiar with the deal said EA had paid roughly $30 million.

After introducing tens of millions of users to the awesome power of peer-to-peer networking -- or at least to all the free music they could eat -- Napster went bankrupt in a blaze of glory. 

Fanning never had voting power over that creation, and he started over with SnoCap, which tried to keep the best elements of Napster but added legal copyright controls. SnoCap faltered as the unauthorized peer-to-peer outfits inspired by Napster continue to grow. The company was sold in April to music-oriented social networking site iMeem for not very much money.

By then, Fanning had moved on to ThreeSF's Rupture, a San Francisco company that allows computer-game players to automatically spread word of their online accomplishments.

When the widely read blog TechCrunch wrote a month ago that gaming giant EA had bought Rupture for a reported $30 million, it wasn't true. But it is now.

Rupture could give EA a crucial tool for becoming a force...

This should take care of that pesky piracy problem

An jury in Alexandria, Va., became the first in the country to convict someone of criminal copyright charges primarily involving online music, the Recording Industry Assn. of America said today.

The federal jury found 25-year-old Barry Gitarts, who understandably preferred such online handles as "Dextro," guilty Thursday of conspiracy to commit criminal infringement.

In order to avoid panicking many millions of garden-variety file-sharers, we should probably point out that Gitarts went quite some distance beyond grabbing a few Grateful Dead bootlegs off BitTorrent. In fact, the U.S. attorney said (download a PDF of the news release here), he was a major player in the Apocalypse Production Crew piracy ring, among other things administering a computer server that members used to upload and download hundreds of thousands of files.

Such rings are the original source of most pirated material on the Net, said U.S. Attorney Chuck Rosenberg, and are being targeted in multiple investigations by the FBI. Many other criminal copyright cases have been brought successfully, ending before trial when the defendants plead guilty.

Gitarts faces fines and up to five years in prison. At last, record executives will be able to sleep soundly, secure in the knowledge that no one will dare rip them off again.

-- Joseph Menn

White House says no to net neutrality

The intensely free-market Bush administration hasn't met too many government regulations it likes. And those are the ones already on the books. So when it comes to potential new regs -- particularly one adamantly opposed by big phone and cable TV companies -- it's a tough sale.

Commerce Secretary Carlos M. Gutierrez made it clear today that the White House wasn't buying what advocates of so-called net neutrality were selling. Speaking at the annual National Cable & Telecommunications Assn. 2008 Cable Show in New Orleans, Gutierrez said the Bush administration opposed congressional attempts to force Internet service providers to treat all content equally.

The issue has heated up again in Washington this year after allegations that Comcast blocked some customers from using the BitTorrent file-sharing technology.

With Congress considering three bills aimed at prohibiting any discriminatory behavior, Gutierrez scored points with the cable crowd by declaring the White House would have none of it.

"Broad regulations that limit the ability of operators to price or manage their networks could actually deter and delay investment and innovation," he said, according to a transcript of his speech to the show released by his office. "The result would be fewer choices and higher prices for consumers."

The position isn't surprising, but it makes crystal clear what many have thought -- net neutrality legislation probably isn't going anywhere this year.

-- Jim Puzzanghera

Puzzanghera, a staff writer, covers tech and media policy from Washington, D.C.

Study says BitTorrent blocking is widespread

The Max Planck Institute for Software Systems in Germany has released an interesting study about the extent to which Internet service providers are blocking access to popular BitTorrent file-sharing technology.

The Federal Communications Commission is investigating allegations that Comcast blocked some users from accessing the program, touching off the latest skirmish in the ongoing battle over so-called net neutrality. We recently wrote about Hollywood’s role in the debate.

The German researchers set-up an online tool with the intriguing Cold War-era name of Glasnost that allowed more than 8,000 BitTorrent users around the world to test whether their ISP was blocking their ability to share videos and other files through the program. The results are preliminary, and BitTorrent users can participate in the ongoing research here.

The study produced a cool map that...