January 3, 2006

Digital Currency: What To Do? [6:25 pm]

While the desire to be anonymous online is seen as a blow for freedom, here’s a story about what happens when anonymous cash transactions are no longer constrained by its physical bulk — a look at what the limits might be:

Gold Rush [pdf]

E-gold is a “digital currency.” Opening an account at www.e-gold.com takes only a few clicks of a mouse. Customers can use a false name if they like because no one checks. With a credit card or wire transfer, a user buys units of e-gold. Those units can then be transferred with a few more clicks to anyone else with an e-gold account. For the recipient, cashing out — changing e-gold back to regular money — is just as convenient and often just as anonymous.

E-gold appeals to “gold bugs”: people who invest in the precious metal and believe money ought to be anchored to it. E-gold boasts that its digital currency is backed by a stash of gold bars stored in London and Dubai. But e-gold also appeals to savvy online crooks who want to move money quickly and without detection. American banks and conventional cash transmitters like Western Union are legally required to monitor customers and report suspicious transactions to the government. E-gold seems to go out of its way to avoid such obligations. Its operations are in Florida, but in 2000, its principals registered the company in the lightly regulated Caribbean haven of Nevis.

Law enforcement officials worry that the little-known digital currency industry is becoming the money laundering machine of choice for cybercriminals. [...]

[...] Federal officials reluctantly confirm this loophole: E-gold and other digital currencies don’t neatly fit the definition of financial institutions covered by existing self-monitoring rules established under the Bank Secrecy Act and USA Patriot Act. “It’s not like it’s regulated by someone else; it’s not regulated,” says Mark Rasch, senior vice-president of the Internet security firm Solutionary Inc. and former head of the Justice Dept.’s computer crime unit. The Treasury Dept.’s Financial Crimes Enforcement Network (FinCEN) is studying ways to close the regulatory gap. Meanwhile, U.S. officials say e-gold and similar companies should voluntarily do more to deter crime.

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FSBO: Alternatives in Real Estate [2:12 pm]

Owners’ Web Gives Realtors Run for Money

Across the country, the National Association of Realtors and the 6 percent commission that most of its members charge to sell a house are under assault by government officials, consumer advocates, lawyers and ambitious entrepreneurs. But the most effective challenge so far emanates from a spare bedroom in the modest home here of Christie Miller.

Ms. Miller, 38, a former social worker who favors fuzzy slippers, and her cousin, Mary Clare Murphy, 51, operate what real estate professionals believe to be the largest for-sale-by-owner Web site in the country.

They have turned Madison, a city of 208,000 known for its liberal politics, into one of the most active for-sale-by-owner markets in the country. And their success suggests that, in challenging the Realtor association’s dominance of home sales, they may have hit on a winning formula that has eluded many other upstarts. Their site, FsboMadison.com (pronounced FIZZ-boh) holds a nearly 20 percent share of the Dane County market for residential real estate listings.

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OT: Bush == Polk? [1:14 pm]

An entertaining, and warning, little historical jaunt: Presidential History Lesson on the Value of Building Consensus [pdf]

Polk may be the only predecessor who matched Bush’s determination to drive massive change on a minute margin of victory. Polk won by fewer than 38,000 votes of 2.7 million cast. Over four tumultuous years, he pursued an ambitious, highly partisan agenda that offered little to those who had voted against him. Sound familiar?

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Gonna Be A Long Year, I’m Afraid [1:07 pm]

This Slate article, Tinker, Tailor, Miner, Spy - Why the NSA’s snooping is unprecedented in scale and scope, suggests John Poindexter “gets it” more that the current administration - *sigh*

In January, Congress plans to hold hearings into the legality of the Bush administration’s eavesdropping program. Lawmakers will want to know why, if the NSA cannot do its job while remaining within the legal bounds established in the 1970s, the Bush administration did not address that problem in the context of the Patriot Act. Congress might also ask why in the rush to begin data-mining, the NSA has abandoned the privacy controls planned for the TIA. As Adm. Poindexter himself noted in his resignation letter from the program in 2003, “it would be no good to solve the security problem and give up the privacy and civil liberties that make our country great.”

Related: does it work — The NSA’s Overt Problem [pdf]

Bruce Hoffman, a terrorism expert at the Rand Corp., notes that most of the major breakthroughs against al Qaeda-linked plots in recent years have shown that the terrorists, wary of phone monitoring, are communicating through couriers on the ground and coordinating plots on the Web. When Muhammad Naeem Noor Khan, a protege of Khalid Sheikh Mohammed, was arrested in July 2004, his laptop contained plans for simultaneous attacks on London and New York that were to have been transmitted electronically. Today, adds Hoffman, the most sophisticated terrorists have learned to evade the NSA altogether. “They keep their messages in a draft file on a Web site, then give someone the password and user name to get in. The NSA can’t track that, because it’s stationary.”

Bush administration officials are now casting the war on terrorism as a fight against al Qaeda’s plans to reestablish a “caliphate” across the Islamic world, referring to the Muslim empire of centuries past. Some experts scoff at such Islamist ambitions. But to the extent the dreams of a caliphate are being discussed by extremist Muslim groups, this is occurring mainly on Internet Web sites, experts say. “The Internet is the key issue,” Gilles Kepel, a prominent Arabist and a professor at the Institut d’Etudes Politiques in Paris, told the New Yorker in 2004. “It allows the propagation of a universal norm, with an Internet sharia and fatwa system.”

[...] It may be possible for the NSA to conduct its massive surveillance legally, but solving the civil liberties issue is only half the agency’s problem. Robert Holliday, a U.S. Customs expert who developed terrorist-identifying software that’s now widely used, says the bad guys still have the edge when it comes to communicating in anonymity and secrecy. “I’m not going to worry about Big Brother,” says Holliday. “There’s just too much data to track out there.” And America needs to find a better way to do it.

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LATimes on Movie Ticket Trends [12:03 pm]

‘05 Box-Office Slump May Be a Blip in the Big Picture [pdf] (also, Moviegoers speak up [pdf] and some fun statistics here: A history of ups and downs [pdf]

Here’s a look at why the much-hyped box-office drought won’t cause much of an economic ripple — at least not yet.

A plot of the ticket sales statistics versus real average ticket prices (using average CPI as a deflator) shows an unsurprising correlation, though.

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Emerging Media Model? [8:45 am]

Is the “Lost” craze a harbinger of what’s to come? Or just the current hot thing? And, what is the role of continuity in keeping an audience involved with a demanding storyline (versus episodic stories)? calendarlive.com: ‘Lost’ is easy to find [pdf]

This season, “Lost” is the fourth-ranked show in total viewers and the all-important 18- to 49-year-old demographic. But “Lost” has become something more, a model for a new media age, one that has far-reaching financial implications for artists and producers as new technology almost demands that they produce original content for Internet sites and blogs, DVDs, podcasts and books.

What’s happening with “Lost” is also a harbinger of the changing nature of TV watching itself, dividing its followers into two groups: the loyal audience that tunes in every week and the fans who devour every bit of information made available to them on the Internet, books and magazines.

“The show is the mother ship, but I think with all the new emerging technology, what we’ve discovered is that the world of ‘Lost’ is not basically circumscribed by the actual show itself,” executive producer Carlton Cuse said.

Other networks and producers are following “Lost” closely to see if this multimedia franchising model can work for them. As technology allows more viewers to tune in how and when they want — most noticeably, commercial free — networks are looking for new ways to distribute their shows as well as spark buzz about them. To that end, network marketers are working closer than ever with the writers and producers to generate campaigns that blend content with marketing strategies.

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StreamCast Readying To Throw In The Towel [8:34 am]

The article suggests that the music industry may have learned from their Napster “win” that stamping on mercury doesn’t get you very far, but it’s still an open question as to whether any of the migration path of these networks to business models that satisfy the music rights-holders will draw enough people off the darknets: File-Sharing Barons Face Day of Reckoning [pdf]

Over the last four months, several Napster heirs have shut down and others are contemplating what they once couldn’t abide — doing business by the entertainment industry’s rules to survive.

“We can take a look at another four years of legal battles and spending millions of dollars on both sides, (but) is that where I want to spend the next four years of my life?” said [Morpheus' Michael] Weiss, 53. “It’s better to focus the company’s energy on creating new technologies.”

StreamCast hasn’t shut down Morpheus, but the company recently approached the entertainment industry to pursue talks about settling a lawsuit against the company, according to court documents.

Wayne Rosso, who built a reputation criticizing the recording industry as head of Grokster Ltd., is also pursuing a decidedly more cordial relationship with music labels as he prepares to launch a copyright-friendly file-sharing service.

“It’s pretty clear who won,” Rosso said. “We always knew that this free trading of all this copyright material couldn’t go on. It just wouldn’t work.”

[...] Still, the amount of file-sharing has continued to increase since the days of Napster, and that’s not likely to change much, said Eric Garland, chief executive of BigChampagne LLC, which tracks activity on file-sharing networks.

“These Web sites and these businesses were shut down but it doesn’t shut down the software, it doesn’t shut down the (file-sharing) networks,” Garland said. “The open-source community will continue to build new, uncensored versions.”

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Music Sales At Retail Fall in 2005 [8:25 am]

No long-running album sales blamed, but there are clear indications that the customer wants something more than what’s being offered: Music biz blues: hot new releases burn out [pdf]

Compared with 2004 — which, in a tic of the calendar, had a 53-week retail year — the market for CDs plunged more than 10%. Based on a 52-week year, sales were down nearly 8%.

This crash — the worst since 2002, which witnessed a plummet of 10.7% — was all the more dizzying for retailers because the business appeared to be rebounding in 2004, when sales rose a modest but encouraging 3.8%.

Sadly, the writing was on the wall throughout the fourth quarter this year. In what is traditionally the critical period for stores, a parade of new titles experienced immediate and sharp sales spikes. Album sales were buoyed at year’s end by some long-running titles, greatest-hits compilations and a new entry in the perennially best-selling “Now” series.

In the entire fourth quarter of 2005, only one album enjoyed two consecutive weeks at No. 1 on the Billboard 200: Eminem’s hits collection “Curtain Call.”

[...] In an interesting measure of consumer fickleness, both “The Emancipation of Mimi” and “The Massacre” received big chart bumps when — taking a page from Usher’s long-running hit “Confessions” — they were re-released in enhanced editions containing fresh music and video content.

[...] [I]n another dispiriting reminder that the music game is being played differently these days, one of the biggest year-end titles wasn’t visible on the charts because it is being sold exclusively by one retailer.

Mass merchant Wal-Mart claimed initial sales of a half-million units for country superstar

Garth Brooks’ “Limited Series,” a six-CD boxed set that went on sale in late November. Because of the proprietary nature of the collection, it does not appear on Billboard’s weekly rundown.

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