Week in review: Sinking the pirates

A group of music publishers has filed a lawsuit against Bertelsmann for at least $17 billion, alleging that the German media company's investment in Napster led to massive abuse of publishers' copyrighted works. The complaint charges that Bertelsmann's strategy to fund Napster extended the life of the file-swapping service, leading to greater numbers of copyrighted works being shared illegally.

The complaint alleges that Bertelsmann "was fully aware of the critical role its funding played in facilitating infringement by Napster users" and therefore "systematically participated in, facilitated, materially contributed to and encouraged" illegal music file swapping. The music publishers also charge that Bertelsmann had the ability to halt Napster services but instead kept it "operating in order to preserve Napster's user base for Bertelsmann's own commercial advantage."

The University of Wyoming is using the digital equivalent of a postal censor to sort through virtually all file-swapping traffic on its network, quietly noting every trade. The technology isn't yet blocking individual file trades, but it's likely to open the next front in the online piracy wars.

With the capacity to look inside every bit of data that flows over a network--whether it's part of a song being illegally traded or a personal e-mail--this new generation of antipiracy technology is sure to prove controversial. The next step for the technology is actually blocking songs and other content. In theory, songs could be blocked as the data passes the network monitor and is compared against this database of fingerprints.

In an odd twist in its fight against Hollywood studios, start-up 321 Studios is offering a $10,000 reward for information about people who use its products to illegally copy DVDs. The major studios sued 321 last December, saying the company promotes copyright infringement by offering products that allow people to copy DVDs.

321 says it merely provides a product that will allow people to make backups of DVDs they already own, a practice that has been protected under a legal doctrine known as fair use. The company said it's committed to preventing illegal copying and uses technology that prevents consumers from duplicating copies of DVDs made with its software.

Microsoft on the move
The folks in Redmond were busy this week mapping new territories for expansion. Next week the company plans to begin testing a radically new instant messaging and communications product called Threedegrees that creates a peer-to-peer social group in which people can chat, share photos, listen to music and meet friends.

The software allows people to create groups, in which up to 10 people can participate in the same instant messaging session. Group members also can share animation and photos or listen to music. The new software comes out of the Microsoft's 18-month-old NetGen division, a team of 12 recent college graduates that has been trying to develop products aimed at the "Net generation," or young people between the ages of 13 and 24.

Tammy Savage, the 33-year-old general manager of the NetGen division, leads the task of creating a new software division that would develop software for the group of teenagers and young adults that grew up using the Internet. CNET News.com spoke with Savage about the NetGen group and the development of Threedegrees.

In a different direction, Microsoft is acquiring some assets of Connectix, including an unreleased server program and software that permits Windows to run on a Macintosh. Best known for its Virtual PC software, Connectix has been trying to recast itself as a maker of server virtualization software, which lets a single machine perform like several independent machines running their own operating systems.

Microsoft declined to comment on financial terms. Some Connectix employees will join Microsoft, although the company did not provide details. The future for Connectix, and for the products that Microsoft did not acquire, is somewhat unclear.

Cooking spammers
Microsoft also moved to protect some of its turf, filing a lawsuit to go after people it suspects of having harvested e-mail addresses from its Hotmail servers to spam subscribers. The so-called John Doe suit doesn't name defendants, but allows the plaintiff the power to issue subpoenas as part of the investigative phase of the trial.

The defendants are accused of using a "dictionary attack" to discover active Hotmail accounts. A dictionary attack is one in which a computer program goes through every entry in a dictionary in an attempt to guess passwords. In this case, the program guessed millions of random e-mail addresses to see which ones were active.

An Australian entrepreneur has created what may be the first antispam service that lets its users charge for the privilege of sending them e-mail. The concept has been discussed in technology circles for the better part of a decade, but a Sydney resident decided to try to turn the concept into a business.

After people pay $36 with a credit card to sign up for a CashRamSpam account, customers may set their contact fee to be anywhere from a few pennies to as high as they think anyone would be willing to pay.

Major Internet access providers are honing their rhetoric and actions against junk mailers that are weighing down their networks and customers. Internet giant America Online reminded its 35 million members about the company's vigilant stance against junk mail and promised added spam-blocking tools in coming months. Those efforts came shortly after EarthLink, the No. 3 Internet service provider, talked about a new line of spam-blocking, antivirus and Web-filtering tools that will come out later this year.

All the companies are talking up efforts against spam at a time when consumers and the media are hyperaware of its growing, loathsome presence in e-mail in-boxes. ISPs record up to a threefold increase in the number of unsolicited e-mail sent to members in the last year; and as a result, they're fielding record consumer complaints.

Also of note
The Federal Communications Commission backed away from an overhaul of the telecommunications industry, but new rules for broadband Internet services could raise prices and lead to a new generation of high-speed links...Overture Services plans to acquire search technology company AltaVista for $140 million in cash and stock, the latest sign of consolidation in the resurgent search business...Microsoft inadvertently provided developers and enterprise customers with early access to the second testing version of the next version of Office...The group of programmers working to run Linux on Microsoft's Xbox video game console is seeking the software giant's seal of approval...AOL has discontinued selling its AOLTV product, ending the Internet giant's attempt to push interactive TV services...IBM fired up a computer running IBM's forthcoming Power5 processor to predictions that systems with the new chip will have four times the performance than those using the current Power4.