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EU investigating Apple, Big Four labels over country-specific pricing

In the wake of Apple's landmark deal with EMI to sell DRM-free music on the iTunes Store, the EU has confirmed that Apple and the Big Four record labels are now the subject of an antitrust investigation by the European Commission. Late last week, the EC reportedly sent a confidential statement of objections to the iPod maker and record labels EMI, Sony BMG, Universal, and Warner, charging them with violating EU "territorial sales restrictions." HangZhou Night Net

At issue are the different, country-specific storefronts used by Apple's iTunes Store. Most EU residents can buy DRMed tracks for €0.99 each (€1.29 for DRM-free music). UK residents, however, pay £0.79 per DRMed song (or £0.99 for DRM-free music), a roughly €0.17 difference.

Complaints over the pricing inequity arose shortly after the European launch of the iTunes Store in the summer of 2004. In December of that year, the UK Office of Fair Trading referred the pricing complaints to the EC, and the current action stems from that referral.

The EC believes that the separate pricing structure goes against EU competition rules, and that Apple should offer music at a single price across all EU countries. Apple says that it agrees with the EU's desire for uniform pricing, but lays the blame for the variable pricing at the feet of the record companies. "Apple has always wanted to operate a single, pan-European iTunes store, accessible by anyone from any member state," a company spokesperson told the Financial Times. "But we were advised by the music labels and publishers that there were certain legal limits to the rights they could grant us."

Apple's business practices in Europe have been closely scrutinized as of late. Consumer groups and a handful of governments across Europe have criticized the tie-in between the iPod and the iTunes Store, although the EU has more recently backed down from some tough talk about the situation. Today's deal with EMI may ameliorate some of those concerns, and the Norwegian Consumer Council has signaled its approval of the move. The EU's press release makes it clear that this new investigation is not about DRM: "The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store."

Given the licensing challenges Apple faced in rolling out the iTunes Store due to the maze of licensing agreements that needed to be negotiated—the store launched first in the UK, France, and Germany in June 2004, with nine more EU countries added in October of that year, and Norway, Sweden, Denmark, and Switzerland in May 2005—the "record labels made us do it" defense is not outside the realm of possibility. Apple says that it believes it has not violated EU law and will "work with the EU to resolve this matter," according to the same spokesperson.

Going ballistic with electrons

Given the trend in solid-state electronics, where the feature size is expected to shrink every couple of years (Moore's Law), single-molecule transistors (or switches) are certain to be a part of your CPU in the not-so-distant future. In anticipation of this, researchers have been studying single-molecule transistors and switches for a while. However, there are several issues that stand in the way of implementing molecular switches. Mostly, the problems boil down to understanding how electrons flow through molecules. HangZhou Night Net

To understand this barrier a little better, let's take a quick peek at how electrons flow through a metal (or semiconductor). In these materials, the atoms are arranged in a regular spatial pattern, so the electrons whose movements match that spatial pattern travel more efficiently than those who do not. By match, I mean that electrons with a certain speed, traveling in a certain direction, will move without interruption in a process called ballistic transport. Those electrons with different velocities will collide* with the electrons remaining around the atoms. These electrons lose energy, change direction, and only drift slowly in the direction given by the applied voltage. Normally we don't observe this difference because metallic conductors have a very poor crystalline structure over long distances so no electrons are ballistic for very long. Nevertheless, it is easy to see that ballistic transport is much faster and generates much less heat than non-ballistic transport. It is also clear that single molecule devices will almost certainly need to work with ballistic electrons, otherwise the absorbed energy will eventually destroy them.

To better understand the transport through single molecules, researchers in Germany have modified a form of electron microscopy. In two separate experiments, C60 fullerenes and an organic molecule (3,4,9,10-perylene-tetracarboxylic acid dianhydride, for the chemists hidden amongst us) were evaporated onto an atomically flat, two-atom-thick layer of bismuth that was itself on a silicon substrate. Bismuth and silicon are well matched in their physical and electronic properties, which maximizes the number of ballistic electrons—provided the applied voltage is correct and the electrons are going in the right direction. Non-ballistic electrons lose energy and most of them are trapped in the metallic layer, therefore measuring the current through the silicon amounts to measuring the ballistic transport properties of the molecule-metal-silicon system. Using the tip from a scanning tunneling electron microscope, the researchers were able to direct electrons to specific positions on the surface molecules—essentially probing where injected electrons can match the electronic properties of the molecule and ballistically transfer through to the silicon.

They found that transport through the fullerenes occurs along the carbon-carbon bonds around the surface of the molecule, rather than tunneling straight through the center. Although modeling had predicted this, it was the first experimental evidence that the model was correct. The organic molecule was something of a surprise. The molecule is a flat layer, consisting of a series of interconnected rings with oxygen end groups at each corner. These molecules lay themselves out in a herringbone pattern on the surface of the metal. From this, one might expect that the current should be pretty even over the whole surface. However, ballistic transport is more efficient at the end groups, where the oxygen molecules bend the molecule down towards the underlying metallic layer.

By themselves, the experimental results are that significant finding. The significance, and the reason the work was published in Science, lies in the development of a technique that allows researchers to understand the detailed electron transport properties through molecules and across contacts between molecules and bulk surfaces. Eventually, this should provide insight into many different properties for single molecule switches and wires, such as points of failure, self-assembly, and contact properties.

*By collide, I don't mean two electrons actually hiting each other, rather the field generated by the electrons surrounding the atom slow and change the direction of the drifting electron.

Google crawls off the web and into TV commercials

Even as BusinessWeek raised questions about the growing power of Googlezon, the fire-breathing search monster lurched into a new market: television. Google announced yesterday that it was launching a closed trial of a new television advertising service in conjunction with Echostar and Astound Cable. Unlike traditional TV advertising, Google will only charge for ads that people actually watch. HangZhou Night Net

The system will utilize set-top box data to track viewership of commercials down to the second-by-second level. "Advances in set-top-box technologies make it possible to report aggregate statistics on how many times an ad was viewed and whether it was watched through to the end," Google said in its announcement. "As part of this trial, we will be working with partners to use aggregate, anonymized set-top-box metrics to deliver timely and accurate viewing reports." The new metrics will give advertisers far more insight into particular ad campaigns than they currently have, and all of the buying decisions and reporting information will be available through the standard Google advertising interface.

The result is that Google will bill by CPM (cost per thousand) impressions of an ad, but these numbers will be actual viewership numbers, not aggregate totals from the entire show. That means that advertisers who air ads back-to-back might pay different rates depending on how many customers flipped the channel as the ads ran. The ads can be targeted by demographic, time of day, or particular channel.

Ads will be purchased using an auction system like the one that currently exists for AdWords. Google hopes that the simplicity of the system and the ability to do small, targeted ad buys will open television advertising to small business, much as Google's system did with the web. Advertisers involved in the initial trial won't be mom-and-pop stores, though; Advertising Age says that Intel and ETrade will be among the first users.

Google has been hinting at such an announcement for several months, and the initiative will join the company's other attempts to move beyond the web page. Google has experimented with print ads, radio ads, and video game ads, but the television project sounds more ambitious than past efforts. Giving advertisers a second-by-second breakdown of how many people watch their ads will bring an entirely new level of granularity to television advertising, but it's not going to happen without partnerships.

Until Google launches its own GoogleSat or turns into an ISP and begins pumping IPTV into consumer homes through all of that dark fiber it owns, the company will need to partner with existing networks and delivery systems in order to have any ad time to sell. Echostar has been willing to let Google resell some of the time that it controls, but other partners with a long history of controlling their own ad sales may balk. This could be especially true of major television networks like NBC or Viacom (owner of several networks), both of which have had conflict with Google over its subsidiary YouTube. Networks that are already wary of Google's online dominance may be hesitant to let the search giant have a piece of the off-line advertising market.

Study finds stable personalities unaffected by violent games

Those of you who have followed the literature examining potential connections between violent video games and real-world violence know that the evidence for such a connection is pretty tenuous. Studies purporting to show such a connection appear on a regular basis, often alternating with other studies that suggest that the connection is illusory. If it's any consolation, researchers in the field find the contradictory results just as confusing as you do, and some have called for efforts to be focused on understanding the reasons underlying the confusion. A paper that's in press at Psychology, Crime & Law claims to have accomplished just that. HangZhou Night Net

The authors of the study note that the literature contains a combination of studies that show a connection between aggression and violent games, others that showed no such connection, and a few studies showing that gaming reduced aggression. They claim that their study is unique in that it considers the possibility that these represent three distinct responses to gaming, and suggest that prior studies may have produced conflicting results by trying to shoehorn these into a binary classification.

They designed a study in which measures of anger levels acted as a proxy for violent behavior. They recruited 135 children, but were forced to kick some out of the study due to bad behavior, leaving them with about 110 boys and 15 girls with a mean age of 14.6 years, all of them familiar with the game of choice, Quake II. The children were given personality profile tests and measured for anger levels, at which point they were set loose for 20 minutes of gaming. Anger levels were measured again following the gaming session.

Crunching the numbers indicated that there were three clear groups. The anger levels of 77 of the subjects remained unchanged after the gaming session. In 22 of the subjects, anger levels nearly doubled from a starting point similar to that of the unaffected children. But 8 of the test subjects started out at this high anger level; for them, 20 minutes of gaming dropped them down to levels similar to those seen in the unaffected group.

The research team then correlated these groups with the personality profiles, and an clear pattern emerged. Those with personalities that were scored as stable largely wound up in the unaffected group, while the remaining two groups were populated by personalities that were considered less stable.

The authors propose that gamers fall into two groups: stable personalities, and those with emotional states that are susceptible to being influenced by game play. Within the latter group, the response to violent games largely depends on the emotional states of the gamers when they begin play. Angry gamers will cool off, calm gamers will get agitated. They also note that only two of the cases of rising anger reached levels that would be considered cause for concern, suggesting that dangerous levels of anger were rarely triggered by gaming.

The authors made it clear that their study should not be viewed as the final word on the matter. The link between anger and aggression is far from clear, and they would like to see similar results reproduced with other test groups and using different games and experimental setups. It's also worth noting that they attempted to measure a wide range of additional factors during their study, but many of these measurements produced statistically insignificant or contradictory results. Nevertheless, the study appears to be significant in that it is the first I've seen that attempts to move beyond adding to the large body of confusing results that already exists, and instead tries to identify the reason that it's so easy to produce contradictory findings in the first place.

Guitar Hero 2 for the 360 is here; a few thoughts inside

"So you play the game with a plastic guitar?" HangZhou Night Net

"Yes."

"Is this for your kids or something?"

"No."

I'm trying to keep my cool, but dealing with the register monkey is driving me crazy. Just give me Guitar Hero 2! The gentleman finally decides to shut up and sell it to me, then looks annoyed when I want a second guitar. But nothing can dampen my enthusiasm as I bound home with my $150 in purchases. Guitar Hero on the 360 is not an inexpensive game to get into, that's for sure. Also,it may take some running. In my area, I had to visit three stores before I found both the game and an extra guitar. Your mileage, as always, may vary.

I'm going to save the in-depth thoughts for the big review, but a few things stood out on my first few songs. First, I'm not doing very well, butevery time I get a new guitar it takes me a night or two to break it in and get comfortable with it. The buttons seem closer together on the 360 guitar controller than they do on the PS2 original, but overall it feels solid. While the cable looks long, I found that it's still a little short for my taste. I leaned back into a solo and almost toppled my 360. A USB extension cable may be in order here.

We also have another game that supports 1080p on the 360, but Guitar Hero was never meant to be a graphical powerhouse. Still, it's nice to know the option is there if your display supports it. We also know from the game directionsthat the jack on the guitar will be used for upcoming effects pedals, which I look forward to checking out. I'm not so sure about the mobile version of the game confirmed by the press release sent out two days ago, though. I don't see playing Guitar Hero on a phone and having a good time. I'm open to being surprised.

I haven't gotten far, but the master track of "Possum Kingdom" sounds great and is an excellent choice as a new song. I'm looking forward to the leaderboards to see how I stack up against other players, whichmay be a good incentive to up your score again and again, and should be a good way tobuild in longevity to the title.

Who else picked it up?

Apple bumps Mac Pro to 8 cores at 3 GHz

The Mac Pro, Apple's flagship desktop Mac, is now available in an 8-core configuration, sporting two quad-core Intel Clovertown CPUs clocked at 3 GHz. It seems I was wrong in an earlier article after all. HangZhou Night Net

According to performance tests done by Apple, the new octo is about 50 percent faster than the 3GHz quad at modo 203 and Maya 8.5 3D rendering and the Cinebench 9.5 rendering test. It's also between a factor 2 and a factor 3.1 faster than the 2.5GHz quad G5. However, the octo is suspiciously missing in action in the Final Cut Pro rendering and encoding tests, suggesting that it doesn't perform significantly faster than the earlier models here. The 3GHz quad is only at most 40 percent faster than the 2.5GHz G5 quad, anyway. On the other hand, the octo isn't listed in many of the other tests either, so it's of course possible that Apple didn't manage to perform the full range of tests yet.

Apple boasts that the Mac Pro is available in no less than 33 million different configurations. For the CPUs, the other choices are two dual-core Woodcrests at 2, 2.66, or 3GHz, with all configurations having a 1.33GHz 64-bit front side bus. Memory can be 1, 2, 4, 8 or 16GB in FB-DIMMs. The four drive bays accommodate between 250GB and 3TB worth of storage, with individual 3Gbps SATA channels per bay. The default GPU is a NVIDIA GeForce 7300 GT with 256MB RAM, but other choices are the ATI Radeon X1900 XT or the the NVIDIA Quadro FX 4500, both with 512MB RAM, or two, three or four GeForce 7300s.

You may want to sit down before clicking the "buy now" button. The base configuration for a dual 2.66GHz model with 1GB RAM isn't too bad at $2499, but the 8-core model is $3997. I'd say that 4GB is the minimum amount of RAM for such a beast, which brings the total to $4696. Did I mention that it's rated to draw as much as 1300 watts?

More colors, marketing, features can’t come Zune enough

Reports are flying around that Microsoft is preparing for a new offensive on the portable media player front. Coming, er, Zune, are new colors—including pink—as well as rumors of new functionality and possibly even a flash-based version. "We will add features to the device, and by the upcoming holidays we will have news around TV, video and podcasting support," said Jason Reindorp, Microsoft's marketing director for Zune. HangZhou Night Net

Microsoft is planning on bumping up the advertising for the Zune as well. "We have a second wave of marketing and advertising coming out next month," Reindorp said. "We had spiked over the holiday period but naturally tapered out."

The Redmond-based company did not reveal exactly how much they were planning to spend to advertise the Zune this time, but it won't be earth-shattering. "It is not as much as the launch spend, but it is still a good sum," said Reindorp. Considering that the only time I ever saw any mention of the Zune in the mainstream media was when Conan O'Brien briefly made fun of it on an Actual Items piece, it seems that Microsoft may have to try a little harder if they want to put a dent in the iPod juggernaut.

Microsoft has a 10 percent share of the hard drive-based media player market according to research firm NPD, and the company says it is on track to ship one million Zunes by June of this year. Apple, in comparison, routinely sells over ten million iPods per quarter. But Microsoft's isn't ready to throw in the towel just yet. "We are developing Zune as an 'entertainment' brand, which means it will include music, video and games," Reindorp says. "But will there be XBox-like games on the device? We don't know yet. We are still thinking through our games strategy."

Large-scale movie and music piracy operation busted in Brazil

Police in São Paolo, Brazil conducted a raid today on four locations used to manufacture counterfeit CDs and DVDs. According to the International Federation of the Phonographic Industry and the MPAA, which supported the police action, over 30,000 pirated CDs and DVDs were seized, along with 200 burners. HangZhou Night Net

The raids came as part of an investigation into counterfeiting rings in metropolitan São Paolo, and more arrests are expected in the days to come.

Counterfeit DVDs along with music and software CDs are commonplace in developing nations, due in no small part to the relatively high prices of legal versions of the media there. The movie studios seem to be well aware of this problem, although they are conflicted as to what their long-term strategy to combat it should be.

Large-scale piracy of music, movies, and software is a well-founded concern for content creators, and offering support to law enforcement types are a better use of their time and money than filing lawsuits against individual file-sharers around the world. Two movie studios have realized that the only way to fight the massive number of pirates in these countries is to compete with them, and have therefore made efforts to offer extremely low-priced DVDs of theatrical releases in China. Time Warner offers DVDs for about $1.25 apiece and Fox sells theirs on the street for about $3 per disc. Microsoft also offers a no-frills, inexpensive version of Windows in some countries, giving the company a shot at a revenue stream that they had previously missed out on completely. It's a lesson the content creation industries should take note of.

Microsoft accused of deceptive marketing, bait-and-switch tactics over Vista

A lawsuit filed in US District Court yesterday alleges that Microsoft unfairly and incorrectly labeled machines as "Windows Vista Capable" when said systems were only capable of running Vista Home Basic. According to the complaint: HangZhou Night Net

"[The PCs in question] cannot run, or run poorly, with Vista Home Premium… the least expensive version of Vista that includes Vista's heavily marketed and most popular features. The enhanced graphics, media center, and remote control that have been marketed and advertised by Microsoft as 'Vista' are available only on Home Premium and more expensive versions of the software… In sum, Microsoft engaged in bait and switch‚assuring consumers they were purchasing 'Vista Capable' machines when, in fact, they could obtain only a stripped-down operating system lacking the functionality and features that Microsoft advertised as 'Vista.'"

Microsoft, unsurprisingly, takes some issue with these claims, and has noted that it provides comprehensive information regarding the features of various Vista versions. One could argue that Microsoft helped create this problem by seeding the market with so many different versions of the operating system, but that's almost beside the point; the interesting question this lawsuit raises is what, exactly, makes Windows Vista "Windows Vista"?

My gut feeling on this one is that it'll go precisely nowhere. Microsoft is hardly the first company to offer the same basic product with variations or features at different price points, and while there may be a handful of marketing-friendly features lacking from Vista Home Basic compared to Vista Home Premium, there are a thousand or more underlying technology advances and upgrades that Microsoft can point to and say "this makes it Vista." In the end, this lawsuit says more about the inherent problems of marketing a new OS to the large segment of the population that is not technology-savvy than it does about any alleged bait-and-switch tactics.

Surprise: Radio-funded report says satellite broadcasters should not merge

The Carmel Group, a California consulting firm with expertise in satellite radio, has issued a brief white paper (PDF) regarding the proposed merger between Sirius and XM. The paper did not mince words: "with all due respect, this proposed merger should not be approved—under any conditions—by the US government," it concluded. Who funded the study? The National Association of Broadcasters, the trade group representing terrestrial radio broadcasters who are bitterly opposed to the merger going forward. HangZhou Night Net

While the NAB funded the report, Carmel's work is taken seriously; it produced a similar report opposing the proposed merger between EchoStar and DirecTV in 2002-03 that was credited (in part) with preventing that merger from occurring. The new paper reuses the key feature from the earlier report, a "ping pong chart" showing the competitive responses that the two competitors made to each other's actions over the last few years. The goal is to show that the two companies do compete with each other, and that losing that competition would be detrimental to consumers.

Back in January, before producing the report, Carmel's senior analyst Jimmy Schaeffler noted that the NAB "does not like satellite radio" and pointed out that the group doesn't particularly care what party is in power; it is happy to lobby either side in the service of its goals. "Even if the 2008 presidential elections bring in a new administration, most doubt whether that would make much difference," Schaeffler said at the time. "That is because the real lobbying force in Washington, the National Association of Broadcasters, is as equally positioned to support Democrats as it is Republicans."

Since then, Schaeffler has publicly worked against the merger, publishing an editorial in USA Today about the issue and authoring the new NAB-funded report on the merger. In the paper, he repeatedly attacks the key position that Sirius and XM executives took in recent Congressional hearings: the idea that the merger is not anticompetitive because satellite radio competes against terrestrial broadcasters, Internet radio stations, and even iPods.

"This position is ludicrous," writes Schaeffler. "At best, satellite radio competes against a sphere of competitors now broader than today's analog AM and FM broadcasters." But even those broadcasters are in a different situation because they don't compete in the national market (this argument is weakened somewhat by the radio dominance of massive firms like ClearChannel which often pump the same programming across the country).

The report also points out that, although both satellite broadcasters continue to lose money, both have substantial cash reserves and are in no danger of going under. Schaeffler points out that other industries that rely on satellites, such as television, took much longer to turn a profit but eventually did so. The proposed merger between XM and Sirius simply shows "their impatience—and greed—by offering this merger proposal today."

The NAB is certainly mobilizing their publicity machine against the merger. Last week, they made sure to publicize a preliminary FCC ruling that neither terrestrial radio nor iPods were actual competitors for satellite radio. XM and Sirius, as part of their initial license agreements with the FCC, did agree not to merge with one another, so the presumption is on them to show that the move would not stifle competition. The two companies trotted out the dog-and-pony show before Congress two weeks ago, making all sorts of promises, but it's clear that the merger will face some significant scrutiny from regulators, along with the constant carping from competitors. Which raises an interesting question: if satellite radio does not compete with terrestrial stations, why is the NAB funding reports against the merger?