Imagine the scenario – you’re the head of a multi-million dollar label, someone has convinced you that your business is losing money due to file-sharing. What do you do? Call in the Ghostbusters? Or do what lots of companies do and call in the likes of MediaDefender to help them. As no anti-piracy system can do anything other than make a very small impact on file-sharing, it’s a far from satisfactory solution.
Early in 2005, established anti-piracy company Viralg of Finland burst onto the P2P scene with a staggering claim: With their technology it was possible to end 99% of all file-sharing.
In 2004, Viralg listed Electronic Arts, Vivendi, Microsoft Game Studios, Sony Computer Entertainment, Atari, Nintendo, Codemasters and THQ as just some of their customers. They were among the nominees for the ICT Prize 2005 and the winner of the Venture Cup business plan competition.
The portfolio certainly made them appear impressive at the time, so when an eBay auction caught the eye today offering to sell Viralg’s technology for a cool $1,000,000, TorrentFreak became a little curious.
So what’s on offer? Looks like Viralg’s ‘intellectual property’ in the form of some patent applications:
Viralg supplies technology aimed at preventing sharing of illegal content such as music, movies, GPS maps, games and software from being shared over P2P networks such as Gnutella. Viralg technology is in widespread use by record companies in Finland (90% of customers) and in the other Scandinavian countries. Technology has generated turnover of over 500.000 US dollars. The patent applications for sale cover the necessary key technology for the only possible effective protection against illegal P2P sharing. Depending on the source illegal P2P causes damages of 4 to 12 billion US dollars to media companies per year.
So should likely buyers (unhappy MediaDefender customers perhaps?) invest in this technology?
Viralg claimed to be able to create a corrupted file but with a working hash, giving it the appearance of a genuine file. As people downloaded they got a selection of genuine and corrupt parts sent to them rendering the final file useless. Although partially effective on the FastTrack network (KaZaA [R.I.P] )years ago, Viralg’s offer of 40 hours of training to use the system still doesn’t cut it in today’s BitTorrent dominated file-sharing world.
Before Prince gets any fancy ideas about buying this for the Web Sheriff to use against The Pirate Bay, this outdated system is pretty useless against BitTorrent, which renders its ‘Patented Virtual Algorithm’, well – useless.
TorrentFreak spoke to Dr. Ir. Johan Pouwelse, researcher on P2P technology at Delft University of Technology, who explained why: “Bittorrent uses a separate hash for every 1-4 MByte. This means you can still exploit the weakness in the protocol by sending bad data. However, clients are now generally so smart that they only accept maximum 1 fake 1-4MB block from an IP address.”
Of course to corrupt lots of files, you need lots of presence on file-sharing networks (servers, accounts, the whole MediaDefender-style setup) so the $1m tag is just the tip of an enormous iceberg.
Maybe some of the sales statistics will tempt prospective buyers? The system has been running since 2003, and in that time it generated a turnover of $500,000. Potential buyers are likely to be more interested in the bottom line, especially now that the bottom has fallen out of the FastTrack network.
Anyone with a bulging bank balance needing a guarantee of being able to corrupt files on the FastTrack network (and is unaware that MediaDefender’s tools are available for free) should hurry over to the eBay auction right now, there’s not long left to go – for the auction or Viralg.
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Posted in Internet, Software, Torrent, eCommerce | No Comments »
The recent collapse of Ginko Financial, a “virtual investment bank” in Second Life, has spurred calls for more oversight, transparency and accountability, especially when it comes to business practices in the metaverse.
Last week, Ginko Financial — an unregulated bank that promised investors astronomical returns (in excess of 40 percent) and was run by a faceless owner whose identity is still a mystery — announced it would no longer exist as a financial entity.
The declared insolvency meant the bank would be unable to repay approximately 200,000,000 Lindens (U.S. $750,000) to Second Life residents who had invested their money with the bank over the course of its three and a half years of existence.
“You have to remember, there’s not a lot of places to put your money in Second Life,” said Benjamin Duranske, a lawyer who publishes Virtually Blind, a blog that chronicles virtual laws and legal issues that impact worlds like Second Life. “When you have disposable income and a bank that’s promising a 60 percent return on deposits, that alluring — especially if it works for a while.”
Quickly following this news, a tidal wave of backlash took shape from thousands of angry Second Lifers in SL forums.
Yet in many ways, the undoing of Ginko and the collective loss of more than 750,000 very real U.S. dollars is only the latest event hammering home the fact that the lawlessness of the virtual land has its drawbacks. Indeed, after Linden Lab, the owner and operator of Second Life, invited the FBI to investigate casino activity, the company subsequently instituted a ban on all gambling earlier this month.
On Tuesday, Linden Lab itself issued a statement trying to clarify its stance on regulations and Second Life’s virtual economy.
“Linden Lab does not intend to recreate or subvert real-world laws in any way,” the statement says. “We caution our residents to be wary of anyone offering extremely high interest rates at no risk, either in the real world or in Second Life — if it sounds too good to be true, it probably is.”
The response was timely, considering Second Life currently has 20 to 30 banks that operate essentially the same way Ginko did. That fact, plus the large losses associated with Ginko, has led to a growing call for even more transparency and regulation among SL residents.
Duranske is at the forefront of the movement. An intellectual property lawyer who’s taking time off from his practice to work on a book about virtual law, he was one of the first people to jump on the shady business dealings at Ginko Financial more than two months ago. Indeed, his blog has one of the most comprehensive accounts of Ginko’s downfall.
Duranske claims he’s personally talked with a few SL residents who have lost as much as $10,000 in the Ginko scheme, but estimates that the majority lost a more moderate amount–somewhere in the range of $50 to $100.
“A lot of people forget, Second Life is governed by U.S. law and the laws of California,” Duranske explained. “It just so happens that these laws haven’t been enforced.”
But that’s about to change. Duranske says because Ginko has received so much press lately, the bank, as well as others, will inevitably become an issue that Linden Lab will have to tackle. That either means self-regulation or more federal intervention.
He’s hoping it won’t come to the latter.
Robert Bloomfield, an accounting professor at Cornell University, is of the same mind. Bloomfield says the collapse of Ginko and the recent closing of casinos, among other incidents of alleged fraud, are shocks to participants in the Second Life financial sector.
That said, Bloomfield believes residents are already responding by creating a variety of oversight institutions of their own, including companies that insure against fraud and homegrown regulatory institutions like the Second Life Exchange Commission, which is modeling itself on the SEC.
“It will be very interesting to see which organizations survive (if any), and how they reduce the risk of fraud,” he said in an e-mail.
Bloomfield admits he’s getting in on the act on a personal level and has forged an ongoing agreement with two Second Life-based stock exchanges, the International Stock Exchange and the SL Capital Exchange (formerly AVIX) that will provide him with comprehensive data on trading histories for all listed firms.
He expects to publish analyses of that data in the near future and says such information could very well be another important step toward transparency.
In the end, Bloomflield says SL’s financial and business sector can teach us a lot about the nature of regulation and oversight. Even with the unfortunate case of Ginko, he still believes the intervention of real-world regulation is remote.
“I am really hoping that RL (real life) regulation does not come to SL because right now SL has the chance to sort out what type of oversight and regulation it wants,” Bloomfield said. “If the RL authorities or Linden Lab do start meddling with business affairs, it could ruin a golden opportunity for real innovation and creativity, a chance to recreate a world in a new image.”
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Posted in Gaming, Internet, eCommerce | 2 Comments »
A new payment service for online vendors has entered the scene, this time introduced by online retail giant Amazon. The Amazon Flexible Payments Service offers an extensive API to developers that will allow them to process payments on their own websites, which can be easily scaled up or down to handle whatever traffic volume is needed. If successful, Amazon FPS will compete with other similar services such as Authorize.net, PayPal, and Google Checkout.
Amazon FPS is an extension of the older Amazon Payments service, which allowed third-party vendors to receive payments for products they sold through Amazon’s website. And while that setup offered a lot of online exposure to those vendors, its flexibility was limited to items sold through Amazon.
One benefit that the company touts is that it allows users who already have Amazon accounts to use their already-existing account information for their purchases. This means that won’t have to reenter that same information on another site, which can be a pain in the butt—you know the process: shipping address, billing address, credit card info, shipping preferences, etc.
There are also no minimum fees for companies that want to use the service, and no startup charges either. According to the company, all pricing is based on transaction size and payment method, charged to the vendor on a per-transaction basis. Google Checkout currently offers a similar deal, but only until January 1, 2008.
Another major draw to Amazon FPS’ fees (or the lack thereof, in this case) is the obscenely low cost of processing micropayments. PayPal offers its own micropayment service, but the fees involved mean that PayPal’s micropayments can’t be that “micro” if the vendor wants to be at all practical. As the folks from Freshbooks discuss on their company blog, Amazon’s micropayment system allows a vendor to bill for as low as once cent per month if they should so choose, and the transaction fee to the vendor for any such micropayments will only be one quarter of a cent. According to Freshbooks, this “changes the game for the entire web.”
Vendors looking for a completely integrated checkout solution may still want to seek out other options like PayPal and Authorize.net, as Amazon FPS currently functions as a payment redirect service like Google Checkout, according to TechCrunch. But for smaller vendors, Amazon’s solution could certainly make it easy to begin processing payments online with minimal commitment. Amazon is offering its new service as a limited beta, and the company is accepting new signups until it feel it has reached max beta capacity.
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