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Apple could have the newest Mac Mini ready to go by next Tuesday.

Apple may clear up the confusion regarding the future of the
Mac Mini a week from Tuesday.

(Credit:
CNET)

MacNN’s report didn’t have specific details on the configurations or pricing that might arrive with the systems. Given the gap between Apple’s last major hardware event in October and its yearly Macworld extravaganza in January, it would make sense for Apple to tweak its desktops ahead of Macworld. That would free up space in January to talk about things like Snow Leopard and the
iPhone and allow Apple to take advantage of the usual increase in demand during the holiday shopping season.

A few weeks ago it seemed Apple was getting ready to kill the Mac Mini, with reports that European retailers had been told not to expect further shipments of Apple’s cheapest Mac. But U.S. customers expect Apple to keep the product line alive, perhaps with tweaks such as the new Mini DisplayPorts added to Apple’s new MacBooks. And it sounds like the iMac, Apple’s main desktop product, could receive similar treatment with the additional inclusion of the new Nvidia graphics chipsets introduced to Mac customers with the new notebooks.

UPDATED 4:20pm: Apple has denied that new systems are on the way. See new story, “Apple debunks Mac Mini, iMac rumor”

That’s what MacNN thinks, reporting Monday that Apple will have refreshed versions of the Mac Mini and iMac desktops to announce next Tuesday, Apple’s traditional day of the week for product launches. Both systems could be in line for refreshes with new Intel hardware, but it doesn’t sound like any drastic changes will be made to either system.

While inflation is raising prices in the real world, prices for credit card numbers and bank accounts with personal identification numbers have dropped from $100 or more to $10-$20 each, according to the report. (McAfee Avert Labs discovered a price list of its own earlier this year.)

“It’s become very professionalized…a cradle-to-death software life-cycle regime, just like The Sopranos,” Ferguson said in an interview in May. “They are pushing the money up the tree. It’s a multitrillion-dollar enterprise…It’s not just a kid in his basement anymore.”

Underneath the second-in-command are several “capos” or “campaign managers” who have their own “affiliation networks” perform attacks and steal data, just like “soldiers” do the “dirty work” in the mafia. “Resellers” similar to “associates” in the mafia, trade, or “fence” the stolen data.

The business of cybercrime has evolved from auctioning vulnerabilities online to the highest bidder in 2006 to creation of “one-stop-Crimeware-shops” where hackers sell toolkits to less tech-savvy attackers in 2007. The toolkits have gotten more sophisticated and providers are even now offering “Crimeware-as-a-Service,” ala the Web’s software-as-a-service model, the report says.

Cybercriminals have even built into the systems ways for buyers of credit card numbers to do real-time verification of the data to see whether it has expired, said Paul Ferguson, an advanced threats researcher at security firm Trend Micro.

Finjan also has located crimeware servers, where stolen data is stored, that function as “drop zones” of organized attacks and interviewed resellers of data to find out how the system is structured and how it works.

(Credit:
Finjan)

Cybercrime, the harvesting and sale of credit card and other data for online fraud and theft, is a “shadow economy” that mimics the real business world in its practices and the mafia in its structure, according to a new report from security firm Finjan.

This diagram illustrates the operations of a crimeware server, showing the flow of crimeware and revenues forming a "closed " business loop.

“The current cybercrime organizations bear an uncanny resemblance to organized crime organizations such as ‘La Cosa Nostra,’” concludes Finjan’s Malicious Code Research Center’s Web Security Trends Report for the second-quarter of 2008 (survey required before downloading the 21-page report).

(Credit:
Finjan)

This diagram shows the organizational chart of a typical cybercrime group. It is very similar to the structure of another type of criminal enterprise, the mafia, according to a Finjan study.

There’s a boss that heads up the organization for both the cybercrime gang and the mafia. The boss does not commit the crimes. Under him is the “underboss” who manages the operation, providing the Trojans for attacks.

Republicans including House Minority Leader John Boehner objected to the proposal as putting taxpayers on the hook for what could be potentially huge losses, according to the summary by The Washington Post. Boehner and his colleagues are backing an alternative that would involve a rescue plan financed by the banks themselves, not taxpayers. (Because their party controls the Congress, Democratic leaders don’t actually need Republican support. They want it anyway for political cover.)

Ask an economist whether the $700 billion bailout will harm or help the economy, and the answer will depend on his or her political (or at least philosophical) predilections.

New York Times columnist Paul Krugman said “doing nothing isn’t a serious option.” Treasury Secretary Henry Paulson told a House committee on Wednesday that doing nothing would “threaten American families’ financial well-being, the viability of businesses both small and large, and the very health of our economy.” An editorial in the Salt Lake Tribune took a similar approach.

The 1920s boom that led to the Great Depression was aided, and may have been largely caused, by the Federal Reserve’s expansion of the money supply by 8 percent a year, or 62 percent over an eight-year period. Such a boom was due for a bust, which started in September 1929.

There’s also FinancialPetition.org, plus a humorous, off-color Web site that encourages people to “list” items they want the government to buy.

Public pressure in opposition to the bailout, from these sites and from unexpected sources like the AFL-CIO and Republican Newt Gingrich, may have helped to slam the brakes on what had been an unusually fast-moving process in Washington.

Editors’ note:
For the latest coverage of the bailout plan, see CBSNews.com.

The cross-town competition comes from VoteNoBailout.org, which says: “We are witnessing a bankers’ coup d’etat. In the name of saving the economy from a crisis created by their own greed and immense profits, the biggest bankers have taken a country and a people hostage.”

Bailout type
Cost to taxpayers (Source: Reuters) Proposed Treasury Department legislation
$700 billion+ Bear Stearns financing
$29 billion Fannie Mae and Freddie
Mac nationalization
$200 billion AIG loan and nationalization
$85 billion Federal Housing Administration housing rescue bill
$300 billion Mortgage community grants
$4 billion JPMorgan Chase repayments
$87 billion Loans to banks via Fed’s Term Auction Facility
$200 billion+ Loans from Depression-era Exchange Stabilization Fund
$50 billion Purchases of mortgage securities by Fannie Mae and Freddie Mac
$144 billion TOTAL
$1.8 trillion+ COST PER HOUSEHOLD
$17,064+

By midday Thursday, news articles began appearing saying a “tentative bailout agreement” had been struck between congressional leaders and the White House. But the day ended with the talks in tatters, an intra-party rebellion by House Republicans, and a promise to continue the meetings on Friday.

Other economists draw unnerving parallels to the Great Depression, warning that it was caused precisely by this kind of government intervention in the economy. The Competitive Enterprise Institute’s OpenMarket.org says the proposed $700 billion intervention will prove to be either “excessively costly or unnecessary.” Peter Schiff, a well-known stock market bear and president of Euro Pacific Capital, warned: “We’re going to have a tremendous recession if the government does nothing but we’re going to have a worse one” if it does. Also see the Huffington Post’s reasons to oppose the bailout, and Republican Rep. Ron Paul’s
warning that “it’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs.”

Instead of taking a hands-off approach, the Federal Reserve intervened on a dramatic scale, in part to allow loans to be taken over; one union leader called it a “barrier against financial demoralization.” President Herbert Hoover overruled his Treasury secretary, who counseled a laissez-faire approach, and embarked on programs to artificially keep wages constant (or higher), expand public works, and boost farm subsidies. By 1931, as the Depression was well under way, Hoover was busy calling for an investigation of short sellers. He later summarized his policies as: “We met the situation with proposals… of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic.”

There is NoWallStreetBailout.com, which asks visitors to sign a petition to Congress. It features a quote from Allan Meltzer, a professor at Carnegie Mellon University’s business school, saying: “This is scare tactics to try to do something that’s in the private but not the public interest. It’s terrible.”

A flurry of Web activism is channelling misgivings about the proposed $700 billion Wall Street bailout into political action.

It’s true that the proposal the Bush administration is advancing today does not come close to the extreme measures that Hoover adopted. But what critics–especially those online–seem to fear is that another step down that path could prove to be an unusually risky one.

Benkler concluded that a very different model of human motivation is needed, that is much more capable of cooperation. It will require looking at many disciplines, including experimental economics, game theory, and organization sociology. “We are building systems loosely coupled because we can’t design perfect systems. We have to allow freedom as a practical human agency designed for cooperation to replace rational actor model with something much more rich and close to way the conversation is,” Benkler said.

People get the idea the only way to design a social space is to have top-down control. Wikipedia is more like a restaurant–people go in and eat and don’t start stabbing people, and there are tools and institutions to deal with misbehavior.

During his remarks, Wales outlined what makes Wikipedia different in light of the perception that world’s most-relied-upon information resource is counterintuitive. The following are notes from his remarks from the session (in his voice):

How does Wikipedia decide what is published? The community decides on a case-by-base basis. Wikipedia has gotten bigger in two ways–sheer size of the work, which means when we started out we were covering George Bush and Michael Jackson and they are so famous they don’t care. Secondly, we have become very powerful in search engines like Google, so it actually matters to people. Because of those two factors, it’s becoming much more on the minds of the community to say how to thoughtfully reflect on question. We look for reliable sources–verifiability. Someone could start an article about their mother, but if they are not well known, who can verify it, so we can’t have an article about it. We also look at the question of human dignity. One of the rules of biographies is that if the person is only notable for one event, and perhaps did some bad thing, and it’s a unique odd event, we typically try to have an article about the event, not the person.

Benkler, who is the Jack N. and Lillian R. Berkman Professor of Entrepreneurial Studies at the Harvard Law School and co-director of the Berkman Center, were participating in a program marking the Berkman Center’s 10th anniversary at the Harvard Law School (see my earlier coverage of the conference). Wales is a Berkman Fellow and hopes to find ways for groups to come to better decisions in his research.

Given that background, and seeing the worst brought out in people, the community has no means to self-regulate. You end up with the top-down police state to manage it.

Companies working on their own entries are mostly overblown. We see that a lot more from small mom-and-pop companies trying to get an article on Wikipedia. A lot of communications professional understand that interacting with social media requires accepting the norms.

Intentional vulnerability is really important. Sometimes it’s reported that a Wikipedia page was hacked, which we chuckle at. The advanced computer skills to hack Wikipedia are not much. Put a curse word on Wikipedia and we fix it in one or two seconds so it’s not that thrilling. We do actually lock the front page though.

CAMBRIDGE, Mass.–Harvard Law and Berkman Center scholar Yochai Benkler and Wikipedia founder Jimmy Wales deconstructed Wikipedia and discussed peer production models at an event here Thursday.

I definitely think we have a problem with the amount of tradition and jargon. People trying to change their biographies, for example, found their changes were reverted with strange codes as an explanation. People should not be required to become expert Wikipedians to join the conversation. It gets really hard when there is too much jargon.

Given enough time humans will screw up Wikipedia just as they have screwed up everything else, but so far it’s not too bad.

The idea that anyone could edit anything at any time made obvious that most people were horrible and it makes the Internet worse. I’ve learned the analogy to a restaurant. You’ve been given the task to design a restaurant and serve steaks. So customers have access to knives, and people with knives might stab people, so you need to keep people in a cage. This model makes a bad society, and its view of human nature we mostly avoid except at the airport.

(Credit:
Dan Farber)

The technology allows us to have a space that is safe and you can block the worst offenders. But how does neutrality fit into this?

Jimmy Wales: Given enough time. humans will screw up Wikipedia just as they have screwed up everything else, but so far it’s not too bad.

We are really strongly focused on consensus. One criticism of Wikipedia is that the majority rules. But majority is not the right way to describe it. We strive for consensus rather than majority rule. If you are in a group of five or ten people working on an article, if 30 percent of those working on the article dissent, then continue to write the article until all but the most unreasonable agree. Those who continue to disagree are typically exhibiting non-collaborative, and sometimes abusive, behavior.

There were a lot of mistakes made in the early social design of the Internet. The unmoderated Usenet groups were difficult to control and exclude bad behavior. It gave the Internet a bad name in some circles, leading to spam, trolls and flamewars, and still exists today.

The author of The Wealth of Networks, Benkler said he had been studying Wikipedia since it was four months old. He compared it to the Encyclopedia Britannica, which represents the “structure of authority over knowledge,” rather that the process of conversation and human interaction as in Wikipedia. He noted that Wikipedia has moved from being quirky and on the side to something that is mainstream.

As Wikipedia has grown, there are subcommunities and a risk of changing interactions from small group to more atomistic random people. It’s a lot harder to maintain civility. It’s a lot harder to be rude to people you know.

Wikia and Wikipedia are completely separate. The only link between the two is that Wales is the founder. Like Mozilla (which makes money from
Firefox) Wikipedia could follow that model, but nobody is thinking about it that much.

As you would expect, Benkler took a more academic approach to deconstructing Wikipedia. “Ten years ago we would not have had this conversation,” he said, referring to the rapid changes in the last decade. “We are moving generationally from 90s of imagining the world and projecting hopes and fears to a more detailed analysis, moving beyond hoping to organizing our research and getting large scale data and new modes of analysis.”

Neutrality Point of View (NPOV) is absolute and non-negotiable in Wikipedia. The problems come up in obscure topics, such as Japanese anime. For common topics people come together and make a decent statement on what it is. It turns out what is really important is that participants have a shared vision of what they want to accomplish.

(Credit:
Dan Farber)

Yochai Benkler: We are building systems loosely coupled because we can’t design perfect systems.

Mutually-assured destruction is inherent in Wikipedia. People who want to push an agenda end up having to write “for the enemy” rather than to those who share the same bias. Most people are pretty reasonable, but you don’t get that sense from TV where they put up two people on opposite sides. Most people are in the middle and aware of pros and cons of issues.

“Encyclopedia Britannica is a stable view of knowledge embedded in a human relation and legal system. It was challenged by a much more loosely coupled system that allows for much greater change and unpredictability, and requires more learning and critique,” Benkler said. It requires the freedom to change, the will to engage and a certain cooperation dynamic, he added.

It intends to have a first-generation solar array aimed at utilities available in 12 months, he said. A product for corporate rooftops is also in the works.

The transistor materials–made of environmentally benign zinc and tin–and related manufacturing techniques could still be used for very large flat displays, said Dan Croft, director of intellectual-property licensing at HP.

(Credit:
SolFocus)

Xtreme says HP’s electronics can do the same task of pointing light. But because it’s not a motor-driven steel mount, the company will be able reduce the costs of CPV, Williams said.

As a result, he said the extent of the role solar-concentrating power will play in the future is uncertain.

Because the tracker and concentrator are transparent, an artistic pattern could be put onto the panel, making it possible to use it on a building facade, Williams said.

Xtreme Energetics has yet to build a product or prototype. Yet its electronic-tracker design could give the budding CPV marketplace a boost.

CPV, specifically, remains relatively expensive and, unlike solar-thermal technology, cannot store electricity, Bradford noted. Also, concentrating solar technology works in areas of the globe with the best irradiance, or solar radiation, including the southwest United States, southern Spain, and North Africa.

Typically, these trackers are mechanical devices such as ground-mounting systems that position cells to follow the light during the course of the day.

Xtreme Energetics will use the technology to create an electronic “tracker” that directs sunlight to hit solar cells straight-on to maximize exposure.

“The fact that we are using an electronic mechanism to do tracking means the cost scaling in volume manufacturing will go much more like the cost scaling in the electronics industry, rather than (the) mechanical-manufacturing industry,” he said.

Niche buster?

The HP-licensing deal is another sign of the active crossover of technologies and of people between clean tech and information technology. IBM, which has a Big Green Innovations initiative, is adapting chip fabrication techniques to solar power, including concentrators.

Click on the image to see a photo gallery of concentrating photovoltaic arrays.

Hewlett-Packard is licensing flat-panel display technology to a start-up that could lead to dramatically more productive–and aesthetically pleasing–solar panels.

At a seminar put on by Greentech Media last week, solar expert and Prometheus Institute President Travis Bradford forecast that concentrating solar power–both concentrating solar thermal and CPV–will account for tens of gigawatts of electricity in the next decade, primarily in utility-scale solar-power plants .

“So long as concentrating PV uses mechanical trackers, it’s going to be niche,” he said.

The deal, announced Wednesday, allows Livermore, Calif.-based Xtreme Energetics to use HP-developed transparent transistors to bend light in concentrating photovoltaic, or CPV, solar arrays. CPV systems squeeze more electricity from panels by maximizing the light that hits solar cells.

The full design calls for a multilayered solar panel with the transparent electronic tracker, a plastic “internal reflection” concentrator, and a high-efficiency solar cell.

Click on the image to see a photo gallery of utilty-scale concentrating solar power technologies.

“I firmly believe (CPV) is a market that will be very large, but it doesn’t have the ability to work in every market,” Bradford said.

The company is in the process of raising an “imminent” $5 million series A round of venture funding, and it anticipates a series B $35 million round, CEO Colin Williams said.

(Credit:
Amonix)

Xtreme Energetics’ Williams said the electronic tracker tackles one of the biggest concerns with concentrating photovoltaics: the high costs associated with lenses and mounting equipment.

And significantly, dust from construction, a major fact of life in contemporary Beijing, was halted, because construction was halted. Though the surge of building that led up to the Olympics will probably not be matched in the near future in that city, some construction will restart.

So, to the extent that the sustained restrictions on driving decrease people’s emitting behavior, that’s great, but only time (and reliable measurements of air quality over time) will give a fair estimate of the effect.

It is difficult to assess, too, how important the other measures taken around the Olympics were. Manufacturing was slowed or stopped all over the region. Some of the dirtier power plants were shut. (Some may still be shut, but reports indicate that much of the industry has reopened.)

But it’s hard to tell whether the automobile and transportation efforts were really the core of Beijing’s cleaner skies during the Olympics. For one thing, it’s useful to remember that before a series of rainstorms, many people didn’t feel the skies were particularly clear. Afterward, opinion among those used to standard Beijing air was uniformly laudatory. The rain may have helped clean things up.

Alex Pasternack at Treehugger points out that the sustained restrictions, which took effect October 1, will be weaker than during the Games. Only one fifth of
cars will be pulled from the road on weekdays, versus half under the Olympics rules.

Much has been made of Beijing’s decision to keep a lighter version of its Olympics traffic restrictions, not least because whatever the city did to clean the air seemed to have worked in August. But the renewed measures are weaker and the probable effect is unclear.

Restricting the number of car license plates issued for the city every year to 100,000–one fourth of the current rate of new car registration. This may in the long run be the most powerful measure, because it will reduce the extent to which increased wealth leads many people to obtain cars.
Raising parking prices. If it costs more to park, maybe people will take the…
Growing public transportation network. Lines five, ten, eight, and the airport express opened in the year leading up to the Olympics. Expansions of existing lines and other new lines are planned in the next two to three years.

According to The Beijinger (also via Alex), the city’s other restrictions include:

But this route has been fraught for technology companies who lost fortunes paying for under-used real estate compounded by bloated employee payrolls.

Watching all this from the sidelines, Microsoft finally decided to try its hand, despite this being what is arguably the worst economy since the Great Depression. Maybe this is the right time. They say there is always opportunity in periods of distress, and Microsoft has deeper pockets than most. The company has hired a Wal-Mart veteran named David Porter to direct its retail strategy and that’s an encouraging harbinger. After all, when you’re talking about retail, few match the success enjoyed by Wal-Mart.

Another direct seller, Gateway, also stumbled badly after opening retail outlets in 1996. At one point, the company’s coast-to-coast retail presence numbered 326 stores. But this, too, ended in failure and Gateway shut all of its outlets in 2004.

The stores lost hundreds of millions of dollars and IBM cut its losses in 1986 when it sold its leases to Nynex, which was one of the seven regional Bell operating companies. (Nynex also lost a fortune with the stores and wound up selling the entire kit and caboodle to ComputerLand five years later.)

News.com Poll Microsoft’s retail foray
Should Microsoft go into retail?

The gambit has worked beyond most expectations. In fact, roughly half of Apple’s 32,000 person workforce is employed in the company’s 251 retail operations around the world. The stores have served as a terrifically effective venue for attracting new customers. Management is fond of repeating in various forums that more people visit an Apple outlet in a given week then attended the Macworld conference.

Microsoft will need his expertise to smooth over the channel conflict that inevitably will crop up. Porter will also face another challenge he did not encounter at Wal-Mart. This is not the same as selling toothpaste or deodorant. Smart merchandising only goes so far when it comes to selling technology products. If you don’t have the goods, all the advertising in the world won’t be enough to compensate.

Did Microsoft just serve up more fodder for the wits who direct Apple’s lacerating series of
Mac versus PC commercials?

But not even Apple is immune to the economy. During the company’s fiscal first quarter, average revenue per store declined 18 percent, from $8.5 million last year to $7 million this year. Still, the company’s outlets are operating comfortably in the black.

Maybe Microsoft’s future retail network will get a boost from the debut of
Windows 7 along with new and improved Zunes. But retail is about buzz, and if Microsoft can’t burnish a reputation as an inventor of cool technology, Justin Long and John Hodgman, the actors in Apple’s tongue-in-cheek Mac versus PC spots, may wind up with lifelong employment.

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CompuAdd, which started off selling its computers direct to customers, had a nice business going in the late 1980s and part of the 1990s. But its ambitions widened, and management decided to open a string of CompuAdd-only stores. By 1996, the company was bankrupt.

So far, the exception to all this has been Apple. In 2001, the company opened its first stores in high-rent locations like New York, Chicago, and Palo Alto, Calif., and they did it right in the middle of the dot-com meltdown. Anybody who knew anything about retail was skeptical, not the least because Apple was wading into an entirely new market that had a rightful reputation for being a snake pit.

Yes. It worked for Apple, it will work for them.
Yes. They need a place to show their wide range of products.
No. It’s a terrible time to be going into retail.
Who cares? I still won’t buy anything from them.

"Who says we're not cool?"

In the 1980s, IBM operated a network of retail stores. You could walk in and find out everything you wanted to know about IBM’s products and services and do a deal on the spot. On paper, IBM believed it was a fine idea. In practice, however, it was an albatross. The stores were stuffy and had all the charm of hospital waiting rooms. What’s more, you were limited to IBM products when snazzier stuff was sold by competing clone makers like Compaq or AST Research.

On the surface, the decision to open a Microsoft chain of retail outlets sounds like a reasonable idea. With consumer spending plummeting, the competition for shoppers’ attention is keener than ever. Why not hang out a shingle and give your wares top billing?

"Hey, wanna check out that cool Microsoft store down the block?"

Melinda Gates talks about the work she and Bill Gates are doing to tackle global health challenges.

Her work has made for some strange bedfellows. In the foundation’s work with U.S. public education issues, it is funding a project in New York that is headed by Joel Klein, the attorney who spearheaded the antitrust case against Microsoft.

“I knew he wasn’t going to wear a tool belt around the house,” Gates said. “That’s always been very clear.”

In her early days with Bill Gates, she said the couple would get heart wrenching letters seeking their help and the two would agonize over what to do. But, after recognizing that their real opportunity was addressing society’s biggest challenges, she said it has gotten easier to figure out where to put their resources.

Mossberg asked Gates how she felt about Bill’s plans once he steps down from Microsoft. She said she is looking forward to his new role.

Gates said all of the foundation’s work is centered around a single purpose–that all lives have equal value. Gates said that her goal is to help further a world in which the lives of a man or a woman are treated the same whether they live in Boston or Botswana or Bangladesh.

(Credit:
Dan Farber/CNET News.com)

“The world does not treat all lives with equal value,” she said.

CARLSBAD, Calif.–Melinda Gates said Tuesday that the job of giving away billions used to be a lot harder.

Click here for full coverage of the D: All Things Digital conference.

“Joel Klein has this incredible business vision,” she said of the work he and Mayor Michael Bloomberg are doing in New York. “They are willing to be bold. They are willing to say we are going to shut down schools that aren’t working.”

Industry representatives, however, said the state of the technology made it difficult to anticipate security weaknesses. Furthermore, they warned, trying to impose broad security standards on the many uses of RFID technology could severely hamper its growth.

(Credit:
Stephanie Condon/CNET Networks)

Industry representatives, government officials, and consumer advocates met at a workshop on Tuesday hosted by the Federal Trade Commission to discuss how to resolve privacy and security concerns with respect to RFID without stifling the growth of the technology.

Industry, government, and public advocacy representatives discussed RFID technology Tuesday.

The European Union Commission is currently preparing a recommendation for member states on how to address privacy, data protection, and information security when implementing RFID technology. In the United States, the FTC is not pursuing any new policies or encouraging any new legislation to address RFID privacy issues because the FTC Act provides a broad mandate that allows for those issues to be addressed, said Katie Ratte, an FTC attorney.

All the participants at the workshop agreed on the need to educate the public about how RFID technology is used.

“Is it too early for a recommendation for a technology that is still evolving?” asked Paul Skehan, director of the European Retail Round Table. “Probably.”

WASHINGTON–The potential applications for radio frequency identification are about as far-reaching and unforeseeable as its privacy and security implications.

“Our discomfort stems from the fact that strong security is not always built into the (RFID technology) to begin with,” said Susan Grant, director of consumer protection for the Consumer Federation of America. “Very often, it’s an afterthought.”

There were security and privacy concerns when the U.S. government began issuing RFID-equipped passports. Evolving private-sector use, such as the migration of contactless payment to mobile phones, has also raised concerns.

“If the public’s not ready for it, that could kill a technology,” said Tom Karygiannis, senior researcher at the National Institute of Standards and Technology.

“The challenge for the studios is that the business is changing,” Saxton said. “As these licensing deals come up for renewal it’s possible that Hollywood will alter them to fit the new reality of digital distribution. Digital definitely has enormous amount of buzz right now and the studios understand that if you don’t get control of the Internet consumers will rip the content and share it.

All this would indicate that it might be a while before digital film sales rival DVD sales.

Apple is an Internet retailer and Netflix is a Web video rental service, but Hollywood treats them as if they are potential competitors to TV broadcasters.

(Credit:
Metro-Goldwyn Mayer)

Saxton said the studios can’t be expected to dump these very lucrative release windows until the Internet sees much wider adoption.

“One would presume that there is some sort of licensing issue at stake here,” wrote MacWorld’s Dan Moren. “But it’s a little odd that these movies just vanished into thin air. Man, it’s like a bad horror movie.”

The big media companies aren’t sitting on their hands when it comes to Web. Several of the largest studios now offer catalog titles on Hulu, and Metro-Goldwyn Mayer recently posted a few films to YouTube. Warner Bros. has offered a digital copy of the hit Batman film The Dark Knight with every purchase of the movie on Blu-ray disc.

Hollywood will only be persuaded to give better terms to Internet stores when large number of consumers show them that they prefer this to traditional TV viewing.

One recent study found that movie downloads make up only 0.06 percent of studio revenue, said Jan Saxton, an analyst with Adams Media Research. She said her firm estimates that the return is a little higher but is still tiny.

CBS was one of the first TV broadcasters to lock up a lucrative broadcast license for the Wizard of Oz.

“On the other hand they do have series of exploitation windows that keeps the profits coming in and helps the business stay viable,” Saxton continued. “(The studios) aren’t going to rush out to shut those windows and shift to digital distribution without carefully planning a strategy and finding some kind of reasonable return.”

The big question many Apple and Netflix fans will have is why are Web stores being treated as though they are entertainment companies instead of merchants?

More money from TV deals
The cash really started to roll in with the rise of premium cable and pay-per-view channels. These outlets often pay big money for exclusive rights. If they say they don’t want Apple, Netflix, or any other Internet retailer selling or renting films inside their window, then that’s the way it is, according to two high-level studio execs.

One studio exec said Hollywood is trying to manage the transition to digital but is trying to do it in a way that doesn’t kill their biggest money makers. “It wouldn’t make any business sense to do it any other way,” said the source.

In the past two weeks, customers of iTunes and Netflix’s streaming digital-movie service have noticed that a growing number of titles are disappearing from the sites or are scheduled to be removed. MacWorld wrote a story last week about how one of the site’s contributors noticed that of the 15 films he bookmarked for future viewing at iTunes, 9 were no longer available. Among the movies that vanished were Charlie Wilson’s War, Eastern Promises, and Michael Clayton.

You have to go back decades to understand how entrenched these release windows are in the film industry. The major movie studios were once afraid of television until they realized TV represented a big new revenue stream. CBS (now the parent company of CNET News) scored a major hit in 1959 by purchasing exclusive broadcast rights for The Wizard of Oz. The classic movie, starring Judy Garland, aired exclusively on the network for years.

The answer, of course, is because broadcasters say they are.

Spokesmen for Netflix and Apple confirmed that they pulled titles due to these licensing requirements.

To be fair, he has a point. Look at the music industry. Atlantic Records just became the first label to see Internet sales equal that of CD sales and that benchmark took almost a decade to reach. It took that long even though it was easier 10 years ago to download music than to download the huge digital movie files now. As far as quality, the Web appears to be a long way from delivering true high-definition images.

Yes, Dan, it is. And the culprit here is a system that for decades has pumped billions of dollars into the coffers of Hollywood studios and the television industry. What has happened is Apple and Netflix have crashed into windows. “Release windows” is the term used to describe periods of time a certain type of media is allowed to show a movie. Typically, a feature film is first released in theaters, then on DVD, followed by pay-per-view channels and finally on broadcast TV.

The situation comes down to basic dollars and cents. At this point, the revenue from TV deals dwarfs the money Netflix and iTunes generate.

Normally, release windows don’t affect retailers or video-rental services after they’ve begun selling or renting films. Warner Bros. doesn’t go into Best Buy and pull DVDs off the shelf when Comcast airs Casablanca. The corner Mom and Pop video store doesn’t surrender copies of Gladiator to Universal Studios when the film appears on ABC. But Internet stores are being treated differently. What this means for iTunes and Netflix customers is that movies will pop in and out of the services.