Net News

European Music Industry Files 2000 Lawsuits in 10 Countries

A new wave of lawsuits has swept across Europe as a global industry group seeks to shut down file-sharing networks and encourage legal purchases of online music.

The International Federation of the Phonographic Industry (IFPI) filed about 2000 suits in 10 countries last month. The move brings the overall number of suits filed by the group to 5500 in 18 countries.

That number does not include the U.S., where the Recording Industry Association of America (RIAA) operates. Considered a sister organization to its European kin, the RIAA has filed about 18,000 lawsuits since it began its enforcement actions against music pirates.

In the UK, a recent report by research firm XTN noted that illegal downloads there have increased from 3% to 28% since last September. The alarming rise has led the IFPI to seek more enforcement and bring more file-swappers to court.

In Portugal, sales of CDs have dropped by 40% in the past 4 years. Industry analysts there blame file-sharing networks for the sharp decline.

The breadth of enforcement actions has had some effect on illegal downloading, some analysts have reported, driving sales higher at legal music services.

But many are doubtful that piracy can be wiped out completely by antipiracy initiatives. Some reports have suggested that illegal downloads still are continuing at a relatively fast clip.

'There are just too many tools and ways to exchange files, and these guys are smart enough to know how to use them,' says Yankee Group analyst Michael Goodman.

Although it makes sense that those in the industry would put up roadblocks to protect their property, it also is reasonable to assume that some dedicated pirates simply will find ways to go around those barriers, Goodman adds.

U.S. online advertising revenues grew for a third consecutive year as keyword ads targeted to specific search queries continued to dominate, an industry group said recently.

Online advertising set a new record of $12.5 billion last year, a 30% increase from the previous high of $9.63 billion in 2004, the Interactive Advertising Bureau (IAB) said.

Search remained the largest generator of revenues, accounting for $5.1 billion, or 41%, of the 2005 figures. That's slightly higher than the 39% share in 2004.

Internet ads also set a record for the fourth quarter, with revenues totaling $3.6 billion, a 34% jump from the same period in 2004 and 15% more than the previous record of $3.1 billion, set in the third quarter of 2005.

'Interactive advertising continues to experience tremendous growth as marketers experience its overall effectiveness in building brands and delivering online and offline sales,' Greg Stuart, chief executive of the IAB, said in a statement.

Stuart said he expects growth to continue as advertisers find additional ways to exploit opportunities in broadband video, Internet-based television and online games.

Despite the record revenues, Internet advertising represents only 5% of all U.S. advertising revenues, up slightly from the 4% share in 2004, PricewaterhouseCoopers LLP said in the study it conducted for IAB.

Nonetheless, in a report released last month, Merrill Lynch media analyst Lauren Rich Fine estimated spending on Internet ads this year will increase 27%, surpassing magazines and the Yellow Pages ' both more established media markets.

Search has been the big driver in online advertising in recent years. It accounts for virtually all the revenues at search engine leader Google Inc., which helped pioneer the format in which text ads are displayed alongside regular search results, customized to the subject on which a user is searching.

Banner and other display ads made up the second-largest category, accounting for 21% of 2005 revenues. Online classified followed at 17%.

Consumer-related ads, such as those for drug stores, toys, retail stores, travel services and cars, accounted for half of last year's revenues. Financial services and computing made up about 12% each, and telecommunications companies accounted for 7%.

An Arkansas judge recently approved a preliminary settlement worth up to $90 million between Google Inc. and advertisers who claimed the world's leading Web search provider overcharged them for their ads.

The settlement applies to all advertisers in Google's network during the past 4 years. Any Web site showing improper charges dating back to 2002 will be eligible for an account credit that could be used toward future ads distributed by Google.

The total value of the credits available to advertisers will be lower than $90 million because Google has earmarked part of that amount to cover fees of lawyers who filed the case last year in Arkansas state court.

The lawsuit, filed by Lane's Gifts and Collectibles of Texarkana on behalf of all Google advertisers, revolves around one of the most sensitive subjects facing Google and Yahoo, Inc.

Mountain View, CA-based Google makes virtually all of its money from text-based advertising links that trigger commissions each time they are clicked on. Besides enriching Google, the system has been a boon for advertisers, whose sales have been boosted by an increased traffic from prospective buyers.

But sometimes mischief-makers and scam artists repeatedly click on specific advertising links even though they have no intention of buying anything. The motives for the malicious activity, known as click fraud, vary widely, but the net effect is the same: advertisers end up paying for fruitless Web traffic.

The lawsuit alleged Google had conspired with its advertising partners to conceal the magnitude of click fraud to avoid making refunds.

The frequency of click fraud hasn't been quantified, causing some stock market analysts to worry that Google's profits will falter if it turns out to be a huge problem.

Google executives have repeatedly said the level of click fraud on its ad network is minuscule, a contention that the settlement amount seems to support.

The $90 million translates into less than 1% of Google's $11.2 billion in revenue during the past 4 years.

NY Attorney General Eliot Spitzer last month accused a major Internet pop-up advertising company of secretly installing spyware and sending ads through spyware already installed on personal computers.

Spitzer sought a court order in state Supreme Court to stop Direct Revenue from allegedly installing millions of pop-up ad programs that he said also monitors the Internet activity of users.

Spitzer claims Direct Revenue or its distributors offered free games, browsers or software but never mentioned the spyware that was attached in the downloads.

European Music Industry Files 2000 Lawsuits in 10 Countries

A new wave of lawsuits has swept across Europe as a global industry group seeks to shut down file-sharing networks and encourage legal purchases of online music.

The International Federation of the Phonographic Industry (IFPI) filed about 2000 suits in 10 countries last month. The move brings the overall number of suits filed by the group to 5500 in 18 countries.

That number does not include the U.S., where the Recording Industry Association of America (RIAA) operates. Considered a sister organization to its European kin, the RIAA has filed about 18,000 lawsuits since it began its enforcement actions against music pirates.

In the UK, a recent report by research firm XTN noted that illegal downloads there have increased from 3% to 28% since last September. The alarming rise has led the IFPI to seek more enforcement and bring more file-swappers to court.

In Portugal, sales of CDs have dropped by 40% in the past 4 years. Industry analysts there blame file-sharing networks for the sharp decline.

The breadth of enforcement actions has had some effect on illegal downloading, some analysts have reported, driving sales higher at legal music services.

But many are doubtful that piracy can be wiped out completely by antipiracy initiatives. Some reports have suggested that illegal downloads still are continuing at a relatively fast clip.

'There are just too many tools and ways to exchange files, and these guys are smart enough to know how to use them,' says Yankee Group analyst Michael Goodman.

Although it makes sense that those in the industry would put up roadblocks to protect their property, it also is reasonable to assume that some dedicated pirates simply will find ways to go around those barriers, Goodman adds.

U.S. online advertising revenues grew for a third consecutive year as keyword ads targeted to specific search queries continued to dominate, an industry group said recently.

Online advertising set a new record of $12.5 billion last year, a 30% increase from the previous high of $9.63 billion in 2004, the Interactive Advertising Bureau (IAB) said.

Search remained the largest generator of revenues, accounting for $5.1 billion, or 41%, of the 2005 figures. That's slightly higher than the 39% share in 2004.

Internet ads also set a record for the fourth quarter, with revenues totaling $3.6 billion, a 34% jump from the same period in 2004 and 15% more than the previous record of $3.1 billion, set in the third quarter of 2005.

'Interactive advertising continues to experience tremendous growth as marketers experience its overall effectiveness in building brands and delivering online and offline sales,' Greg Stuart, chief executive of the IAB, said in a statement.

Stuart said he expects growth to continue as advertisers find additional ways to exploit opportunities in broadband video, Internet-based television and online games.

Despite the record revenues, Internet advertising represents only 5% of all U.S. advertising revenues, up slightly from the 4% share in 2004, PricewaterhouseCoopers LLP said in the study it conducted for IAB.

Nonetheless, in a report released last month, Merrill Lynch media analyst Lauren Rich Fine estimated spending on Internet ads this year will increase 27%, surpassing magazines and the Yellow Pages ' both more established media markets.

Search has been the big driver in online advertising in recent years. It accounts for virtually all the revenues at search engine leader Google Inc., which helped pioneer the format in which text ads are displayed alongside regular search results, customized to the subject on which a user is searching.

Banner and other display ads made up the second-largest category, accounting for 21% of 2005 revenues. Online classified followed at 17%.

Consumer-related ads, such as those for drug stores, toys, retail stores, travel services and cars, accounted for half of last year's revenues. Financial services and computing made up about 12% each, and telecommunications companies accounted for 7%.

An Arkansas judge recently approved a preliminary settlement worth up to $90 million between Google Inc. and advertisers who claimed the world's leading Web search provider overcharged them for their ads.

The settlement applies to all advertisers in Google's network during the past 4 years. Any Web site showing improper charges dating back to 2002 will be eligible for an account credit that could be used toward future ads distributed by Google.

The total value of the credits available to advertisers will be lower than $90 million because Google has earmarked part of that amount to cover fees of lawyers who filed the case last year in Arkansas state court.

The lawsuit, filed by Lane's Gifts and Collectibles of Texarkana on behalf of all Google advertisers, revolves around one of the most sensitive subjects facing Google and Yahoo, Inc.

Mountain View, CA-based Google makes virtually all of its money from text-based advertising links that trigger commissions each time they are clicked on. Besides enriching Google, the system has been a boon for advertisers, whose sales have been boosted by an increased traffic from prospective buyers.

But sometimes mischief-makers and scam artists repeatedly click on specific advertising links even though they have no intention of buying anything. The motives for the malicious activity, known as click fraud, vary widely, but the net effect is the same: advertisers end up paying for fruitless Web traffic.

The lawsuit alleged Google had conspired with its advertising partners to conceal the magnitude of click fraud to avoid making refunds.

The frequency of click fraud hasn't been quantified, causing some stock market analysts to worry that Google's profits will falter if it turns out to be a huge problem.

Google executives have repeatedly said the level of click fraud on its ad network is minuscule, a contention that the settlement amount seems to support.

The $90 million translates into less than 1% of Google's $11.2 billion in revenue during the past 4 years.

NY Attorney General Eliot Spitzer last month accused a major Internet pop-up advertising company of secretly installing spyware and sending ads through spyware already installed on personal computers.

Spitzer sought a court order in state Supreme Court to stop Direct Revenue from allegedly installing millions of pop-up ad programs that he said also monitors the Internet activity of users.

Spitzer claims Direct Revenue or its distributors offered free games, browsers or software but never mentioned the spyware that was attached in the downloads.