Kathryn Cramer

Advanced Marketing Services in Chapter 11 Shortly After 3rd Exec Is Convicted in Fraud Case

Just before the end of the year, Advanced Marketing Services (Pink Sheets: MKTS), a major book distributor (and owner of Publishers Group West), went into Chapter 11 bankruptcy, taking with it a big chunk of US publishing's Christmas receipts. This household has been watching it closely, and this was something I didn't blog because I didn't want to spook anyone with half-baked info.

The New York Times finally got round to running a story on January 5th. Our Year's Best SF series is published by HarperCollins, so I pay particular attention to the line in the NYT piece:

“We’re exploring ways to keep working with them,” a spokeswoman for HarperCollins, Erin Crum, said.

Uuummm. Ooohhkaayy.

Of course everyone caught in this has one big question: Are we going to get paid?

But my bigger question, once I looked into the situation was not whether HarperCollins and a whole laundry list of publishers were going to be able to find a way to continue working with AMS, but rather why they were working with them in the first place.

The New York Times remarks, a little too tactfully:

Advanced Marketing Services’ financial difficulties were widely known in the industry, after an accounting scandal in 2003 resulted in the ouster of several senior managers.

Ouster? Ouster? Try criminal conviction! From the San Diego Union Tribune, dateline December 12, 2006: Former AMS exec sentenced to 3 years for role in fraud case

A federal judge yesterday sentenced the former vice president of advertising at Advanced Marketing Services to 36 months in prison for her role in falsifying earnings at the San Diego company.

Sandra Miller Christie pleaded guilty in 2005 to charges that she conspired with other former employees to defraud AMS clients and inflate the profitability of the company's advertising department. The scheme occurred from 1999 through 2003. . . . Two other former AMS employees were sentenced by Burns earlier this year.

So WHY OH WHY were so many publishers caught short using a company that has just had three employees criminally convicted of cooking the books? The NYT article suggests a possible reason:

The distributor has near-exclusive access to the discount retailers known as price clubs, including Costco and Sam’s Club.

In other words, the problem here is Monopoly Capitalism: there has been so much consolidation of the once-diverse distribution system that publishers are forced to use a distributor known to have major issues with cooking the books in order to reach significant portions of the market.

Hello? Department of Justice? Can we get some anti-trust litigation going here? (Well, at least the FBI is still interested!)

AMS has been in turmoil since 2003, when agents from the FBI raided its Sorrento Mesa headquarters.

Three former AMS executives were sentenced last year to prison after pleading guilty to fraud charges. The executives defrauded publishers of funds that were intended to market books, but retained to boost company revenues, according to federal indictments.

An investigation into the company’s operations remains open, federal prosecutors said.

In addition to the criminal probe, AMS hasn’t reported financial results for more than three years, and has yet to restate its financial results dating back to its 2003 fiscal year.

Publishers Weekly reports:

Several of the largest publishers feel betrayed by AMS—just days before the Chapter 11 filing, AMS had assured the major New York houses that everything was fine.

Publishers Weekly relays Costco's advice on the current situation:

A Costco spokesperson said that until further notice, publishers should operate "on a business as usual basis."

Pay no attention to those men behind the curtain. You are growing sleepy, very sleepy. These are not the accountants you are looking for . . .

Meanwhile, Costco's profits are up:

Costco, the nation's largest wholesale club operator, said Thursday its first-quarter profit rose 10 percent and said it would take a second-quarter charge related to stock option grants.

For the quarter ending Nov. 26, net income totaled $236.9 million, or 51 cents per share, compared with $215.8 million, or 45 cents per share, a year ago. Revenue climbed 9 percent to $14.15 billion from $12.93 billion last year. . . . In October, Costco said an internal committee and independent experts reviewing the company's stock option grant practices found no evidence of fraud, but did find "imprecisions" related to certain grants.

The distributors are much bigger businesses than the publishers and the big box club stores are in turn much bigger businesses than the distributors.

Does ANYONE at Costco or Sam's Club care that they are and have been forcing the entire publishing industry to do business with crooks? It would appear that the answer is no: that's how Costco keeps its prices down.  Business as usual is business with crooks.

Meanwhile, perhaps the best we can hope for the Christmas publishing revenues is that they are having a nice holiday in the Cayman Islands.

Mitläufer in the Caucus-Race: Google Helps Keep China Safe from the Indecency of Democracy; Intel to Help, Too.

Here are two news stories to be read side by side.

Xinhua (China): Central news websites back Internet self-censorship (via Rebecca MacKinnon & Imagethief)

  BEIJING, April 11 (Xinhua) -- China's central news websites on Tuesday backed the proposal of major Beijing-based portals for self-censorship and the eradication of pornographic and violent Internet content.

    In a joint announcement, 11 news websites vehemently supported the initiative, saying it represents the aspiration of China's Internet users.

    "Chinese websites are capable and confident of resisting indecent Internet content," the announcement said.

  The websites also vowed to play a leading role in self-censoring Internet content in compliance with the "Eight Honors and Disgraces", a new concept of socialist morality set forth by Hu Jintao, president and general secretary of the Communist Party of China (CPC) Central Committee, recently.

    "We will make the Internet a vital publisher of scientific theories, spread the advanced cultures and promote decency, so as to boost economic growth, maintain social stability, and promote the building of a socialist harmonious society," they pledged.  . . .

    "We are in a stern opposition to indecent on-line messages that undermine public morality and the culture and fine traditions of the Chinese people," the proposal acknowledged.

. . . and the New York Times: Google Chief Rejects Putting Pressure on China

BEIJING, April 12 — Google's chief executive, Eric E. Schmidt, whose company has been sharply criticized for complying with Chinese censorship, said on Wednesday that the company had not lobbied to change the censorship laws and, for now, had no plans to do so.

"I think it's arrogant for us to walk into a country where we are just beginning operations and tell that country how to run itself," Mr. Schmidt told reporters from foreign news organizations.

Mr. Schmidt is visiting China this week to promote Google's new Chinese search engine and to meet with officials of government ministries. He announced the opening of a research and development center in Beijing's high-technology district and also introduced a Chinese-language brand name for the company's domestic search engine — Gu Ge, which roughly translates as "a harvesting song."

But in briefing sessions that involved both Chinese and foreign reporters, Mr. Schmidt faced questions about the censorship controversy that has involved Google, Microsoft, Yahoo and Cisco Systems.

At a Congressional hearing in February, executives from the four companies were criticized as collaborating with the Chinese government to silence dissidents. Google's Chinese search engine, introduced in January, blocks subjects restricted by the government, including searches for "Tibet" and "democracy."

On Wednesday, Mr. Schmidt defended the decision to cooperate with the censors, saying that accepting the restrictions of Chinese law were unavoidable for Google to enter the Chinese market. "We had a choice to enter the country and follow the law," Mr. Schmidt told the foreign reporters. "Or we had a choice not to enter the country."

Interestingly, Google Inc. is having a few issues with democracy of  its own. From the San Jose Mercury News: Google shareholder wants two-tiered stock structure dismantled

A pension fund that owns 4,735 Google shares -- out of a total of 297 million -- filed a proposal Wednesday asking the Mountain View company to dismantle its two-class stock structure. That arrangement gives co-founders Sergey Brin and Larry Page and Chief Executive Eric Schmidt control of Google.

But to pass, the measure would require the support of those from whom it wants to strip power -- Brin, Page and Schmidt hold nearly 70 percent of the voting control of the company. . . .

Google has two classes of stock. The class B shares held by the three executives count as 10 votes for every share, compared to one vote for every share of class A stock held by most other shareholders. The proposal will be voted on during Google's annual shareholder meeting on May 11.

As of March 17, Brin, Page and Schmidt owned 76.1 million shares of Google stock, almost all of it class B. The shares represented 25.6 percent of all shares outstanding, but gave them voting power worth 68.8 percent.

But returning to the matter at hand, Google's co-option into the Chinese censorship apparatus, I can't help but be astonished how easy it is for smart guys like Schmidt to be transformed into Mitläufer.

MEANWHILE, not wanting to be left out of the Caucus-Race, Intel Corp. has signed a memorandum of understanding with the Shanghai company Baidu: Intel and Baidu 'join hands' in China

HONG KONG (MarketWatch) -- Intel Corp. and Internet search engine Baidu.com have signed a memorandum of understanding to develop search applications for Intel platforms in a deal that could have important branding and technology implications for the two companies in China's high-stakes online market.
According to a press release issued by Baidu's (BIDU : 56.80, +1.22, +2.2% ) offices in Shanghai, the two companies will cooperate in developing search applications for laptops, handsets, personal computers, and other home appliances.

Baidu is basically viewed as a direct competitor to Google's (GOOG : 408.95, -0.71, -0.2% ) growing aspirations in China. The Shanghai-based startup is widely viewed as having a better search engine for Chinese text, however, its ability to search the international web pages lags behind Google. . . .

Intel spokesman Thomas M. Kilroy said the cooperation would "provide optimized search performance".

Um. Optimized for what?

I think it's time for a quote from Alice's Adventures in Wonderland: Chapter III - A Caucus-Race and a Long Tale

'What IS a Caucus-race?' said Alice; not that she wanted much to know, but the Dodo had paused as if it thought that SOMEBODY ought to speak, and no one else seemed inclined to say anything.

'Why,' said the Dodo, 'the best way to explain it is to do it.' (And, as you might like to try the thing yourself, some winter day, I will tell you how the Dodo managed it.)

First it marked out a race-course, in a sort of circle, (`the exact shape doesn't matter,' it said,) and then all the party were placed along the course, here and there. There was no `One, two, three, and away,' but they began running when they liked, and left off when they liked, so that it was not easy to know when the race was over. However, when they had been running half an hour or so, and were quite dry again, the Dodo suddenly called out `The race is over!' and they all crowded round it, panting, and asking, `But who has won?'

This question the Dodo could not answer without a great deal of thought, and it sat for a long time with one finger pressed upon its forehead (the position in which you usually see Shakespeare, in the pictures of him), while the rest waited in silence. At last the Dodo said, 'EVERYBODY has won, and all must have prizes.'

Ah, capitalism! As Richard at The Peking Duck remarks:

Now that China is (or at least seems to be) the place to go to get rich, this seems to be everyone's attitude. "Who are we to impose our cultural beliefs on another country...?" All such complex ethical issues dissolve in front of the one god worshipped by everyone, money.

The Global ONLINE Freedom Act of 2006 (HR 4780)

There are two very different bills with very similar names that are sometimes being discussed interchangeably. Short version: Global ONLINE Freedom Act of 2006 (HR 4780) mostly good; Global INTERNET Freedom Act (HR 4741) lame.

HR 4741 attempts to address the problem of Internet censorship, but its authors seem innocent of the fact that the US is exporting the tools to do the thing the bill's authors want combated.

On  the other hand, HR 4780, on a quick read through, looks pretty good and would sort out a lot of the Google-China type issues, and also seem to me to lay the groundwork for restricting exports of SmartFilter-type stuff, and also some of the most worrisome DRM enforcement tools that may be developed. (Wouldn't it be great to kill DRM by keeping the enforcement tools from being exported from the US into the global market?)

Before leaping into the fray, I want to have HR 4780 explained to me by someone who really knows how to read this sort of thing, but it looks awfully good to me.

Both Rebecca MacKinnon and the EFF have weighed in and have misgivings with the part of the bill specifying that would require US Internet companies to hand over all lists of forbidden words provided to them by "any foreign official of an Internet-restricting country." But I find one passage of Danny O'Brien of the EFF's discussion of what he'd like to see instead at least as problematic as what he intends to replace.

Don't Do Direct Business with Forces of State Oppression

Companies should be prohibited from providing intentional ongoing support and assistance to those who abuse human rights in foreign countries. While many products such as filtering software, Internet monitoring programs and programs to unlock protected data can have multiple uses, American companies should not be actively and knowingly providing services that facilitate censorship or repression.

This is sufficiently vague as to allow for implementation along the lines of a trade embargo in which individuals needing access to US technology to overcome their oppression might be denied it in the name of not doing business with oppressive states.

And MacKinnon remarks,

But we must act in a way that respects the rights of people in other countries as much as we respect our own rights.

These are nice ideals, but I don't see how any kind of Internet filtering technology could be meaningfully restricted without ways of monitoring what was being filtered. My preferred tactic is adding censorware and related technologies to the Munitions List such that their export would require State Department approval, which would be given or not on a case-by-case basis. This would also require a recognition on the part of the US firms creating censorware that it is in a sense a military-type technology and needs to be handled accordingly.

Even if it is not perfect, HR 4780 has a lot to recommend it. Reporters Without Borders apparently supports the bill, and I am tentatively inclined to do likewise. Also, while HR 4780 does not specifically add censorware to the Munitions List, it lays the groundwork for that possibility.

Certainly, we don't need yet another situation in which the US plays global cop, but the bill is aimed mostly at policing our own technology exports in a situation in which we are exporting the tools for dystopia.

Kuwait Dabbling in Allowing Foreign Investment: I Wonder What This Machine Does

Kuwait, which has strict controls on foreign investment, especially in its oil industry, has in the past few years begun to open the door a little to foreign investors in the form of something called Project Kuwait:

In March 2001, Kuwait's national assembly passed the "Foreign Direct Investment Act," which aimed at promoting foreign investment. Among other things, the Act eased restrictions on foreign banks, provided long-term protection to foreign investors against nationalization or confiscation, and eliminated the requirement for foreign companies to have a Kuwaiti sponsor or partner. In the oil sector, the Kuwaiti constitution forbids foreign ownership of Kuwait's mineral resources, but the Kuwaiti government is exploring allowing foreign investment in upstream oil development under terms . . . which provide for per-barrel fees to the foreign firms rather than traditional production sharing agreements (PSA's). The Kuwaiti government is currently making an attempt to enact legislation to facilitate foreign investment in the upstream oil sector, as part of its "Project Kuwait" initiative to boost production capacity. The Kuwaiti parliament is expected to act on the proposed legislation sometime in 2005.  . . .

"Project Kuwait" is a $7 billion, 25-year plan, first formulated in 1997 by the SPC, to increase the country's oil production (and to help compensate for declines at the mature Burgan field), with the help of international oil companies (IOCs). In particular, Kuwait aims to increase output at five northern oil fields -- Abdali, Bahra, Ratqa, Raudhatain, and Sabriya (Kuwait's third largest field) -- from their current rate of around 650,000 bbl/d to 900,000 bbl/d within three years. Project Kuwait has been repeatedly delayed, however, due to political opposition and resistance from nationalists and Islamists in parliament to the idea of allowing foreign companies into the country's oil sector. Legislation which would facilitate Project Kuwait has been introduced again in the Kuwaiti parliament in early 2005. The bill was approved by the Finance and Economic Committee in June 2005, but with amendments limiting its scope to four of the five fields, excluding Bahra. Final action on the bill by the full parliament is still pending, but is expected by the end of 2005.

In February 2003, KPC completed a draft contract and proposed financial terms for Project Kuwait. There are three major consortia competing for the project, led by: 1) ChevronTexaco (along with Total, PetroCanada, Sibneft and Sinopec); 2) ExxonMobil (along with Shell, ConocoPhillips, and Maersk); and 3) BP (along with Occidental, ONGC/Indian Oil Corp.). Reportedly, KPC prefers to have three groups working under three separate IBBCs: one for Raudhatain and Sabriya (the largest IBBC); one for Ratqa, Bahra and Abdali; and one for Minagish and Umm Gudair. Currently, foreign companies like BP, Shell, and ChevronTexaco operate in Kuwait strictly under service contracts (SCs).

Alexander's Gas & Oil Connection (2003) has more detail:

One consortium is led by US major ChevronTexaco, which is the operator and has a 50 % stake. France's Total is the second operator and has a 20 % stake. The consortium's non-operating partners are PetroCanada, Sibneft and Sinopec, each having a 10 % stake.

A second consortium is led by the UK's BP as operator with a 65 % stake, and includes the US' Occidental Petroleum and India's Indian Oil Corporation as non-operators. A third consortium is led by US major ExxonMobil as first operator with a 37.5 % stake. Shell is the consortium's second operator with a 32.5 % stake. US firm ConocoPhillips and Denmark's Maersk are non-operating participants.

I think it's really sweet how they're spreading the love around the member countries of the UN Security Council! For example, group number one includes: Chevron (US), Total (France), Petro-Canada (Canada), Sibneft (Russia), & Sinopec (China). As Henry Kissinger said, power is the ultimate aphrodisiac.

This distribution sounds, well, a little familiar: From the Timesonline, 2004: Saddam ‘bought UN allies’ with oil

The UN oil-for-food scheme was set up in 1995 to allow Iraq to sell controlled amounts of oil to raise money for humanitarian supplies. However, the leaked report reveals Saddam systematically abused the scheme, using it to buy “political influence” throughout the world.

The former Iraqi regime was in effect free to “allocate” oil to whom it wished. Dozens of private individuals were given oil at knockdown prices. They were able to nominate recognised traders to buy the cheap oil from the Iraqi state oil firm and sell it for a personal profit.

The report says oil was given to key countries: “The regime gave priority to Russia, China and France. This was because they were permanent members of, and hence had the ability to influence decisions made by, the UN Security Council. The regime . . . allocated ‘private oil’ to individuals or political parties that sympathised in some way with the regime.”

The report also details how the regime benefited by arranging illegal “kickbacks” from oil sales.

From September 2000, it is said Saddam made $228m (£127m) from kickbacks deposited in accounts across the Middle East. The analysis details only the export of oil — not the import of humanitarian supplies, also alleged to have been riddled with corruption.

So here we see that same UN Security Council buy-off pattern. Interesting. So what's up?

This 2003 article, Kuwait will not Benefit form Foreign Investment in the Northern Fields Even if an Agreement with Iraq is Reached, argues that the purpose of Project Kuwait is not the additional capacity that will be generated, but rather that it is driven by "political consideration."

Kuwait may not benefit from allowing foreign investment in its upstream oil industry because it does not need the additional capacity, especially at a time when Kuwait is trimming its production along with other OPEC members to increase oil prices. Recently, Kuwait called on OPEC members to extend production cuts beyond September 2002 and lobbied successfully to prevent OPEC from increasing its quota. In a recent speech, Nader Sultan, the CEO of KPC, declared that Kuwait will invest in extra capacity only if there is a demand for it. He insisted that investment in extra capacity must be justified by the return on investment; otherwise funds will be directed toward more profitable investments. When OPEC is cutting output, there is no justification for more investment to increase capacity. This conclusion gives even more weight to the previous conclusion that "Project Kuwait" is based mostly on political considerations.

So, just what are the politics of this? Whatever the answer turns out to be, it is likely to be complex, as this 2004 article explains: Scheme to expand Kuwait's oil production likely to cause stir

One of the most heated debates is likely to be on the fate of a scheme proposed by the government to expand production from oilfields in the far north of the country, close to the Iraqi border. On the face of it, this does not seem to be high on the list of controversial subjects that have tend to raise the blood pressure of certain Kuwaiti MPs (like demands that women should be given the vote, for example). But when one points out that the scheme has been on the drawing board since 1998, it becomes clear right away that the proposals are far from straightforward.

The question now is whether the government will succeed this time, having failed thus far in separating the project - known as Project Kuwait - from the complex web of the nation's internal politics. In other words, will it be able to win the National Assembly's support for a venture which it insists is essential for the country's future and which most MPs say is either unnecessary or politically unacceptable.

The authorities are determined to push ahead regardless. An indication of their determination was the recent creation of a post on the board of the state-owned Kuwait Petroleum Corporation (KPC) dedicated to the northern oilfields scheme.

ITPBusiness.net (2005) suggests that Project Kuwait may be a way off, in effect, allowing Kuwait the use of the military capacity of the participating countries:

Some analysts, however, think it is the government astutely playing geopolitics: let foreign oil prospectors go digging along the border, and should Iraqi tanks rumble over their wells, the majors’ governments will hear their cries and run to Kuwait’s defense.

Despite the controversial nature of Project Kuwait, it seems to have survived the death of one of its key supporters, Emir Sheikh Jaber al-Ahmed al-Sabah.

Kuwait's government is trying to push through parliament the $8.5 billion Project Kuwait, involving multinationals to upgrade four major northern oilfields to help boost its output capacity.

"The country has set a long-term oil strategy which will not change. It is committed to increasing production capacity to meet the needs of the oil markets," Baghli said.

"Project Kuwait will eventually pass after parliament adds the legal touches and some regulatory restrictions on the government," he said.

Several MPs have objected to the plan in its current form, and the parliament is due to hold a special session on January 23 to discuss the long-awaited project, which has been under discussion since the early 1990s.

As of last week Kuwait's Energy Minister Shaikh Ahmad Fahd Al Sabah said top ministry executives will meet with audit bureau officials to 'reach an understanding on the issue':

Kuwaiti MPs and the government have discussed legal and financial objections to a controversial $8.5 billion oil investment in which foreign oil majors would participate.

Objections to the legal framework and financial details had been raised by the audit bureau, the state accounting watchdog, prompting MPs in December to withdraw a report on the long-stalled project preventing its debate in parliament.

The head of parliament's financial and economic affairs committee MP Ahmad Baqer, a former justice minister, said the panel asked the bureau to prepare a fresh report based on new information sent by the energy ministry.

The report will be assessed by the committee after three weeks when it would probably take a final decision on the investment which has been opposed by more than 20 MPs of the 50-member parliament.

Energy Minister Shaikh Ahmad Fahd Al Sabah, who attended the meeting, said top ministry executives will meet with audit bureau officials to 'reach an understanding on the issue.'

'We will study the bureau's comments on the project ... and could accept some of them to make the necessary changes,' Shaikh Ahmad said.

Eight and a half billion dollars, hmm? I think they'll reach an understanding.

UPDATE: Via Mountain Runner, I happened across this Knight Ridder news story: Administration backs off Bush's vow to reduce Mideast oil imports. Why would the Administration want to reduce Mideast oil imports when Kuwait is ready to cut our oil companies such a deal?!?

Find Out How Your Site Rates on SmartFilter

If you've been wondering how to find out what SmartFilter thinks of your site and the sites you regularly read, here's how to find out what their censors think of you and your reading habits: the SmartFilterWhere URL Checker:

I love the stock-art lady wit the curls in their graphic. What is she finding so fascinating on the screen? Has she perhaps found something they missed in their attempts to sanitize the web?

SmartFilter: Holocaust Denier

Found on the blog grin and bare it, this astonishing post (I can't seem to find a way to link to individual posts, so I've used a screen shot):

(Full text below the cut.)

Secure Computing: My Letter to Paxworld

This is part of a series on Secure Computing and SmartFilter.

I just sent the following letter to Anita Green, V.P. for Social Research at Paxworld, a socially responsible mutual fund with significant investments in Secure Computing (SCUR):

Dear Anita Green:

I am writing to express concern about one of the companies in the Paxworld Balanced Fund's portfolio, Secure Computing (SCUR). While I am not one of Paxworld's investors, I support the general philosophy of companies like yours. I am an investor in the New Alternatives Fund which emphasizes alternative energy.

I have several concerns about the SCUR. Chief among these is that it is my understanding that they are licensing their censorship software, SmartFilter, to the oppressive governments of Saudi Arabia, United Arab Emirates, Qatar, and Tunisia.  It really ought to be illegal for them to export content restriction software to governments that restrict freedom of speech and freedom of the press. It isn't yet, but this practice should be strongly discouraged on human rights grounds.

Secondly, this same software has been licensed to the US Military and is in use controlling what military personnel and security contractors can read overseas. If all they were filtering out was hardcore porn, that would be one thing. But their filtering is much more expansive and includes, for example, the popular weblog BoingBoing which no reasonable person would consider smut. Also there seems to be a political bias to which sites are available for viewing and which are not. And the company seems to have a very aggressive idea of what constitutes pornography and nudity. I had a very unsatisfactory correspondence with Tomo Foote-Lennox of Secure Computing yesterday about what kinds of depictions of breastfeeding might make it through their filters, for example. Mr. Foote-Lennox seems to have a very sexualized concept of the mother infant relationship which bears some examination in light of the censorship power he exercises and his claims that he is protecting the interests of children.

I would like to encourage you to consider divesting Paxworld of their SCUR holdings.

Sincerely,

Kathryn Cramer

I suppose I should also have mentioned SCUR's unsubstantiated claims in their 2004 report about various domains hosting vast troves of porn but I didn't want to go on too long.

 

Secure Computing, Smart Filter, & the Female Breast

This is part of a series on Secure Computing and SmartFilter. The image to the right is via the Got BreastMilk? Project.

Following the New York Times story Popular Web Site Falls Victim to a Content Filter, concerning Secure Computing's product SmartFilter blocking BoingBoing,  I wrote the following letter to Tomo Foote-Lennox, of Secure Computing, who is apparently the guy in charge of deciding what is smut and what isn't. He claims to be a defender of the interests of children:

In an e-mail message to Xeni Jardin, another of Boing Boing's chiefs, Tomo Foote-Lennox, a director of filtering data for Secure Computing, asked why the bloggers were starting a war. "We discussed several ways that you could organize your site so that I could protect the kids and you could distribute all the information you wanted," Mr. Foote-Lennox wrote.

One of the BoingBoing posts that Secure Computing used to justify classifying involved a shot showing a cat attempting to nurse on a woman's breast: Japanese TV show about cat that loves human milk. The image was very blurry and involved less actual nudity than your average shot of an Oscar-night dress. As a very experienced nursing mother, my hunch was that nursing, not an interspecies relationship, nor the expanse of cleavage, was at issue. So I wrote to Secure Computing's Censor-in-Chief to ask about this issue.

Regular readers of this blog are aware that I write with some frequency about breastfeeding issues, and may even be aware that when BBC Radio needed a Representative of American Womanhood to talk about nursing in public, they picked me. I have spent hundreds of hours nursing in public and have nursed on most major airlines and even nursed from the podium while doing public speaking. This is not a political stance, but rather a matter of pure practicality. The BBC pitted me against a man who said over and over that Public nudity is not socially acceptable, in the context of arguing that a nursing mother (Margaret Boyle-White) who refused to stop when confronted by UK police should have been arrested. I was followed on the program by Scottish MP Elaine Smith, who had introduced the bill recently passed at the time of the program making it an offense to stop mothers breastfeeding in public. (Preventing a woman from breastfeeding is already illegal in the State of New York.)

So I wrote the following letter to Foote-Lennox, to try to tease out whether what I suspected was true:

Dear Thom Foote-Lennox:

I am writing to express concern about your remarks concerning BoingBoing in the New York Times. As a long time BoingBoing reader, I am quite certain that it is by no stretch of the imagination a porn site. But I am also a nursing mother, so I am also concerned about what exactly causes you and your company to draw the conclusion the the nursing cat post was porn.

Nursing is not a sexual act. While there exist adults who sexualize children and the activities of children such as nursing, that is not what is going on in that image. The nursing cat seems to me simply a stand-in for a breast pump. Breast engorgement is a real phenomenon and dealing with it is a practical, not a sexual problem.

So what exactly about the nursing cat is sexual?

Sincerely,

Kathryn Cramer
Pleasantville, New York

He replied:

We never called it porn.  We have categories for pornography, but we rated this as nudity.  Some of our customers want to limit the viewing of nude pictures in their schools or offices.  We give them the ability to make that choice.

- Tomo

I wrote back:

So a site that, say, depicted public breast feeding would make your list as nudity?

Kathryn

He replied:

Look at our categories on our web site.  Medical diagrams (women nursing cats on television don't count) are rated as nudity if they are explicit, but also as health, educational or consumer information.  Many elementary schools choose to block all nudity, but high schools usually exempt health and education, meaning if it is health or education, you ignore any other category it may have.

- Tomo

I wrote back:

You are aware that in some countries where women are not even allowed to expose their faces in public, it is socially acceptable for women to bare their breasts to feed their infants, yes?

K

It strikes me when I read his replies that, first of all, my basic intuition is correct. It was exposing the human breast in the context of nursing that was perceived as sexual and inappropriate, not the surreal twist given it by Japanese TV.

When breastfeeding in public for those hundreds of hours (sometimes even in elementary schools [gasp!]; always with at least one child present), I utterly failed to to provide health, educational, and consumer information. Here's voice-over I forgot to give: You know, dear, using breastmillk as eye-drops works as well for clearing up pink-eye as commercial pharmaceuticals! And it works pretty well in clearing up ear infections when used as ear drops as well! I assumed you knew. You did know that, didn't you? Mothers: always remember to educate the public while nursing in public, lest your public nursing be taken as some kind if sexual act!

Secondly: here I am talking to the Internet Censor-in-Chief for the US Military and their overseas contractors and for three countries (Saudi Arabia, the United Arab Emirates, and Qatar), and he has this oddly sexualized idea of breastfeeding. He's just this guy, and he's entitled to his personal quirks, but exactly how did this situation evolve to put him in charge of deciding what is sexual and what is not? What is porn and what is not? What he was giving me was distanced by being a description of how software works, but was really very close to the rantings of that strange little man the BBC pitted me against who just kept repeating "nudity is not socially acceptable."

Combining this with questions about the legitimacy of Secure Computing's claims to have found vast quantities of porn on some sites, I conclude that the awarding of these sweeping contracts to them was really quite premature, even if you accept the idea that the military and three whole countries need their Internet censored (which I don't). What exactly qualifies this guy to evaluate what is and is not nudity, porn, inappropriate, etc.? Did he have some special training? Even Justice Potter Stewart was reduced to trying to define porn by saying "I knowing when I see it." Secure Computing offers much more than a definition: multiple categories of inappropriate material, each with their own definition. So just where does this guy Tomo get off telling the world exactly the manner in which the female breast may and may not be displayed on the Internet?

What I think we have here is censorship practiced as a kind of fetishism: Secure Computing employees read the Internet with a dirty mind and then have their way with it based on what they read into what they see.

Anti-Intelligence: Secure Computing (SCUR)

Before I begin, I want to say that there needs to exist something like the US Munitions List for the various types content restriction software and that it should be illegal to export content restriction software and various DRM enforcement tools to countries that do not respect freedom of speech and freedom of the press. There really ought to be a law --

This blog post started out as a remark on a headline from American Chronicle: New Anti-Intelligence Leak Initiatives Adopted by Gov't. The headline pertains to leaks involving the CIA. But before the ink was even dry on the post, I found a really fine example of what one might mean by "Anti-Intelligence."

If there is such a thing as anti-intelligence, it must certainly figure into the business model of the company Secure Computing, which is making money selling censorware to oppressive governments. (That'll teach the world to sing!)

Mark Frauenfelder writes:

It helps corrupt dictators oppress their people. In defiance of the US government's stated goal of promoting democracy around the world, Secure Computing has the gall to license its filtering products to totalitarian governments, such as the United Arab Emirates, Qatar, and Saudi Arabia. These countries, which have government-run ISPs, pass all their citizens' web requests through centralized filters. Can you imagine having a business model that includes selling tools of oppression to tyrants?

Their product description for SmartFilter, currently blocking BoingBoing and possibly also Google's translation tools, begins:

Protect your organization from the risks associated with employee Internet use with SmartFilter® Web filtering. By controlling inappropriate Internet use with SmartFilter, organizations can reduce legal liability, enhance Web security, increase productivity, and preserve bandwidth for business-related activities. SmartFilter puts you in control.

But given whom they are selling to and the purpose it's being put to, it might as well read:

Protect your country from the risks associated with citizen Internet use with SmartFilter® Web filtering. SmartFilter puts you in control.

Why wait for the Dystopian Future when you can have it right now?

Secure Computing’s executives are John McNulty, President, Chairman and CEO; Tim Steinkopf; Senior Vice President and Chief Financial Officer; Vincent M. Schiavo, Senior Vice President, Worldwide Sales; Mike Gallagher, Senior Vice President, Product Development; Mary K. Budge, Senior Vice President, Secretary and General Counsel, Paul Henry, Vice President, Strategic Accounts, and Scott Montgomery, Vice President, Product Management. T. Paul Thomas has resigned after a "brief stint" as senior vice president, marketing and corporate strategy in early March.

Looks to me like the one possibly responsible for the worrisome international deals is probably Vincent M. Schiavo, Senior Vice President, Worldwide Sales.

Prior to joining Secure Computing, Vince Schiavo was president at PolyServe, Inc., an enterprise software development firm, where he guided the company from concept to international presence with multimillion-dollar annual software revenues. With 21 years in the computer industry, Mr. Schiavo has a proven track record in OEM sales, distribution channels, direct sales, business development, marketing and team leadership. He served as Vice President, Worldwide Sales at Sonic Solutions, Inc. and has also held sales and marketing positions with Radius, Inc., Apple Computer, Inc. and Data General Corporation. Mr. Schiavo has a B.S. in Computer Science from the University of Maryland.

Secure Computing is a publicly held company with ticker symbol SCUR. This is a chart of how their stock as done over the past year:

This Press Release came out from the company over Business Wire this morning:

Secure Computing's SmartFilter and Webwasher Products Help Customers Manage Internet Usage Policies While Preserving Bandwidth

SAN JOSE, Calif.--(BUSINESS WIRE)--March 6, 2006--Secure Computing Corporation (NASDAQ:SCUR - News), the experts in securing connections between people, applications and networks(TM) today announced that its SmartFilter® and Webwasher® Secure Content Management suite can help companies manage important bandwidth and maintain employee productivity during high profile events such as college basketball's signature event, the 2006 NCAA Basketball Tournament, which is also known as March Madness(TM).

I imagine it also helps whole countries preserve bandwidth during public beheadings or while  filling mass graves, yes? I think I need a new category: Corporate Navel-Gazing.

Here are their major shareholders. Perhaps some could be pursuaded to divest themselves of SCUR on moral grounds.

To date, Secure Computing's press coverage seems to have been dominated almost entirely by their press releases. There seems to be almost no discussion of the company or the nature of its products on the financial discussion boards. Perhaps that needs to change.

Also, their execs do make public appearances from time to time. Someone might want to go see Paul Henry, VP of Strategic Accounts, and ask what is strategic about selling censorware to tyrants. Here are a few of his speaking engangements:

• The Association for Operations Managment: Thu, Apr 13 2006, Denver, CO.
• LayerOne: Sat, Apr 15 2006, Pasadena, CA.
• CSI NetSec 2006: Tue, Jun 13 2006, 3:15-4:15PM, Scottsdale, AZ

Finally, if any of the Secure Computing execs are reading this, I suggest they read about the recent media shutdown in Kenya, for example, before they license their products to any more oppressive governments. This isn't about whether the US rock'n'roll lifestyle can be exported, or whether  corporate employees or people in the milotary get to see nipples at work. This is about very basic freedoms: Freedom of Speech and Freedom of the Press. Thou shalt not export censorware to tyrants.

UPDATE: It appears that one of SCUR's major stockholders, Paxworld Balanced Fund, is a socially responsible mutual fund. We should all politely request that they request themselves of SCUR.

(See also Websites blocked by political stripes for Marines in Iraq? on BoingBoing.)

Watermarking as a Strategy for Insisting on Corporate "Creators": Is DRM the Killer App for Corporate Authorship?

Ed Felton at Freedom to Tinker has a good post on the problem of digital watermarking, How Watermarks Fail (via BoingBoing), in which he concludes that watermarking schemes (such as Koplar's VEIL technology, discussed in my post VEIL Technology: Four Patents & an Application the other day) are not well suited for Digital Rights Management (preventing unauthorized copying of copyrighted material).

The discussion in the comment section is particularly interesting. Consider this comment, for example:

Let’s imagine a case where Microsoft’s post-Vista OS, codenamed Blacksheep, will only work with video cards that require a watermark in order to play Super-HD video (2048-4096 lines of resolution). Then such videos could be distributed in encrypted form with the watermark embedded. The decryption and watermark detection algorithm could be public; however the encoding/embedding algorithm would be secret.

Users could use the public decryption algorithm to create raw MPEG files with the watermark stripped, but would not be able to play them on commercially available video cards (similar to how video cards are now requiring monitors with HDCP support in order to play HD video). Users would not be able to create new videos with altered watermarks because the algorithm to do that is secret.

If digital watermarking schemes for DRM are put into practice, they may have little effect on the problem of bootleg versions of mega-corporate products. However, as discussed in the comment section, they may be quite effective about keeping digital artistic productions by individuals out of the distribution system: in the end, what DRM may accomplish is forcing individuals to give big corporations a cut for distribution just to get the authorized watermarking.

My experience in the early-mid 90s teaches me that part of the purpose of setting the production standards of early CD-ROMs absurdly high was to promote corporate authorship over individual authorship with the idea that digital products could be authored like film and TV, not like books, thus empowering the executive level and disempowering the actual creators, or rather reconfiguring relations such that executives become part of the creative "team."

Now computers are being sold that allow individuals, and small groups of individuals, to produce works to very high production standards on very low budgets. This also threatens the rise of corporate authorship. So watermark-style DRM may do very little to prevent the "piracy" about which the big media corporations are up in arms, it may be the killer app of corporate authorship.

It needs to be said over and over that in the early '90s, corporations did not own or control most of these digital rights they now claim the right to defend. In large part, these rights were taken, without additional compensation, from the artistic creators. (I know who the real pirates are!)

Transitioning from a world where art is created by individuals to a world where it is "created" by corporate "creative teams" is the second part of an overall stratgey to consolidate corporate control over the revenue that can be extracted from the popular arts; for creating a future in which consumers remain consumers and don't try to horn in on the revenue due to producers of artistic commodities.

(See also Dr. K.)

VEIL Technology: Four Patents & an Application

After hearing Cory Doctorow's terrific guest of honor speech at Boskone, an updated version of his Microsoft DRM speech, I have become interested in finding out about this VEIL technology which is in proposed legislation (Digital Transition Content Security Act, HR 4569) intended to "plug the analog hole" aka the "a-hole." (This rhetoric reminds me of the joke about why the asshole is the body's most important organ. Someone in this process forgot to hire a writer.)

What made my little ears prick up at the discussion of VEIL is the unreasonable secrecy surrounding the technology. It is summarized nicely at Freedom to Tinker:

I emailed the company that sells VEIL and asked for a copy of the specification. I figured I would be able to get it. After all, the bill would make compliance with the VEIL spec mandatory — the spec would in effect be part of the law. Surely, I thought, they’re not proposing passing a secret law. Surely they’re not going to say that the citizenry isn’t allowed to know what’s in the law that Congress is considering. We’re talking about television here, not national security.

After some discussion, the company helpfully explained that I could get the spec, if I first signed their license agreement. The agreement requires me (a) to pay them $10,000, and (b) to promise not to talk to anybody about what is in the spec. In other words, I can know the contents of the bill Congress is debating, but only if I pay $10k to a private party, and only if I promise not to tell anybody what is in the bill or engage in public debate about it.

Worse yet, this license covers only half of the technology: the VEIL decoder, which detects VEIL signals. There is no way you or I can find out about the encoder technology that puts VEIL signals into video.

This secrecy screams SCAM to me, and regular readers of this space know that I have been finding certain kinds of secrecy and scams entertaining of late. So I'm taking a look. Koplar Communications International, home of VEIL technology, seems to be a real company with a real address and real execs and all that (unlike certain companies I've lately looked into). But the response Freedom to Tinker got to their inquiry is just wrong wrong wrong. And in my experience, when you find something like that and start picking at the threads, things get interesting pretty quickly.

So lets pick at threads. I mean, it's not like a technology to be used this widely for consumer applications ought to be classified, is it? This sort of thing is supposed to be open for public debate, i.e. debate by the public.

Here's the opening of the VEIL Wikipedia entry:

Video Encoded Invisible Light (VEIL) is a technology for encoding low-bandwidth digital data bitstream in video signal, developed by VEIL Interactive Technologies. VEIL is compatible with multiple formats of video signals, including PAL, SECAM, and NTSC. The technology is based on a steganographically encoded data stream in the luminance of the videosignal.

The Veil Rights Assertion Mark (VRAM or V-RAM) is a DRM technology combining VEIL with a broadcast flag. It is also known as "CGMS-A plus Veil" and "broadcast flag on steroids."

This morning, I added some listings of the patents plus an application probably associated with this to the Wikipedia entry. (There was one there; I added a few more.)