Digital Media

This was originally posted at ZDNet's Between the Lines.

FriendFinder Networks, the company formerly known as Penthouse Media Group, is filing to go public to pay off almost a half a billion in debt in an equity market that stinks. Simply put, FriendFinder is launching an IPO Hail Mary to stay alive. At least FriendFinder's initial public offering filing turned up a bunch of interesting nuggets.

FriendFinder is best known for its Adult FriendFinder site, which is a social network for folks looking for services that probably shouldn't be mentioned on a family friendly site on Christmas Eve. But I'm a sucker for an entertaining regulatory filing as are a few other bloggers (Techmeme).

The IPO, which is underwritten by a firm called Renaissance Capital (we're not talking Goldman Sachs and Morgan Stanley folks), details a bevy of interesting stats such as churn rates on Adult FriendFinder as well as nuggets on how Penthouse magazine is trying to cover sports and games. FriendFinder also operates sites such as AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com, and SeniorFriendFinder.com.

As background, Penthouse bought Various, which is the parent of FriendFinder, a year ago for $400 million. The $460 million in potential IPO proceeds will go to paying off FriendFinder's almost $450 million in debt. For the nine months ending September 30, FriendFinder had revenue of $243 million, operating income of $17.6 million and a net loss of $32.3 million. Prior year comparables are largely irrelevant since you're comparing a social network to Penthouse magazine.

Here's all you really need to know: This IPO is a Hail Mary pass for survival. The company says it all in its prospectus:

Our ability to continue as a going concern is dependent on our ability to raise additional capital, including from this offering. As of September 30, 2008, our balance sheet had approximately $43.3 million in cash and restricted cash and $420.1 million in short-term debt, net of unamortized discount, $411.0 million of which had been reclassified from long-term debt, due to our failure to comply with certain covenants and restrictions in the agreements governing our 2005 Notes and 2006 Notes and our subsidiary's First Lien Senior Secured Notes, Second Lien Subordinated Secured Notes and Subordinated Convertible Notes and for which waivers had not been obtained...If we are unable to cure such defaults and/or obtain waivers, we could trigger the acceleration of payment provisions in such agreements which would require us to immediately repay up to approximately $466.0 million to our noteholders. We do not currently have sufficient cash to repay this indebtedness if our debt is accelerated and if the noteholders instituted foreclosure proceedings against our assets, the proceeds of the assets could be insufficient to repay such indebtedness in full. Under these circumstances, we may be unable to continue operating as a going concern.

Comforting eh?

At least there are some really interesting stats from FriendFinder (since we don't get much color from private social networks like Facebook). Here's a look:

• FriendFinder averaged 1 million paying subscribers a month for the first nine months of September 30. That's good for 77.2 percent of Internet revenue. Net revenue per subscriber was $19.06 a month.

• Paid users, people who pay by usage, averaged 1.7 million minutes a month--good for 19.6 percent of revenue.

• The monthly churn rate is 18 percent for the nine months ending September 30, down from 19.6 percent at the end of 2007. Here's the breakdown by product category (click to enlarge):

(Credit: FriendFinder)

• Ad revenue of $152,356 a month for the nine months ending September 30 is skimpy. The company is hoping to change that, but acknowledges: "We have never generated significant revenue from internet advertising and may not be able to in the future."

• A nice history lesson on Various, which operates other social networks beyond Adult FriendFinder.

• American Express won't process credit card transactions for adult material.

• Various neglected to collect taxes in the EU. The company says:

After our acquisition of Various, we became aware that Various and its subsidiaries had not collected VAT from subscribers in the European Union nor had Various remitted VAT to the tax jurisdictions requiring it. We have since registered with the tax authorities of the applicable jurisdictions and have begun collecting VAT from our subscribers in the European Union and remitting it as required. We have initiated discussions with most tax authorities in the European Union jurisdictions to attempt to resolve liabilities related to Various' past failure to collect and remit VAT, and have now resolved such prior liabilities in several jurisdictions on favorable terms, but there can be no assurance that we will resolve or reach a favorable resolution in every jurisdiction. If we are unable to reach a favorable resolution with a jurisdiction, the terms of such resolution could adversely affect our financial condition or results of operations.

Overall, I'd file this IPO filing in the "you must be kidding" department.

Track Santa Claus' Christmas Eve sleigh via Google Earth.

(Credit: Google)

As it has for the past four years, Google will be mapping Santa Claus' trek from the icy North Pole to rooftops around the globe on Christmas Eve. But this year, good girls and boys can track their gifts via mobile phones and Twitter, too.

Starting at 3 a.m. PST on Wednesday, a Google Map with Santa's current location will be displayed on the NORAD Santa Web site, operated by Google and the North American Aerospace Defense Command.

Santa fans can also track his movements in 3D in Google Earth (download) by downloading a special NORAD Tracks Santa KML. iGoogle users can add a NORAD Tracks Santa gadget to their iGoogle page.

Google will be displaying high-resolution "Santa Cam" video of the gift-laden airborne sleigh. For locations without video, photos from Panoramio will be displayed in Google Maps.

And for the first time, people can track Santa's journey on mobile phones with Google Maps for Mobile and follow him on Twitter by adding "@noradsanta."

You can read the history of Google's Santa tracking efforts on the Official Google Blog.

Google became NORAD's official Santa Tracking technology partner last year. NORAD has been tracking Santa for about 50 years.

Residents of the Redding and Chico areas of Northern California who had still been watching analog TV were moved to digital channels on Monday as the CBS, NBC, and Fox stations permanently switched to digital-only TV two months ahead of the national mandate.

Station executives said on Tuesday that the transition went well, except for those households that didn't have an analog-to-digital converter.

"We did a good job about getting the word out about converter boxes early," said Doug Holroyd, general manager of Fox KCVU, which serves as many as 12,000 households.

The station gave away converter boxes at a town hall last week and did as much as it could to inform the community about what viewers need to do to guarantee continued service during the transition, he said.

The U.S. government is providing coupons for $40 off the price of a typically $60 converter box, but the coupons take 30 days to arrive in the mail and expire after 90 days, said John Stall, general manager for the CBS and NBC affiliates, which serves more than 30,000 households in Chico and Redding.

With the February 17 deadline quickly approaching, the window for using coupons to buy converter boxes is closing. Many people are likely to wait until the last minute to buy the boxes, running the risk that they will see empty shelves and have their TV left in the dark on that day.

That, in part, was why Fox KCVU decided apply to transition early to digital-only TV, Holroyd said. But it also lets the station change receivers on mountain tops before they get too snowy and difficult to reach, he said, adding that an analog transmitter in Eureka was dying anyway. In granting the request for the early transition, the FCC felt the area's mountainous terrain and sparser population made it an ideal test market, Holroyd added.

When the local station cuts the analog signal off, people also will have to set their digital tuners to do a re-scan to find the digital station, and if the station is moving the digital signal to a different channel, people may also need to delete the original channel on the scanner, Stall said.

The transition will mostly affect smaller markets and rural areas with households that aren't using cable or satellite service. An estimated 18 percent of the households in the country will need to use digital converter boxes, according to Nielsen.

"The digital signal offers a better picture, but it is also a little tricky," Stall said. "It can get blocked out by trees; it is line-of-sight...if you put an antenna on your roof you shouldn't have a problem."

Residents in Chico and Redding appear to have fared better than people in Wilmington, N.C., who were switched over to digital in September in the first real-world analog-to-digital trial. The U.S. Federal Communications Commission hotline and phones at the local Wilmington stations were inundated with calls.

For more details on what consumers need to do read "What you need to know about the digital TV switch."

A publisher of mostly small, local newspapers has sued the New York Times Co. over its aggregation of news headlines on Boston.com, challenging the practice many sites use of linking to other sources.

In its lawsuit filed in U.S. District Court in Massachusetts on Monday, Fairport, N.Y.-based GateHouse Media, which publishes more than 100 papers in Massachusetts, accuses the Times of violating copyright by allowing its Boston Globe online unit to copy verbatim the headlines and first sentences from articles published on sites owned by GateHouse, including the Newton Tab.

The links, as seen on Boston.com's Newton site for instance, lead to the original articles on the GateHouse-owned sites, which display advertising. However the lawsuit claims GateHouse is losing advertising revenue as a result of the linking because readers don't see the ads on the GateHouse site's home page.

The linking also confuses readers, leading them to believe that GateHouse endorses the linking practice, according to the lawsuit.

Catherine Mathis, senior vice president of corporate communications at the New York Times, said the linking practice is commonly used around the Web and that GateHouse's claims are without merit.

"Boston.com's local pages, like hundreds of other news sites, aggregate headlines and snippets of relevant stories published on the Web. They link back to the originating site where the interested user can read the entire article," she wrote in a statement.

"Far from being illegal or improper, this practice of linking to sites is common and is familiar to anyone who has searched the Web," Mathis wrote. "It is fair and benefits both Web users and the originating site."

In an e-mail sent to GateHouse staff, an executive said GateHouse had taken the legal action after being unable to resolve the matter informally.

"GateHouse has taken this step to enforce its rights under the law and protect the integrity of its trademarks and original news content, in furtherance of its ability to provide hyper-local news coverage to its newspaper readers and website viewers in the communities throughout the greater Boston region which it has served over many years," wrote Kirk Davis, president of GateHouse Media New England. "As a matter of policy, I won't be commenting further on this matter. Instead, it is appropriate that we let this matter take its natural legal course."

Google got heat a few years ago for its Google News aggregation of headlines and summaries and settled a copyright lawsuit with Agence France-Presse last year. Google also is paying the Associated Press to use its content on Google News.

Meanwhile, a weekly publication in Chicago, The Chicago Reader, has pointed the finger at The Huffington Post for re-posting an entire concert preview.

In an e-mail sent to CNET News on Tuesday, Chicago Reader Web Editor Whet Moser wrote that the Huffington Post had printed multiple concert previews "in full from multiple publications over the course of a couple months."

Huffington Post co-founder Jonah Peretti defended the site's aggregation practice to Wired News and said the complete article re-printing was a mistake.

Online research firm Futuresource released a study Monday that discussed the relative success Blu-ray is enjoying right now in Western Europe.

According to the report, Blu-ray disc sales are up significantly in Europe so far this holiday season, and based on its findings, it believes the strong sales will continue through 2009. In fact, it believes European Blu-ray sales will triple during 2009, seeing 2.5 million players enter homes next year. Similar results are being witnessed in the U.S.

But that's not all. A release last week claimed the latest Batman film, The Dark Knight, witnessed sales of 1.7 million Blu-ray units, representing the most popular Blu-ray title of all-time.

Quite impressive, eh? Well, what if I told you that worldwide combined DVD and Blu-ray sales of The Dark Knight totaled 13.5 million units? Suddenly, that 1.7 million Blu-ray unit mark doesn't look so hot next to the 11.8 million DVDs that were sold, huh?

Of course, we shouldn't expect Blu-ray to catch up anytime soon. According to Futuresource in a study it released earlier this year, Blu-ray isn't expected to outsell DVD until 2012. And even then, Blu-ray will control just a bit more than 50 percent of media sales with DVD coming in around 45 percent to 50 percent. In other words, DVDs will still be a major force four years from now.

Based on all that information, can we honestly sit here and say that Blu-ray has a chance at becoming the success DVD is?

I just don't see it.

Facebook's chief privacy officer is expected to declare his candidacy soon for attorney general of California, according to a report on TechCrunch.

Chris Kelly, who will run in the 2010 general election as a Democrat, is expected to leave the social-networking site in June to focus on his campaign, according to the report.

For Kelly, who has led the company's negotiations with state attorneys general on issues such as privacy, it will mean a sort of a change of sides. In May, Kelly negotiated an agreement with the attorneys general of 49 states and the District of Columbia to develop age verification technology.

Kelly first began publicly dealing with state attorneys general in October 2007. Andrew Cuomo, the New York state attorney general, subpoenaed Facebook after his office conducted an undercover investigation that he said yielded a slow response from the social network to complaints of harassment and inappropriate conduct.

Later that month, Facebook reached an accord with Cuomo's office, in which Kelly admitted that Facebook had "slipped a little bit" in its vigilance toward user privacy.

Kelly has a law degree from Harvard, and has worked at international law firm Baker & Mckenzie and technology law firm Wilson Sonsini Goodrich & Rosati.

Other declared candidates for the attorney general's office include San Francisco District Attorney Kamala Harris, Torrance Assemblyman Ted Lieu, and Pittsburg Assemblyman Gerald Canciamilla.

Warner Music Group has been saying since Saturday that it was the one who asked that the label's videos be removed from YouTube after talks to renegotiate its licensing deal with Google's video site stalled.

That's not what happened, say two high-level sources with knowledge of the negotiations.

YouTube began removing videos from its site after Warner came to YouTube with an "11th-hour demand" for better financial terms, according to the sources. All four of the top recording companies are renegotiating their contracts with YouTube for music and music videos.

Managers at the Web's largest video site considered Warner's demand. The label received its answer when YouTube began pulling videos. YouTube also beat Warner to the punch by firing the first public relations volley when it notified the public of the split by posting a note to the company's blog. Ever since, Warner's PR people have been busy trying to get their side of the story out.

Perhaps that's why headlines have resurfaced about how all four of the top labels are interested in building their own YouTube competitor, and how YouTube isn't driving much money to the record companies, and how Warner's departure may be a bad signal for YouTube.

None of that is accurate. Here's what my music industry sources said: the labels have not made any serious plans to build their own music-video site, at least not those that have tallied big returns from video streaming and YouTube. I reported earlier this year that Universal had considered a video site, but the plan hasn't gone anywhere since.

As for the kind of revenue YouTube is delivering to the labels, Silicon Alley Insider reported that Universal Music Group is making as little as $25,000 a month on ad revenue fees. That is flat out wrong, my sources said.

An executive with Universal Music Group told me on the record last week that YouTube has made the No. 1 music company "tens of millions" of dollars this year. I reported, as did Peter Kafka at All Things Digital, that Universal is on track to book nearly $100 million in video-streaming revenue this year. Some of that money comes from other services, but the source said 80 percent is from YouTube.

By all indications, Warner overplayed its hand. YouTube can afford to let Warner walk. The vast majority of music listened to at YouTube comes from the two largest recording companies: Universal and Sony BMG. Universal, the label that represents U2, Kanye West, and The Rolling Stones, is the most-viewed YouTube channel all time with more than 3 billion views. Sony BMG is a distant second with 491 million views.

Warner isn't even in the top 10. The record company's 278 million views is good enough only for 11th place.

So it appears that some labels are happy with YouTube money and Warner is not. According to my sources, some of Warner's problems with the Web's No. 1 video site are of its own making.

Google's gift to staffers: the HTC Dream, or G1, smartphone.

(Credit: James Martin/CNET Networks)

Clarification added December 30 (see text below).

For Googlers eagerly awaiting their famous holiday bonuses, be warned: Santa is tightening his belt too.

Google employees, some of whom have reportedly grown used to fairytale-like cash bonuses on the north side of $20,000, apparently got coal in their stockings this year. Certainly that's the takeaway for gossip blog Valleywag, which in a headline likened this year's bonus to "dogfood"--a euphemism for in-house testing--because Google would like some feedback. (Clarification: A few Google employees have contacted me to suggest that Valleywag's report on holiday bonus amounts of $20,000 likely confused performance bonuses with holiday bonuses said to be on the order of $1,000.)

So how bad was it? Well, Google gave its employees a smartphone. Yep, can you believe it? Man, if I had a nickel for all the years my bosses gave me a smartphone...

But I digress. Back to Google's gift. Apparently, Valleywag took issue with Google giving its employees an Android--its own phone! Well, actually, the memo that Valleywag reprinted referred to it as a "Dream phone." It's basically the T-Mobile G1 that retails for $179.99, but it's been customized to "work anywhere in the world" on the carrier of their choice. (Google estimates its value at $400.)

The nerve!

Here, in the real world, while many in the tech industry have received pink slips, Google employees are receiving a gift--oh, yeah, it is a gift--that many people would love to find under their trees. What a bummer, man. As far as the dogfooding goes, I am guessing that this company that has a reputation for being astoundingly generous when economic realities were more positive isn't going to can employees for not sending back the questionnaire.

Now, back to the topic of Santa...

This was originally posted at ZDNet's Between the Lines.

Could Google, Microsoft, and Yahoo be the equivalent of Ford, GM, and Chrysler decades ago?

That thought-provoking question was raised by Bernstein analyst Jeffrey Lindsay, who cooks up weekend missives designed to make you go hmm. The argument is an interesting one. Lindsay notes that the downturn of 2001 to 2003 in Web advertising--AOL imploded and Yahoo fumbled--allowed Google to emerge. Instead of getting bought, the future search giant went public and owned the sector.

Fast-forward a bit and MySpace, YouTube, and Facebook had no shot at going public. Facebook had its IPO shot, but blew it. Lindsay says:

Will the current downturn provide the condition for the next Google to emerge--and if so where will it come from? The problem today is that today's Internet players have formidable cash piles which they can use to buy up almost anything. The venture capital players that brought the Internet sector into being have generally less cash to hand and are becoming increasingly interested in other sectors.

Buick, Oldsmobile, and Chevrolet were the high-tech industry of the early 20th century. They were gobbled up to become GM. I thought Lindsay was stretching a bit when I read through his research note. But then I pondered Yahoo, which has Flickr, Delicious, Rivals.com, Zimbra and a bunch of other properties in its collection. Are these properties really any different than the nameplates and brands that GM and Ford have?

Microsoft and Google are similar stories. Any company that may be a threat someday is gobbled up. In the last two years, Microsoft has made an acquisition every three weeks, according to a Wikipedia tally. Google has made an acquisition every five weeks over the last two years. And why are all of these acquisitions happening? Microsoft, Google, and Yahoo all have too much dough that theoretically should be returned to shareholders.

Lindsay writes:

We think having massive cash reserves causes the Internet companies to do the wrong thing. Microsoft has operated a loss-making online services division now for years. Current projections suggest that the company's online activities may lose $1.5 billion in 2009--just to keep the option open for Microsoft to expand its online activities in the future. The net effect of Microsoft subsidizing its loss-making online activities is that it creates problems for the other players--such as Yahoo and AOL. Having three Web 1.0 portals around in the current market ensures that there is overcapacity in display advertising. Nobody at the minute can get even halfway decent CPMs, because these three players are supporting three large sales forces, three ad serving platforms and are cutting each other's throat on pricing. Add to that the fact that all three are supporting one or two network/exchanges each. Each of the large Internet players owns an in-house ad exchange network now. This virtually ensures that nobody can get any pricing power in display and that the premium ad display business is constantly undermined by bargain basement pricing on the network/exchanges.

Lindsay says that Google is better than Microsoft and Yahoo but it's blowing money at a rapid clip on inefficient product development. The point: Companies with a ton of cash can be stupid. Would eBay have acquired Skype if it had to raise funding from Wall Street?

Lindsay's argument continues:

While we would be among the first to agree with the general principles of Chandler's "Coming of Managerial Capitalism" that consolidation is the inevitable corollary of increasing efficiency in almost all industries, we think the maturation of the Internet sector is being accelerated by the large players with big cash piles. Quite simply the Internet sector is getting old before its time because several large players are buying up just about anything that looks interesting and the venture capital sector is much less active. What makes things worse is that the large players are not doing much with these new technologies and innovative management teams once they take them inside. Nor is this necessarily a good situation for shareholders. We would further argue that today's internet players are increasingly acting like yesterday's media conglomerates. Arguably this has already been the downfall of AOL and has been a major factor in Yahoo's recent demise. The problem with the Web 1.0 portal model is that they all copy each other's strategies.

Examples of copycat "innovation" abound. AOL launches a photo site, Yahoo copies and then buys Flickr. MSN follows with a copycat. Google gets Picasa. There are four finance portals-AOL Finance, Yahoo Finance, Google Finance, and MSN Finance. It's a similar situation for personals sites. Are these sites really necessary?

The bright side: A downturn is forcing these companies to cut back on spending. Google may not need those additional data centers. Microsoft and Yahoo still may become pals. AOL.com will eventually merge into another portal. However, there are no guarantees that these Internet giants won't continue to be dumb with their dollars. If the likes of Google, Yahoo, and Microsoft continue on their current path they could be on a fast track to a Detroit-like future, argues Lindsay. He concludes:

To our grandparent's generation Detroit was the equivalent of Silicon Valley--we would rather the Internet remained a source of innovation and wealth for future generations.

This morning I wrote a story about Jerry Scroggin, owner-operator of Bayou Internet and Communications, and why he thinks copyright owners should compensate ISPs if they want help protecting content from piracy.

To give readers an idea of the kind of requests he receives from film and music companies each month, Scroggin forwarded some of his e-mail exchanges. Those are included here.

The first is from Payartists, which according to its Web site "provides a way for copyright infringers to settle their disputes with the copyright owners" and in this case was representing the family of the late rocker Frank Zappa.

The next notice is from Safenet, an information-security company, on behalf of Warner Bros. Entertainment. Near the bottom, within the body of the e-mail from "Tommy (presumably a Payartists employee)" you can see one of Scroggin's replies, which he said is his typical response.

Note: I have removed IP addresses and some personal identifying information.

From: xxxxxxxxxx@payartists.com
Sent: Sun 12/14/2008 4:26 PM
To: Jerry Scroggin
Subject: Second Notice of Claimed Infringement
***NOTE TO ISP: PLEASE FORWARD THE ENTIRE NOTICE***

Re: SECOND NOTICE OF INFRINGING ACTIVITY Cease and Desist Infringement of Copyrights Owned Exclusively by the Zappa Family Trust
Reference#: XX-XXXXXX (M)
2008-12-14 13:01:23 PST

Dear Sir or Madam:

We are authorized agents of the Zappa Family Trust ('ZFT'). On 2008-11-30 13:01:14 PST we sent you a notice of infringement with reference#: AE-xxxxxxx. That letter also notified Bayou Internet that downloading of sound recordings of performances of Frank Zappa compositions that occurred at your IP address XXX.XXX.XXX.XX on or about 2008-11-28 18:31:02 PST infringed copyrights belonging exclusively to the ZFT. As of today we have not yet received a response from you regarding this matter. You are at risk for being a repeat infringer.

The ZFT is the owner of all right, title and interest, including without limitation the copyright therein, in and to the Frank Zappa musical compositions, which are embodied on sound recordings being unlawfully copied and distributed by you at the following IP address XXX.XXX.XXX.XX. The undersigned is authorized to act on behalf of the ZFT, whose exclusive rights are being infringed. The composition(s) owned by the ZFT that have been infringed at the above IP address are as follows:

Infringement Source: Gnutella
Current Infringement Timestamp: 2008-11-28 18:31:02 PST
Infringers IP Address: 2008-11-28 18:31:02 PST
Infringers IP Address: XXX.XXX.XXX.XX
Infringers Port: XXXXX

Listing of infringement(s) (Title/Filename/Timestamp/Hash):
Wind Up Workin\' In A Gas Station | 2008-11-28 18:31:02 PST | Frank Zappa - Wind Up
Workin' In A Gas Station.mp3
RE: ONGOING INFRINGEMENTS

We hereby demand you immediately and permanently cease and desist the unauthorized copying and or distribution (including, but not limited to, downloading, uploading, file sharing, file 'swapping' or other similar activities) of recordings of Frank Zappa compositions, including but not limited to those items listed in this correspondence. If you do not so cease and desist activities that infringe copyrights belonging to the ZFT, the ZFT will pursue every available remedy including injunctions and recovery of attorney's fees, costs and any and all other damages which are incurred by the ZFT as a result of any action that is commenced against you. Should we become aware in the future that you have yet again infringed additional copyrights belonging to the ZFT we will pursue every available remedy against you and we will also promptly request that your ISP enforce its acceptable use policy against you.

RE: INFRINGEMENTS THAT HAVE ALREADY OCCURED

In regard to the infringements that have already occurred and that have been described above: while the ZFT is entitled to monetary damages from the infringing party under 17 U.S.C. Section 504, the ZFT believes that it may be expeditious to settle this matter without the need of costly and time-consuming litigation. In order to help you avoid further legal action from the ZFT, we have been authorized to offer a settlement solution that we believe is reasonable. This is our second notice to you in regard to your infringement of copyrights belonging to the ZFT.

If, within the next ten (10) business days, you do not agree to settle this matter in accordance with the terms proposed at the link described below, or make other arrangements through us to settle this matter with the ZFT, the ZFT will pursue every available remedy including injunctions and recovery of attorney's fees, costs and any and all other damages which are incurred by the ZFT as a result of any action that is commenced against you.

If you choose to accept the settlement offer at the following URL, then the ZFT will agree to settle all claims in regard to the acts of past infringements described above.

To access this settlement offer, copy and paste the following URL below into a browser and follow the instructions at that website:

https://www.payartists.com/?n_id=AE-XXXXXX
Password: xxxxxx

Nothing contained or omitted from this letter is, or shall be deemed to be either a full statement of the facts or applicable law, an admission of any fact, or waiver or limitation of any of the Zappa Family Trust's rights or remedies, all of which are specifically retained and reserved.

The information in this notification is accurate. I, as agent for the ZFT, have a good faith belief that use of the material in the manner complained of herein is not authorized by the copyright owner, its agent, or by operation of law. I swear, under penalty of perjury, that I am authorized to act on behalf of the owner of the exclusive rights that have been infringed.

Very truly yours,

Tommy Funderburk
President
FFS Enterprises, LLC
dba Payartists.com
6656 B Dume Drive
Malibu, California 90265
United States
+1 XXX-xxx-xxxx

**For any correspondence regarding this case, please send your emails to xxxxxxxx@payartists.com and refer to Notice ID: AE-XXXXXX. If you need immediate assistance or if you have general questions please call the number listed above.

--------------------------

Wednesday, December 17, 2008

Bayou Internet
1109 Hudson Lane
Monroe, LA 71201 US

RE: Unauthorized Distribution of the Copyrighted Motion Picture Entitled Gran Torino

Dear Jerry Scroggin:

We are writing this letter on behalf of Warner Bros. Entertainment Inc. ("Warner Bros.").

We have received information that an individual has utilized the below-referenced IP address at the noted date and time to offer downloads of copyrighted motion picture(s) through a "peer-to-peer" service, including such title(s) as:

Gran Torino

The distribution of unauthorized copies of copyrighted motion pictures constitutes copyright infringement under the Copyright Act, Title 17 United States Code Section 106(3). This conduct may also violate the laws of other countries, international law, and/or treaty obligations.

Since you own this IP address (XX.XXX.XXX.XXX), we request that you immediately do the following:

1) Disable access to the individual who has engaged in the conduct described above; and
2) Take appropriate action against the account holder under your Abuse Policy/Terms of Service Agreement.

On behalf of Warner Bros., owner of the exclusive rights to the copyrighted material at issue in this notice, we hereby state, that we have a good faith belief that use of the material in the manner complained of is not authorized by Warner Bros., its respective agents, or the law.

Also, we hereby state, under penalty of perjury, under the laws of the State of California and under the laws of the United States, that the information in this notification is accurate and that we are authorized to act on behalf of the owner of the exclusive rights being infringed as set forth in this notification.

Please direct any end user queries the following.

Warner Bros. Entertainment Inc.
Attn: Worldwide Anti-Piracy
4000 Warner Blvd.
Burbank, CA 91522
xxx-xxx-xxx -
XXXXXXX@warnerbros.com - email

Kindly include the Case ID XXXXXXXX also noted above, in the subject line of all future correspondence regarding this matter.

We appreciate your assistance and thank you for your cooperation in this matter. Your prompt response is requested.

Respectfully,

A Kempe
Enforcement Coordinator
SafeNet, Inc.

-----------------------------
From: Tommy (presumably a Payartists employee)
Sent: Sun 12/21/2008 7:40 AM
To: Jerry Scroggin
Subject: Re: FROM PAYARTISTS.COM your non response

jerry@XXXXX.com wrote:
guys you have sent me 3 threats now without proof. We all know IPs are easily spoofed. I have asked for your billing information so we can have a contract signed and full understanding of what i do. If you want me to work for you you should expect to pay. I dont work for free.

(reply from Payartists)
Please attached the reference # (s) you where given with the notices and we will attach the evidence. We understand that IP's are easily spoofed, but the notice you recieve is a result of your ISP (Internet Service Provider) investigated our claim and the ISP traced it back to your subscription.

Send us the reference # (s) and we will verify and investigate the matter further.

In regards to billing, we fail to understand what you mean with that!

Regards
Payartists.com

For more stories, see: RIAA's year-end shocker