In the mid-'90s, two broadcast networks were founded to compete with the original "Big Three" networks as well as with Fox, which after a decade on the air had begun to establish itself.

The networks, UPN and The WB, each had some individual hits, but overall they both struggled to compete and lost billions of dollars. It served as a reminder that even TV networks are just businesses, with no guarantee of profits. Some business models and opportunities don't pan out, but fortunately the parties involved were able to try out new ways to please the viewers.

In September 2006, their owners, CBS and Warner Bros., essentially merged the best content from the two networks to form The CW. The CW hasn't catapulted to the top, but it is now occasionally competing among the likes of NBC, making it appropriate to start speaking of a new "Big Five".

The CW's website, CWTV.com, is made to appeal to its young female target demographic. The CW is banking on using lots of online show-related content and social networking to keep its audience engaged and coming back.

It has all the usual tokens in spades, and more. To start, it has plenty of mobile content, photos of the shows and their stars, games, and downloadable content like buddy icons and wallpaper. And all its most popular programs have their own themed widgets. The site also offers a calendar with trivia such as celebrity birthdays to sweeten the fact that it also delivers info about its shows.

But there's also a section devoted entirely to the music of The CW's prime-time series. Several of The CW's series serve double duty as promotions for musicians, which is handy when you run a music label in addition to a TV network.

At the end of each episode of several programs, viewers see an announcement of which bands played the music that was featured in the show; they can also go online to see a list of which tracks played in which episodes, often with a direct link to buy the song online. The audience likes it because it exposes them to new music, and content creators can use it to make up for sagging revenue in both music and television.

Working in a similar fashion is the CW Style section, which (when available) allows viewers to find clothes similar or identical to the ones worn by stars on half a dozen of The CW's hottest shows.

Also helping to keep the audience engaged is The CW's embrace of forum boards (with tens of thousands of members) and new media staples like social networking--the Facebook fan page for The CW is well over 50,000 strong--and personal blogs.

Even the video player is evidence of this "audience engagement" strategy: it doesn't have any fancy controls (you can send custom clips via email and expand video to fullscreen) or superior quality, but it does have "The CW Bonus Box" in which trivia about the show and little quiz questions appear during video playback.

CWTV.com really is all about keeping the viewers' attention, making their favorite shows part of a lifestyle, and drawing them back week after week.

Neither UPN nor The WB could survive alone, so they experimented with a new business model that has started to prove successful. CWTV.com is part of that model, providing extra value to keep viewers involved, and from the looks of things, it's working.

The New York Times had a piece yesterday about Disney's new movie Earth, which opened last Wednesday to coincide with Earth Day. To generate buzz for the movie, Disney pledged to plant a tree in a Brazilian rainforest for every ticket sold for the movie during it's first week.

The problem? The movie was already available over P2P networks, no ticket necessary.

Now maybe none of the people who are sharing that particular movie illegally online would have gone to see it in theaters, so maybe the rainforests didn't actually suffer much for this particular file being available online. But it certainly underscores the point that piracy of copyrighted content doesn't just harm our digital society; it can even have a negative impact on the rest of our world too. And that's a shame.

Arts+Labs is very excited to announce our newest member, BMI (Broadcast Music, Inc).  We released this statement today.

Arts+Labs, a unique alliance of the technology, content and creative communities, announced today that Broadcast Music, Inc. (BMI) has signed on as its newest partner.  BMI, a U.S. performing rights organization whose members include leading songwriters, composers and music publishers, unites with current Arts+Labs partners AT&T, Viacom, NBC Universal, Cisco, Microsoft and the Songwriters Guild of America in an effort to forward the group's vision of a thriving digital society.

Launched in September 2008, Arts+Labs was formed to encourage cross-industry collaborations that support a number of initiatives including: enhanced and intelligent Internet infrastructure, safe, legal and accessible distribution of content and respect and recognition of copyright. Arts+Labs aims to ensure that artists, creators and innovators can safely choose to make their works available through online distribution channels so that their right to earn fair compensation for their creativity is respected.

"We are proud to join the Arts+Labs coalition and look forward to participating with its technology and creative community members in its digital and copyright agenda," said BMI President & CEO, Del R. Bryant.  "We believe that the global economy is driven by copyright and creativity and the partnership with the digital communities is a dynamic force in this transformation. By being a member of this coalition, songwriters, copyright owners, digital technology innovators and media leaders will be able to help create and endorse systems that will ensure creators rights and fair compensation for all."

A key element of the Arts+Labs mission is to inform and educate consumers about the availability of legal, safe, affordable and innovative entertainment content on the Internet.  The group is co-chaired by Mike McCurry, former White House press secretary to President Bill Clinton (1995-1998), and Mark McKinnon, a former songwriter and newspaper editor who is widely regarded as one of the most insightful voices on the use of modern media.

"It's an absolute pleasure to collaborate with an established group like BMI, who shares our vision of a vibrant and expanding digital marketplace," said Arts+Labs co-chair Mike McCurry. "Arts+Labs take pride in the diverse makeup of our supporters and we're delighted that BMI brings another collaborative voice to the table on behalf of its impressive list of its songwriters, composers and music publishers." 

"As a former songwriter myself, I appreciate how difficult it is to create music and how vital it is to be fairly rewarded for your creativity," added Arts+Labs co-chair Mark McKinnon. "We welcome BMI and look forward to a successful partnership."

It's hard to discuss online video for very long without bringing up Hulu. Hulu is a massively popular video-on-demand website, a joint venture of NBC Universal and Fox Entertainment Group. Because of the range of free content it carries, the clean design and the solid features of the site, we've found ourselves turning to Hulu to get our viewing fix time and again.

It's not that Hulu carries a bevy of content that can't be found anywhere else. Indeed, you can find many of its TV episodes on the websites of the individual networks. But Hulu packs the content from all those networks onto one sleek site, making it easy for viewers to find and watch their favorites.

CNET's Greg Sandoval had a great article over the weekend about whether the Pirate Bay verdict last Friday is a harbinger of things to come for the free culture movement. Sandoval suggests that maybe it is, asking if online piracy has reached a "tipping point."

Underscoring that point, Sandoval cites Arts+Labs' own Mike McCurry about the very real cost of piracy:

"There might be just a point here where the culture is changing on what's legitimate behavior online," said Mike McCurry, the former White House press secretary under President Bill Clinton and co-chairman of Arts+Labs, a collaborative group of technology and media companies. "I think perhaps something of a tipping point has been reached where people are finally saying that activity we thought was just okay or skirting around the edge has tipped over into something both dangerous, criminal, and unfair."

Of course it isn't the big stars or the label and studio executives who are hurt most by piracy, especially during a recession, as CNET acknowledges:

The tab for all that so-called free content is being picked up by stunt men, makeup artists, secretaries, sound engineers, editors, truck drivers, and lots of other people who work for media and entertainment companies, according to the executives. They maintain that at a time of massive corporate cutbacks and layoffs, media and entertainment firms have to cut a little deeper because of piracy. So, the stakes are higher now for content creators.

So what's the way forward? If this is the tipping point, how do we knock the piracy racket all the way over? NBC Universal's Rick Cotton says collaboration and experimentation by both ISPs and content creators are the key:

"What's important is all the creators of the broadband Internet be working together to reduce pirating activity," Cotton said.

We couldn't agree more. Those who want to address piracy effectively support both consumer education and business experimentation to find new business models.

According to Wired (and many others), the four men "connected to The Pirate Bay, the world's most notorious file sharing site, were convicted by a Swedish court Friday of contributory copyright infringement, and each sentenced to a year in prison."  They were also "ordered to pay damages of 30 million kronor ($3.6 million)" for the infringement of various movies and music.

What can be said?  We are certainly sorry that it came to this point.  It did not have to.  The desire to access and share content can be fulfilled without violating the rights of artists and creators.  The right of artists to earn a fair living from their work has been vindicated.  We are very glad to see that. 

At CNet, Arts+Labs' "Rick Carnes, president of the Songwriters' Guild of America, said he and everybody else "put out of business by cyber-looting" was smiling after the verdict."

"I would like to tell the Pirate Bay the same thing everybody has told us for the past 10 years," Carnes said. "They should go out and find a new business model, one that doesn't involve profiting from stolen property...What everybody who steals music should realize is that e-looting is not a victimless crime. Everyone who does it is hurting themselves. They are killing the music.

"They are turning the Internet into a cyber Somalia," Carnes continued, "and that doesn't do any good for anybody."

Our digital society is stronger when the rights of our artists and creators are secure.  We applaud the Swedish court for confirming these rights.

According to CNet, YouTube "is bringing in more professionally made content and plans to make it a marquee product."

The Internet's largest video site on Thursday announced that it has struck deals with a host of entertainment companies, including Sony Pictures, CBS (parent company of CNET News), Metro-Goldwyn-Mayer, Lionsgate, Starz, and the BBC, to acquire "thousands" of TV episodes and hundreds of films. The new content will only be available in the United States.

YouTube executives also said during a conference call that they have redesigned part of its Web site to create separate areas for professionally made content. On the site's front door will be two new tabs.

Arts+Labs Co-chairman Mike McCurry has released the following statement.

We need to see all of the details, but at first blush this looks like convincing evidence that the marketplace is working to deliver legal, accessible, high-quality content to consumers over the Internet.  This agreement is further proof that the creative community and the technology sector can successfully cross industry lines to build a better digital society.

When it comes to delivering quality content, the focus is commonly on delivering static media like music and video. But arguably the most interesting and powerful form of sharing and content delivery on the internet has long been in video games, which have built a broad user base.

While some solo games are compelling, computer allies and opponents typically become predictable and stale far faster than humans do. Developers of computer games took advantage of the internet to greatly increase the value of their games by connecting players from across the globe to each other. Each new player brings slightly different skills and personality to the table, which makes every game experience new.

As computer games took great strides in connectivity, console games lagged far behind. Early efforts at connecting players over the internet were plagued by a variety of problems, not the least of which was the relative difficulty of establishing a stable connection for a video game console at a time when connecting to the internet meant tying up a phone line.

So to get even a minimal multiplayer experience of 2 to 4 players, gamers had to either gather some friends at the house or drop quarters on a public arcade machine. And video game consoles were pretty much limited to playing games; over the course of the '90s they could play CDs and then DVDs, but they didn't offer anything special over other relatively cheap electronics.

Microsoft got into the video game console market with the original Xbox in late 2001, making it clear at the time that it was part of Microsoft's strategy to be at the forefront of multimedia convergence. Beyond just playing music CDs, the Xbox could store (what was then considered) a decent amount of music on its standard 8 GB hard drive.

Thinking ahead, Microsoft also included an Ethernet port on the standard Xbox which, combined with the hard drive, could be used to download new content after the games' release. A year after the release of the console, Microsoft launched the online service Xbox LIVE.

Xbox LIVE started with limited functionality, but nevertheless signed up more than a quarter of a million users in its first two months, and steadily gained popularity.

What LIVE did give to players, aside from the great leap of being able to reliably play console games with other people over the internet, was a single standard for voice communication and a unified identity and friends list for all games across the platform. This put Xbox LIVE on the leading edge even among computer games, few of which had built-in voice communication and all of which had walled-off communities.

In many ways, it served as a test run for an expanded and improved service when, in late 2005, Microsoft launched its next generation of video game console, the Xbox 360. By this time, all Xbox titles had some kind of tie-in to the LIVE service - online competitive play, downloadable content, and the like.

With continuous improvements in both form and function, Xbox LIVE started to grow much more rapidly. Far more gamers now have access to broadband, which has always been needed for LIVE, and most Xbox owners have the requisite hard drive or memory unit.

So what can you expect if you try out Xbox LIVE today? Quite a lot.

We've been pleased to see the widespread negative reaction to the leak and pirating of an unfinished copy of Wolverine.  As COED Magazine wrote, "the online fan community itself condemned the leak. Universally."   We think that's a positive sign of the kind of mutual respect for rights and property that needs to exist in a digital society. 

So, we are delighted to see confirmation of our take in Newsweek's read of the conventional wisdom.

Read the full Newsweek CW report here.

As tax day draws closer, Arts+Labs has been working to spread the word about the dangers of inadvertent file-sharing on P2P networks, which we've written about before (here on the DailyBeast and also on the ArtLab blog).

On Friday, Arts+Labs executive director Coley Hudgins talked to CNET about some practical advice for keeping your documents safe from prying eyes on P2P networks:

Another potential risk comes from programs that may be on the computer that you don't know about, and not just malware. For instance, if teenagers using the same computer that the tax preparation is done on have downloaded peer-to-peer software make sure the settings on the application do not allow for access to areas on the computer where sensitive data, like tax information, is stored.

Given the propensity for inadvertent file sharing, it might be wise to not use peer-to-peer programs on the same computer where tax data is located, said Coley Hudgins, executive director of Arts+Labs, a venture formed by Microsoft, Cisco, AT&T, NBC, and the Songwriters Guild of America that opposes the use of peer-to-peer networks for sharing copyright-protected content.
Of course the best way to make sure you aren't sharing things inadvertently on file-sharing networks is not to use them, especially since so much of the traffic on P2P networks is illegal, copyrighted content. If you want to steer clear of cyber criminals, it's a good idea not to use web applications that overwhelmingly traffic in stolen content.

But, as Coley told the Wall Street Journal, users who insist on using P2P applications should "take the time to understand how the software you downloaded works."

As it is in many cases, a little education goes a long way.

Patrick Ross had a great post up at the Copyright Alliance blog last week about some of the inaccurate coverage of AT&T's new efforts to notify subscribers of copyright infringement.  A number of reflexive critics suggested--again, inaccurately--that this was the beginning of a three-strike rule or a "campaign to kick people off the internet."

But as Ross rightly notes, merely sending notices about infringement is a far cry from a three-strikes proposal, and AT&T has been emphatic about saying it has no intention of cutting off subscribers.  AT&T's CEO Jim Cicconi made this pretty clear, saying, "AT&T is not going to suspend or terminate anyone's policy without a court order."

The reality is that sending notices about copyright infringement is very effective consumer education.  As Cicconi explained, "In most cases the behavior changed immediately" after receiving a notice. "It validated what so many of us knew instinctively: that so much of this is kids doing it without their parents' knowledge."

That's good news. At Copyright Alliance, Ross points out that "most of us can be persuaded to play by the rules when it no longer seems to be in our interest to break them. The effect of these letters show that."

Response to the letters also underscores the intuitive idea that once people understand that they're breaking the law and learn that they have a reasonable alternative, most people don't want to infringe copyright.  That's a big part of the reason there's so much experimentation right now on the part of content creators and distributors to make their products available to as many people as possible.

The best way to address bad information is to provide good information.  It's hard to understand why the critics would object to AT&T and other ISP's providing good information to consumers.  If ISP's can help reduce illegal activity and piracy by educating consumers, that is a win/win situation for everybody. 

Conficker Day may have come and gone already without incident, but there's still plenty of malware, spyware, SPAM, worms, and viruses out there. If you didn't catch it last Sunday, you can learn more from this 60 Minutes feature on the problem:

On the positive side , it looks like some of the scarier predictions about Conficker didn't come true...yet. Of all PCs in the world that are the source of suspicious online activity, only 4% are infected with Conficker.c, according to security experts.

But it's still disturbing to know that even if you think you're doing all the right things, you could still be vulnerable. One-in-four Americans having fallen prey to the more destructive cyber-security problems--according to 60 Minutes--is certainly a high number, one that we should all be working harder to avoid.