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Note that the title of most blog entries provides a link to the relevant document.

Monday, December 12, 2005

Media Max prospectus

Ned Ulbricht at Freedom to Tinker waded through the revised MediaMax filing SB-2 Amdendment #5, dated November 4, 2005as filed with the SEC. Some interesting things popped out.
"MediaMax Technology Corporation, a Nevada corporation is in the business of providing copy control technology to the music and entertainment industry. This industry is generally unpopular with consumers because of their ability to make inexpensive unauthorized copies of entertainment software. The proliferation of illicit copying has resulted in perhaps billions of dollars of lost revenues for industry-wide content owners. The latest data available from the MPAA estimates that the U.S. motion picture industry lost in excess of $3.5 billion in 2003 due to packaged media piracy. Music industry unit ("CD") sales have been falling approximately 10% year-over-year for the past four years, according to the International Federation of Phonographic Industries ("IFPI"). In addition, the International Intellectual Property Alliance ("IIPA") estimated that copyright piracy, not including Internet piracy, around the world inflicts $20-$22 billion in annual losses to the U.S. copyright industries. As technology has become more advanced and efficient, illegal copying activity has increased because of its ease and simplicity."
This, of course, explains why Sony has included DRM software on many of its recent albums.
"On November 2, 2005, we entered into an Employment Agreement with Kevin Clement, an executive at Sony BMG Music Entertainment, to join our company as Chief Executive Officer and President and as a member of our Board of Directors as of November 21, 2005. "
Which helps explain why Sony BMG picked MediaMax / SunnComm for DRM software.
"We have an Exclusive Distribution Agreement with SunnComm to distribute, market, advertise, and sublicense the SunnComm Products throughout the world. The SunnComm Product that we will begin marketing is a content protection control technology called Media Max M4. The market for Media Max are all major and independent record companies along with their artists which may be concerned over lost revenues to illegal copying. Management believes that approximately 2 billion music CD's are sold annually worldwide. SunnComm currently has an agreement with a major record label and manufacturer to provide the Media Max M4 product upon their demand."
This explains some of the relationship between Media Max and SunnComm. Interesting though that they don't point out that the "major record label" is presumably Sony BMG, esp. given that by this time, Sony BMG must have already shipped a number of SunnComm protected CDs AND they had hired Kevin Clement away from Sony.
"The License Management Technology, "LMT", provides a security platform that is able to monitor and control activity on all CD/DVD drives or burners when it determines that content protection could be compromised. The software is designed to be completely invisible to users, programs and system components. CDs created with the LMT are 100% compatible with standard audio CDs; therefore, playability on any regular CD or DVD device is guaranteed."
And that is one of the big problems with the SunnComm DRM code - that it is so invisible that the user doesn't even know that it is installed on his computer, esp. since it installs regardless of whether the Sony EULA is agreed to or not.
"When the disc is inserted, the auto launch feature will activate the MediaMax M4 program on the second session, which feature is called launchcd.exe. Depending on the DRM license implementation, this program is either activated directly or through another program called autorun.exe. Launched first determines if the LMT Software controls are installed on the computer. If not, or if the disc concerned contains a newer version, it will copy the controls from the disc concerned and will install same. The LMT Software controls consist of two dynamic link libraries. The controls are used by the MediaMax M4 application (which is browser based).
Whenever the LMT Software controls are activated, (i.e. when the second session software is executed), the LMT Software controls will first determine if the content protection device driver is installed on the system. If not, it will extract it from the main LMT Software into a separate file and install it as a standard Windows device driver.
The driver first locates all CDROM devices installed on the computer. Then it will poll each device once per second to determine if a new disc has been inserted. If so, it will read various elements of the disc to determine if it is a MediaMax M4 disc. It is important to note that the driver is completely idle (without any chance to affect the computer), unless an actual MediaMax M4 disc has been detected. Once detected, the driver will insert itself into the communication stream for that drive to prevent any non-authorized activities. While allowing the computer to access the second session without any limitations, the driver will interfere when applications try to access the first session.
When the driver detects that the MediaMax M4 disc is ejected, it will remove itself from the communication stream for that drive and switch back to the polling mode. Several enhancements are currently under development to make it very difficult to locate and/or remove the device drivers."
Media Max is essentially admitting here that the SunnComm code installs itself regardless of whether or not the computer user accepts the EULA, that it ties up resources by scanning running processes, and that the code tries very hard to hide itself from the user.
"We believe that today's market prefers playability over protection which its MediaMax M4 technology provides because it is compliant with the CD Redbook Standard."
Which business plan got us here, where MediaMax / SunnComm DRM code is automatically installed on computers regardless of whether or not the accompanying EULA is accepted.

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17 Comments:

Anonymous Anonymous said...

"This explains some of the relationship between Media Max and SunnComm."

Actually the relationship between SunnComm and MediaMax Technology is far more interesting than the prospectus would indicate. They are essentially the same company and have been for several years.

A fascinating insight into what is going on is in the following P2PNET article. Unbelievable as it may seem, the SunnComm shenanigans as a company are far more interesting than the DRM issues that have hit the news recently.

At the link, page down a screen to get to this article...

"SunnComm to MediaMax Technology Corporation: A rose by any other name?"

http://p2pnet.net/story/4567

Also worth reading...

'SunnComm needs time ---

http://p2pnet.net/story/7201

SEC Complaints

http://www.our-street.com/SEC-SunnComm4.htm

(Note that has 4 complaints, so read all through it. Also, the Quiet Tiger company in the 1st complaint is the previous incarnation of MediaMax Technology Corporation)

Is SunnComm a sham or the next, big DRM success?

http://www.theregister.co.uk/2004/09/27/sunncomm_death_or_glorry/

The biggest shame of all is the fact that the SEC has let this go on for so long. Many investors have lost up to 95% of their investments and are likely to lose all when the dust settles over the recent fiasco.

What is also interesting is that Sony-BMG (specifically pre-merger BMG) has been aware of most of the above, yet has had no scruples dealing with such a company.

9:06 AM  
Anonymous Ned Ulbricht said...

Bruce,

It's probably worth emphasizing that I posted in a comment at Freedom-To-Tinker. I don't have any other relationship with Professor Felten's blog than as a regular reader and occasional commenter in various fora where these issues have been discussed over the past several years.

10:58 AM  
Anonymous Anonymous said...

Me again...

I don't get you guys. Try to give you hints and you don't follow through.

"This explains some of the relationship between Media Max and SunnComm."

Have you seen this sunncomm PR:

"MediaMax Technology Corporation Signs Letter of Intent to Merge with SunnComm International, Inc."

http://www.sunncomm.com/press/pressrelease.asp?prid=200503310900

Note the date: 03/31/2005

Now go to http://www.internetfrog.com/

Select WHOIS half way down the left hand side. Put www.sunncomm.com and later www.mediamaxtech.com as the domain name. Notice the similarity. For www.mediamax.com, notice the Create Date:

Record create date - 2004-12-01

Compare that to the PR.

Open a Command Window on your windows PC and type:

PING WWW.SUNNCOMM.COM

PING WWW.MEDIAMAXTECH.COM

Notice anything about the IP address of each company.

On your browser, go to www.sunncomm.com and later to www.mediamaxtech.com. Go to the contact information and look at both fax numbers. Notice anything?

Look at an old SEC filing from MediaMax Technology. For example, this one from 3/31/03, when it was still called Quiet Tiger

http://www.sec.gov/Archives/edgar/data/1057024/000119983503000071/0001199835-03-000071-index.htm

Look at the contact info at the bottom:

Mailing Address
668 N. 44TH STREET, SUITE 248
PHOENIX AZ 85008

Now look at the SunnComm's address on their website again. Interesting isn't it.

Based on the above, how do you account for this PR from Quiet Tiger (now MediaMax Technology) from 1/23/2004

"Quiet Tiger Enters into Marketing Agreement with SunnComm Technologies"

http://www.sunncomm.com/press/pressrelease.asp?prid=200401230700

followed by this one from 3/31/2005

"MediaMax Technology Corporation Signs Letter of Intent to Merge with SunnComm International, Inc."

http://www.sunncomm.com/press/pressrelease.asp?prid=200503310900

Pretty weird, huh? And all explained in http://p2pnet.net/story/4567


The big story here is not Spyware or Rootkits and EULAs. We are talking about investors being taken to the cleaners.

It's so frustrating to see Inspector Jacques Clouseau looking for fingerprints on the shift stick of the car and missing the dead body in the passenger seat.

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I liked your information in Media Max prospectus. Too bad it doesn't have more on incorporate and nevada. I was looking for incorporate and nevada in my area. Enjoyed reading what you have. I'll check back later when I get some spare time next week. Thanks Bruce Hayden.

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