The entertainment industry thinks it has found a new opening in its fight against online piracy and is working hard to make it count.

Internet service providers are being pushed into the front lines of this battle - some willingly. In the US, AT&T was pretty open a couple of weeks ago about lining up behind NBC Universal to stamp out illegal content passing over its networks. In France, President Sarkozy gave the media industry hope when he came up with a plan that forces ISPs to cut off pirates on the third offense.

To John Kennedy, head of music industry trade body IFPI, this is the beginning of something much bigger. In the IFPI’s annual report today he calls for ISPs to take a central role in monitoring internet traffic - and for governments to follow France’s lead in making the internet a medium where “we protect our culture”:

There must be obligations on the ISPs to warn, suspend and eventually disconnect infringing users and apply filtering measures… 2007 was the year ISP responsibility started to become an accepted principle. 2008 must be the year it becomes reality.

It hardly needs saying that the implications of this are far-reaching. Should ISPs be forced to monitor what passes over their networks, make decisions about what is or isn’t legal, and act unilaterally on the results?

In the US, this is quickly turning into the next eruption of the net neutrality debate. The Federal Trade Commission has already said this month that it is going to investigate Comcast’s move to block file-sharing traffic on BitTorrent.

It is easy to understand why ISPs would use the piracy issue as an excuse to try to exert more control over the economics of their networks. But do they really want the policing responsibility that would go along with it?

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If Meg Whitman does indeed decide to hang up her gavel (reported here in the Wall Street Journal, but yet to be confirmed), who will be left running a company that accounts for some 15 per cent of all global ecommerce?

The eBay chief has had various stabs at nurturing home-grown talent and has reached outside at various times to bring in extra firepower. As succession planning goes, it hasn’t exactly been a smooth ride. This is how it has played out:

Jeff Jordan. A former Disney executive who Whitman brought with her when she arrived, Jordan was clearly being groomed for big things. His jobs included running PayPal and the company’s North American operations. He was eventually a casualty of the big slowdown that hit eBay’s core business 3-4 years ago, forcing Whitman to retool her management team, and he was eventually passed over, leaving 18 months ago to “spend more time with his family.”

Bill Cobb. When she gave former marketing executive Cobb charge of the North American business three years ago, Whitman signalled that she was setting up a succession race, which at the time also included Matt Bannick (another executive whose star has since faded.) However, Cobb oversaw the disastrous revamp of seller incentives that represents one of eBay’s biggest slips of recent years, as lower listing fees caused its site to be overrun with less valuable inventory, and his role now carries less responsibility than it once did.

Rajiv Dutta. A long-time chief financial officer and head of strategy, Dutta championed the acquisition of Skype and was given his first operational role heading the internet telephone service. Whitman finally admitted the flaws in that deal last year, writing the acquisition down by $1.4bn. Dutta has since moved on to head PayPal, but the false-start at Skype has not left him in a strong position to take the top job.

John Donahoe. Hired in 2005, the former head of Bain (where he also once worked under Whitman) looks like the man who will benefit from these slips. As head of the marketplace division, a position from which he effectively runs eBay’s core business, Donahoe spent last year fixing the mess left from the botched fees overhaul. He is now trying to carve out a broader strategy, using classifieds and other methods to supplement eBay’s traditional auction format for linking buyers and sellers (he described his plans to us in this piece last month.) Wall Street has seen enough of Donahoe to feel comfortable that he has now made the transition from consultant to full operating executive, so the time could be right.

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The growing interest of traditional video game publishers in casual games looks like creating new hybrid formats and experimental business models.

Electronic Arts has announced its first completely free title, Battlefield Heroes, available for download this summer.

It looks like a dumbed-down cartoon-like version of its Battlefield 1942 PC game, but still seems far more sophisticated than a typical casual game such as Texas Hold ‘Em or Bejeweled.

There will also be elements of the MMORPG (massively multiplayer online role-playing game) genre, dominated by World of Warcraft. EA says players will be able to build their characters in an ever-expanding online world, paying a few dollars in micro-transactions for extra weapons and equipment. In-game advertising is also planned.

The success of Microsoft’s Xbox Live service has revealed there is money to be made from smaller-scale games, available for download there for less than $10.

EA is reinventing and repurposing an existing fading franchise. If it is successful, expect to see more of EA’s original IP appearing in a casualised form, aimed at less-than-hard-core gamers.

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For evidence of how seriously Microsoft is starting to take the market for virtualisation software, take a look at its acquisition today of Calista Technologies. This is a company that was launched as recently as 2006. It has raised only one round of venture capital (around $7m) and it has yet to ship any products.

Yet Calista got prominent billing today as Microsoft put some of the pieces in place for its attack on a market that represents both huge potential and a sizeable threat for its server and desktop businesses. No price for Calista was disclosed but when we spoke to Barry Eggers of Lightspeed Ventures, one of the company’s backers, he left no doubt that Microsoft is paying up in its efforts to catch up with VMWare (latest profile here):

We’re not in the business of selling good technologies early. Obviously it has to be a good deal for everybody all around.

Calista’s software is meant to make rich media work better on virtualised desktops - for instance, the graphics in Windows Vista could be made to work smoothly on a PC which does not run an instance of the software, but which is drawing it from a remote server.

Yet while Microsoft is racing to buy component technologies, it has yet to put the most important building block in pace. It still seems that a hypervisor for Windows - the key piece of software that lets multiple operating systems run on a single machine - will not be available in its server software until the second half of this year.

As happened with search technology, Microsoft has fallen well behind a competitor (in this case VMWare) that is moving fast to tighten its grip on a new market. Unlike search, though, Microsoft may be able to apply some of its most effective competitive weapons - “bundling” the software with its server products, using its control of desktop and server licensing - to make a dent.

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You could forgive Kevin Harvey of Benchmark Capital if he sounded a little smug when I spoke to him earlier today about the eye-catching $1bn sale of MySQL. A longtime venture investor in open source companies, Harvey has had to put up with a few knocks along the way. As he put it:

When we first invested in Red Hat it was thought to be totally insane. When we funded MySQL it was only partly insane.

Benchmark’s purchase of a 26 per cent stake certainly looks pretty smart now. Harvey (whose earlier successes have included eBay) wouldn’t say how much he had invested, but MySQL took in around $39m in all.

It’s hard to shake off the lingering feeling, though, that open source as a pure-play strategy will never add up to much, and Sun’s purchase of MySQL seems to confirm this. Sure, it’s hugely disruptive to the software establishment, but it’s beginning to look like open source has more value when used as part of a traditional technology company’s armoury, rather than as a stand-alone business.

Sun hopes that owning MySQL will give it a chance to sell other (proprietary) software to users of the open source database. That is the same idea that prompted earlier open source acquisitions by Novell (of Linux distributor SuSe) and IBM (middleware company Gluecode.) Oracle didn’t even bother making an acquisition but simply declared that it would support Red Hat’s version of Linux, dealing a big blow to that company.

It seems only Red Hat really believes in trying to build a pure open source software “stack”. At around $500m a year and growing at 30 per cent, Red Hat’s revenues are not to be sneezed at. But, tellingly, it is Sun, not Red Hat, that has bagged MySQL. Equally tellingly, MySQL’s investors discovered that the company was worth more as takeover-bait for Sun than as a stand alone business. “It was on the IPO track until Sun convinced us to take this track,” says Harvey.

Maybe Sun has overpaid. But if Schwartz is right and MySQL is worth more dead than alive (as it were), then it suggests that the dominant software models will be hyrbid ones, not pure open source.

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Hidden behind some billion-dollar database-company

acquisitions - on what must be a record-breaking day for number of deals in the sector - came a little funding news that could eventually have equal

significance for the way we organise our information online.

While Sun was paying $1bn for MySQL, Oracle was buying BEA

Systems for $8.5bn and SAP was wrapping up its $7.15bn Business Objects

acquisition, San Francisco-based Metaweb received $42.5m in second-round

funding led by Goldman Sachs.

Metaweb says its aim is to build a better infrastructure for

the web. Its first product is Freebase – “an open, shared database of the

world’s information.”

Web sites have been able to provide more relevant and

meaningful results for users’ searches in recent years, thanks to XML, which

allows more detailed tagging and categorising of information.

Wikipedia is an example of information being organised by

users themselves in an even more structured way and Freebase is extending this

by drawing on Wikipedia and many other sources for its open database.

It differs from Wikipedia in listing facts and statistics

rather than articles on subjects. This rawer format allows others to sort and

repurpose the information into new forms on their own web sites. Freebase is

also different from Google Base in eliminating any duplication of data and

providing a community editing tool.

It is still early days, but Metaweb hopes to make

money by serving ads next to the information that Freebase throws up - a model

where Google has been rather successful and where Metaweb could become a threat

– as well as by charging for some commercial uses of its APIs.

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Crisis averted!

The National Association of Broadcasters sends word of a new survey that found that 79 percent of Americans have now “seen, read or heard something about the February 17, 2009 transition to digital television.”

Here’s hoping there won’t be anymore hand-wringing about whether anyone will have to go three seconds without television.

So, have you applied for your digital converter box rebates yet?

Full news release from the NAB after the jump.

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I probably would have ignored this in a normal election year, but given the slight possibility that the Republicans will enter their convention this summer without a nominee, it just might be interesting.

If so, if this year’s convention becomes the sort of nail-biting, horse-trading, back-stabbing drama that often took place before both parties implemented a primary system, you’ll be able to see pretty much all of it at www.gopconvention2008.com.

Upstream TV announced that it will power the site, which will carry more than just the speeches. It will also air interviews that journalists and bloggers conduct with GOP movers and shakers. Plus, it will archive the whole thing so people can see whatever they want, whenever they want.

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