Written on 26th November 2008
1 COMMENT Zee, Editor in Chief at The Next Web, Principal at WeDoCreative.
We’ve just discovered a PDF (below) stating that Prosper.com is to be shutdown by the SEC (Securities and Exchange Commission).
It seems the shutdown is based on the amount of reliance both the lender and borrower have on the site. Since the lender does not know who the borrower it leaves the lender vulnerable and unable “to pursue his or her rights as a noteholder” if the borrower fails to meet the agreed payment terms. In addition, the document states that for the loan agreement to continue it would require Prosper.com to still exist and operate which in this climate, is no guarantee.
The SEC sum up in the final paragraph by stating
They lack the requisite experience to run a loan auction or to create and service a loan package. Rather, the Prosper lenders rely on Prosper’s continued operation of the platform in order to transact and to recoup any gain on their investments.
In other words, Prosper.com simply do not having the backing, preparation nor experience to ensure transactions are handled legally, appropriately and securely.
Although the reasons provided seem to be in the best interest of all parties involved, particularly the lender, this is clearly awful news for the startup. With rulings such as this, it will definitely have an impact on the number of startups forming in this niche which is sad from an innovation point of view. Whether this will also have an impact on other lending startups such as Zopa we’ll have to see.
Click here for an interesting overview from an actual Prosper lender and here for an interesting discussion in the Prospers.org forum (not owned/operated by Prosper.com).
Online piracy is also an issue for the adult video industry, in case you were wondering. Jason Tucker, head of The PAK Group, a new anti-piracy company dedicated to adult content, and president of the content production company Falcon Foto, recently told the industry web site XBIZ (NSFW) that lawsuits against individuals are no longer on the top of their list in the fight against piracy, because they “require ridiculous amounts of resources” yet don’t accomplish much.
Tucker said they’re more likely to start concentrating on adult video sharing sites, or as Tucker puts it: “companies creating locations where the exploitation of stolen works is encouraged”.
He told XBiz:
“We are close to filing a suit against a major tube site, and we will follow that up with a lot more. No one is immune. The big problem I see right now is not outsiders doing this; rather, it is people who purport to be contributing members in our industry. As a result, we know who is doing this, we know where they are, we know where they process transactions, we know where they bank, we know where they host and we know where they live. This means when we come for you, we know how to get you.”
Hat tip to NewTeeVee, which offers some more background information.
A Swedish court has convicted a 31 year old file-sharer for uploading 4,500 music tracks and 30 movies with the filesharing application Direct Connect. He was fined to 10000 kronor ($1650) and will have to pay the cost of the trial which will be another 44670 kronor ($7360).
Interestingly enough the court blames the industry for a part of the mess they created. That is also why the 31-year-old was not sent to prison but instead given a suspended sentence and a fine.
According to Sweden’s Anti-Piracy Agency (APB) this is an important case because it will set an example and general a matter of principle for other file-sharers. “It’s clear that the court takes seriously the extensive infringement of which the man is guilty. The huge amount of illegal file sharing which takes place in Sweden causes creators tremendous harm,” said APB’s lawyer Sara Lindbäck.
But I can’t imagine that the open accusation from this court that they have themselves to blame is the result they were hoping for. My guess is that most File-sharers will use this verdict more as an excuse to share and download content more than before. After all, even a judge agrees that the current situation is a mess.
The first company I met today was Faroo. They are from Germany and Gosia Garbe, the CEO, gave me a quick update on their progress.
Garbe started development on Faroo more than 6 years ago and launched during Techcrunch40 here in San Francisco about a year ago. They are based in Germany. It is a P2P search engine that users install on their PCs, is free to use, as quick as Google and even can earn you some money as revenue is shared with users.
Garbe told me she was slightly disappointed with user adoption (actual downloads) since they launched.
Unfortunately the application only works on PCs and isn’t supported on Mac and Linux and there is no way to test the actual search engine without installing the application first. I can imagine that this requires too big a leap of faith for most users.
The idea of P2P search is interesting though. Google reportedly spends 2 billion a year on their server infrastructure. If a search engine would be able to move all that data to the end user thereby speeding up the service and saving huge amounts of money that would give them a huge edge.
The question is how to entice these users to start contributing to a product that won’t prove its benefit until you start contributing. A chicken and egg problem that Faroo is eager to solve.
German Independent music label ‘Dependent records’ has announced that they are shutting down their business. But they don’t just hold a bargain sale or sell off their rights. They decided to upload ALL their records onto The Pirate Bay a few days ago accompanied with a message:
I closed down my record label Dependent Records for good. But since I want my music to be heard by the people out there, everything I have ever published is now available on The Pirate Bay. This is a LEGAL torrent!
Over the past few years more artists have decided to make their music available for free. But most do it in hopes of ultimately reaching more listeners who are willing to buy their records. This move sounds like a great PR stunt, except that there won’t be anybody left to benefit from it.
One of the reasons Dependent records has decided to give up on selling music is the P2P networks. Its CEO Stefan Herwig once wrote “A popular claim often seen on Internet fora maintains that the P2P culture weakens the majors and bolsters the independent labels. This is, we can assure you, 100% bullshit. Even if there are listeners who download first and buy later, they are clearly in the dwindling minority.”
UPDATE: I received several emails (also see comments here) that this news is incorrect. So far, no official comment has been placed on the Dependent Records website but their music CAN be found on The Pirate Bay and their Wikipedia page has been updated with the same story. So it might be a PR stunt after all…
UPDATE II: Dependent Records have posted a formal reply in which they deny this story and blame blogs for not investigating further. Wikipedia has been updated and all blogs are updating their websites. So to recap: Yes, Dependent Records is shutting down. Yes, their whole catalog is available on The Pirate Bay. No, Stefan Herwig did not personally upload his catalog to The Pirate Bay.
I also have a note about his accusation that ‘we’ should have investigated further. In hindsight he is right, of course. In reality we do try to confirm if news is real or not. Unfortunately it would take way to long to prove that all news IS real. We check as many sources as we can and if all looks right we publish. The original article had a lot of comments, none hinting that something could be wrong. Wikipedia reflected the news and we could find the music on The Pirate Bay posted by a ‘Stefan Herwig’. Was that proof that this story was valid? No, but it was enough to run with it. We don’t actually check with Yahoo or Microsoft either to find proof for news. The companies who the news is about often simply reply with ‘No comment’ when we ask for confirmation.
Fortunately we can update our stories and say ‘We Were Wrong’. Mea culpa.
Written on 26th November 2008
1 COMMENT 
We’ve just discovered a PDF (below) stating that Prosper.com is to be shutdown by the SEC (Securities and Exchange Commission).
Written on 31st July 2008
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