Commission Junction seeks your feedback on 'stealware'

The e-commerce world was rocked this week by a feature story in Friday's New York Times explaining that many free, peer-to-peer music-sharing programs have been secretly diverting affiliate commissions from the rightful recipients to themselves.

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Commission Junction (CJ), the largest clearinghouse for such commissions, is in the thick of the controversy because its officials haven't yet decided whether or not to block the parties who are profiting from the diversion programs.

"We'd really like to see an industry forum on this," said CJ vice president of marketing Elizabeth Cholawsky in an interview. "Right now, we need a statement from the industry as to whether this is a legal way to do business."

The Times reported that routines -- called "stealware" or "parasiteware" by some -- are quietly installed on PCs by the peer-to-peer music-swapping services Kazaa, Morpheus, Limewire, and others. In some cases, the software inserts an affiliate code whenever a user buys something at an e-commerce site, such as Buy.com. In other cases, a legitimate affiliate's code is changed to another code on the fly. This diverts the commission (typically about 5 percent) to the intercepting party.

The Times cited figures from Forrester Research stating that roughly 15 to 20 percent of $72 billion in online sales originates from Web affiliate sites.

Amazon.com, TigerDirect.com, and some other e-tailers are already blocking payments to Morpheus, the Times says. And BeFree.com, a payment-processing service that competes with CJ, proposes banning "shopping plug-ins" from major clearinghouses as well as sites that use a special code: http://www.befree.com@n6.be/4e6e

A much larger issue, however, is whether "plug-ins" are entitled to any payouts at all. Simply inserting an affiliate code into a PC's memory whenever a user visits an e-commerce site doesn't meet the requirements of e-tailers' agreements. Typically, users must at least click a specific link from an affiliate site to an online store for an affiliate to earn a commission.

To make matters worse, tens of millions of plug-ins have already been distributed with free music-sharing programs. In many cases, there is no way to upgrade these tools to change their behavior.

Creators of such plug-ins, including WurldMedia.com and WhenU.com, say the programs are legitimate. When users click "OK" to install the software, they tacitly accept licenses that permit the diversions. Such one-click licenses, called click-wrap agreements, are often upheld by judges.

But courts have also ruled that "unconscionable" provisions of such contracts are not enforceable. You can't say "Do you mind if I steal?" in the fine print of a license and thereby create a binding contract.

I'll have more on this uproar next week. Send me your thoughts on these programs by Oct. 6 for possible publication, with "Plug-ins" as the Subject line of your message: mailto:Brian@SecretsPro.com.

In the meantime, you can peruse a "parasiteware" list and fixes at: http://www.afterdawn.com@31.dk/5e0e

And the Times article (free registration required) is at: http://www.nytimes.com@th.gs/7196

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LIVINGSTON'S TOP 10 NEWS PICKS O' THE WEEK

1. Online holiday shoppers are starting earlier and spending more: http://www.internetnews.com@a2.tc/436

2. Regulators persuade Amazon.com to tighten its privacy policies: http://www.macworld.com@n6.be/81e

3. Washington tries to keep state laws off the backs of Internet e-tailers: http://www.news.com@836.as/c06

4. Music labels pay $142 million in CD price-fixing legal settlement: http://news.dmusic.com@1c.to/fee

5. How your e-mail list might be stolen by spammers (part 1 of 2): http://www.emailsherpa.com@a6r.ms/13d6

6. How to safeguard your list against being stolen (part 2 of 2): http://www.emailsherpa.com@a6r.ms/17be

7. Better server technology may mean more efficient transactions: http://www.ecommercetimes.com@3n.be/1ba6

8. PayPal.com is targeted in bogus account and password scheme: http://www.internetnews.com@th.gs/1f8e

9. Flash tips: Avoid these problems using Flash content at your site: http://www.webmasterbase.com@54.vg/2376

10. What does FUBAR mean? Look this up and thousands more at Stands4.com: http://www.stands4.com@e.la/275e

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WACKY WEB WEEK: A MARKETING STUDY FOR THE HOMELESS

When I ran across a site doing "market research for the homeless," I expected a politically incorrect screwball rant. But the project, hosted on the public television site of PBS, actually raises some worthy questions while exemplifying a professional-looking Web survey.

When you visit the site, you're shown a series of six photos of and pitches by homeless people (with audio tracks that you can choose to play or not). You click a box to "give" each one an amount from $1 to zero. When you're done, you see what other people gave -- and you can see the thinking behind the project.

Nothing about being homeless is "fun," but playing the game is well worth your time, even if you frankly don't give a dime: http://www.pbs.org@836.as/c39e

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E-BUSINESS SECRETS: Our mission is to bring you such useful and thought-provoking information about the Web that you actually look forward to reading your e-mail.

ABOUT THE AUTHOR: E-Business Secrets is written by InfoWorld contributing editor Brian Livingston: http://SecretsPro.com

Research director is Vickie Stevens. Brian has published 10 books, including:

Windows Me Secrets: http://www.amazon.com@isbn.at/0764534939

Windows 2000 Secrets: http://www.amazon.com@isbn.at/0764534130

Win a gift certificate good for a book, CD, or DVD of your choice if you're the first to send a tip Brian prints. mailto:Brian@SecretsPro.com