Businessweek Article on "Darknets"

[Dave Farber <dave () farber net>]

> Date: Mon, 08 Sep 2003 08:11:11 -0400
> From: Michael Hodges <>
> Subject: Businessweek Article on "Darknets"
> To: dave () farber net
>
> [Dave: May be too recent for "Fair Use" as it's in the current edition, but
> FYI that this is getting mainstream business coverage. Please edit out my
> email address. mrh]
>
> SEPTEMBER 15, 2003
>
> INFORMATION TECHNOLOGY
>
> The Underground Internet
> Members-only "darknets" are popping up to protect file-sharing from prying
> eyes
>
>
> Around the time the Recording Industry Assn. of America said this spring it
> would start tracking down individuals who were trading pirated music on the
> Internet, Trader X, a 17-year-old U.S. high school senior who declined to
> provide a name to avoid prosecution, hightailed it over to a service for
> swapping music and other digital files called Direct Connect (DC). Trader X
> had used other file-sharing services in the past, but chose DC for two
> simple reasons: privacy and plenty of movies. In most file-sharing services,
> millions of computers swap files with millions of others openly online, in
> plain view of the RIAA and others. DC's free software lets individuals set
> up a password-protected, members-only network that relays music and movies
> among a closed group of people. "Frankly, as long as the Internet exists,
> file trading can't be stopped," says Trader X.
>
> This is just one glimpse into the world of darknets -- gated communities
> that run on the Internet but are open only to those who belong to the
> private network. These mini-networks are gaining appeal among more than just
> teenagers looking for a free copy of rapper 50 Cent's 21 Questions.
> Political dissidents from China to Iran, as well as civil liberterians in
> the U.S., are interested in avoiding the prying eyes of government
> authorities and reestablishing some privacy on the transparent Internet.
> Even well-respected corporations, including Hewlett-Packard Co. (HPQ ) and
> Siemens, are turning to darknets to allow them to share sensitive data with
> outside partners while protecting the data from rivals and restricting the
> partners from burrowing into the corporation's own intranet.
>
> How do darknets work? Typically, people who want to build a darknet will
> start by installing on their computers specialized software, which they can
> buy or often download for free from the Internet. Then individuals who want
> to form their own group swap passwords or digital keys so their computers
> can communicate with each other. The data shuttling between computers often
> are encrypted, a security feature similar to that used for online
> credit-card transactions. This makes darknets more secure than typical
> corporate intranets, since companies usually don't encrypt data. Anyone
> tracking the private networks could monitor the traffic, but wouldn't know
> what information was inside the encrypted packets. And gaining entry to a
> group of, say, college kids swapping music is no easy feat: Prospective
> members often need recommendations from friends to join.
>
> It's a sweeping revision of the notion of the open Internet. Netizens are
> walling themselves off for certain activities like never before. Darknets
> are very different from the typical corporate networks, monoliths built to
> last for years. These networks are designed to be put up and taken down
> quickly and easily, so they can be used for a week or a year. Teenagers
> could establish a darknet to trade music -- and take it down as soon as they
> feel pressure from authorities by simply removing the software from their
> machines. GlaxoSmithKline (GSK ) PLC is using a darknet so chemists,
> biologists, and others in-house and at some universities can share
> information for the development of an obesity drug.
>
> Innovation in darknet technology is coming from many different directions.
> independent developers are giving away freenet and invisibleNET, software
> that allows dissidents in countries where censorship exists to get
> information from the outside world and speak more freely among themselves. A
> free program called Waste, designed by America Online's Nullsoft division,
> showed up on the Web four months ago and is catching on among pirated-music
> dealers. BadBlue and Groove Networks Inc. are among the companies trying to
> make money from darknets. They sell collaboration software that permits a
> company to safely share sensitive documents or financial information with
> partners.
>
> Trust among members is the critical ingredient for certain darknets,
> including those using technology from Waste and DC. DC is less secure than
> Waste because the software giving access to the main computer that runs the
> network is simply password-protected. If someone infiltrates a group, that
> person can track everything that's going on within the hub. Waste is more
> secure. It uses encryption to protect files and messages sent among the
> members of a private network, called a mesh. To join a mesh, a member
> exchanges encryption keys with someone in the network. Although AOL quickly
> yanked the software off Nullsoft's site, programmers with copies downloaded
> from the Web are busily enhancing it. Devotees predict the technology will
> blossom. "Waste will only improve over time as more users and developers
> adopt it," says Tom, a 22-year-old programmer who has set up one mesh for
> family photos and news and another for software development.
>
> Freenet's emphasis is on anonymity through technology, not trust. The
> brainchild of Irish programmer Ian Clarke, Freenet works by tying together
> computers around the Internet through strong encryption. Freenet organizes a
> bucket brigade of computers that dedicate a portion of their hard drives to
> encrypted data and only talk to their nearest neighbor on the network. When
> a request for some bit of information is made, each computer queries its
> neighbor to determine if it has that information. If not, the request is
> passed to another neighbor that the first computer doesn't know about.
> Freenet-China, a Mandarin translation that has been up for a year and a
> half, publishes news that the Chinese government would censor and allows
> dissidents to read banned sites, such as CNN.com. "The Internet doesn't
> really have all that much anonymity now," says Clarke. "People are looking
> for ways to share information without being watched."
>
> Inevitably, as the pressure mounts on illegal copying, people interested in
> pirated-file trading are seeking out private networks. Since the RIAA
> started targeting individuals who are sharing files, monthly revenues of
> BadBlue's software designed for small-scale use, which costs between $30 and
> $60, have increased about 50%, says Doug Ross, the company's chief
> technology officer. Moreover, Clarke says that Freenet downloads have
> tripled during the past four months to a total of about 2 million. "As soon
> as [the RIAA] laid down those individual subpoenas, we started seeing posts
> from people looking for private networks," says Chris Hedgecock, president
> of Zeropaid Inc., a site where about 160,000 file sharers discuss news and
> exchange tips.
>
> The entertainment industry says these digital versions of Prohibition-style
> speakeasies are of little concern. Since darknets typically include no more
> than 50 or 100 people because of technology limitations or security
> concerns, music and movie companies think they can't do much damage. "If
> they are using private networks, there is very little risk of being caught,
> but there is very little risk of them really doing much harm to the
> entertainment companies," says Randy Saaf, president of MediaDefender Inc.,
> a copyright-protection security company.
>
> The debate over whether limits should be put on private networks is only
> beginning. Just as darknets provide room for free speech or the exchange of
> data from pharmaceutical trials, they can also be used for black-market
> trading of pirated music. It's too early to tell how popular these darknets
> could eventually be, but the groundwork is already being laid to welcome
> those fleeing the public networks -- for all kinds of reasons.
>
> By Heather Green in New York

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