Congress weighs curbs on state 'iTaxes'

Congress weighs curbs on state 'iTaxes'
If there are two things state tax collectors seem to agree on, the first is that finding more money could really come in handy right now. The second is that taxing iTunes and other digital purchases might just do the trick.A new proposal in the U.S. Congress is, however, designed to curb many of these "iTaxes," which have popped up all over the country in the last three years. Currently, some 23 states and the District of Columbia levy sales taxes in one form or another on e-books, music, apps, ringtones, and other digital downloads.The bill, sponsored by Reps. Rick Boucher (D-Va.) and Lamar Smith (R-Tex.), is part of a broader effort by technology firms and telecommunications providers to push back against what they view as tax agencies that are unreasonably singling out electronic purchases with unfair, expensive, and confusing rules.Apple, AT&T, Electronic Arts, Cox Communications, Verizon, T-Mobile, and Time Warner Cable are among the companies that have endorsed the legislation, saying that "fast-paced technological and commercial changes are making it increasingly difficult, and in some cases nearly impossible" to comply with "confusing and conflicting" state tax laws.Even cloud-computing applications, which might seem straightforward enough, can create tax headaches for Internet companies. New York and Utah both tax cloud computing, but New York taxes it based on the address of the customer, while Utah calculates rates based on where the server is located."It is definitely a growing problem as states that are adopting legislation each take a different approach to the issue," says Stephen Kranz, a partner at the Sutherland Asbill and Brennan law firm who tracks state legislation. "As electronic delivery of content and services grows, so too will the problems associated with multiple and discriminatory state and local taxation.""Tax administrators say that a ringtone is the digital equivalent of tangible personal property. What do they think it is? A doorbell?" --Steve DelBianco, executive director, NetChoiceOther states have singled out downloaded music for tax rates reserved for "telecommunications services" that are more costly than sales tax rates, Kranz says. Some rates can even go as high as 15 or 20 percent. (Industry figures from 2006 show (PDF) that the average telecommunications tax on wireless is 10.94 percent, far higher than the 6.94 percent average nationwide rate for sales taxes.)Opposition to the legislation introduced last week, titled the Digital Goods and Services Tax Fairness Act, is likely to come from state and local officials concerned that Washington might slap unreasonable limits on their tax collection procedures.Neal Osten, who oversees federal-state tax issues for the National Conference of State Legislatures, said on Wednesday that he has not yet reviewed the bill. The National Governors Association did not immediately respond to a request for comment. Scott Peterson, executive director of the multi-state Streamlined Sales Tax Governing Board, said his organization has not been asked to take a position on it.Boucher, one of the measure's two sponsors, represents a rural Virginia district that's been targeted by Republicans for a takeover this fall by State Senate Majority Leader Morgan Griffith. Lending his support to a lower-tax measure is likely to help Boucher, who said the bill was necessary because "unfair, multiple, and inconsistent taxation of these digital goods and services will increase costs for U.S. businesses and make them less competitive in the global economy."Perhaps the most controversial part of the Boucher-Smith bill is the section that says only those iTaxes on downloads that have been formally approved by state legislatures are valid. That would end what critics describe as the controversial practice of state tax collectors stretching century-old legal definitions to permit levying iTaxes without any actual authorization.CNET first described the phenomenon in a 2006 article, which cited examples like Kentucky's law that did not explicitly permit iTaxes. Nevertheless, Jill Midkiff, a spokeswoman for the Kentucky Department of Revenue said at the time, "Music is included because music downloads fit the definition of personal property."Since then, 10 states and the District of Columbia now say digital content is tangible personal property, even though their legislatures have never made that clear. Those states are Texas, Arizona, Colorado, Connecticut, New Mexico, Louisiana, Alabama, Idaho, Hawaii, and Maine, according to the Sutherland law firm's research. (Thirteen other states tax digital downloads based on specific laws instead of administrative interpretations.)"Tax administrators say that a ringtone is the digital equivalent of tangible personal property," says Steve DelBianco, executive director of the NetChoice coalition, whose members include AOL, eBay, and Yahoo. "What do they think it is? A doorbell? You can't let a tax administrator who never has to stand for reelection deem things as 'taxable.'"Another portion of the bill prohibits taxes on "digital medical services, digital education services, or digital energy management services."A third section would prevent "multiple or discriminatory taxes" on "digital goods or digital services." That amounts to a preemptive strike against state and local governments that might decide that digital purchases should be taxed at, say, two or three times the normal sales tax rate.Thanks to an all-but-forgotten law that expires on November 1, 2014, such electronic-only taxes currently are prohibited. But once the moratorium expires, states will be free to levy discriminatory taxes unless the Boucher-Smith bill is enacted."Legislation like this is necessary because tax administrators have been so aggressive in reaching for new taxes on digital goods and services," DelBianco says. "With the expiration of the moratorium in 2014, nothing will stand in their way." (The National Taxpayers Union also likes the bill, calling it an "excellent" first step.)State tax collectors haven't exactly been idle. They've been trying to force Amazon to turn over purchase records in North Carolina; attempting to force retailers to become tax-tattlers in California and Tennessee; and putting the squeeze on affiliate programs in Colorado. The Direct Marketing Association sued Colorado last week, saying its law requiring out-of-state retailers to turn over purchase history information is unconstitutional.Meanwhile, Rep. Bill Delahunt, a Massachusetts Democrat, introduced a bill last week that seeks to compel retailers like Amazon to collect sales taxes.The Boucher-Smith bill "removes one avenue for states to tax Internet commerce at oppressive rates," says Kelly Cobb, government affairs manager for Americans for Tax Reform, which runs the Stop eTaxes Web site. "However, the battle over the next year will be fought with those who look past digital goods and just want to tax everything online, despite the constitutional violations."


Rhapsody app makes duet of streaming music and tickets

Rhapsody app makes duet of streaming music and tickets
Cantankerous critics gripe that nothing is new in music anymore, except ways of melding and repackaging what has come before.Rhapsody's new app does just that, and the company is hoping the combination will hit the right notes to win new subscribers and distinguish it in a crowded field of competitors The company, one of the oldest Web subscription music services, is launching a concert tickets app on Tuesday. It's the second of Rhapsody's companion apps to its namesake one for streaming music, following up Songmatch, a Shazam-like offering that plugs tunes into playlists. Rhapsody has more apps on the way, as it turns greater focus to mobile. Related storiesSpotify, Rdio, Beats Music, and more: How to get started with subscription music servicesRhapsody revives CEO position, hires mobile vet as interim chiefRhapsody hits 2 million paid membersRhapsody tells (almost) all to get you listeningRhapsody invests in Dubset, an electronic dance music startupIt launches Tuesday for iOS, with an Android version to follow. Other apps already exist to find shows and purchase tickets. Live Nation, the huge concert promoter and world's largest ticket seller via its Ticketmaster merger, has an app to sell tickets -- and is nearing the launch of a new platform that will give it more flexibility. Ticket reseller StubHub, a unit of eBay, dominates the secondary ticket market and has an app as well. But Rhapsody Concerts is setting itself apart by marrying ticketing with its on-demand streaming capabilities. To find live events, users can search by artist, venue, or what is nearby, either by a search or with GPS. Ticket purchases occur in the app itself, powered by SeatGeek. SeatGeek's program shares revenue of the ticket sales with partners like Rhapsody.Unlike other ticket apps, the Rhapsody offering can take users into an on-demand choices -- subscribers can listen to the performer's full albums right away, get to know the music of opening acts, or find similar artists. Digital music is one of the few corners of the music industry that is flourishing, which has attracted a diverse and crowded field of competitors. In addition to other streaming services like Pandora and Spotify, giants like Google and Apple are throwing their weight behind their own challengers. As consumer spending on concert tickets recovers after the economic downturn, another company with its model threatened by new entrants has turned to live events as a new pillar of support. Redbox's DVD rental kiosks are the main profit engine under the hood of parent company Coinstar, still named for the coin-counting kiosks it was founded on.But online video streaming outfits like Netflix and other forms of video on demand have the days of the DVD format numbered. Redbox has partnered with Verizon for its own streaming video offering, but it also is testing live-event ticketing at kiosks as a way to leverage its machinery into a new way to make money, still linked to entertainment. Having expanded the foray to a second market earlier this year, Redbox has found the strategy offers inventory owners and venues a way to promote their events to entertainment-conscious consumers at the nearly ubiquitous kiosks and immediately sell tickets to them in a simple way.Rhapsody's new app is aiming for the same behavior, and it's putting it in the palm of your hand. "Our members are huge music fans and we have always understood that fans want to 'do more than listen,'" said Paul Springer, Rhapsody's senior vice president of product and design. "We wanted to go another step forward for fans by helping them discover great live events."

The 404 739- Where it's your tuna fish (podcast)

The 404 739: Where it's your tuna fish (podcast)
We're back from our four-day weekend despite yesterday's gloomy celebration of Blue Monday, the "holiday" psychologists deem the most miserable day of the year.DragCloseThis content is rated TV-MA, and is for viewers 18 years or older. Are you of age?YesNoSorry, you are not old enough to view this content.Blue Monday is the result of a questionable formula written by psychologist Cliff Arnall in 2005, who calculated that the third Monday of January based on seven variables including weather, debt, monthly salary, time since Christmas, time since failed quitting attempt, low motivational levels, and the need to take action. The formula seems dubious, especially since Arnall was employed by a PR company at its recognition, but it also happened to fall on my 27th birthday, so it might hold water after all.Speaking of B.S., tune into today's episode for a skeptical discussion about astrology based on a random astrologer correctly guessing my birthday yesterday in a coffee shop. Wilson and I don't take astrology very seriously, but the coincidence is enough to make us wonder about its legitimacy. Plus Jeff's daily Aries horoscope is spot-on today! Also, don't worry about your zodiac sign changing, as some media outlets are calling a red herring, and Ophiuchus is old news!In other news, Apple CEO Steve Jobs announced his second medical leave of absence in the last two years. Jobs will remain CEO of the company, but Chief Operating Officer Tim Cook will take responsibility of the day-to-day operations.The company's stocks are already taking a hit with a 4 percent slide just an hour and a half into today's Nasdaq exchange, but we're deferring to our Apple expert Wilson Tang to predict the future of Apple once again.Episode 739PodcastYour browser does not support the audio element. Subscribe in iTunes audio | Suscribe to iTunes (video) |Subscribe in RSS Audio | Subscribe in RSS Video  Follow us on Twitter!The 404Jeff BakalarJustin YuWilson TangAdd us on Facebook!The 404 Fan PageThe 404 GroupJustin YuJeff BakalarWilson Tang


Pandora redesigns iPad app as iTunes Radio rolls out

Pandora redesigns iPad app as iTunes Radio rolls out
Pandora's iPad app on Wednesday got its biggest revamp since the Apple tablet came into being. The same day that Apple is slated to roll out iTunes Radio in the US, Pandora added elements like social sharing to its tablet app in the first major changes to the application since debuting on the device when it was introduced in April 2010. PandoraThe Pandora iPad update allows users to learn more about artists and share via Facebook and Twitter. A music feed provides a timeline of your music preferences, such as stations created.At the same time, Pandora updated the rest of its iOS designs to adopt the look and feel of iOS 7, which Apple is set to make available Wednesday, and refreshed its branding, like its logos and icons.Pandora Chief Technology Officer Tom Conrad told CNET in an interview that the fresh coat of paint, not only for the iPad app but also the company's general visual presentation, marks "an evolution of where we've been both in terms of visual design and how we talk about ourselves." "If anything, it's a reflection of a certain amount of maturity," he said. The company will release the redesigned version of the Pandora app for Android tablets this fall.Related storiesIs 'Avatar' giving you the blues?Car Tech Live 151:The best of the Detroit auto show (podcast)EMI licenses songs to new ad-supported siteThe company holds sway at the top of the Internet radio market, but it faces uncertainty as it takes on a major new competitor in iTunes Radio while adjusting toleadership under a new chief executive with a track record in advertising. Pandora has more than 200 million registered users, more than 71 million of whom were regular listeners at the end of last month, but even at the front of the pack, Pandora only represents about 7 percent of US radio listening.


Friday Poll- Apple + Valve = What-

Friday Poll: Apple + Valve = What?
Apple meets ValveIf Apple and Valve are indeed teaming up, what would you like to see come out of it?Apple fans joined gaming fanatics in frenetic speculation when Apple CEO Tim Cook was reportedly recently seen at the headquarters of Valve, the maker of ginormously successful games like Half Life and Portal.The supposed visit was hot on the heels of Valve's job posting for someone with hardware skills. "For years, Valve has been all about writing software that provides great gameplay experiences," the post said. "Now we're developing hardware to enhance those experiences, and you can be a key part of making that happen...We're not talking about me-too mice and gamepads here -- help us invent whole new gaming experiences."Is the maker of off-the-charts hardware teaming with the developer of off-the-charts games to create an off-the-charts gaming console? That's what was suggested by Cult of Mac, which first reported Cook's supposed visit. Theblog said Apple's planning a "full-on assault to take over the living room," one that will include a Siri-fied TV set with an iTunes-integrated touch-screen remote -- and a Kinect-like gaming console.But wait: last Friday, a Valve employee mentioned in a blog post that the company has been messing around with "wearable computing."Could that mean, as Forbes suggested, that Apple's CEO is, um, cooking something up with Valve along the lines of Google's Project Glass high-tech specs? And could it, perhaps, be another aspect of this mysterious supposed console? You know, the one that's not about "me-too mice and gamepads"? Will Portal-like robots with Siri-like voices soon be joining us on the subway during our morning commute, no gadgets required (if, that is, you remembered to put in your iPortal contacts)?CNET's Josh Lowensohen reports that a partnership between the two companies is by no means a given. For one thing, the companies have competing distribution systems when it comes to games for the Mac -- Apple's Mac App Store versus Valve's Steam service. But let's just say the frenemies have decided to make a partnership happen. What resulting gizmo would you like? Vote in our poll, and offer up your own frenetic speculation in the comments section.


Free DVD ripper supports iPhone 5

Free DVD ripper supports iPhone 5
The iPhone 5's screen may not be huge, but it's definitely a little nicer for watching movies than the old screen.Consequently, you may want to rerip some of your movies to take advantage of the extra screen estate. Just one problem: your old DVD ripper doesn't support the new screen resolution or aspect ratio.Here's one that does -- and it's free. For a limited time, you can get uRexsoft's iPhone DVD Ripper (Win) free of charge.True to its name, the utility copies DVDs to your PC and converts them to iPhone-friendly formats. That's true of any number of rippers (including some freeware ones, as I'm sure a few users will take joy in pointing out), but uRexsoft is among the first developers to add support for the iPhone 5.It also has outputs for all the other iPhone models, as well as the Apple TV and iPod Touch. (Alas, the fifth-gen Touch isn't on the list, though any of the iPhone 5 outputs should work just fine.)To get the program, click here, then click the blue "Get it Free" button. That'll download a zip file containing both the installer and a readme file, the latter containing the license code you'll need to copy and paste into the program the first time you run it.iPhone DVD Ripper worked just fine (albeit rather slowly) on my copy of "Jurassic Park." However, because I don't have an iPhone 5 (though I do have a new iPod Touch on order), I wasn't able to test the resulting rip on anything other than my computer -- where it looked and sounded just fine.The only things not free here are tech support and upgrades. Of course, because giveaways like these happen so regularly, the upgrade issue really isn't one.Bottom line: DVD ripper. Works with iPhone 5. Free. Anything else you need to know?


Ultrabooks to see fast growth, says analyst

Ultrabooks to see fast growth, says analyst
But consumers' preferences will change as they become more acclimated to skinny devices that offer laptop-like utility, such as the iPad and upcoming Amazon Kindle Fire. "To compete with media tablets, notebook PCs must become sexier and more appealing to consumers," said Matthew Wilkins, an iSuppli analyst, in a statement today. "With media tablets having already reversed the expansion of the previously fast-growing netbook platform, PC makers now are keenly aware that the notebook must evolve to maintain market growth and relevance," Wilkins wrote.Apple's iPad is driving a lot this growth. Windows 8 will be a boon to ultrabooks. That operating system will have an advanced touch interface and be more power efficient--in effect, tailor-made for the ultrabook.And Intel's vision of the ultrabook is closely aligned with Windows 8, Wilkins said.That said, prices will have to come down. Acer made a splash last month when it announced its ultrabook for $899 (and it's selling for as little as $840 at some resellers). But that's still pricey and out of the reach for a lot of consumers.Prices will need to be closer to $699 or even $599 to trigger broader buying patterns, according to Deron Kershaw, an analyst at Gap Intelligence.What will an ultrabook look like in 2015? Nobody knows, of course.Nor is it likely that a special naming scheme will even be relevant at that point.But expect a raft of very thin hybrid devices that offer the best of the laptop and tablet.


Two tracker services shutter, following Apple's DMCA takedown

Two tracker services shutter, following Apple's DMCA takedown
Founder Mordy Tikotzky shut down Apple-Tracker and iPhone-Check after Apple issued a Digital Millennium Copyright Act (DMCA) takedown notice on the latter site. Both services helped consumers track down the availability of Apple products.Apple-Tracker posted the alleged takedown notice, showing that an Apple attorney from the law firm Kilpatrick Townsend and Stockton LLP requested that iPhone-Check be taken down."I have a good faith belief that the the Web site identified by URL below is unlawful because, among other things, the page scrapes and collects data from apple.com in violation of the Apple.com Internet Service Terms of Use," the attorney wrote to the service's founder Mordy Tikotzky.CNET previously reported on iPhone-Check and its features.Tikotzky launched both services earlier this year. Apple-Tracker, along with iPhone-Check, allowed users to input a zip code and subsequently find out whether an iPhone was in stock at local retail stores. The tool was available in the US and scraped Apple's retail store site to identify inventory availability.In a statement on Apple-Tracker, Tikotzky expressed his displeasure with shutting down the Apple-Tracker as well, but said he was doing so because he didn't want to fight Apple in a legal battle:I've deciced (sic) to turn off the site. I'm not doing this because I want to, but rather because I received a DMCA takedown notice from Apple. I'm not really interested in picking a fight with apple so..... I guess it's time to just say good bye. Before I go though I just wanted to says thanks to all of you for the nice comments and emails that you've sent in the last few weeks. It was fun while it lasted.(Via The Verge)


Two new iPads due next month, report says

Two new iPads due next month, report says
The iPad rumor mill is spawning twins.According to DigiTimes, Apple will unveil two versions of its next-generation tablet next month at the Macworld|iWorld conference.Sources at Apple's supply chain partners tell the blog that the new models will target the mid- and high-end markets, while the existing iPad 2 will be positioned to compete with the Amazon Kindle Fire.The new models will sport 9.7-inch screens instead of the 7.85-inch screen the Taipei-based tech blog reported two weeks ago that the new tablet would "likely" launch with. The screens will reportedly feature QXGA resolution and dual light bars to strengthen panel brightness. The report follows previous reports about Apple's immediate QXGA ambitions.Richard Shim, an analyst at DisplaySearch, told CNET in November that, "It's happening--QXGA, 2048x1536. Panel production has started [for the next-generation iPad]. There's three suppliers." (In that month-ago report, Shim named the same suppliers that DigiTimes did today.) It's also no secret that Apple is expected to release a next-generation 9.7-inch screen model in the March-June time frame.However, like many of DigiTimes' recent reports on Apple's device roadmap, this report should definitely be taken with a grain of salt. In addition to its sources doing a zig-zag on the screen size, DigiTimes reports that Apple plans to unveil the new models at the Apple fan event formerly known as just Macworld, which the Cupertino, Calif.-based company abandoned three years ago. Apple's surprise return to conference, put on by IDG World Expo, would certainly garner significant buzz on its own.


Two iPhones to hitch a ride on last shuttle mission

Two iPhones to hitch a ride on last shuttle mission
Two iPhone 4s will be on board NASA's final shuttle mission next month.According to Odyssey Space Research, it has developed an iPhone app, called SpaceLab for iOS, that will be used on the International Space Station for several months this year to conduct space research. The iPhones will get to the ISS on the Atlantis space shuttle.While in space, those in the International Space Station will complete four experiments. According to Odyssey, a "Limb Tracker" experiment will involve taking pictures of the Earth with the iPhone, and "matching an arc to the horizon through manipulation of an overlay." That experiment, the organization said, will help to "yield an estimate of altitude and 'off-axis' angle, a measurement of the angle of the image with respect to the Earth's center."In addition, the iPhone 4 will be used in a "sensor calibration experience" that will help to improve the accuracy of future iPhone measurements. The iPhone's gyroscope and accelerometer will be employed to determine the latitude and longitude of the spacecraft.Finally, the researchers will use the iPhone to measure radiation effects on the smartphone while in space.To bring earthlings in on the fun, Odyssey has launched its application in Apple's App Store. Users can buy the app for 99 cents and perform the same experiments with information simulated "to account for the presence of gravity."Odyssey's iPhones are scheduled to launch on July 8 when Atlantis takes off on its final mission.


Twitter's value may be higher than $11 billion, report says

Twitter's value may be higher than $11 billion, report says
There has always been a lot of speculation about what Twitter is really worth, and a new report suggests the site could currently be valued as higher than $11 billion as it prepares to go public next year. Forbes reported today that financial researcher Greencrest is basing its rough valuation of $11 billion on trading in secondary markets and says part of the current higher value is due to speculation that Apple is interested in acquiring Twitter. Even if there is no acquisition, Twitter's higher value still makes sense, Greencrest said, according to Forbes, "as growth in users and new monetization efforts are both yielding fruit and pointing toward a good 2013 for Twitter."Twitter's valuation has shifted a bit over the past couple years. A new round of funding in 2011 pegged the company at $8 billion, and its value rose to $10 billion on secondary markets, according to The Guardian, before dropping a bit following Facebook's dismal IPO in 2012. Related stories:Jack Dorsey: An IPO is not an exit planTwitter: Five predictions for 2013Twitter: The five biggest stories of 2012Greencrest believes Twitter will start preparing this year for an IPO in 2014. Twitter co-founder and Chairman Jack Dorsey has long said the company will go public when it feels it's ready. He has noted in interviews many times that Twitter doesn't think of an IPO as an exit or a goal, but as more of a milestone. We've contacted Apple and Twitter and will update this story when we hear back.


Android ownership hottest in North America

Over the past year, the iPhone has also grown faster outside of North America. AdMob found that iPhone OS devices grew by 269 percent in Western Europe, 474 percent in Asia, and 367 percent in Oceana (which includes Australia, New Zealand, and nearby Pacific islands).But Android is doing well in markets such as China. In April, Android owners outnumbered iPhone owners in China, noted AdMob, with the top three Android devices being the HTC Hero, HTC Magic, and HTC Dream.Android and the iPhone both continue to enjoy rapid growth around the world--a recent Gartner study pegged them as the only two mobile smartphone platforms to rise in unit sales in the first quarter of 2010 compared with the same quarter last year. Google said last week that it's now activating 100,000 Android devices each day, according to AdMob, while Apple has sold 85 million iPhones and iPod Touches over the past three years.Through its mobile-advertising network, AdMob tracks the number of unique devices running the Android and iPhone operating systems. So its stats only cover the devices it actually sees and aren't necessarily representative of the entire universe of Android and iPhone devices.AdMob itself is being acquired by Android owner Google, a deal that just received the thumbs up from the Federal Trade Commission despite initial concerns that the purchase would give Google a significant chunk of the mobile ad market.

Android overtakes Apple's iOS during holiday season

Apple has of course remained a dominant force in the smartphone arena. But it's been getting stung by a nest of Android rivals, including HTC, Motorola, and especially Samsung. Combine the vast number of devices with the surge in demand, and Android continues to scoop up market share.The open nature of Android itself is also driving growth as device makers have the freedom to offer the mobile OS on a variety of devices and customize the user experience."The highly flexible nature of Android in regard to both hardware and software create the conditions necessary for what market leaders in all industries fear most: change," noted Chitika.Google also continues to build up its Android Market with around 400,000 apps now available. Though Apple has well over 500,000, Google has lately been able to increase the pace at which new apps become available.Of course, the open nature of Android Market has taken its share of lumps, with many security experts pointing to Google's mobile ecosystem as a favorite target for malware writers. But such openness is also key to attracting developers and consumers alike, says Chitika.Overall, though, Apple still leads in the number of active iOS devices with 250 million (including the iPhone, iPad, and iPod Touch), compared with Android with 230 million.