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Join Date: May 2001
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![]() ![]() "In 2014 iOS app developers earned more than Hollywood did from box office in the US." – Horace Dediu "The libertarian conservative base is pretty astute at recognizing crony capitalism and understand how campaign finance and corporate influence affects policy, and this is a pretty transparent moment for all that." – David Segal "I was 10 when I started downloading music with Napster. For as long as I’ve been a consumer of media, I’ve been able to find pretty much everything I wanted to watch, read or listen available almost instantly and for free online. All my friends have grown up in a similar situation. Actually owning something physical has no appeal." – Harry Guinness "Pirates are now watching films at higher quality than the industry insiders voting on them." – Andy Baio January 24th, 2015 ![]() Pirates Defeating Watermarks, Releasing Torrents of Oscar Movie Screeners DRM fail: Piracy sites loaded with unprecedented number of Oscar DVD screeners. David Kravets When an incomplete and early version of the X-Men Origins: Wolverine leaked to torrent sites in 2009, Twentieth Century Fox announced that the uploader "will be prosecuted to the fullest extent of the law." "We forensically mark our content so we can identify sources that make it available or download it," the studio said in a statement. Nabbed by a watermark, a New York man subsequently pleaded guilty to making the movie available on Megaupload. Gilberto Sanchez was sentenced to a year in prison in 2011. A triumphant US Attorney Andre Birotte Jr. said that "sentence handed down in this case sends a strong message of deterrence to would-be Internet pirates." But fast forward to today. An unprecedented number of in-theater movies like The Hobbit: The Battle of the Five Armies and other movies are now flooding torrent sites. These are the same movies—watermarked DVD screeners—handed out to critics and Academy members who vote on the Oscars. A Screen Actor's Guild member was popped in 2011 for making available the King's Speech on The Pirate Bay after a watermark on his copy matched the one that was online. But movie pirates are now embracing technology of their own and defeating the studios' watermarks. The quality of the scrubbed versions isn't perfect. But the removal of the code digitally woven into the Oscar screeners is making camcorded torrrents of in-theater movies look like child's play. Piracy groups are bragging about it, too. The CM8 release group wrote on kickasstorrents that it was a time-consuming effort to make available The Hobbit: The Battle of the Five Armies. First real Screener of this Year!!! got you First and Second Part, now its time for Part Three! Have FUN! A bit later than last years, but better late and safe than sorry. Last 2 weeks have been hell, searched all over for Hobbit day and night. Movie had Watermarks visible and invisible ones, had to remove frames to get rid of them. Nothing i havent done before, It was hours of work, but its finally done and here for you to get! TorrentFreak notes that the number of Oscar screeners now appearing on torrent sites—at least a dozen, is "unprecedented." The latest Hobbit installment was downloaded 500,000 times within 24 hours of its initial debut on torrent sites a week ago. "Several ‘versions’ of the movie exist on torrent sites, each labeled by rival release groups including CM8, EVO, TiTAN, Ozlem and RAV3N," TorrentFreak said. And it's happening without the The Pirate Bay, which was shuttered last month, following a raid on a Stockholm server room. http://arstechnica.com/tech-policy/2...vie-screeners/ ![]() Judge Rules That Dish’s Sling Features, Ad-Skipping Don’t Violate Copyright Ted Johnson A federal judge said Dish Network’s offering of features that automatically skip ads and another that allows subscribers to watch live broadcasts remotely do not violate copyright law. But U.S. District Judge Dolly M. Gee’s ruling, unsealed on Tuesday, came just days after Dish and the network challenging its features, Fox, said that a settlement of their litigation was “highly likely.” Their litigation was put on hold until October, when a retransmission contract between the companies is set to expire. Fox sought to limit key aspects of Dish’s Hopper service, including PrimeTime Anytime, which records and stores entire nights’ worth of programming, along with AutoHop, a feature that allows subscribers to automatically skip commercials. It also challenged Dish Anywhere, using Sling technology, which allows subscribers to view live programming remotely, outside of the home, on a range of devices. While Gee ruled that such offerings did not infringe copyright, she sided with Fox in concluding that some of the Dish features, like Hopper Transfers, which enables users to download shows on mobile devices, violated its contract agreements with the broadcaster that restrict copying of programming for use outside the home. She also found fault with Dish’s copying of Fox programming for quality assurance purposes in its offering of the ad-skipping feature AutoHop, ruling that it violated Fox’s exclusive right of reproduction. R. Stanton Dodge, Dish’s executive vice president and general counsel, said in a statement, “The decision is the sixth in a string of victories in federal courts on both coasts for the American consumer related to our Hopper Whole-Home DVR platform. We are proud to have stood by their side in this important fight over fundamental rights of consumer choice and control.” A Fox spokesman said, “Just as we learned in the Aereo case, protecting our content sometimes requires persistence and patience. This case is not, and never has been, about consumer rights or new technology. It’s always been about protecting creative works from being exploited without permission.” Fox had argued that the Supreme Court’s landmark ruling in favor of broadcasters in the Aereo case had a substantial bearing on the Dish case, particularly in the satcaster’s offering of Dish Anywhere. But Gee found difference between Aereo and Dish. “Aereo streamed a subscriber specific copy of its programming from Aereo’s hard drive to the subscriber’s screen via individual satellite when the subscriber requested it, whereas Dish Anywhere can only be used by a subscriber to gain access to her own home STB/DVR and the authorized recorded content on that box,” Gee wrote. “Any subsequent transfer of the programming by Dish Anywhere takes place after the subscriber has validly received it, whereas Aereo transmitted its programming to subscribers directly, without a license to do so.” Gee also rejected claims that Dish’s transmissions were a public performance, pointing out that the transmission “travels either to the subscriber herself or to someone in her household using an authenticated device.” She also rejected Fox’s claims that Dish’s AutoHop and PrimeTime Anytime offerings violated the terms of a retransmission contract. Fox argued that Dish’s Primetime Anytime feature — in which the Dish DVR automatically records entire nights’ worth of programming — was really an on-demand service, something prohibited in their contract. Dish’s offerings, part of its Hopper DVR service, drew great attention in 2012 with the introdution of the AutoHop feature, by which subscribers can play back recordings of shows with the commercials skipped over automatically. Broadcasters, worried that such a feature would undermine their business model, filed suit. ABC and CBS settled their litigation last year, with Dish agreeing to modify the ad-skipping feature so that it won’t be available for three days after shows run on ABC stations, and for seven days after they run on CBS stations. NBC’s litigation remains, but it had indicated that it was awaiting the result of the Fox case. “While we are still disappointed that court felt that PrimeTime Anytime and AutoHop do not violate our copyrights or contract, Dish has been largely disabling AutoHop anyway,” the Fox spokesman said. Dodge, however, said the case “has far-reaching significance, because it is the first to apply the Supreme Court’s opinion in Aereo to other technology.” http://variety.com/2015/biz/news/jud...ht-1201410019/ ![]() Sirius XM is Dealt New Setback in Turtles Copyright Lawsuit Jonathan Stempel A New York federal judge on Thursday largely rejected Sirius XM Holdings Inc's request to reconsider her Nov. 14 decision in favor of members of the 1960s band The Turtles over the payment of royalties for songs made before 1972. U.S. District Judge Colleen McMahon rejected Sirius' arguments that Flo & Eddie Inc, controlled by founding band members Howard Kaylan and Mark Volman, did not own copyrights in The Turtles' recordings such as "Happy Together," or gave it an "implied" license to play Turtles songs. She did, however, agree with the New York-based satellite radio company that Flo & Eddie could recover damages for copyright infringement only for the three years before it sued on Aug. 16, 2013, not six years as she had previously suggested. A lawyer for Flo & Eddie said the plaintiff plans by an April 3 deadline to formally seek class action certification on behalf of itself and other artists, rather than accept McMahon's alternative of an immediate ruling on liability in its favor. "We're obviously pleased that the judge sees the law the same way we do," the lawyer Harvey Geller said in a telephone interview. A spokesman for Sirius had no immediate comment. The lawsuit is one of a handful challenging Sirius and Pandora Media Inc over their playing of songs recorded before Feb. 15, 1972. Though such songs are not covered by federal copyright law, some recording artists and labels have won rulings entitling them to copyright protection under individual state laws. Record sales have long been falling industrywide, forcing artists and labels to depend more on online or satellite services to make money. Flo & Eddie has filed lawsuits in New York, California and Florida, seeking more than $100 million for Sirius' alleged infringements. In September, a federal judge in California found Sirius liable for infringements under that state's laws. The case is Flo & Eddie Inc v. Sirius XM Radio Inc et al, U.S. District Court, Southern District of New York, No. 13-05784. (Reporting by Jonathan Stempel in New York, editing by G Crosse) http://www.reuters.com/article/2015/...0KO2TL20150115 ![]() Bob Dylan Getting into File Sharing by Mailing his CD to Retired People Sean O'Neal Hopping onto the hot new trend of artists sharing their albums for free, Bob Dylan has announced that he will release a torrent of his new Frank Sinatra covers album into the waiting mailboxes of AARP subscribers. As previously reported, Dylan recently paid tribute to Sinatra with Shadows In The Night, in which the 73-year-old musician sings standards popularized by the late crooner. Now he’ll distribute 50,000 copies of that record for free, on CD, through the U.S. mail, to subscribers of the American Association of Retired Persons’ magazine, in what is the perfect combination of art, physical format, distribution, and audience. Dylan announced his bold foray into the world of file sharing as part of an interview with AARP—his first in three years, and a publication Dylan sought out specifically, rather than talk to the old fogeys at Rolling Stone. In it, he suggests that AARP’s 35 million-member audience of people 50 and older could possibly find something appealing about the idea of an album of Bob Dylan singing old Sinatra songs. “A lot of those readers are going to like this record,” Dylan says, ever an iconoclast willing to take a bold stand. “If it was up to me, I’d give you the records for nothing and you give them to every [reader of your] magazine.” And so he will—or, at least, to a randomly selected 50,000 of them, some of who will still probably call up AARP support, demanding to know how this album ended up in their inbox. Of course, for those who want to delete Shadows In The Night, it’s as simple as dragging it to the trash. http://www.avclub.com/article/bob-dy...cd-reti-214264 ![]() Apple Aims to "Legalize" Music, Video File Sharing with New Patent Summary:It's likely this will build on Apple's own AirDrop technology. But this may be one of the first steps in recent years that may combat illegal file sharing. Zack Whittaker Apple has been awarded a patent that would allow users to share music, video, and pictures directly with each other -- without having to worry about piracy. The patent, filed in 2011 and awarded earlier this month, aims to make it substantially easier for iPhone and iPad users to share content with each other, particularly music and video files that come with digital rights restrictions. The system would likely work in a similar way to AirDrop, which allows Macs, iPhones, and iPads to share documents and other content with other Apple devices. But content that's protected by digital rights software (DRM) cannot be shared. Instead of downloading a copy of the file from iTunes, the patent describes how music and video files can be shared (through AirDrop or similar means) with others once they obtain a license. The patent says this peer-to-peer sharing system has benefits, like reduced bandwidth costs for the content store owners. This means Apple device owners could be incentivized to use the file-sharing system by being offered a license to play the file at a cheaper cost. Peer-to-peer technology may be used widely by illegal file-sharers, but Apple says in its filing this system may reduce piracy. By offering content cheaper through nearby file-sharing, "this may encourage users to trade or copy digital content units as well as authorize these copies," the patent reads. "Such sharing may, in turn, reduce piracy or illegal copying since the opportunity cost of having one or more rights in an authorized copy of the digital content unit may be reduced." Apple invents and patents technologies all the time, and there is no guarantee that it will end up in a later version of Apple's mobile software, iOS. The Cupertino, Calif.-based technology giant has dipped its toe into "pirate" waters before. In 2011, Apple introduced iTunes Match, which allowed users to pay about $25 per year to upload songs they owned (legally or not) and receive better quality versions if they were available. At the time, the conclusion was that Apple was "legitimizing" music that had been pirated by sharing some of the profits from iTunes Match back to the rights owners in form of royalties. The cloud-based service continues to generate trust and revenue for the company. The company's iTunes division revenue has gone from making $729 million in the fourth-quarter of 2011 to $4.6 billion in the same quarter three years later -- albeit with a few internal division changes. Apple could not be immediately reached for comment Friday. http://www.zdnet.com/article/apple-a...video-sharing/ ![]() Netflix CEO Shows Why Piracy is a Major Threat Again Gregory Ferenstein Netflix had thought it beat back the threat of piracy. Back in 2011, when it popularized movie streaming, Netflix traffic overtook peer-to-peer file sharing in U.S. traffic. “How Netflix is killing piracy” read a Slate headline. Indeed, Google trends data show how Netflix handily crushed torrent. The reason was obvious: Pirating wasn’t so much about free material as it was about convenience. DVDs were a pain in the neck. Users wanted immediate access. In 2011, Netflix was faster than finding a reliable pirated copy, so people happily switched for a few dollars a month. But then, savvy software pirates took a page out of their playbook and created “Popcorn Time,” a super-slick torrent application that was ironically dubbed “Netflix for Torrents.” “Piracy continues to be one of our biggest competitors. This graph of Popcorn Time’s sharp rise relative to Netflix and HBO in the Netherlands, for example, is sobering,” Netflix wrote in their shareholder earnings reporter released yesterday [PDF]. The graph they were alluding to shows Popcorn Time now trending on par with Netflix in the Netherlands. At the moment, this only applies to northern Europe. Everywhere else in the world, Netflix’s Google popularity is many multiples of Popcorn Time. But Popcorn Time’s popularity continues to surge upward. Below is a graph from search in California. Popcorn Time has all the convenience of Netflix and includes all the new movies online available in theaters. It’s possible that the wild success of The Interview‘s direct-to-consumer launch could convince more Hollywood studios to publish movies online. I think many in my peer group have no interest in going to a theater. Personally, I see it as a giant waste of time and money. I watch movies on my laptop in the comfort of my pajamas, while playing around on Facebook or getting work done. Lately, I’ve been doing my daily workout while watching iTunes early release movies. If it weren’t for the annual tradition of seeing a movie on Christmas day, I’d probably never visit a theater. Netflix CEO is right: Piracy is a major threat. http://venturebeat.com/2015/01/21/ne...n-in-3-charts/ ![]() Netflix Will Stream 'The Interview' Starting this Weekend Seth Fiegerman Netflix is the latest company to offer up The Interview on demand. The online video service announced Tuesday that it will offer The Interview, which it dubbed "the controversial comedy," to its subscribers in the United States and Canada for no additional charge starting on Jan. 24. Google Play, Xbox and Apple TV previously offered the movie for purchase after the movie was pulled from many theaters following threats from hackers. The announcement came as part of Netflix's fourth-quarter earnings release. Netflix reported earnings of $0.72 per share on revenue of $1.48 in the December quarter, handily beating Wall Street estimates for earnings of $0.45 per share and coming in just shy of revenue. Netflix added more than 4 million paying members globally in the fourth quarter, bringing its total to 57.4 million subscribers. It expects to hit 61.4 million global members next quarter. That subscriber growth and better-than-expected profits further validates Netflix's continued international expansion efforts and investments in original programming. While the company says it's still figuring out certain markets like China — "If we go, it will be a modest investment," CEO Reed Hastings said on the earnings call Tuesday — Netflix nonetheless expects to "complete our global expansion" into a total of 200 countries "over the next two years, while staying profitable, which is earlier than expected." Netflix also expects to air 320 hours of original programming in 2015, triple the amount it aired in the previous year. On the programming front, Netflix faces growing competition from Amazon, which recently won a Golden Globe for its show Transparent and made headlines by signing up Woody Allen to produce his first-ever TV series. If that wasn't enough, Amazon is pushing into movie-making with plans to develop a dozen movies a year and screen them in theaters. The company's stock shot up more than 10% in after-hours trading following the earnings report — a far better outcome than the previous quarter when the stock dipped 25% for missing its subscriber forecasts. http://mashable.com/2015/01/20/netfl...earnings-2015/ ![]() The End of Ownership: Netflix, Spotify, and The Streaming Generation Harry Guinness Every time I write about how Spotify is awesome, or why my Kindle is better than physical books, I get the same comments. Someone always says, “I’ll never use that service, I like to own my things”. A Physical License When you own a book, what do you actually own? You don’t own the contents; you don’t own the words written inside. The text itself is generally protected by copyright, and is owned by the creator or publisher. You just own the physical object – the pages that hold the tale, not the tale itself. What about digital files? Well the situation is the same. You probably own the device you’re reading the ebook on, but you don’t own the content you’re reading. Without the constraints of a physical book, publishers need some way of transferring the information to you without transferring ownership of the file. The way they do that is with a licensing agreement. You never buy a song from iTunes or an ebook from Amazon. – you only buy a license to view the content. It’s not actually much of a change from the way physical products work — in that case, the printed book is simply your license to view the contents in perpetuity. Growing Up In The Second Golden Age Of Piracy I’m pretty young – I don’t even know who the fourth member of The Beatles is. For almost my entire life Internet piracy has been rampant. I was 10 when I started downloading music with Napster, and as Internet connections got faster and the technologies developed, I moved on to pirating movies with BitTorrent. For as long as I’ve been a consumer of media, I’ve been able to find pretty much everything I wanted to watch, read or listen available almost instantly and for free online. Why would I even think about buying CDs or DVDs? It was far simpler to just download the data to my computer. And I’m not alone with this – all my friends have grown up in a similar situation. Actually owning something physical has no appeal. CDs are just going to be ripped. DVDs are more likely to be watched on a computer than a TV. And if owning something tangible has no appeal, why would owning a nebulous license for a digital copy? The Rise Of Streaming This is why services like Spotify, Netflix and Amazon’s Kindle Unlimited are so great. We get almost all the benefits of piracy — instant access to all the content you could want — without the downsides, all for a reasonable monthly fee. What’s not to love? Rather than purchasing a one-off license for a single piece of digital content, you subscribe on an ongoing basis to a license that gives you access to a far larger collection of media than you could ever, even in a lifetime, amass on your own. Last year on Spotify I listened to 34540 minutes of music. That’s almost 24 days non-stop. Let’s say each song was 4 minutes long on average. That means I listened to 8635 tracks. Even if my top 100 songs accounted for 80% of that, it still means I, more than likely, listened to well over 1000 different songs. To buy each of them on iTunes would have cost nearly 10 times what it cost me to use Spotify. Not only that, but the experience was much better. I was able to find and listen to whatever I wanted without fear of wasting money. If I played a song and didn’t like it, no problem: I just wouldn’t play it again. If I bought an album and didn’t like it… then it’s tough luck. The same is also true of Netflix. Online movie streaming has killed DVD rentals. For the cost of renting a movie, you can get a full month of Netflix. When compared with buying a DVD the difference is even more stark. Resistance Is Futile If you refuse to use digital products on general principle then I don’t think I’ll ever convince you of the merits of streaming services. Resistance is futile. — The Borg (@OfficialBorg) April 20, 2011 If, on the other hand, you buy licenses for music from iTunes, you’re already half way there. You don’t own the music. Assuming a file you “buy” comes with DRM, the companies you purchase the licenses from can revoke them at any moment. Plus, so long as you buy, on average, one album a month off iTunes, Spotify is going to be cheaper in the long run. Streaming services are getting bigger and bigger. Spotify just passed 60 million users and shows no sign of stopping. Netflix accounts for 35% of US Internet traffic. These services aren’t going away. The End of Ownership What it means to “own” a piece of intellectual property has always been a bit nebulous – with digital files, it’s even more so. What we think of as ownership really ended with the rise of services like iTunes and the Kindle Store, which explicitly sell licenses. But now it’s truly dead. Piracy has bred a generation that expect instant digital access to content. We don’t care about having CDs, books or DVDs lying on a shelf – let alone digital files sitting on a hard drive. We don’t want to own a movie, we just want to watch it. http://www.makeuseof.com/tag/end-own...ng-generation/ ![]() The MPAA Isn't About Helping Hollywood. It's About Preserving Its Own Need To Exist. Mike Masnick In the past we've discussed the Shirky Principle, named after a statement by Clay Shirky that: "Institutions will try to preserve the problem to which they are the solution." In some ways that's a corollary to Upton Sinclair's famous quote: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" I've long believed that the MPAA has this problem in spades. The group, which is supposed to be about helping the big Hollywood studios, has long taken a very different positions. Five years ago, we wrote about how bizarre it was that the MPAA had an entire "Content Protection" division. As we noted at the time, the organization not only had a Chief Content Protection Officer, but also an Executive VP of Content Protection, a Senior VP of Content Protection and a regular VP of Content Protection, and probably a handful of Content Protection Minions or whatever they call their non-VP worker bees. And yet, there didn't seem to be anyone at the MPAA who had a title along the lines of "Chief Open Internet Evangelist" or "Chief Digital Business Model Strategist" or something along those lines, who could have been working with Hollywood to help transition the organization into the digital age. No, instead that transition has come in fits and starts with the MPAA itself fighting against most of the key moves and doing little to help forward thinking filmmakers and studios. In fact, if you talk to many of the up-and-coming filmmakers these days, they're just as angry about the MPAA's stance as open internet supporters -- because they realize just how counterproductive a "protection" regime is, rather than a "embrace the opportunity" regime would be. Eli Dourado has written up a fantastic discussion of this very idea, by focusing on two key things that came out of the Sony Hack that, together, more or less highlight the point above: that the MPAA is not pro-Hollywood at all, but rather seems entirely focused on "giving itself a reason to exist, rather than solving the film industry's" challenges. Specifically he highlights these two things: 1. Leaked emails revealed the Motion Picture Association of America’s ongoing plans to censor the Internet to reduce digital film piracy. 2. The hack prompted a surprise, online Christmas Eve release of The Interview that let us observe the effect of a new distribution model on film revenue. We have, of course, covered both of these, but Dourado puts them together nicely in context, showing how the MPAA's site-blocking/filtering/censorship strategy is one focused on destroying many of the opportunities of the internet, while the digital release of The Interview showed how embracing digital can actually be quite useful for Hollywood -- not that the MPAA wants anything to do with that at all. When put together, these vignettes raise important questions about the future of the film industry and its lobbying efforts. Is the MPAA really representing Hollywood’s long-term interests in Washington, or is it trying to fight old battles over and over in an attempt to justify its own existence? Dourado goes through the detailed history -- revealed by the Sony Hack -- of how, post-SOPA, the MPAA has regrouped to focus on ways to bring back site-blocking and censorship online, while simultaneously attacking Google at every turn (even when Google did exactly what the MPAA asked for and demoted sites the MPAA dislikes). As Dourado notes: But the more striking point is what this strategy reveals about the MPAA: the organization still deeply believes in site blocking as more or less the solution to online piracy. It continues to position itself as an enemy of the open Internet. From there, he discusses the success of the online release of The Interview, pointing out how well it did. Of course, some of that may have been because of all the (somewhat questionable) news about the supposed threat from North Korea, leading some to choose to watch it for patriotic reasons. Still, Dourado notes that, while there was piracy of the film as well, much of it came outside the US, because Sony initially limited the release to US only online. And the movie did make a fair bit of money online and, perhaps more importantly, got people to pay attention to its online efforts: There is additional evidence that the online release was a win for Sony: its YouTube channel gained 243,000 new subscribers in the aftermath of the Interview release. As YouTube entrepreneurs like Michelle Phan would note, subscribers are as good as cash, a ready source of revenue for future online movie releases, if Sony decides to do more of them. The Interview episode shows that the Internet need not be viewed only as a source of piracy. With a modest change in business model, it can also be the film industry’s next great distribution platform. And then you get to the divergence question: which strategy is best for Hollywood and the film industry... and which strategy is best for the MPAA? Take a wild guess: What is the best strategy for the film industry going forward? Should it continue to fight the open Internet, as it did with SOPA, and as it has continued to do through state AG investigations and lobbying the ITC? Or should it embrace the Internet as a potentially profitable distribution platform that is in any case here to stay? It’s clear which strategy the MPAA, the lobbying organization, prefers. If the studios were to truly embrace the Internet, the MPAA would have a much diminished reason for existence. There is no one you need to lobby in order to release films online. Many employees, such as chairman Chris Dodd and general counsel Steven Fabrizio, would have little to do. The organization would have to go back to administering its film ratings system and asking states for ridiculous film tax credits. He goes even further, pointing out that this stupid focus on "content protection" has been shown time and time again not to work, whereas embracing the internet seems much more likely to work. But, of course, it would leave the MPAA with less things to do. And thus, to me, it goes all the way back around to the Shirky Principle. The MPAA has to keep focusing on "the piracy problem" because it has set itself up as "the solution" to that problem, perhaps knowing full well that it's a solution that can never be solved. Yet, because of this, it guarantees a large role for itself, convincing gullible studio bosses to keep forking money over to the MPAA, so that its leadership can keep earning multi-million dollar salaries. The real issue here is that, as younger, more internet-savvy filmmakers continue to bubble up throughout Hollywood, sooner or later more of them are going to realize what a farce the MPAA has become. And just like the MPAA's "content protection" strategy has totally failed Hollywood, eventually it's going to totally fail itself as well. That's what you get for fighting the future, rather than embracing it. https://www.techdirt.com/articles/20...to-exist.shtml ![]() Bigger than Hollywood Horace Dediu Apple paid $10 billion to developers in calendar 2014. Additional statistics for the App store are: • $500 million spent on iOS apps in first week of January 2015 • Billings for apps increased 50% in 2014 • Cumulative developer revenues were $25 billion (making 2014 revenues 40% of all app sales since store opened in 2008) • 627,000 jobs created in the US • 1.4 million iOS apps catalog is sold in 155 countries Putting these data points together with others from previous releases results in a fairly clear picture of the iTunes/Software/Services[1] The App ecosystem billings (what consumers actually pay) is shown in the red area above. 70% of those payments are transferred directly to developers and Apple reports the 30% remaining as part of its revenues. This view of the iTunes ecosystem shows the impact of Apps relative to the other media types. When we measure the payments to the content owners we can see that Apps also dominate: The red area above adds up to the approximately $25 billion total paid to developers. This view of the payments to ecosystem contributors shows how apps are now a bigger digital content business than music[2] and TV programs and Movie rentals and purchases put together. This is quite a story. Put another way, in 2014 iOS app developers earned more than Hollywood did from box office in the US. Although the totals for Domestic (US) Box Office are not the complete Hollywood revenues picture, Apple’s App Store billings is not the complete App revenue picture either. The Apps economy includes Android and ads and service businesses and custom development. Including all revenues, apps are still likely to be bigger than Hollywood. But there’s more to the story. It’s also likely that the App industry is healthier. On an individual level, some App developers earn more than Hollywood stars[3] and I would guess that the median income of app developers is higher than the median income of actors.[4] The app economy sustains more jobs (627,000 iOS jobs in the US vs. 374,000 in Hollywood) and is easier to enter and has wider reach. As the graph below shows It’s also growing far more rapidly. The curious thing is that even though the medium of apps is swamping other forms of entertainment in all measurable ways, comprehension of the phenomenon is lagging. Information asymmetry is a wonderful thing. http://www.asymco.com/2015/01/22/bigger-than-hollywood/ ![]() Shifting Politics of Net Neutrality Debate Ahead of F.C.C. Vote Jonathan Weisman Last November, when President Obama proposed strict rules to prevent broadband companies from blocking or intentionally slowing down the web, Republicans pounced on what they called yet another heavy-handed liberal proposal. Senator Ted Cruz of Texas pronounced the regulations “Obamacare for the Internet.” But what was, on the surface, a simple fight over big government versus small has put Republicans in the awkward position of aligning themselves with the cable giants, among the most maligned industries in the country, against the sad Netflix viewer waiting for “House of Cards” to break through its “buffering” vortex. In the intervening weeks, politics on the so-called net neutrality issue have shifted so much that House and Senate Republicans are circulating legislation that would ostensibly do exactly what the president wants: ban the blocking or “throttling” of web traffic and prohibit the creation of paid “fast lanes” for Internet content providers willing to pay for faster delivery. But it would also prohibit the Federal Communications Commission from issuing regulations to achieve those goals — the approach favored by the Obama administration and most Internet companies. “The ground has shifted,” said Chip Pickering, a former Republican House member now lobbying for small Internet service providers who support net neutrality regulations. “Republicans lumped net neutrality in with the carbon tax and Obamacare: ‘He’s taking over everything and now he wants to take over the Internet.’ But it was a reactive, visceral response without a real understanding.” The arcane fight over net neutrality is about to burst into the open. House and Senate panels will hold hearings on Wednesday pitting the heads of the cable television and wireless lobbies against Amazon and scrappy little Etsy, an online craft market. Senator John Thune, the South Dakota Republican who now heads the commerce committee, hopes to have legislation ready the following week — ahead of the F.C.C.’s February meeting and what Internet activists are calling “the most important F.C.C. vote of our lifetime.” “By turning the F.C.C. away from a heavy-handed and messy approach to regulating the Internet, this draft protects both consumers who rely on Internet services and innovators who create jobs,” Mr. Thune said about his legislation in a statement. Internet companies and online activists say Republicans have adopted the language of the net neutrality movement, even as they carry the water of the cable companies, and they are preparing for battle. Some of those same players blackened their website, appealed to their customers and ultimately torpedoed bipartisan legislation in 2012 to combat online piracy in a major new economy-old economy fight. Once again, an Internet regulatory showdown might be guided as much by grass-roots guerrilla tactics as the lobbying of Comcast and Verizon. The F.C.C. has received four million comments on net neutrality — overwhelmingly in favor — ahead of its Feb. 26 decision day, second only to Janet Jackson’s “wardrobe malfunction” at the Super Bowl in 2004. After Mr. Cruz called net neutrality “the biggest regulatory threat to the Internet” on his Facebook page, the entry was flooded with comments like “I’m a Republican, and I support Sen. Cruz, and I’m a big admirer, but on this, he’s wrong, very wrong,” or “I’m a Ted Cruz fan, but as a small website owner, it seems to me net neutrality is a good thing,” and “Senator Cruz, you are risking alienating a huge part of your base by such a pro-monopoly stance. The battle for net neutrality is a conservative cause.” Internet activists, backed by many Internet companies, like Reddit, Vimeo, Netflix and Tumblr, staged an Internet slowdown in September to draw attention to their cause, much as online stunts by Wikipedia and Google in early 2012 stunned the powerful motion picture and music industries and helped bring down the Stop Online Piracy Act. This time, the fight might be even more palpable to consumers. Companies like Netflix say they need protection against behemoths like Comcast, Verizon, AT&T and Time Warner, which could use their power over cable and fiber-optic lines to slow consumer access to websites that offer competing content or fail to pay for fast service. Between summer 2013 and early 2014, Comcast customers found their access to Netflix getting progressively slower as Netflix’s streaming grew more popular and Comcast refused to upgrade its capacity, Netflix officials say. Then last February, Netflix did what Comcast wanted: It paid a still-undisclosed sum and the problem went away. “The reason I think Netflix has captured people’s attention is what happened to our service was real, it was bad, and it was recent,” said Corie Wright, the director of global public policy at Netflix. “They think of that buffering signal and the video that didn’t start and the problems that net neutrality is supposed to solve were literally brought home.” Comcast officials declined to comment, citing F.C.C. deliberations, not only on net neutrality regulations but also on the company’s merger with NBCUniversal. But in a filing to the F.C.C. last month, the company said reclassifying wireless and wired broadband service as a regulated public utility would harm investment and diminish capacity. If a broadband company throttled access to popular sites like Netflix, the company contends, customers would simply go to a competitor. In that sense, broadband providers argue, net neutrality is a solution in search of a problem. “The public discourse on open Internet issues has now reached a fever pitch,” Comcast wrote. “Emotion and hyperbole are substituting for fact.” Verizon, in its public policy blog, was even more blunt, blaming Netflix for the slow service Verizon customers were complaining about. Despite “an unprecedented amount of data” to send, the video-streaming company was using cut-rate providers — “perhaps to cut costs and improve its profitability” — to carry content to the big broadband companies, Verizon said. “Netflix knew better. Netflix is responsible,” Verizon said. Internet activists say the “solution in search of a problem” argument is growing thin, after the Netflix episode and other issues. And the coalition appears to be girding for a fight — and hoping to catch politicians on the wrong side of what one cable lobbyist called “religion” more than policy discourse. “The libertarian conservative base is pretty astute at recognizing crony capitalism and understand how campaign finance and corporate influence affects policy,” said David Segal, executive director of Demand Progress, a net neutrality advocacy group. “And this is a pretty transparent moment for all that.” http://www.nytimes.com/2015/01/20/te...-fcc-vote.html ![]() Inside Obama's Ambitious Plan to Make Your Internet Suck Less Aaron Sankin Twitter President Obama recently unveiled a dramatic plan aimed at making your Internet connection suck less. In one of a slew of new initiatives launched in anticipation of Tuesday's State of the Union address, Obama announced a dramatic push to improve broadband Internet service for people around the country. The president argued that millions of Americans are underserved by their current options for high-speed Internet. One way to rectify that is to allow local governments to build their own municipal broadband networks. Problem is, state legislatures around the country have passed laws making it considerably more difficult for these public Internet projects to get off the ground. In some states, building municipal broadband is prohibited altogether. President Obama has instructed the Federal Communications Commission (FCC) to do what it can to invalidate these laws and allow local government to easily set up their own municipal Internet networks FCC Chairman Tom Wheeler is broadly supportive of the idea, although Republicans on the commission have come out in opposition. Wheeler proposed something very similar himself while speaking at cable industry event last year. Even so, it's not as if the targeted laws could all be made to disappear in an instant. It's likely to be a slow process for a range of reasons: The rules were largely put in place at the behest of power private telecom firms leery of facing additional competition; invalidating those laws sets the stage for a pitched states'-rights battle; and the laws themselves are far from uniform, meaning there's likely no single way to push them aside. In addition, the regulatory authority under which the FCC will be attempting to invalidate the laws, Section 706 of the Telecommunications Act, is extremely broad. It says that the FCC "shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans" by "[promoting] competition" and "[removing] barriers to infrastructure investment." Figuring out how each of the state laws fit into the puzzle will likely be tricky—especially in the face of stiff Republican and cable-industry opposition. A handful of states, like Texas and Nebraska, have outright bans on governmental agencies creating their own ISPs and then selling Internet access to the public. However, most of the rules in place are considerably more complicated. Some states, like California and Montana, have said that local governments can only embark on broadband projects if there are no private entities in the region willing to provide service. On one hand, this rule stops deep-pocketed government entities from undercutting a private sector unable to keep up; however, one of the main goals of brining in municipal Internet is sparking just this type of direct competition. A report by the New America Foundation noted America's Internet infrastructure lags behind many other developed nations because major incumbent cable Internet providers rarely face direct competition in a given geographic area. In other words, most Americans have only one, sometimes two, Internet providers available in their area. For example, when the country's two largest Internet service providers, Comcast and Time Warner Cable, announced their intention to merge, the companies pointed out that they don't directly compete against each other in any location in the United States. Therefore, they largely get to act like monopolies. Comcast has developed the reputation of being the worst company in America, but its status as the only option for many consumers leaves people with few, if any, alternatives. A recent report the Government Accountability Office found that municipal broadband networks typically offer faster speeds for lower prices than private networks. As a result, the private networks then have an incentive to make the necessary investments for providing better service. However, when states like California restrict municipal broadband projects to areas where there isn't already service, the entire competition-promoting aspect gets wiped out. Other states have rules in place that require municipal broadband projects to add in additional costs into their models, even though those costs don't actually exist. For instance, even though local governments can borrow money at much lower rates than private firms by issuing bonds, they may still have to act like they're paying higher rates and therefore would be required to charge high prices to their customers. "In North Carolina," municipal broadband advocate Chris Mitchell of the Institute for Local Self-Reliance tells the Daily Dot, "the law says that muni networks would have to calculate the taxes that a private company would have to pay—which is an interesting turn of phrase as Time Warner Cable and others often pay much less than they 'would have to pay' due to fuzzy math." "The impact of these laws is that a community that moves forward opens itself up to years of litigation as courts will have to figure out what such poorly conceived laws mean," Mitchell added. "So the danger isn't so much the cost of additional dollars but the exposure to years of court room wrangling." Here is a map showing all the states with anti-municipal broadband laws Obama wants the FCC to go after, along with brief descriptions of the restrictions in place in each state. Alabama: Municipal broadband services can't use local taxes to pay start-up costs, eliminating one of the biggest advantages possessed by government infrastructure projects. Each stand-alone service has to be self-sustaining—meaning no "triple play" bundles of phone, TV, and Internet service. A public vote is required before every project. Arkansas: Only municipalities already providing public electricity service can offer broadband. California: Utilities can only provide municipal broadband to an area if no private entity is willing to do it. If a private firm pops up, the municipality has to immediately sell or lease the system it spent years building—likely at a loss. Colorado: A public vote is required in all areas other than where a community has specifically requested service from private companies and been refused. Florida: All projects are required to be profitable within four years, which rarely happens for any broadband network—even in the private sector. A special ad valorem tax, unique among infrastructure projects, is imposed on pubic broadband efforts. Louisiana: Requires a public referendum before each municipal broadband projects. Public providers are required to shoulder higher costs than a private company would be required to pay in a similar situation. Michigan: Before kicking off a public Internet projects, municipalities must seek offers from private firms and cannot build themselves if they receive three or more qualified bids. Minnesota: A public vote with 65 percent supermajority is required before starting any municipal broadband project. Missouri: Municipalities are prohibited from offering telecommunications services to the public. Stand-alone broadband is currently exempted, but a bill working its way through the state legislature would eliminate that exemption. Montana: Governments can only provide broadband if there is no private company offering service in a particular city. If a non-governmental provider starts offering service, municipality can shut down within months. Nebraska: Public entities are banned from offering broadband service to the public. Nevada: Towns larger than 25,000 and counties larger than 55,000 are banned from offering any form of telecommunications service. North Carolina: Public providers are forced to deal with numerous legal roadblocks not encountered by private firms, such as tacking additional costs onto their rates to simulate what a private company would have to pay. All municipal broadband projects must pass public vote before launching. Pennsylvania: Municipalities are barred from providing comparable services offered by private company. ("Comparable" can only refer to data speed.) Governments are not allowed to look at other factors like price or quality of service. South Carolina: Municipal networks have to add phantom costs that a private provider might have to pay. Tennessee: Electric utilities can bring broadband to their service areas, but cannot expand beyond it. For example, Chattanooga's municipal fiber network is one of the best in the country and this rule prevents it from expanding service to neighboring cities. Texas: Public sector agencies are prohibited from offering Internet service to the public, both directly and through partnerships with private firms. Utah: Accounting regulations placed on municipal broadband networks mean that the state has a "de facto prohibition" on such services. Virginia: Municipal providers are not allowed to subsidize service or charge rates lower than private firms. Nor are they allowed to offer "triple play" packages because providing cable television service is banned. Washington: Public utilities cannot provide telecommunications service directly to customers—although they can offer wholesale data service to private providers, which can re-sell it to customers. http://www.dailydot.com/politics/mun...a-state-union/ ![]() Sprint Backs FCC on Reclassifying Broadband as Utility In a surprise move, Sprint counters its industry brethren by saying the FCC's plan won't prevent it from further investing in its broadband network. Marguerite Reardon Sprint doesn't think that the Federal Communications Commission's plan to reclassify broadband traffic as a utility is such a bad idea after all. In a letter to the FCC filed on Friday, Sprint's chief technology officer went against the rest of the wireless and broadband industry by saying the company could live with stricter Net neutrality regulation if applied with a "light touch," Sprint's Stephen Bye wrote. "So long as the FCC continues to allow wireless carriers to manage our networks and differentiate our products, Sprint will continue to invest in data networks regardless of whether they are regulated by Title II, Section 706, or some other light touch regulatory regime," he said. Bye added that -- unlike other wireless and broadband carriers -- Sprint doesn't think the FCC's moves to protect and strengthen Net neutrality will chill network investment. Net neutrality is the idea that Internet providers give equal access to content and applications, and not force content providers to pay for faster delivery. Sprint's statement comes just weeks before FCC chairman Tom Wheeler is expected to circulate his final proposal to reinstate open Internet rules that were struck down by a federal court a year ago. In the new order, which will be voted on by the full FCC on February 26, the FCC is expected to reclassify broadband service under Title II of the Communications Act. This change in classification has been opposed by all the big broadband and wireless service providers. Wheeler argues that classifying broadband as a utility will give the FCC stronger footing to withstand potential legal challenges from the industry, while broadband providers say it will stifle innovation and bring investment in their networks to a grinding halt. Earlier this week, a Verizon spokesman reiterated his company's position on the subject: "Verizon believes that to apply 1930s-era utility regulation to the Internet under Title II reclassification would be a radical reversal for what has been an open, competitive and innovative Internet economy, and would be particularly harmful to wireless broadband, which unlike traditional voice services, developed free of legacy Title II regulations." Chairman Wheeler's initial Net neutrality plan proposed in May did not include the drastic step of reclassifying broadband services as a utility. In an exclusive interview with CNET this week, he explained he began to rethink his approach earlier this summer after talking to consumers and entrepreneurs. The chairman has also been adamant that the new, stricter regulations for wireline broadband will also apply to wireless, which the previous Net neutrality laws did not. Wheeler also said the approach he is proposing will exclude things such a rate regulation. He said the approach is similar to one that the FCC has used to regulate wireless voice networks. And he said that this style of regulation has worked well for the wireless industry. "It clearly has not thwarted investment in the wireless industry," he said. "I mean, golly, there has been $300 billion -- that's with a 'b' -- invested in the wireless industry." He also pointed to the ongoing wireless spectrum auction, which to date has bids totaling nearly $45 billion, the biggest auction in the agency's history. While Sprint's statement Friday makes clear that the carrier would be fine with the inevitable Title II approach that the FCC is taking with the new rules, the company hints that it still hopes the FCC will treat wireless differently from wired broadband networks. In the 2010 rules, wireless networks were exempt from some of the no-blocking rules that applied to wireline networks. But Wheeler has stated emphatically that wireless should be treated no differently than traditional wired broadband. "Wireless can't carry 55 percent of the Internet's traffic and expect to be exempt from Open Internet requirements," he said. Verizon aside, the rest of the wireless industry opposes the Title II reclassification of broadband. Meredith Atwell Baker, head of the wireless industry's main lobbying group CTIA, has called the chairman's comparisons to wireless regulation "misplaced and irrelevant." "The chairman is correct that deregulation worked," she said in a statement. "The chairman cannot now use that same deregulatory tool to extend regulation and government intrusion where it has never been before." http://www.cnet.com/news/sprint-back...ing-broadband/ ![]() EE, Virgin and Vodafone Back Net Neutrality ISPs commit to net neutrality by signing up to Open Internet Code. Alexander Sword EE, Virgin Media and Vodafone have thrown their support behind net neutrality by signing up to the Open Internet Code. Launched in 2012 by the Broadband Stakeholder Group (BSG), the UK code commits the three internet service providers (ISPs) to provide full internet access with no data blocked "on the basis of commercial rivalry." Content providers can now lodge a complaint with the BSG if they feel their services are being discriminated against. This latest development means that all major ISPs providing fixed and mobile networks are signed up to the code. BSG CEO Matthew Evans said: "Unlike some countries, where net neutrality has become a controversial topic for discussion, the UK benefits from a fiercely competitive market and high levels of transparency - which together offer the best assurance of an open internet." "The code now provides an even stronger and more effective foundation, whilst also allowing for an environment where new business models for internet-based services which benefit consumer choice can thrive." EE also made headlines today after wrongly charging customers VAT for using data roaming abroad. "Due to a configuration error in our billing system, made following a system change, a small number of customers were wrongly charged VAT on the Data Roaming bundle outside of Europe," an EE spokesperson commented. "This was a mistake, and we are now refunding these charges and contacting affected customers to apologise for the error." http://www.cbronline.com/news/ee-vir...rality-4491631 ![]() Verizon Nears “the End” of FiOS Builds Verizon lost $2.23 billion, but FiOS and wireless businesses remain profitable. Jon Brodkin It's been nearly five years since Verizon decided to stop expanding its FiOS fiber network into new cities and towns, so this week's news won't come as a huge surprise: Verizon is nearing "the end" of its fiber construction and is reducing wireline capital expenditures while spending more on wireless. "I have been pretty consistent with this in the fact that we will spend more CapEx in the Wireless side and we will continue to curtail CapEx on the Wireline side. Some of that is because we are getting to the end of our committed build around FiOS, penetration is getting higher," Verizon CFO Fran Shammo said yesterday in the Q4 2014 call with investors. Wireline capital spending totaled $1.6 billion in the most recent quarter and $5.8 billion for 2014, down 7.7 percent from 2013, Verizon said. Verizon posted a net loss of $2.23 billion in Q4 2014, despite making a profit of $9.63 billion for the full year. The loss included "significant non-operational items... primarily related to the annual actuarial valuation of benefit plans and mark-to-market pension adjustments," Verizon said. The numbers look better when examining individual divisions. Wireline operating income margin was 4.4 percent in Q4 2014, up from 1.2 percent the previous fourth quarter, Verizon's earnings announcement said. FiOS revenue grew 11.6 percent year-over-year to $3.3 billion in Q4 2014, and FIOS brought in 77 percent of consumer wireline revenue. Those profitability numbers pale in comparison to wireless, where Verizon reported 23.5 percent operating income margin in Q4 2014. That helps explains why Verizon is shifting capital expenditures from wireline to wireless. Verizon Wireless added 2.1 million retail connections in the fourth quarter, bringing its total to 108.2 million. Among those are 35.6 million retail postpaid accounts, averaging 2.87 connections per account for 102.1 million postpaid connections. Although FiOS competes strongly against cable companies like Comcast, the expense of replacing old copper lines with fiber led Verizon to stop building in new regions and to complete wiring up the areas where it had already begun. Verizon even partnered with cable companies in 2012 to resell cable service in bundles with Verizon Wireless in areas where FiOS was never built. Verizon doesn't seem to want to maintain its copper telephone network either, with many customers and advocacy groups complaining that the company drags its feet in fixing problems in order to force users onto fiber or wireless. Verizon is reaping the financial rewards of FiOS now that it has mostly finished construction. "We are reconnecting homes that we've already connected, so it's not additional capital that we have to outlay," Shammo said. "That is a very good return for us because we already spent the capital to connect that home." Verizon's plan "to improve profitable growth includes driving further FiOS penetration and improving operating and capital efficiency." Fifty-nine percent of FiOS consumer Internet customers subscribed to data speeds of at least 50Mbps, up from 46 percent one year earlier. Verizon says that FiOS lines have passed more than 19.8 million premises. FiOS Internet has nine percent more Internet connections than it did a year ago and 7.4 percent more video connections. "In broadband, we added 145,000 net FiOS customers in the quarter and 544,000 for the year," Shammo said yesterday. "We have a total of 6.6 million FiOS Internet subscribers, representing 41.1 percent penetration... Overall net broadband subscribers increased 59,000 in the quarter and 190,000 for the full year. In FiOS video, we added 116,000 net customers in the quarter and 387,000 for the year. We have a total of 5.6 million FiOS video subscribers, which represents 35.8 percent penetration." (The penetration percentages don't square with the 19.8 million buildings passed figure. Verizon told Ars that out of the premises passed, 16.1 million homes are "open for sale" for Internet service and 15.8 million are open for sale for TV. Some homes are passed with fiber but aren't ready for services because network gear in the central office hasn't been initialized. Premises passed include also businesses. Verizon said the 19.8 million buildings passed with fiber are "vastly" homes but declined to say how many are businesses, and would not say how many homes are passed with copper.) Verizon has converted more than 800,000 copper customers to fiber since 2011 and said it intends to convert another 200,000 in 2015, though that number would likely be higher if Verizon hadn't halted its fiber expansion. Customers can switch to fiber without purchasing FiOS service, as fiber can carry circuit-switched telephone calls—but without the benefit of working throughout multiple-day power outages, as older copper lines could do. Even if customers switch to fiber for phone service only, those conversions "provide a long-term opportunity for customers to purchase FiOS services," Shammo said. http://arstechnica.com/business/2015...f-fios-builds/ ![]() Stations Won't Air Conservative Ads Attacking Comcast-Time Warner Merger The conservative battle against cable continues. David Weigel Nine days ago, the Conservative War Chest PAC set out to run TV ads in swing-state markets. They took the form of two-minute jeremiads against the political slant of some MSNBC hosts, ending with appeals to watchers (and voters) to call their affiliates and get them to oppose the proposed merger of Comcast (which owns NBCUniversal) and Time Warner Cable. Nine days later, no station has taken the ads. It wasn't Plan A, but it'll do. "NBC’s refusal to air our ads validates the exact concerns that sparked our warnings about the Comcast merger," said CWC's Michael Flynn. "If the government approves the Comcast merger, the company will control 80 percent of local political advertising. Censoring our ad should frighten all sides of the political spectrum. Who knows who a government-sanctioned Comcast would try to censor tomorrow?" The group's next step is likely to be an FCC complaint, elevating the argument and bringing a government watchdog into it. Meanwhile, progressive opponents of the merger are pounding away, and appreciating the air cover. https://www.bloomberg.com/politics/a...-warner-merger ![]() The Digital Arms Race NSA preps America for future battle By Jacob Appelbaum, Aaron Gibson, Claudio Guarnieri, Andy Müller-Maguhn, Laura Poitras, Marcel Rosenbach, Leif Ryge, Hilmar Schmundt and Michael Sontheimer The NSA's mass surveillance is just the beginning. Documents from Edward Snowden show that the intelligence agency is arming America for future digital wars -- a struggle for control of the Internet that is already well underway. Normally, internship applicants need to have polished resumes, with volunteer work on social projects considered a plus. But at Politerain, the job posting calls for candidates with significantly different skill sets. We are, the ad says, "looking for interns who want to break things." Politerain is not a project associated with a conventional company. It is run by a US government intelligence organization, the National Security Agency (NSA). More precisely, it's operated by the NSA's digital snipers with Tailored Access Operations (TAO), the department responsible for breaking into computers. Potential interns are also told that research into third party computers might include plans to "remotely degrade or destroy opponent computers, routers, servers and network enabled devices by attacking the hardware." Using a program called Passionatepolka, for example, they may be asked to "remotely brick network cards." With programs like Berserkr they would implant "persistent backdoors" and "parasitic drivers". Using another piece of software called Barnfire, they would "erase the BIOS on a brand of servers that act as a backbone to many rival governments." An intern's tasks might also include remotely destroying the functionality of hard drives. Ultimately, the goal of the internship program was "developing an attacker's mindset." The internship listing is eight years old, but the attacker's mindset has since become a kind of doctrine for the NSA's data spies. And the intelligence service isn't just trying to achieve mass surveillance of Internet communication, either. The digital spies of the Five Eyes alliance -- comprised of the United States, Britain, Canada, Australia and New Zealand -- want more. The Birth of D Weapons According to top secret documents from the archive of NSA whistleblower Edward Snowden seen exclusively by SPIEGEL, they are planning for wars of the future in which the Internet will play a critical role, with the aim of being able to use the net to paralyze computer networks and, by doing so, potentially all the infrastructure they control, including power and water supplies, factories, airports or the flow of money. During the 20th century, scientists developed so-called ABC weapons -- atomic, biological and chemical. It took decades before their deployment could be regulated and, at least partly, outlawed. New digital weapons have now been developed for the war on the Internet. But there are almost no international conventions or supervisory authorities for these D weapons, and the only law that applies is the survival of the fittest. Canadian media theorist Marshall McLuhan foresaw these developments decades ago. In 1970, he wrote, "World War III is a guerrilla information war with no division between military and civilian participation." That's precisely the reality that spies are preparing for today. The US Army, Navy, Marines and Air Force have already established their own cyber forces, but it is the NSA, also officially a military agency, that is taking the lead. It's no coincidence that the director of the NSA also serves as the head of the US Cyber Command. The country's leading data spy, Admiral Michael Rogers, is also its chief cyber warrior and his close to 40,000 employees are responsible for both digital spying and destructive network attacks. Surveillance only 'Phase 0' From a military perspective, surveillance of the Internet is merely "Phase 0" in the US digital war strategy. Internal NSA documents indicate that it is the prerequisite for everything that follows. They show that the aim of the surveillance is to detect vulnerabilities in enemy systems. Once "stealthy implants" have been placed to infiltrate enemy systems, thus allowing "permanent accesses," then Phase Three has been achieved -- a phase headed by the word "dominate" in the documents. This enables them to "control/destroy critical systems & networks at will through pre-positioned accesses (laid in Phase 0)." Critical infrastructure is considered by the agency to be anything that is important in keeping a society running: energy, communications and transportation. The internal documents state that the ultimate goal is "real time controlled escalation". One NSA presentation proclaims that "the next major conflict will start in cyberspace." To that end, the US government is currently undertaking a massive effort to digitally arm itself for network warfare. For the 2013 secret intelligence budget, the NSA projected it would need around $1 billion in order to increase the strength of its computer network attack operations. The budget included an increase of some $32 million for "unconventional solutions" alone. In recent years, malware has emerged that experts have attributed to the NSA and its Five Eyes alliance based on a number of indicators. They include programs like Stuxnet, used to attack the Iranian nuclear program. Or Regin, a powerful spyware trojan that created a furor in Germany after it infected the USB stick of a high-ranking staffer to Chancellor Angela Merkel. Agents also used Regin in attacks against the European Commission, the EU's executive, and Belgian telecoms company Belgacom in 2011. Given that spies can routinely break through just about any security software, virtually all Internet users are at risk of a data attack. The new documents shed some new light on other revelations as well. Although an attack called Quantuminsert has been widely reported by SPIEGEL and others, documentation shows that in reality it has a low success rate and it has likely been replaced by more reliable attacks such as Quantumdirk, which injects malicious content into chat services provided by websites such as Facebook and Yahoo. And computers infected with Straitbizarre can be turned into disposable and non-attributable "shooter" nodes. These nodes can then receive messages from the NSA's Quantum network, which is used for "command and control for very large scale active exploitation and attack." The secret agents were also able to breach mobile phones by exploiting a vulnerability in the Safari browser in order to obtain sensitive data and remotely implant malicious code. In this guerilla war over data, little differentiation is made between soldiers and civilians, the Snowden documents show. Any Internet user could suffer damage to his or her data or computer. It also has the potential to create perils in the offline world as well. If, for example, a D weapon like Barnfire were to destroy or "brick" the control center of a hospital as a result of a programming error, people who don't even own a mobile phone could be affected. Intelligence agencies have adopted "plausible deniability" as their guiding principle for Internet operations. To ensure their ability to do so, they seek to make it impossible to trace the author of the attack. It's a stunning approach with which the digital spies deliberately undermine the very foundations of the rule of law around the globe. This approach threatens to transform the Internet into a lawless zone in which superpowers and their secret services operate according to their own whims with very few ways to hold them accountable for their actions. Attribution is difficult and requires considerable forensic effort. But in the new documents there are at least a few pointers. Querty, for example, is a keylogger that was part of the Snowden archive. It's a piece of software designed to surreptitiously intercept all keyboard keys pressed by the victim and record them for later inspection. It is an ordinary, indeed rather dated, keylogger. Similar software can already be found in numerous applications, so it doesn't seem to pose any acute danger -- but the sourcecode contained in it does reveal some interesting details. They suggest that this keylogger might be part of the large arsenal of modules that that belong to the Warriorpride program, a kind of universal Esperanto software used by all the Five Eyes partner agencies that at times was even able to break into iPhones, among other capabilities. The documents published by SPIEGEL include sample code from the keylogger to foster further research and enable the creation of appropriate defenses. 'Just a Bunch of Hackers' The men and women working for the Remote Operations Center (ROC), which uses the codename S321, at the agency's headquarters in Fort Meade, Maryland, work on one of the NSA's most crucial teams, the unit responsible for covert operations. S321 employees are located on the third floor of one of the main buildings on the NSA's campus. In one report from the Snowden archive, an NSA man reminisces about how, when they got started, the ROC people were "just a bunch of hackers." Initially, people worked "in a more ad hoc manner," the report states. Nowadays, however, procedures are "more systematic". Even before NSA management massively expanded the ROC group during the summer of 2005, the department's motto was, "Your data is our data, your equipment is our equipment." The agents sit in front of their monitors, working in shifts around the clock. Just how close the NSA has already gotten to its aim of "global network dominance" is illustrated particularly well by the work of department S31177, codenamed Transgression. The department's task is to trace foreign cyber attacks, observe and analyze them and, in the best case scenario, to siphon off the insights of competing intelligence agencies. This form of "Cyber Counter Intelligence" counts among the most delicate forms of modern spying. How the NSA Reads Over Shoulders of Other Spies In addition to providing a view of the US's own ability to conduct digital attacks, Snowden's archive also reveals the capabilities of other countries. The Transgression team has access to years of preliminary field work and experience at its disposal, including databases in which malware and network attacks from other countries are cataloged. The Snowden documents show that the NSA and its Five Eyes partners have put numerous network attacks waged by other countries to their own use in recent years. One 2009 document states that the department's remit is to "discover, understand (and) evaluate" foreign attacks. Another document reads: "Steal their tools, tradecraft, targets and take." In 2009, an NSA unit took notice of a data breach affecting workers at the US Department of Defense. The department traced an IP address in Asia that functioned as the command center for the attack. By the end of their detective work, the Americans succeeded not only in tracing the attack's point of origin to China, but also in tapping intelligence information from other Chinese attacks -- including data that had been stolen from the United Nations. Afterwards, NSA workers in Fort Meade continued to read over their shoulders as the Chinese secretly collected further internal UN data. "NSA is able to tap into Chinese SIGINT collection," a report on the success in 2011 stated. SIGINT is short for signals intelligence. The practice of letting other intelligence services do the dirty work and then tapping their results is so successful that the NSA even has a name for it: "Fourth Party Collection." And all countries that aren't part of the Five Eye alliance are considered potential targets for use of this "non-traditional" technique -- even Germany. 'Difficult To Track, Difficult To Target' The Snowden documents show that, thanks to fourth party collection, the NSA succeeded in detecting numerous incidents of data spying over the past 10 years, with many attacks originating from China and Russia. It also enabled the Tailored Access Operations (TAO) to track down the IP address of the control server used by China and, from there, to detect the people responsible inside the Peoples' Liberation Army. It wasn't easy, the NSA spies noted. The Chinese had apparently used changing IP addresses, making them "difficult to track; difficult to target." In the end, though, the document states, they succeeded in exploiting a central router. The document suggests that things got more challenging when the NSA sought to turn the tables and go after the attacker. Only after extensive "wading through uninteresting data" did they finally succeed in infiltrating the computer of a high-ranking Chinese military official and accessing information regarding targets in the US government and in other governments around the world. They also were able to access sourcecode for Chinese malware. But there have also been successful Chinese operations. The Snowden documents include an internal NSA assessment from a few years ago of the damage caused. The report indicates that the US Defense Department alone registered more than 30,000 known incidents; more than 1,600 computers connected to its network had been hacked. Surprisingly high costs are listed for damage assessment and network repair: more than $100 million. Among the data on "sensitive military technologies" hit in the attack were air refueling schedules, the military logistics planning system, missile navigation systems belonging to the Navy, information about nuclear submarines, missile defense and other top secret defense projects. The desire to know everything isn't, of course, an affliction only suffered by the Chinese, Americans, Russians and British. Years ago, US agents discovered a hacking operation originating in Iran in a monitoring operation that was codenamed Voyeur. A different wave of attacks, known as Snowglobe, appears to have originated in France. Transforming Defenses into Attacks The search for foreign cyber attacks has long since been largely automated by the NSA and its Five Eyes partners. The Tutelage system can identify incursions and ensure that they do not reach their targets. The examples given in the Snowden documents are not limited to attacks originating in China. The relatively primitive Low Orbit Ion Cannon (LOIC) is also mentioned. The name refers to malware used by the protest movement Anonymous to disable target websites. In that instance, one document notes, Tutelage was able to recognize and block the IP addresses being used to conduct the denial of service attack. The NSA is also able to transform its defenses into an attack of its own. The method is described as "reverse engineer, repurpose software" and involves botnets, sometimes comprising millions of computers belonging to normal users onto which software has been covertly installed. They can thus be controlled remotely as part of a "zombie army" to paralyze companies or to extort them. If the infected hosts appear to be within the United States, the relevant information will be forwarded to the FBI Office of Victim Assistance. However, a host infected with an exploitable bot could be hijacked through a Quantumbot attack and redirected to the NSA. This program is identified in NSA documents as Defiantwarrior and it is said to provide advantages such as "pervasive network analysis vantage points" and "throw-away non-attributable CNA (eds: computer network attack) nodes". This system leaves people's computers vulnerable and covertly uses them for network operations that might be traced back to an innocent victim. Instead of providing protection to private Internet users, Quantumbot uses them as human shields in order to disguise its own attacks. NSA specialists at the Remote Operations Center (ROC) have an entire palette of digital skeleton keys and crowbars enabling access to even the best protected computer networks. They give their tools aggressive-sounding names, as though they were operating an app-store for cyber criminals: The implant tool "Hammerchant" allows the recording of Internet-based phone calls (VoIP). Foxacid allows agents to continually add functions to small malware programs even after they have been installed in target computers. The project's logo is a fox that screams as it is dissolved in acid. The NSA has declined to comment on operational details but insists that it has not violated the law. But as well developed as the weapons of digital war may be, there is a paradox lurking when it comes to breaking into and spying on third party networks: How can intelligence services be sure that they won't become victims of their own methods and be infiltrated by private hackers, criminals or other intelligence services, for example? To control their malware, the Remote Operation Center operatives remain connected to them via their own shadow network, through which highly sensitive telephone recordings, malware programs and passwords travel. The incentive to break into this network is enormous. Any collection of VPN keys, passwords and backdoors is obviously of very high value. Those who possess such passwords and keys could theoretically pillage bank accounts, thwart military deployments, clone fighter jets and shut down power plants. It means nothing less than "global network dominance". But the intelligence world is a schizophrenic one. The NSA's job is to defend the Internet while at the same time exploiting its security holes. It is both cop and robber, consistent with the motto adhered to by spies everywhere: "Reveal their secrets, protect our own." As a result, some hacked servers are like a bus during rush hour, with people constantly coming and going. The difference, though, is that the server's owner has no idea anyone is there. And the presumed authorities stand aside and do nothing. 'Unwitting Data Mules' It's absurd: As they are busy spying, the spies are spied on by other spies. In response, they routinely seek to cover their tracks or to lay fake ones instead. In technical terms, the ROC lays false tracks as follows: After third-party computers are infiltrated, the process of exfiltration can begin -- the act of exporting the data that has been gleaned. But the loot isn't delivered directly to ROC's IP address. Rather, it is routed to a so-called Scapegoat Target. That means that stolen information could end up on someone else's servers, making it look as though they were the perpetrators. Before the data ends up at the Scapegoat Target, of course, the NSA intercepts and copies it using its mass surveillance infrastructure and sends it on to the ROC. But such cover-up tactics increase the risk of a controlled or uncontrolled escalation between the agencies involved. It's not just computers, of course, that can be systematically broken into, spied on or misused as part of a botnet. Mobile phones can also be used to steal information from the owner's employer. The unwitting victim, whose phone has been infected with a spy program, smuggles the information out of the office. The information is then retrieved remotely as the victim heads home after work. Digital spies have even adopted drug-dealer slang in referring to these unsuspecting accomplices. They are called "unwitting data mules." NSA agents aren't concerned about being caught. That's partly because they work for such a powerful agency, but also because they don't leave behind any evidence that would hold up in court. And if there is no evidence of wrongdoing, there can be no legal penalty, no parliamentary control of intelligence agencies and no international agreement. Thus far, very little is known about the risks and side-effects inherent in these new D weapons and there is almost no government regulation. Edward Snowden has revealed how intelligence agencies around the world, led by the NSA, are doing their best to ensure a legal vacuum in the Internet. In a recent interview with the US public broadcaster PBS, the whistleblower voiced his concerns that "defense is becoming less of a priority than offense." Snowden finds that concerning. "What we need to do," he said, "is we need to create new international standards of behavior." http://www.spiegel.de/international/...a-1013409.html ![]() Why David Cameron's Crusade Against Encryption Could Backfire On Business A secret US cybersecurity report warned that government and private computers were being left vulnerable to online attacks from Russia, China and criminal gangs because encryption technologies were not being implemented fast enough. David Jackman In an attempt to combat active terrorism in the UK, if David Cameron wins next year’s election, messaging services that allow communication between parties that cannot be read by security services will be made illegal. The Prime Minister didn’t name any specific apps or services directly or how they would go about preventing citizens from downloading these apps, but he did mention that those with encrypted data would not meet the new legislative surveillance standards. This can easily include popular chat and social apps such as Whatsapp, iMessage, Skype, Google Hangouts, FaceTime and much more. Most of these companies are dedicated to encrypting their data, a practice that has increased since Edward Snowden’s unveiling of NSA surveillance. However, Cameron believes that this encryption poses as a major challenge to law enforcement services’ efforts against the growing threat of terrorism and other crimes in the UK. David Cameron’s statements are following the waves of shootings in Paris that occurred last week allegedly by Islamic extremists. If authorities were able to gather more information regarding communications records or actual content, it would help thwart and investigate attacks. On the other hand, his comments have also come at a time where government surveillance and the loss of digital privacy has become a huge concern. Also, the same day that Prime Minister Cameron delivered his remarks, President Obama in the US has announced plans for new legislation to give Americans more control of their own data. He proposed a Consumer Privacy Bill Of Rights, allowing consumers to choose what parts of their personal data is collected by companies and how it will be used. http://full-timewhistle.com/technolo...ness-3754.html ![]() Kim Dotcom Launches End-to-End Encrypted Audio and Video Chat Service Abhimanyu Ghoshal Kim Dotcom is making good on his promise to take on Skype with MegaChat, a new browser-based end-to-end encrypted audio and video chat service that has just launched today. The service is still in beta but open to all registered users to try for free on the company’s new Mega.nz domain. Dotcom said on Twitter that MegaChat users made over half a million encrypted video calls in the first hour since its launch. While audio and video calling are already up and running, Dotcom said that text chat and video conferencing are coming soon. To try MegaChat, head to Mega, register or login with your account and click the chat icon on the left toolbar. You can then start an audio or video call with any of your contacts who also use the service. http://thenextweb.com/apps/2015/01/2...-chat-service/ ![]() A “Dead Man’s Switch” for Your Computer? Viktor Petersson In the last few weeks, a lot of details have been disclosed around Ross Ulbricht’s arrest. For those not familiar with the matter, Ulbricht was arrested at a library in San Francisco some time ago with his laptop open. The agents managed to steal the laptop out of Ulbricht’s hands and therefore prevent him from locking the computer (which presumably had full-disk encryption). This got me thinking; why don’t we have Dead Man’s Switches for computers? It would be very simple to create one. Having such device would not only be useful if you’re a high profile target (like Ulbricht), but also to conveniently lock your computer in an office environment. Using a USB stick Hardware • Using just things we have laying around, we should be able to design the most primitive version. All you really need is a USB stick and some strings (or lanyard) • Format your USB drive with a some random file on. Make a bracelet out of strings or a lanyard. The string from the bracelet must be long enough such that it isn’t in the way while you’re typing/working. Imagine a modified version of this. Software With the hardware ready, we now need a daemon or similar that runs on your computer and checks for this file. If this file disappears (i.e. you remove the USB device), the computer will lock down. Here’s an example of a very primitive version of such script. All it does is to check for the file every second, and if it is absent, it will lock the computer (assuming you’re using OS X): Code:
#!/bin/bash # Where is the file located? # Should be something like "/Volumes/<disk label>/<file name> on OS X. WATCHFILE="/path/to/file" while true; do if [ -f "$WATCHFILE" ]; then sleep 1 else /System/Library/CoreServices/Menu\ Extras/User.menu/Contents/Resources/CGSession -suspend fi done Using wearables There are a lot of issues with the approach above. First and foremost, it is likely not be very comfortable to work with a strap around your wrist all day. You’re also likely to accidentally drag your laptop off of your desk in an unexpected move. Secondly, having such device around your wrist is going to look very suspicious (and odd). So what can we do about this? Given the raise of wearables, there are now a ton of different options available at our disposal. For instance, we could use a Fitbit or Pebble for the same purpose. However, instead of checking for a file, we would check for the proximity of the device over Bluetooth. If the the computer loses connection to the device, it auto-locks. There are however problems with Bluetooth, as the range can get a little too good for this particular situation. As such, we’d likely have take into account the signal strength. Perhaps we lock the computer if the signal strength goes below a certain level. Using some sort of wearable technology would clearly require more work than simple USB drive version above, but it would look a lot less suspicious and also also be a lot more convenient. http://blog.viktorpetersson.com/post...-your-computer ![]() Calls for ISPs to Filter Content Could be Illegal, EU Council Documents Suggest Loek Essers Last week justice ministers from across the European Union called on ISPs to conduct voluntary censorship of online content—but documents in preparation for a meeting of telecoms ministers suggest such a move could be illegal. The documents, prepared by the Latvian presidency of the Council of the EU, note that calls to allow Internet service providers to block or filter content in the “public interest” as part of a proposed net neutrality law could violate privacy laws that protect the confidentiality of communication. The Council, along with the Commission and the Parliament, is one of the EU’s three lawmaking bodies. The member states take turns as president of the council: Latvia took over from Italy for its six-month stint on Jan. 1. Different ministers participate in each meeting of the Council: net neutrality is on the agenda for a forthcoming meeting of telecommunications ministers, and on Tuesday the presidency released a document outlining issues that need to be addressed. The Council is in the process of determining what to do with the proposals of the Commission and the Parliament to enshrine net neutrality in EU law. While the Parliament wants a strict form of net neutrality that treats all traffic equally and without discrimination, the Council is trying to get some traffic discrimination into the draft. One of the main issues raised by the new presidency is the legality of ISPs blocking or filtering certain content on a self-regulatory basis in pursuit of recognized public interests. A request to allow Internet service providers to do this “appears to raise certain legal issues relating to the Charter of Fundamental Rights of the European Union and/or the 2002/58 ePrivacy Directive, including with respect to confidentiality of communications,” the presidency wrote, adding that it is unsure if these issues can be resolved. The recognition that it might be illegal to block or filter content was warmly welcomed by European digital rights group EDRi, which has for the past five years argued that it is illegal under EU and international law for states to encourage Internet companies to block or filter traffic outside a clear legal framework. “This recognition is particularly important, taking into account the EU’s drive for private, ad hoc, arbitrary policing of the Internet by private companies—something that was already being pushed, but policy makers are now exploiting the Paris attacks for this purpose,” said Joe McNamee, executive director of EDRi in an email. He was referring to plans by EU justice ministers to work closely with ISPs in order to quickly remove online material that “aims to incite hatred and terror” in the wake of shootings at the offices of the satirical magazine Charlie Hebdo in Paris. McNamee wasn’t entirely happy with the net neutrality draft proposal revealed in the Latvian working documents, which he described as still “extremely confused and deeply destructive to net neutrality.” The Latvian presidency plans to discuss changes to three articles of the proposed text at a meeting of the Council’s working party on Jan. 27, which will prepare documents for a meeting of telecommunications minsters. Latvia has proposed completing the definitions in Article 2 with one for an Internet access service, which it defines as “a publicly available electronic communications service that provides access to the Internet ... irrespective of the network technology and terminal equipment used,” in order to distinguish it from other electronic communications services provided over the same infrastructure that require a “specific level of quality”. Changes to Article 23 will also be discussed. This reduces the number of grounds on which providers can block content from six to four. The article further stresses the right of users to an open Internet and the freedom of electronic communication providers to offer services other than Internet access over their infrastructure, provided that there is “no demonstrable negative impact on the availability and general quality of internet access services.” Article 24, which aims to regulate how national authorities can monitor service providers’ compliance with the rules set out in Article 23, will also be on the agenda. In addition to discussion of the proposed modifications to the text, and the legality of allowing ISPs to block content, the Latvians will also sound out member states’ support for a ban on positive price discrimination in telecommunications services across the EU. http://www.itworld.com/article/28732...s-suggest.html ![]() China Cracks Down On VPN Services After Censorship System ‘Upgrade’ Jon Russell China is cracking down on VPNs, software that allows internet users to access Twitter, Facebook, Gmail and others services blocked in the country, according to state media and service providers. People’s Daily reports that China’s ‘Great Firewall’ internet censorship system was “upgraded for cyberspace sovereignty”, a move that affected the usage of at least three popular VPN services and attacked others with more vigor than usual. Strong VPN noted on its blog that it is suffering “connection issues” from China, while TunnelBear told TechCrunch it is investigating after reports from some China-based customers who “have been less successful in connecting over the last few weeks.” Furthermore, Astrill, a service that is well used by China’s expat and business community, this week alerted users of issues with its iOS client. An employee at Astrill reportedly told People’s Daily that the company did not know how long the disruption would last following the “upgrade,” although Astrill’s service on other platforms — including Apple’s Macs — is apparently not affected. Other prominent VPN services noted stronger attacks, but claimed to operate as usual. A spokesperson at ExpressVPN told TechCrunch that its “services appear to be working normally on all platforms, including for China customers.” Golden Frog, another that specifically caters to the Chinese market, claimed its VyprVPN service was also uninterrupted. A spokesperson did note that this week’s “attacks” on VPN services are “more sophisticated than what we’ve seen in the past.” “The Chinese government has attempted to curtail the use of VPNs that its citizens use to escape the Great Firewall for a couple years. [The] latest attack appears to use deep packet inspection to inspect and block VPN protocols in combination with blocking specific VPN server endpoints,” Golden Frog president Sunday Yokubaitis said in a statement. It’s always difficult to speak with certainty about internet censorship in China, as changes occur frequently and without warning, but more hostile tactics towards VPN services would be keeping with the government’s tightening of web controls over the past nine months or so. Google services ground to a halt over the summer. While disruption always occurs around the Tiananmen Square anniversary, Gmail and other Google products remained affected for longer than usual. Alternative channels to Gmail — including POP, SMAP, and IMAP — were disrupted this past month, while evidence surfaced to suggest that users of Microsoft’s Outlook email service had also been targeted over the weekend. The People’s Daily report cited analysts who claim that internet users and services should “observe the network governance of the country for safety,” but censorship observers argue that China’s continued squeezing of the internet is causing problems for businesses. “We wouldn’t go so far to say that the authorities don’t want foreigners in China, but we do believe that the increased censorship of the Chinese internet is building a lot of new barriers — it’s now not just about blocking access to information,” Charlie Smith, the pseudonym of one founder at censorship monitoring site Great Fire, told TechCrunch. “Censorship has suddenly become a serious business issue. When domestic and foreign companies cannot use the internet for basic business operations, it presents a real economic hurdle,” Smith added. http://techcrunch.com/2015/01/23/china-vpn-crackdown/ ![]() You’ll Never Guess Who’s Trying to Hack Your iPhone Nicole Kardell The FBI wants to search through your electronic life. You may think it’s a given that the government is in the business of collecting everyone’s personal data — Big Brother run amok in defiance of the Constitution. But under the limits of the Fourth Amendment, nothing it finds can be used to prosecute its targets. Now the FBI is taking steps to carry out broad searches and data collection under the color of authority, making all of us more vulnerable to “fishing expeditions.” The investigative arm of the Department of Justice is attempting to short-circuit the legal checks of the Fourth Amendment by requesting a change in the Federal Rules of Criminal Procedure. These procedural rules dictate how law enforcement agencies must conduct criminal prosecutions, from investigation to trial. Any deviations from the rules can have serious consequences, including dismissal of a case. The specific rule the FBI is targeting outlines the terms for obtaining a search warrant. It’s called Federal Rule 41(b), and the requested change would allow law enforcement to obtain a warrant to search electronic data without providing any specific details as long as the target computer location has been hidden through a technical tool like Tor or a virtual private network. It would also allow nonspecific search warrants where computers have been intentionally damaged (such as through botnets, but also through common malware and viruses) and are in five or more separate federal judicial districts. Furthermore, the provision would allow investigators to seize electronically stored information regardless of whether that information is stored inside or outside the court’s jurisdiction. The change may sound like a technical tweak, but it is a big leap from current procedure. As it stands, Rule 41(b) only allows (with few exceptions) a court to issue a warrant for people or property within that court’s district. The federal rules impose this location limitation — along with requirements that the agent specifically identify the person and place to be searched, find probable cause, and meet other limiting factors — to reduce the impact an investigation could have on people’s right to privacy. Now the FBI is asking for the authority to hack into and search devices without identifying any of the essential whos, whats, wheres, or whys — giving the FBI the authority to search your computer, tablet, or smartphone even if you are in no way suspected of a crime. All you have to do is cross the FBI’s virtual path. For instance, the proposed amendment would mean that agents could use tactics like creating online “watering holes” to attract their targets. Anyone who clicked on law enforcement’s false-front website would download the government malware and expose their electronic device to an agent’s search (and also expose the device to follow-on hackers). One obvious target for this strategy is any forum that attracts government skeptics and dissenters — FEE.org, for example. Such tactics could inadvertently impact thousands of people who aren’t investigation targets. This sort of sweeping authority is in obvious conflict with the Constitution. The Fourth Amendment makes it clear that the government cannot legally search your house or your personal effects, including your electronic devices, without (1) probable cause of a suspected crime (2) defined in a legal document (generally, a search warrant issued by a judge) (3) that specifically identifies what is to be searched and what is to be seized. The FBI is not the first government agency to find itself challenged by the plain language of the Fourth Amendment. Past overreach has required judges and Congress to clarify what constitutes a legal search and seizure in particular contexts. In the 1960s, when electronic eavesdropping (via wiretaps and bugs) came about, Congress established the Omnibus Crime Control and Safe Streets Act of 1968 (the Wiretap Act). The law addressed concerns about these new surreptitious and invasive investigative tactics and provided several strictures on legal searches via wiretap or bug. Since covert investigative tools can be hard to detect, it was important to institute more rigorous standards to keep agents in line. The same concerns that Congress addressed in the 1960s are present today, but they take on far greater significance. With our growing reliance on electronic devices to communicate with others, to transact business, to shop, travel, date, and store the details of our private lives, these devices are becoming our most important personal effects. The ability of government actors to enter our digital space and search our electronic data is a major privacy concern that must be checked by Fourth Amendment standards. As the Supreme Court recently pronounced in Riley v. California, the search of a modern electronic device such as a smartphone or computer is more intrusive to privacy than even “the most exhaustive search of a house.” What seems most troubling, though, is that the FBI is attempting to override the Fourth Amendment, along with the body of law developed over the years to reign in surveillance powers, through a relatively obscure forum. Instead of seeking congressional authority or judicial clarification, it has sought a major power grab through a procedural rule tweak — a tweak that would do away with jurisdictional limitations and specificity requirements, among other important checks on law enforcement. The request seems objectively — and constitutionally — offensive. http://fee.org/freeman/detail/youll-...ck-your-iphone ![]() Researchers Use Siri to Steal Data From iPhones Eduard Kovacs Siri, Apple’s voice activated personal assistant and knowledge navigator application, can be leveraged to steal sensitive information from iOS smartphones in a stealthy manner, according to researchers. Luca Caviglione of the National Research Council of Italy and Wojciech Mazurczy of the Warsaw University of Technology warn that malicious actors could use Siri for stealthy data exfiltration by using a method that’s based on steganography, the practice of hiding information. Malware that uses such techniques is becoming more and more common. For example, the developers of Duqu, Alureon and Zeus have all used innocent-looking image files for data transmission and command and control (C&C) communications. Other threats have used the traffic generated by popular applications such as Skype to hide data. iOS malware is also increasingly common, but many of these threats are not very stealthy. However, Mazurczy and Caviglione have demonstrated that iOS malware could become difficult to detect. When users talk to Siri, their voice is processed with the Speex Codec, and the data is transmitted to Apple’s servers where the voice input is translated to text. The attack method developed by the researchers, dubbed iStegSiri, involves controlling the “shape” of this traffic to embed sensitive data from the device. This covert channel could be used to send credit card numbers, Apple IDs, passwords, and other sensitive information from the phone to the criminal mastermind, researchers said in their paper. An iStegSiri attack takes place in three phases. In the first phase, the secret message is converted into an audio sequence based on voice and silence alternation. Then, the sound pattern is provided to Siri as input through the internal microphone. Finally, the recipient of the secret message inspects the traffic going to Apple’s servers and extracts the information based on a decoding scheme. Secret messages are highlighted by a specific set of features, the experts noted. In their experiments, Mazurczy and Caviglione managed to use this method to exfiltrate data at a rate of 0.5 bytes per second. At this speed, it would take roughly 2 minutes to send a 16-digit payment card number to the attacker. The iStegSiri attack can be effective because it doesn’t require the installation of additional software components and it doesn’t need the device’s alteration. On the other hand, it only works on jailbroken devices and attackers somehow need to be able to intercept the modified Siri traffic. However, the researchers highlighted that the purpose of iStegSiri is to help the security community with the detection of malware on the iOS platform. “Because information-hiding methods use very specific technological traits, no current off-the-shelf products effectively detect covert communications. This forces security experts to craft dedicated countermeasures for each method,” researchers wrote in their paper. “With iStegSiri, the ideal countermeasure acts on the server side. For example, Apple should analyze patterns within the recognized text to determine if the sequence of words deviates significantly from the used language’s typical behaviors. Accordingly, the connection could be dropped to limit the covert communication’s data rate. “ The researchers told IEEE Spectrum that they haven’t made specific details on iStegSiri public to prevent cybercriminals from leveraging their work. http://www.securityweek.com/research...l-data-iphones ![]() Google Chairman Eric Schmidt: "The Internet Will Disappear" Georg Szalai • He also discusses online dominance on a World Economic Forum panel with Facebook COO Sheryl Sandberg, while Yahoo CEO Marissa Mayer is asked about privacy issues. Google executive chairman Eric Schmidt on Thursday predicted the end of the Internet as we know it. At the end of a panel at the World Economic Forum in Davos, Switzerland, where his comments were webcast, he was asked for his prediction on the future of the web. “I will answer very simply that the Internet will disappear,” Schmidt said. “There will be so many IP addresses…so many devices, sensors, things that you are wearing, things that you are interacting with that you won’t even sense it,” he explained. “It will be part of your presence all the time. Imagine you walk into a room, and the room is dynamic. And with your permission and all of that, you are interacting with the things going on in the room.” Concluded Schmidt: “A highly personalized, highly interactive and very, very interesting world emerges.” The panel, entitled The Future of the Digital Economy, also featured Facebook COO Sheryl Sandberg and others. Earlier in the debate, Schmidt discussed the issue of market dominance. The European Union has been looking at Google’s search market dominance in a long-running antitrust case, and the European parliament late last year even called for a breakup. “You now see so many strong tech platforms coming, and you are seeing a reordering and a future reordering of dominance or leaders or whatever term you want to use because of the rise of the apps on the smartphone,” Schmidt said Thursday. “All bets are off at this point as to what the smartphone app infrastructure is going to look like” as a “whole new set” of players emerges to power smartphones, which are nothing but super-computers, the Google chairman argued. “I view that as a completely open market at this point.” Asked about his recent trip to North Korea, Schmidt said the country has many Internet connections through data phones, but there is no roaming and web usage is “heavily supervised.” Schmidt said “it’s very much surveillance of use,” which he said was not good for the country and others. Sandberg and Schmidt lauded the Internet as an important way to give more people in the world a voice. Currently, only 40 percent of people have Internet access, the Facebook COO said, adding that any growth in reach helps extend people’s voice and increase economic opportunity. “I’m a huge optimist,” she said about her outlook for the industry. “Imagine what we can do” once the world gets to 50 percent, 60 percent and more in terms of Internet penetration. She cited women as being among the beneficiaries, saying the Internet narrows divides. Schmidt similarly said that broadband can address governance issues, information needs, personal issues, women empowerment needs and education issues. “The Internet is the greatest empowerment of citizens … in many years,” he said. “Suddenly citizens have a voice, they can be heard.” During another technology panel at the World Economic Forum on Thursday, Yahoo CEO Marissa Mayer, Liberty Global CEO Mike Fries and others answered questions on the need to regulate privacy standards on the Internet and for tech companies following the Snowden case, the Sony hack and the like. Mayer said that the personalized Internet “is a better Internet,” emphasizing: “We don’t sell your personal data … We don’t transfer your personal data to third parties.” She said users own their data and need to have control, adding that people give up data to the government for tax assessment, social services and other purposes. Fries said Liberty Global subscribers view billions of hours of content and generate billions of clicks, but added that “today we do nothing.” He explained: “We generate zero revenue from all of that information.” But he acknowledged that big data was big business for a lot of people. Both executives said transparency was important to make sure users know privacy standards and the like. Gunther Oettinger, a conservative German politician serving as the European Union’s commissioner for digital economy and society, said on the panel that “we need a convincing global understanding, we need a UN agency for data protection and security.” Asked what form that “understanding” should have, he said he was looking for “clear, pragmatic, market-based regulation.” Explained Oettinger: “It’s a public-private partnership.” Fries said such a solution was likely not to happen in the near term, given the size of the EU. “I think it is going to take several years,” he said, adding that some countries’ parliaments would likely take a stab at it. But he warned that a joint solution would make more sense. “We don’t want Germany to have its own Internet,” Fries said. “Some countries may build their own Internets” and “balkanize” the web, he warned. Mayer said on the issue of regulation: “I like Tim’s idea better of the beneficent marketplace.” She spoke of fellow panelist and computer specialist Tim Berners-Lee, known as the inventor of the World Wide Web. Asked how Yahoo stores and handles client records, she said the online giant “changed the way we store and communicate data” after Snowden and also changed encryptions between data centers. And the company protects users through encryption methods, she added. Mayer said that trust and confidence of Yahoo users has rebounded since. Mayer was also asked what happens if a government asks for a user’s data, a question that has new significance after the recent terrorist attacks in Paris, which have led some to call for increased surveillance powers of the Internet for governments. Mayer said Yahoo always assesses if such a request is reasonable. “We have a very good track record for standing up to what’s not reasonable,” she said. http://www.hollywoodreporter.com/new...nternet-765989 ![]() Pirating the 2015 Oscars – HD Edition Pirates are now watching films at higher quality than the industry insiders voting on them. Andy Baio Tracking 13 Years of Data In January 2004, the Los Angeles Times published an article headlined “Screener Ends Up on the Internet,” a story about the recent leak of the Something’s Gotta Give screener copy intended for Oscar voters. This headline struck me as laughably clueless — like reading “Local Man Views Pornography On Internet” — but the MPAA statements inside were even more surreal, claiming it “marked the first time a so-called screener sent to an Oscar voter had been made available for illegal copying.” Anyone who’d spent ten minutes on Usenet in the early 2000s knew this was nonsense. Oscar screeners leaked regularly and reliably, often with watermarks intact, typically around December and early January when they were mailed to Academy voters. So I did a little digging and found that all but one of that year’s 22 nominated films were already online. A decade later, it’s become an annual ritual for me. On the morning the Oscar nominees are announced, I roll out of bed, load up some tabs, and start doing research into every nominated film. The result is this Google Spreadsheet encompassing all 413 Oscar-nominated feature films for the last 13 years. Along with the official U.S. and Oscar screener release dates, I include the leak dates for each major way that films typically find their way online: 1. Cam. The old standby, a handheld camera in a theater. The worst quality, and increasingly uncommon. 2. Telesync. Typically, a cam with better audio, often from headphone jacks in theater seats intended as hearing aids. 3. Telecine, R5, PPV, Webrip, and HDRips. The terminology and sourcing’s changed through the years, but these are all high-quality rips with solid audio and video. (Generally speaking, Telecines were ripped from original prints distributed to theaters, R5 from “Region 5” DVDs sent to other regions to combat piracy, PPV from advanced pay-per-view sources, Webrip from early online releases like iTunes, and HDRip from a variety of sources, but typically from HDTV.) 4. Screener. Great quality, usually intended for media or competition review, but can leak at any point in the distribution chain, often with watermarks intact. (As Ellen DeGeneres knows well.) 5. Retail. A rip from the official retail release. And then I use a little spreadsheet magic to calculate tables with a bunch of stats tracking how many films leaked online and how quickly. Yes, this is my idea of a good time. I’m great at parties. DVD In An HD World In April 2004, the MPAA was already crowing about a decline in screener piracy, citing their watermarking technology and FBI assistance to increase accountability. This was the start of a decade-long battle against screener piracy, but a funny thing happened in the last couple years: Screeners weren’t declining then, but they’re declining now. But not because of increased accountability, watermarks, or new DRM technology. Screeners aren’t leaking because they don’t matter anymore. Think of it this way: If you’re in a scene release group—one of the underground bands of misfits with names like SiMPLE, EVO, or TiTAN you see tagged in every torrent — you’re competing with dozens of others trying to release films online as quickly as possible, at the highest possible quality. If you’re the first to release a highly-prized film in a high-quality release, you win bragging rights over every other group. A release that’s lower quality than one already leaked by someone else? Completely worthless. A cam isn’t great, but a telesync is better. A telecine is marginally better than a telesync, but a watermarked screener? Much, much better. But here’s the thing: screeners are stuck in the last decade. While we’re all streaming HD movies from iTunes or Netflix, the movie studios almost universally send screeners by mail on DVDs, which is forever stuck in low-resolution standard-definition quality. A small handful are sent in higher-definition Blu-ray. This year, one Academy member received 68 screeners — 59 on DVD and only nine on Blu-ray. Only 13% of screeners were sent to voters in HD quality. As a result, virtually any HD source is more prestigious than a DVD screener. And with the shift to online distribution, there’s an increasing supply of possible HD sources to draw from before screeners are ever sent to voters. On December 27, Foxcatcher leaked online in HD quality by the release group EVO with hardcoded Arabic subtitles, a pretty strong indication it wasn’t sourced from a screener. EVO released a new version without subtitles on January 6, captured from a 1080p source and released as a WEB-DL. Even if someone did manage to get a copy of the Foxcatcher DVD screener right now, it’s unlikely it would ever be released. It’s garbage compared to either of these two releases — standard-definition and likely littered with watermarks or other dumb security precautions. Now, in 2015, Oscar-nominated films leak online as quickly and consistently as ever. Of this year’s 36 nominated films, 34 already leaked online in some form — everything except Song of the Sea and Glen Campbell: I’ll Be Me. But only 36% of those were leaked from screeners, down from a high of 89% in 2003 and 2004. With the caveat that there’s a month left before the Oscar ceremony, the chart below shows the percentage of screeners that have leaked online by Oscar night since 2003. Seems to be trending downward, right? The Academy must finally be winning the war against piracy! Huzzah! Not so fast. Here’s the percentage of films that have leaked in any high-quality format — whether ripped from the web, pay-per-view, retail or screeners — before Oscar night. Already, with a month to go before the ceremony, 92% of this year’s nominated films have already leaked in DVD or higher quality, more than last year. (Inevitably, this number will rise in the days leading up to the ceremony.) The big change: A staggering 44% of this year’s crop of nominees leaked as a high-quality rip from some source outside of traditional screeners or retail releases — the highest percentage since I started tracking films in 2003. The insatiable appetite for HD video led pirate groups to find new pipelines for sharing films before they even reach voters’ mailboxes, and in much better quality. These new sources for HD leaks, lurking anywhere from mastering studios to the mailroom, may be much harder for the MPAA to find than leaks from their own members. The industry’s reliance on DVDs for review copies, combined with their insistence on watermarks and other irritating security measures, made them undesirable in an HD world. But the studios may not have a choice. Academy voters are an older crowd — the average age is 63 — who may not own Blu-ray players or be comfortable watching screeners online. If studios want their films viewed, they’re stuck stuffing DVDs in envelopes. Eventually, the industry will need to adapt to digital distribution as DVDs die along with the oldest generation of voters. Until then, Academy voters hoping to review HD films at home will have to do like the pirates do — grab some popcorn, turn down the lights, and fire up BitTorrent. https://medium.com/message/pirating-...n-6c78e0cb471d Until next week, - js. ![]() Current Week In Review ![]() Recent WiRs - January 17th, January 10th, January 3rd, December 27th Jack Spratts' Week In Review is published every Friday. Submit letters, articles, press releases, comments, questions etc. in plain text English to jackspratts (at) lycos (dot) com. Submission deadlines are Thursdays @ 1400 UTC. Please include contact info. The right to publish all remarks is reserved. "The First Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." - Hugo Black |
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