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Peer-To-Peer News - The Week In Review - May 1st, ’21
May 1st, 2021
Netflix, Disney and Amazon’s Streaming Wars Heat Up Overseas
With U.S. market saturated, companies are slowing Hollywood exports and spending billions of dollars to make international content
Tech companies and Hollywood studios are increasingly looking to expand their streaming services abroad by spending more money on developing local content geared to the billions of potential overseas subscribers as the U.S. market becomes saturated.
Following the lead of Netflix Inc., NFLX -0.63% companies such as Walt Disney Co. DIS 0.14% and Amazon. AMZN 0.96% com Inc. are pulling away from the production and distribution model of old, in which Hollywood shipped its movies and TV shows abroad, with the content dubbed or subtitled for the local market. Now, with a direct line to consumers through global streaming platforms, these companies are investing billions of dollars to make culturally specific, local-language content to woo subscribers.
“What you’re seeing is more and more streamers come online realizing the vast majority of their consumers are going to be outside the U.S., over time,” said Erik Barmack, a former Netflix executive who during his tenure at the company spearheaded international production. “The question is how international does your content need to be to be successful.”
The rise in overseas production is spurring a historic boom of new films and TV series in many different languages, including Hindi, French, Portuguese, German and Polish. The emphasis on global content is creating more work and competition for international producers and storytellers, while also ushering in a new era in which Hollywood-made American content plays a smaller role in the world-wide entertainment industry.
The number of streaming subscriptions world-wide exceeded 1.1 billion last year, up from fewer than 400 million subscriptions in 2016, according to the Motion Picture Association. The growth was driven by Netflix’s overseas expansion, Disney’s launch of its Disney+ service and a pandemic that kept many people at home.
Netflix’s quarterly results this week showed the importance of the overseas business. The company said that 89% of its nearly four million new customers in the year’s first three months came from outside the U.S. and Canada, and that its most-watched new series during the quarter was “Lupin,” a thriller set in Paris that is inspired by a literary gentleman thief.
“The show was not like a watered-down French show; it was a very French show,” said Netflix’s co-chief executive and chief content officer, Ted Sarandos, adding that with international films and series, “the more authentically local they are, the more likely they are to play around the world.” In a sign of how tastes are evolving in Hollywood and world-wide, South Korea’s “Parasite” last year won the Oscar for best picture, the first time a non-English-language film took the prize.
Netflix’s drive abroad is part of a paradigm shift in which content fashioned with Hollywood-level production values is being created all over the world for one digital platform. In the past, new TV shows and movies—especially those produced by Hollywood—were distributed to consumers in a much different way.
“Over the years, media companies have been really great at exporting Hollywood content around the world,” Mr. Sarandos said. “We started launching in international territories with no original programming in local language with local producers. And now we’re producing in most corners of the world.”
About half of the new content Netflix is developing are productions based outside the U.S., with roughly 38% non-English-language content as of mid-March, according to media measurement company Ampere Analysis. In South Korea, Netflix recently announced it would invest $500 million there in local-language content.
How Disney+ Became a Streaming Service Heavyweight
The launch of Disney+ has brought a bit of magic to a company whose stock had taken a nosedive after the coronavirus shut down theme parks and movie theaters. WSJ explains how Disney’s streaming platform has become a top competitor in a crowded field. Photo illustration: Jacob Reynolds/WSJ
Netflix projects spending more than $17 billion on content this year, and between 2018 and 2020 it doubled its investment in non-English original content. Netflix is in over 190 countries and has more than 200 million subscribers world-wide.
As for Disney, Ampere said, 24% of the new content in development is based overseas. Only 3% of Disney+ content originated outside the U.S. as of mid-March, Ampere said. Disney is in 59 countries and has nabbed more than 100 million subscribers in about a year and a half.
Disney said during its investor day in December that it would be spending up to $9 billion a year on content for Disney+ by 2024, which would include 50 international projects. Then, in February, it announced a slate of 10 European projects for countries including France, Italy and Germany.
At Amazon, the volume of original, local-language content being produced has doubled each year since 2017, said James Farrell, head of international originals at Amazon Studios. “If you’re going to have a successful service in Japan or Brazil you’ve got to have Japanese shows, Brazilian shows,” Mr. Farrell said.
Amazon recently said that its Prime service has more than 200 million subscribers and that the number of international subscribers streaming video jumped by more than 80% in 2020 compared with the previous year.
While growth opportunities abound overseas, at home in the U.S., the market has become saturated in recent years as more companies launch streaming services. More than 80% of American consumers subscribe to at least one paid streaming service while the average subscriber pays for four services, according to a Deloitte report published this week.
Joining Amazon, U.S.-based streaming rivals such as AT&T Inc.’s HBO Max and Apple Inc.’s Apple TV+ are increasing spending on local-language content as they chase international subscribers. Apple TV+ is available in more than 100 countries, and HBO Max plans to be available in more than 50 by the end of the year.
The push to create more content abroad is disrupting the global entertainment industry. The moves have triggered increased competition for writers, actors and crew members outside Hollywood; threatened entrenched broadcast networks and distributors in other countries; and raised questions about equal pay and ownership.
In Europe, the race for content is forcing local players to be more aggressive when bidding for projects, according to several industry leaders. “It’s a very competitive environment,” said Martin Moszkowicz, executive chairman of German-based Constantin Film, which has worked with major U.S. streaming services.
Sanford Panitch, a former executive at Fox International Productions who now presides over Sony Pictures Entertainment Motion Picture Group, said it wasn’t that long ago when Hollywood shunned the idea of executives’ focusing on local-language content for international markets.
“It was incredibly unpopular, and almost weird and unheard of 10 years ago,” he said. “The profit and loss statements used to say ‘U.S. and Other.’”
Amazon Tops Q1 Expectations, Bezos Touts More Than 175 Million Prime Video Viewers
Amazon knocked the cover off the ball again in the first quarter of 2021 — and released a new data point: More than 175 million Prime members have streamed TV shows and movies in the past year.
Founder Jeff Bezos revealed the new figure in announcing the Q1 results, adding that Prime Video streaming hours are up more than 70% year over year. He also noted that Amazon Studios received a record 12 Oscar nominations and two wins, and called out the performance of the company’s AWS cloud division, which now has a $54 billion annual sales run rate.
“We love Prime Video and AWS, and we’re proud to have them in the family,” said Bezos, referring to the product groups as “two of our kids” who have turned 10 (Prime Video) and 15 years old (AWS).
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Bezos plans to step down as CEO in the third quarter of 2021 to become executive chairman. Amazon’s new chief exec will be Andy Jassy, currently CEO of Amazon Web Services.
While Amazon didn’t provide any further details on Prime Video usage, the announcement seemed to signal the company’s interest in showing it has scaled up streaming to be nearly in the same league as Netflix. As of the end of Q1, Netflix reported 207.4 million subscribers, after total net adds came in light for the period.
Amazon’s Twitch live-streaming service, meanwhile, now averages 35 million daily visitors, CFO Brian Olsavsky said on the earnings call.
In 2020, Amazon spent $11 billion on TV series, movies and music for Prime services last year, up about 40% from 2019. Last month, Amazon inked a 10-year deal with the NFL nabbing exclusive rights to “Thursday Night Football” starting in 2023, in a deal worth $1.32 billion per year, Sportico reported.
The e-commerce mammoth — which overall now has more than 200 million Prime members — reported revenue of $108.5 billion, up 44%, for the quarter ended March 31. Net income more than tripled, to $8.1 billion in the first quarter, or $15.79 per diluted share.
The overall sales surge shows that the COVID-fueled momentum continues for Amazon, as has been the case with other big tech companies like Google and Facebook. Wall Street analyst consensus estimates had pegged Amazon Q1 revenue coming in at $104.5 billion and earnings per share of $9.54.
Two weeks ago, Bezos announced that Amazon Prime has more than 200 million subscribers worldwide, in his final annual letter to shareholders as CEO. Prime is the ecommerce giant’s membership program that includes free shipping on millions of products, access to Prime Video and other perks.
This year’s Prime Day — Amazon’s annual shopping event — will take place in Q2, the company said. Assuming that happens, Amazon expects sales to increase 24%-30% compared with the year-earlier period. Operating income in Q2 is projected to be hit with $1.5 billion of costs related to COVID-19.
Meanwhile, Amazon yesterday announced pay raises for more than 500,000 employees on its fulfillment and delivery teams, who will get bumps of 50 cents to $3 per hour. (The ecommerce giant adopted a $15/hour minimum wage policy in 2018.) The increases, rolling out in Q2, will translate into $1 billion in incremental costs. That comes just a few weeks after a union organization effort by workers at its Bessemer, Ala., fulfillment center failed to pass. Amazon directly employs some 1.3 million people worldwide.
Spotify is Raising Prices for Lots of its Plans
US subscribers will only see a hike to Family plans, but the UK and Europe aren’t so lucky
Spotify is increasing the price of many of its subscriptions this week across the UK and parts of Europe, with the US seeing a hike to Family plans. Subscribers have started to receive emails informing them of the changes, and they will affect Student, Duo, and Family plans across parts of Europe and the UK, and Family subscriptions in the US from April 30th. Single Spotify Premium subscriptions are unaffected.
Spotify family is increasing from $14.99 to $15.99 per month in the US. Fortunately, Duo, Premium, and Student pricing will remain the same... for now. The bigger hits to pricing will affect users in the UK and Europe.
In the UK, Spotify Student is increasing from £4.99 to £5.99 per month, with a Duo subscription (for two people) moving from £12.99 to £13.99 a month . Family users will also be hit with price increases, with the Spotify Family plan (up to six accounts) jumping from £14.99 to £16.99 a month.
Similar price increases will affect Spotify users in some European countries, too. Ireland and a handful of other European countries will see both Student and Duo increasing by a euro each per month, to €5.99 and €12.99 per month respectively. The Family plan in Europe is also increasing from €14.99 to €17.99 per month. Some countries in Asia and South America will also see similar price increases.
All existing Spotify subscribers in the US, Europe, and UK users of Spotify will have a one-month grace period before prices are automatically increased, so existing subscribers will see an increase during the June period of billing.
Spotify confirmed the increases in a statement to The Verge, and it’s likely we’ll see US pricing changes shortly, too. “We offer a variety of subscription plans tailored to our users’ needs, and we occasionally update our prices to reflect local macroeconomic factors and meet market demands while offering an unparalleled service,” says a Spotify spokesperson.
Spotify’s price increases come just months after the company revealed it now has more than 150 million subscribers. Despite this, Spotify still made a loss of €125 million in the recent quarter, and average revenue per user also fell by 8 percent. Spotify is due to post its latest earnings on Thursday, which will provide even more insight into why prices are increasing.
FCC Green-Lights SpaceX Satellite Plans
Margaret Harding McGill
SpaceX scored a regulatory victory at the Federal Communications Commission Tuesday, overcoming opposition from Amazon and other satellite companies on a key change to its plans for a satellite network that will beam internet access across the globe.
Why it matters: SpaceX needed FCC approval to move forward with its plan to provide internet access in hard-to-reach areas.
What's happening: SpaceX asked the FCC for permission to lower the orbit of its future Starlink satellites.
• Amazon — which plans to launch its competing Project Kuiper satellite network — objected, arguing that the SpaceX change would interfere with its plans.
• But the FCC unanimously sided with SpaceX, saying it doesn't believe the company's plans will cause significant interference.
• "Based on our review, we agree with SpaceX that the modification will improve the experience for users of the SpaceX service, including in often-underserved polar regions," the FCC said in the order.
What they're saying: Amazon described the FCC's decision as a "positive outcome" because of conditions the agency imposed on SpaceX, including accepting additional interference.
• "These conditions address our primary concerns regarding space safety and interference, and we appreciate the Commission’s work to maintain a safe and competitive environment in low earth orbit," an Amazon spokesperson said in a statement.
Between the lines, from Axios' Miriam Kramer: This victory further cements SpaceX as the leader among companies attempting to build mega-constellations of internet-beaming satellites. Whether any others will be able to catch up remains to be seen.
As it Emerges from Bankruptcy, Frontier Communications Officials Say the Company's Future is in Fiber Optics
As Frontier Communications emerged from Chapter 11 bankruptcy on Friday, officials with the Norwalk-based telecommunication company made it clear they expect high-speed internet service — delivered by fiber optic cable — to deliver them from the financial wilderness.
“The focus is on fiber,” said John Stratton, the incoming executive chairman of the board for Frontier, which saw its executive team undergo a dramatic reorganization during the full year it was under Chapter 11 bankruptcy protection. “The goal is to replace our existing copper network with fiber.”
Stratton and other Frontier executives explained the company’s strategy during a call with financial analysts reporting on its first quarter earnings. The company had earnings of $60 million in the three-month period that ended March 31 — a dramatic reversal from the same period in 2020, when the company lost $186 million.
Frontier filed for Chapter 11 protection on April 14, 2020. Prior to the analyst call, it was announced that Frontier had signed a new lease for 48,000 square feet of office space for its headquarters staff in the Merritt 7 office complex in the northern end of Norwalk.
Since entering Chapter 11, Frontier executives had been cagey with state officials about whether the company would keep its headquarters in Connecticut. Even while making the announcement about its renewed lease in Norwalk, a company vice president, Jim Campbell, acknowledged that Frontier executives toured “the market to find the best fit for our firm in the post-pandemic office world.”
“Merritt 7 stood above all the competition” Campbell said.
Nick Jeffery, Frontier’s new chief executive officer, said the company will “aggressively target data products and fiber” going forward.
“Frontier’s purpose will be to become a leader in building digital America,” said Jeffrey, who led a turnaround of British telecommunications giant Vodafone before taking his current job. “We have a lot of work to do, but I could not be more excited about the year ahead.”
He said Frontier plans to:
• Install new fiber in 495,000 locations across Connecticut and 24 other states over the next year.
• Increase the penetration rate in the markets where the company provides fiber-based Internet service from its current level of 41 percent to at least 50 percent. (Penetration rate in this case refers percentage of customers in a given area that use Frontier’s service compared to the total number of internet service customers.)
• Phase out Internet products over time that make use of copper cable to deliver the service.
Company officials did not reveal any plans for an increased fiber optic roll-out that are specific to Connecticut, but said expanding that technology in the state was a priority, along with increased availability in California and Texas.
“We have proven we can win market share where we have fiber,” Jeffery said. “A fiber-centric future for Frontier is feasible and financially attractive.”
The opportunity for the company to grab market share by expanding its fiber optic network has great potential, he said, since fiber optic cable passes only 38 percent of all homes in the United States.
Using fiber optic cable to deliver broadband Internet service is preferable because it allows data to move at higher speeds, according to Lon Seidman, an Essex-based technology expert who reviews products on his YouTube channel, LON.TV.
“Fiber, at the moment, delivers significantly faster upstream performance versus cable (Internet service) and is the better technology over long distances,” Seidman said. “And fiber is more reliable. That will be important for businesses and home workers if they can get enough reach (within the communities Frontier serves).”
But if Frontier’s fiber optic push is to be successful, he said, the company needs to do a better job marketing its availability.
Until recently, according Seidman, the company didn’t have map showing where fiber optic service is available in Connecticut, even though it has been marketing its availability online for months.
But installing increased volumes of fiber optic cable “is going to be an expensive proposition,” he said. And because of the expensive involved, Seidman said it is likely that the first areas to get the new fiber optic cable installed will be more densely populated.
When viewed in the long term, Jeffrey said fiber optic cable is more cost effective than a copper network.
“The fiber we are laying now will last for up to 50 years and will cost less to maintain,” he said.
Jeff Kagan, an independent telecommunications analyst based in Atlanta, said regardless of the expense involved, Frontier has no choice but to forge ahead with its plan if the company wants to continue to exist.
“The future is about the Internet: Every thing will be coming over the Internet, whether it’s delivered by wire line or wireless,” Kagan said. “This is the direction they (Frontier) have to move in. They have already waited too long to pull the trigger.”
Stamford-Based Charter Communications Ordered to Pay $19 Million to Arkansas Telecom Firm
Charter Communications has been ordered by a federal court to pay approximately $19 million to an Arkansas-based telecommunications company, after a judge found Charter had deceptively advertised its services and improperly disconnected several hundred customers.
The judgment comes after a two-year legal battle between Stamford-based Charter — one of the country’s largest cable, internet and phone providers through its Spectrum-branded services — and Little Rock, Ark.-based Windstream Holdings, which filed for bankruptcy in early 2019 and soon after sued Charter in response to the disconnections and advertising.
Judge Robert Drain found that Charter should be held in contempt for violating an “automatic stay” on actions against Windstream that had been triggered by the bankruptcy filing. Charter breached the stay by terminating “last mile” connection services to some Windstream customers, based on pre-bankruptcy amounts owed by Charter under the companies’ reseller agreement, Drain wrote in his decision.
Drain also concluded that Charter carried out a “literally false and intentionally misleading advertising campaign to induce the debtors’ (Windstream) customers to terminate their agreements with the debtors.” He agreed with Windstream’s assessment that it consequently sustained about $5 million in lost profits.
The ruling was praised by officials at Windstream, which emerged from bankruptcy last September and now operates as a privately held company. The company has alleged in court filings that Charter disseminated false advertisements “directly targeting” Windstream’s “strongest customer bases” in Alabama, Georgia, Kentucky, Ohio, Nebraska and North Carolina.
“We are gratified that Judge Drain’s ruling means Charter will have to pay a significant price for its egregious false advertising,” Kristi Moody, Windstream’s general counsel, said in a statement. “Charter knew full well what it was doing when it embarked on a dishonest scare-tactic campaign to lure away our customers. At Windstream, we will always aggressively defend ourselves and our customers against predatory schemes and meritless allegations.”
Charter declined to comment on the ruling.
The judgment includes about $9 million in damages for Windstream’s litigation fees and expenses. Among other components, there are damages of about $4 million to cover the cost of a Windstream promotional campaign in late 2019 that included customer upgrades, discounts and other pricing promotions. Drain determined that Windstream incurred those costs related to Charter’s advertising.
Some counts in Windstream’s original complaint — including those related to federal and state deceptive trade laws — were transferred to a federal district court, but no hearing has been scheduled, according to a Windstream spokesman.
Charter disconnected about 350 Windstream customers on or around March 14, 2019, Windstream said an April 2019 court filing. A “smaller number” of additional shutoffs occurred in April and May 2019, according to a footnote of Drain’s decision.
Drain said he considered the company’s explanation of the disconnections.
“Charter’s only response is a variation on the ‘inability’ defense to a finding of contempt, that is, that the termination of service was wholly mechanical, arising from ‘automatic nonpayment protocols’ programmed into its computerized billing system, or, possibly, that Charter reasonably attempted to comply,” he said.
But he was not persuaded by that argument.
“It is not really a defense for a large and sophisticated entity like Charter that provides services to many customers, some of whom inevitably will file for relief under the bankruptcy code, to argue that its systems do not have an effective fail‐safe to prevent it from violating the automatic stay,” he said. “Charter has not contended that it lacked the capacity to adopt systems to override such automated collection activity.”
Charter took from February 25, 2019 to May 9, 2019 to complete their “manual analysis and restoration of the debtors’ accounts that should not have been automatically terminated in violation of the automatic stay,” according to Drain’s footnote.
‘Literally false and intentionally misleading advertising’
Drain found that Charter had misrepresented in an early 2019 advertising campaign the nature of Windstream’s bankruptcy.
“The evidence also shows that Charter should be held in contempt... for interfering with the plaintiffs’ customer contracts and goodwill through Charter’s literally false and intentionally misleading advertising campaign intended to create the impression, using mailings designed to seem as if they were coming from the debtors, that the debtors were going out of business,” Drain said.
Among the evidence in its filings, Windstream included a Spectrum ad, which said “Now is the time to switch to Spectrum. Windstream’s future is unknown, but Spectrum is here to stay — delivering internet and TV services you can count on.”
An economist brought in by Windstream for the case estimated that the company lost nearly 1,400 customers as a result of Charter’s advertising.
Incidentally, Charter had filed for bankruptcy in 2009 and then sued DirecTV for “false” advertising that Charter said at the time could give customers the mistaken impression that it would be liquidating and that its cable services would soon end.
Drain’s other cases include management of the bankruptcy proceedings of OxyContin maker Purdue Pharma, a next-door neighbor of Charter, which is headquartered at 400 Atlantic St., in downtown Stamford.
Charter, however, is planning to open later this year a new headquarters a few blocks away at 406 Washington Blvd., next to the downtown Metro-North Railroad station. The relocation reflects the growth of the No. 71 company on last year’s Fortune 500 list, with Charter now serving more than 30 million residential and business customers.
Scoop: Telecom Goes to War with New York Over Low-Income Broadband Law
Margaret Harding McGill
Trade groups representing AT&T, Verizon and other telecom companies are opening fire on a new law requiring them to provide discounted internet service to low-income households in New York.
Why it matters: New York's first-in-the-nation law could be adopted by other states at a time when the White House has signaled it wants to reduce broadband prices for all Americans.
Driving the news: Trade associations USTelecom, CTIA, the New York State Telecommunications Association and others representing smaller companies filed a lawsuit Friday against New York's new law requiring providers in the state to offer broadband service for $15 a month to low-income households.
• New York estimates that 7 million people in 2.7 million households will qualify for the discounted service.
What they're saying: The trade groups say the state doesn't have the authority to mandate broadband prices, and warn it could undermine companies' ability to invest and upgrade their networks.
• “While well-intended, this bill is preempted by federal law and ignores the $50 monthly broadband discount recently enacted by Congress, as well as the many unprecedented commitments, donations and accommodations that broadband providers have made for low-income consumers since the pandemic began," the coalition of broadband groups said in a statement.
• "We urge state policymakers to coordinate with their federal counterparts, and with the broadband industry, to better serve the needs of New Yorkers.”
The other side: New York Gov. Andrew Cuomo told the trade groups to "bring it on" in a statement in response to the lawsuit.
• "This is nothing more than a transparent attempt by billion-dollar corporations putting profit ahead of creating a more fair and just society," Cuomo said in the statement.
• "If these companies want to pick this fight, impede the ability of millions of New Yorkers to access this essential service and prevent them from participating in our economic recovery, I say bring it on."
Between the lines: Many of the large providers already have low-income service options, but they offer them on their own terms.
Meanwhile, Congress created a $3.2 billion program to help low income households pay for internet during the pandemic, with the $50 a month subsidy program set to launch in May.
• According to the lawsuit, more than 50 providers in New York intend to participate in the subsidy program, known as the Emergency Broadband Benefit.
What's next: There's a fear from providers that other states could adopt the New York law.
• "The states have seen in the last four years the federal government do almost nothing to get people online," Gigi Sohn, a former FCC adviser told Axios. "They’re stepping in and stepping up. I don’t think this is going to be the last state that does this."
Internet Outage in Canada Blamed on Beavers Gnawing Through Fiber Cables
Rascally beavers took down internet service for about 900 customers in a remote Canadian community this weekend after gnawing through crucial fiber cables, the Candian Broadcasting Corporation reported Sunday. The outage, which has since been resolved, also affected 60 cable TV customers and disrupted local cell phone service, according to a statement from the area’s provider, Telus.
Tumbler Ridge, a tiny municipality in northeastern British Columbia with a population of about 2,000 people, lost service for roughly 36 hours in what Telus described as a “uniquely Canadian disruption!”
“Beavers have chewed through our fibre cable at multiple points, causing extensive damage,” said Telus spokesperson Liz Sauvé in an email to Gizmodo. “Our team located a nearby dam, and it appears the beavers dug underground alongside the creek to reach our cable, which is buried about three feet underground and protected by a 4.5-inch thick conduit. The beavers first chewed through the conduit before chewing through the cable in multiple locations.”
After going down early Saturday morning, service was restored just before 6:30 p.m. ET on Sunday, Sauvé confirmed. In its statement, the company said crews worked “around the clock” to address the issue and determine how far the damage continued up the cable line. Telus brought in additional equipment and technicians to tackle “challenging conditions” due to the fact that the ground above the cable is partially frozen this time of year.
The beavers seem to have been scouting for materials to build their home. A photo taken of the site shows that they used fiber marking tape, usually buried several feet underground, as part of their dam, CBC reports.
Telus said it was “very sorry for this interruption,” but also appeared to recognize the humor in such a bizarre situation. Speaking to the CBC, Sauvé called the fiasco “a very unusual and uniquely Canadian turn of events.”
Daniel Kaminsky, Internet Security Savior, Dies at 42
If you are reading this obituary online, you owe your digital safety to him.
Daniel Kaminsky, a security researcher known for his discovery of a fundamental flaw in the fabric of the internet, died on Friday at his home in San Francisco. He was 42.
His aunt, Dr. Toby Maurer, said the cause was diabetes ketoacidosis, a serious diabetic condition that led to his frequent hospitalization in recent years.
In 2008, Mr. Kaminsky was widely hailed as a latter-day, digital Paul Revere after he found a serious flaw in the internet’s basic plumbing that could allow skilled coders to take over websites, siphon off bank credentials or even shut down the internet. Mr. Kaminsky alerted the Department of Homeland Security, executives at Microsoft and Cisco, and other internet security experts to the problem and helped spearhead a patch.
He was a respected practitioner of “penetration testing,” the business of compromising the security of computer systems at the behest of owners who want to harden their systems from attack. It was a profession that his mother, Trudy Maurer, said he first developed a knack for at 4 years old after his father gifted him a computer from Radio Shack. By age 5, Mrs. Maurer said, Mr. Kaminsky had taught himself to code.
His childhood paralleled the 1983 movie “War Games,” in which a young child, played by Matthew Broderick, unwittingly accesses a U.S. military supercomputer. When Mr. Kaminsky was 11, his mother said, she received an angry phone call from someone who identified himself as a network administrator for the Western United States. The administrator said someone at her residence was “monkeying around in territories where he shouldn’t be monkeying around.”
Without her knowledge, Mr. Kaminsky had been examining military websites. The administrator vowed to “punish” him by cutting off the family’s internet access. Mrs. Maurer warned the administrator that if he made good on his threat, she would take out an advertisement in The San Francisco Chronicle denouncing the Pentagon’s security.
“I will take out an ad that says, ‘Your security is so crappy, even an 11-year-old can break it,’” Mrs. Maurer recalled telling the administrator, in an interview on Monday.
They settled on a compromise punishment: three days without internet.
Nearly two decades after he lost his access to the internet, Mr. Kaminsky wound up saving it. What Mr. Kaminsky discovered in 2008 was a problem with the internet’s basic address system, known as the Domain Name System, or DNS, a dynamic phone book that converts human-friendly web addresses like NYTimes.com and Google.com into their machine-friendly numeric counterparts. He found a way that thieves or spies could covertly manipulate DNS traffic so that a person typing the website for a bank would instead be redirected to an impostor site that could steal the user’s account number and password.
Mr. Kaminsky’s first call was to Paul Vixie, a longtime steward of the internet’s DNS system. The usually unflappable Mr. Vixie recalled that his panic grew as he listened to Mr. Kaminsky’s explanation. “I realized we were looking down the gun barrel of history,” Mr. Vixie recalled. “It meant everything in the digital universe was going to have to get patched.”
Mr. Vixie asked Mr. Kaminsky if he had a fix in mind. “He said, ‘We are going to get all the makers of DNS software to coordinate a fix, implement it at the same time and keep it a secret until I present my findings at Black Hat,” Mr. Vixie said, referring to an annual hacking conference in Las Vegas.
Mr. Kaminsky, then the director of penetration testing at IOActive, a security firm based in Seattle, had developed a close working relationship with Microsoft. He and Mr. Vixie persuaded Microsoft to host a secret convention of the world’s senior cybersecurity experts.
“I remember calling people and telling them, ‘I’m not at liberty to tell you what it is, but there’s this thing and you will need to get on a plane and meet us in this room at Microsoft on such-and-such date,’” Mr. Vixie said.
Over the course of several days, they cobbled together a solution in stealth, a fix that Mr. Vixie compared to dog excrement. But given the threat of internet apocalypse, he recalled it as being the best dog excrement “we could have ever come up with.”
By the time Mr. Kaminsky took the stage at Black Hat that August, the web had been spared. Mr. Kaminsky, who typically donned a T-shirt, shorts and flip flops, appeared onstage in a suit his mother had bought for him. She had also requested that he wear closed-toed shoes. He sort of complied — twirling onto the stage in roller skates.
When his talk was complete, Mr. Kaminsky was approached by a stranger in the crowd. It was the administrator who had kicked Mr. Kaminsky off the internet years earlier. Now, he wanted to thank Mr. Kaminsky and to ask for an introduction to “the meanest mother he ever met.”
While his DNS fix was Mr. Kaminsky’s most celebrated contribution to internet security, it was hardly his only contribution. In 2005, after researchers discovered Sony BMG was covertly installing software on PCs to combat music piracy, Sony executives played down the move. Mr. Kaminsky forced the issue into public awareness after discovering Sony’s software had infected more than 568,000 computers.
“He did things because they were the right thing to do, not because they would elicit financial gain,” his mother, Mrs. Maurer, said.
(When a reporter asked Mr. Kaminsky why he did not exploit the DNS flaw to become immensely wealthy, he said that doing so would have been morally wrong, and that he did not want his mother to have to visit him in prison.)
Silicon Valley’s giants often sought Mr. Kaminsky’s expertise and recruited him with lucrative job offers to serve as their chief information security officers. He politely declined, preferring the quiet yeoman’s work of internet security.
In a community known for its biting, sometimes misogynistic discourse on Twitter, Mr. Kaminsky stood out for his consistent empathy. He disdained Twitter pile-ons and served as a generous mentor to journalists and aspiring hackers. Mr. Kaminsky would often quietly foot a hotel or travel bill to Black Hat for those who could not otherwise afford it. When a mentee broke up with her boyfriend, Mr. Kaminsky bought her a plane ticket to see him, believing they were meant to be. (They married.)
He was outspoken when privacy and security were on the line. After the F.B.I. tried to force Apple, in federal court, to weaken the encryption of its iPhones in 2015, James B. Comey, who was then the F.B.I. director, testified to Congress in 2016 that he was not asking for a backdoor, but for Apple to “take the vicious guard dog away and let us pick the lock.”
“I am that vicious guard dog, and that used to be a compliment,” Mr. Kaminsky told this reporter at the time. “The question for Mr. Comey is: What is the policy of the United States right now? Is it to make things more secure or to make them less secure?”
The Electronic Frontier Foundation, a group that promotes civil liberties, said in a tweet on Saturday that Mr. Kaminsky was a “friend of freedom and embodiment of the true hacker spirit.” Jeff Moss, the founder of the DefCon and Black Hat hacking conferences, suggested that Mr. Kaminsky be inducted into the Internet Hall of Fame.
Mr. Kaminsky’s empathy extended to his many side projects. When a friend struggled with color blindness, he developed the DanKam, a mobile app that uses a phone’s camera to decipher colors otherwise indecipherable to the colorblind. When his grandmother Raia Maurer, now 97, experienced hearing loss, he refocused his efforts on hearing-aid technology. And when his aunt, a dermatologist, told him she could no longer treat under-resourced patients for AIDS-related skin diseases, some potentially fatal, in sub-Saharan Africa and Rohingya refugee camps, Mr. Kaminsky helped develop telemedicine tools for the National Institutes of Health and AMPATH, a health project led by Indiana University that he sought to bring to San Francisco during the coronavirus pandemic.
In addition to his mother and grandmother, Mr. Kaminsky is survived by his sister, Angie Roberts, and stepfather, Randy Howell.
Security was always Mr. Kaminsky’s lifework, most recently as the chief scientist at White Ops, a security company he helped found that was recently renamed HUMAN. He was not above criticizing his own industry. In a 2016 keynote address at Black Hat, he said the industry had fallen far short of expectations. “Everybody looks busy, but the house still burns,” he said, before pitching the cyber equivalent of the Manhattan Project.
“The internet was never designed to be secure,” Mr. Kaminsky recalled in a 2016 interview. “The internet was designed to move pictures of cats. We are very good at moving pictures of cats.” But, he added, “we didn’t think you’d be moving trillions of dollars onto this. What are we going to do? And here’s the answer: Some of us got to go out and fix it.”
To Be Tracked or Not? Apple Is Now Giving Us the Choice.
With Apple’s latest mobile software update, we can decide whether apps monitor and share our activities with others. Here’s what to know.
Brian X. Chen
If we had a choice, would any of us want to be tracked online for the sake of seeing more relevant digital ads?
We are about to find out.
On Monday, Apple plans to release iOS 14.5, one of its most anticipated software updates for iPhones and iPads in years. It includes a new privacy tool, called App Tracking Transparency, which could give us more control over how our data is shared.
Here’s how it works: When an app wants to follow our activities to share information with third parties such as advertisers, a window will show up on our Apple device to ask for our permission to do so. If we say no, the app must stop monitoring and sharing our data.
A pop-up window may sound like a minor design tweak, but it has thrown the online advertising industry into upheaval. Most notably, Facebook has gone on the warpath. Last year, the social network created a website and took out full-page ads in newspapers denouncing Apple’s privacy feature as harmful to small businesses.
A big motivator, of course, was that the privacy setting could hurt Facebook’s own business. If we choose not to let Facebook track us, it will be harder for the company to see what we are shopping for or doing inside other apps, which will make it more difficult for brands to target us with ads.(Mark Zuckerberg, Facebook’s chief executive, has disputed that his company’s business will be hurt by Apple’s policy.)
“This is a huge step in the right direction, if only because it’s making Facebook sweat,” said Gennie Gebhart, a director at the Electronic Frontier Foundation, a digital rights nonprofit.
But, she added, “One big question is, will it work?”
Ms. Gebhart and other privacy experts said Apple’s new feature might not be enough to put an end to shady tracking on iPhones. It could simply push developers and ad-technology firms to find loopholes so they can continue tracking people in different ways, she and others said.
For about two months, I have been testing early versions of iOS 14.5 to get acclimated with the new privacy control and other new features. Only a few developers have been testing the pop-up window with the public, so my findings about how well the privacy feature works have been limited.
But I found that iOS 14.5 also has other important new features. One is the ability to use Siri to work with a music player other than Apple Music, such as Spotify. That’s a big deal: In the past, you could only ask Siri to play songs through Apple Music, so the voice assistant wasn’t as useful for those who preferred other music services.
Here’s what you need to know about Apple’s new software.
Don’t Track Me (Please)
It’s important to understand how tracking works inside apps.
Let’s say you use a shopping app to browse for a blender. You look at a blender from Brand X, then close the app. Later, ads for that blender start showing up in other mobile apps, like Facebook and Instagram.
Here’s what happened: The shopping app hired an ad-tech company that embedded trackers inside the app. Those trackers looked at information on your device to pinpoint you. When you opened other apps working with the same ad-tech firm, those apps were able to identify you and serve you ads for Brand X’s blender.
Apple’s new privacy feature is intended to let you decide whether you want that to happen. Now, when you open some apps, you will be greeted with a pop-up window: “Allow [App Name] to track your activity across other companies’ apps and websites?” You can choose “Ask App Not to Track” or “Allow.”
Let Us Help You Protect Your Digital Life
• A little maintenance on your devices and accounts can go a long way in maintaining your security against outside parties’ unwanted attempts to access your data. Here’s a guide to the few simple changes you can make to protect yourself and your information online.
• Ever considered a password manager? You should.
• There are also many ways to brush away the tracks you leave on the internet.
• Late last year, Apple introduced a new requirement that makers of the apps offered in its App Store include so-called privacy labels, which list the types of data being collected from users in an easily scannable format. We read them so you don’t have to.
When we select “Ask App Not to Track,” two things happen. The first is that Apple disables the app from using an Apple device identifier, a random string of letters and numbers assigned to our iPhones and that is used to track our activities across apps and websites. The second is that we communicate to the app developer that, broadly speaking, we don’t want our information to be tracked and shared with anyone in any way.
That seems easy enough. But No. 2 is where things also get slightly complicated.
Ad-tech companies already have many ways to follow us beyond Apple’s device identifier. For example, advertisers can use a method called fingerprinting. This involves looking at seemingly innocuous characteristics of your device — like the screen resolution, operating system version and model — and combining them to determine your identity and track you across different apps.
It’s difficult for Apple to block all tracking and fingerprinting happening on iPhones, privacy researchers said. That would require knowing about or predicting every new tracking method that an ad-tech firm comes up with.
“From a technical standpoint, there isn’t a whole lot that you can do” to stop such tracking, said Mike Audi, the founder of Tiki, an app that can help you see what other apps are doing with your data.
Yet the privacy change is still significant because it explicitly asks us for consent. If we tell apps that we don’t want to be tracked and they keep doing so, Apple can ban the offenders from its App Store.
The pop-up window also makes the privacy control far easier for people to discover, said Stephanie Nguyen, a research scientist who has studied user experience design and data privacy. In the past, iPhone owners could restrict advertisers from tracking them, but the tools to do so were buried in settings where most people wouldn’t look.
“The option was available before, but really, was it?” Ms. Nguyen said. “That’s a big shift — making it visible.”
As of this week, all apps with tracking behavior must include the App Tracking Transparency pop-up in their next software updates. That means we initially will probably see a small number of apps requesting permission to track us, with the number growing over time as more apps get updated.
Apple’s new software also includes two other interesting new features: the ability to use Siri to play audio with a third-party app like Spotify and the option to quickly unlock an iPhone while wearing a mask.
For many, these will feel long overdue. Siri has generally worked only with Apple Music for music playback since 2015, which has been annoying and inconvenient for those who want to use the voice assistant to play songs using other music apps. The change comes as antitrust scrutiny mounts over whether Apple stifles competition by favoring its own apps.
To make Siri work with other audio services, you won’t have to change any settings. If you normally listen to music with a third-party app, such as Spotify, Siri will simply learn over time that you prefer that app and react accordingly. (Audio app developers need to program their apps to support Siri, so if they haven’t done so yet, this won’t work.) That means if you always use Spotify to play music, you will be able to say “Hey Siri, play The Beatles” to start playing a Beatles playlist on Spotify.
The other new feature helps solve a pandemic issue. For more than a year, wearing a mask has been extra annoying for owners of newer iPhones that have face scanners to unlock the device. That’s because the iPhone camera has not been able to recognize our covered mugs. Apple’s iOS 14.5 finally delivers a mechanism to unlock the phone while masked, though it requires wearing an Apple Watch.
Here’s how that works: When you scan your face and the phone determines it can’t recognize you because your mouth and nose are obstructed, it will check to see if your Apple Watch is unlocked and nearby. The Apple Watch, in effect, acts as proof to verify that you are the one trying to unlock your phone.
To make this work, update the software on your iPhone and Apple Watch, then open the Settings app on your iPhone. Scroll down to “Face ID & Passcode.” In this menu, go to “Unlock with Apple Watch” and toggle on the option to use your Apple Watch to unlock when the image scanner detects your face with a mask.
Next time you are at the grocery store and look at your phone, your watch will vibrate once and unlock your phone. Sweet relief.
You’re in the army now
Illegal Downloading and File Sharing in Germany
WIESBADEN, HE, GERMANY
U.S. Army Garrison Wiesbaden
By Daniel A. Lauretano, Sr.
Chief, Client Services and Policy Division
WIESBADEN, Germany—Private downloading of music, films and TV series by at-home internet users has become very popular. Those doing so should be aware that downloading copyright-protected material and making it available to the public via peer to peer file sharing software is against the law in Germany. Internet users can be held liable for damages to the copyright holder under German copyright laws.
German copyright laws grant the owner of copyrighted work an exclusive right to reproduce, distribute, publicly perform and publicly display the work or to authorize such. Downloading and uploading copyrighted works without permission contravenes the copyright holder’s right of reproduction and distribution.
Upon discovering a violation, German law firms acting on behalf of proprietors of copyright literary/artistic/musical material will mail out cease and desist letters to hundreds, if not thousands, of Internet users alleging that those users made unauthorized use of such copyrighted work by illegally downloading music, audio books or films from the Internet and making those works available to other Internet users.
The wording of these cease-and-desist letters are nearly identical and consist of allegations that on a particular day at a particular time the Internet user associated with a specific IP address downloaded a protected work and made it available to other users mainly through a P2P file sharing program.
Copyright holders identify illegal downloading activities by using the services of anti-piracy firms to track and search copyrighted works, which often include current chart hits or movies on popular file sharing P2P networks. The firms can then match an upload available online to a specific IP address. Once an IP address is identified, the firm applies for a court order, and once granted, it generally orders the internet service providers who store user data to release contact information for the user to whom the investigated IP address is assigned. Requested contact information includes the name and address of the user.
As a general rule, the individual who contracted with the ISP is legally responsible for any illegal download activity, even if it is carried out by family members, visitors or neighbors.
In fact, leaving a WLAN unsecured makes a user responsible for any violations third parties may cause on the network. To protect yourself against any illegal downloading from others using your unsecured WLAN, you should set up a username and password for a wireless router or any similar equipment so that only those who know the password are able to use the Internet connection through the wireless router. Keep the password safe.
If you receive a demand letter from a law firm alleging you made an illegal download, don’t ignore it. The issued notice letter is generally considered to be legally sufficient and enforceable. In their letter, most attorneys insist on payment of damages, a statement from you promising not to illegally download, and legal fees.
You should consult with an attorney prior to communicating with the law firm, signing any documents, or making any payments.
If you require legal advice in relation to an allegation of illegal downloading, make an appointment to see a legal assistance attorney by emailing us at: USARMY.WIESBADEN.USAREUR.MBX.OJA-WLC...ENDAR@MAIL.MIL.
Until next week,
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