Digital Media

Update 9:30 a.m. PT To include e-mail exchanges between Qwest employees and Cathi Paradiso.

All Cathi "Cat" Paradiso knew for sure, as she learned that her Web access was being shut off, was that she was losing her struggle to stay calm.

To Paradiso, the customer-service representative from Qwest Communications on the phone with her could have been speaking Slovenian for all the sense it made. Her Internet service was suspended... Hollywood studios accused her of copyright violations... she illegally downloaded 18 films and TV shows..."Zombieland," "Harry Potter," "South Park..."

Cathi Paradiso, a Pueblo, Colo.-based artist, was wrongly accused of pirating movies, and a watchdog group says safeguards need to be put in place to protect against mistakes.

(Credit: Brandy Meggison)

South Park? What would a 53-year-old grandmother want with "South Park" she thought to herself? But this much about what the Qwest rep said sank in: if Paradiso was accused of copyright infringement once more, her Internet service provider would have no choice but to terminate her account. Paradiso said she was also told that she would have a hard time acquiring new service as the other ISPs in the area would know her name and what she did.

"Take me off your hit list," Paradiso wrote in a January 15 e-mail plea to some of the studios who had accused her. "I have never downloaded a movie. Period... You'll need to admit you made a mistake and move on to the correct perpetrator... I am saying this once more: My computer is not a toy. My livelihood depends on my ISP's reliability. Look for the perpetrator and leave my service alone."

Paradiso, a technical recruiter who works out of her home near Pueblo, Colo., would eventually be cleared. Last week, Qwest had a technician investigate--after CNET began making inquiries--and he discovered that her network had been compromised, according to Monica Martinez, a Qwest spokeswoman. So Paradiso is off the hook, but she wants to know what would have happened had she not gone to the media. There was no independent third party to hear her complaint. There was no one to advocate for her.

If ISPs are to become copyright cops, a role that companies such as Comcast, Verizon, Cox, and others appear to be warming up to at the request of the entertainment sector, then what this case suggests is that there's a need for better safeguards to prevent people from being wrongly accused and cut off from the Web.

"This goes to show that there's a problem with due process in these kinds of situations," said Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation, which advocates for Internet users and technology companies. "If you're going to kick somebody off the Internet, there's a lot of procedures that need to be put in place to protect the innocent. It doesn't look like those were in place here."

An attorney who works closely with one of the studios involved and asked to remain anonymous, said these issues are being addressed. Entertainment companies and ISPs agree that there should be some kind of review process and people accused of copyright violations must also be properly informed before any service disruption takes place. One possible way is to redirect an accused customer's computer screen to a warning notice or to send warnings via certified mail.

For ISPs, protecting customers from being wrongly accused of piracy is just one of the hurdles confronting them. They have been thrust into the middle of a digital tug-of-war between people who illegally download video games, music, and films and the creators of those materials.

Entertainment companies see bandwidth providers as natural gatekeepers that can easily set up road blocks against piracy. Both the film and music industries want ISPs to adopt some version of what they call a "graduated response" program. This calls for a series of warnings to be issued to people accused of infringing intellectual property. If ignored, the warnings would eventually be followed by some kind of service interruption--suspension or termination.

The idea of booting paying customers makes some ISPs very squeamish. AT&T said last year that it would never terminate service unless it received a court order. That hasn't stopped AT&T and other ISPs from issuing more and more warning letters to customers accused of copyright violations. For example, Verizon has a long history of defying the entertainment industry's attempts to draft it into antipiracy efforts. Nonetheless, Verizon began sending letters on behalf of the film industry in April and started doing it for themajor music labels in November, according to entertainment sources.

Qwest's approach
Some ISPs are more aggressive in helping copyright owners than others. Cox Communications has said it has terminated Internet access of a tiny number of customers accused of multiple copyright violations. Qwest is apparently another ISP that takes a strong stand on protecting intellectual property.

Martinez said that any customer accused of violating copyright is notified by e-mail or letter before Qwest initiates any service interruption. The company works with customers who believe they are wrongly accused and it "routinely results in good resolutions" for all, she said. "We will work with them if there is a security issue or a mistake as much as we can," Martinez said. "What we can do is sometimes limited."

Those "limitations" may be how Paradiso nearly fell through the cracks. Qwest, however, doesn't appear to have acted hastily in Paradiso's situation.

The film industry began flagging her Internet protocol address in October. Before Qwest finally suspended her service, nearly three months had passed and 18 separate claims of copyright infringement had piled up.

Martinez declined to specify exactly what occurred in Paradiso's case, citing possible litigation. Paradiso, who said she never received any e-mails or letters from Qwest notifying her of the problem, has hired Lory Lybeck, the attorney representing Tanya Andersen, a woman wrongly accused by the music industry of illegal file sharing five years ago. Lybeck told CNET he is investigating Paradiso's case.

Do the companies that tracked file sharing back to Paradiso bear any responsibility for the mix-up? Mark Ishikawa, the CEO of BayTSP, an Internet security firm, says the answer is "no." Ishikawa notified Qwest that Paradiso's IP address was being used to download "South Park" and "Transformers: Revenge of the Fallen," both owned by Viacom.

Ishikawa said that BayTSP has systems in place that do multiple checks to ensure that the people fingered for piracy are correctly identified. He added that mistakes are very rare and those wrongly accused represent only a tiny fraction of the people flagged for illegal file sharing. But he says there isn't much anyone can do when a network is unsecured. "That's like leaving your keys in your car," Ishikawa said. "She essentially became the neighborhood's ISP."

Ishikawa raises an important question: is it right to penalize someone for not being tech-savvy enough to properly secure a wireless network?

Paradiso doesn't think so. She says she did her best to lock down her network, but she acknowledges that she's not an expert. She says there are lots of people who might have made the same mistake (Qwest is working to help her prevent any more security breaches). Paradiso, an artist who has sold several paintings, says that if one of the reasons for enlisting ISPs to help fight piracy is that it generates less public animosity than suing fans, then Hollywood loses those benefits when it falsely accuses people.

"I'm the last person that would steal somebody's art," Paradiso said. "I've never downloaded a movie or song in my life. I'm against it. After going through this, I realize this is the kind of thing that could really hurt artists. I'm so paranoid now, I won't buy music or movies online ever."

Below are recent e-mail exchanges between Qwest's employees to Paradiso. More to come.

From: Cathi [mailto:REDACTED]
Sent: Wednesday, January 27, 2010 9:37 PM
To: REDACTED, Howard
Cc: Martinez, Monica
Subject: Hey Howard

Thanks for your help. Sorry I missed your call. When you say the matter is resolved, does that mean I won't be getting any more threatening letters or does it mean my DSL is working again?

Cat Paradiso

[REDACTED]

-----Original Message-----
From: Howard [mailto:REDACTED@qwest.com]
Sent: Thursday, January 28, 2010 7:54 AM
To: 'Cathi'
Cc: Martinez, Monica
Subject: RE: Hey Howard

Well, it should be both! Since you're using only wired (Ethernet) connections for your computers the wireless light on your DSL modem should be out. Since this was the source of your problem...no more threatening letters. I like to call this a "win - win" ;-)

Howard REDACTED

-----Original Message-----
From: REDACTED@qwest.net [mailto:REDACTED@qwest.net]
Sent: Wednesday, January 13, 2010 10:47 AM
To: REDACTED@msn.com; Cathi Paradiso
Subject: [REDACTED] DMCA Complaints - Update

Qwest: Hello,

In response to your email: (Editor's note: Qwest included the next paragraph that was sent to them by Paradiso): "This is NOT my IP address or port.. I NEVER NEVER NEVER download movies. The IP address below is included in a range of IP addresses owned by a school district in Colorado Springs. It appears they are the culprit and not me. I would like this matter resolved."

(Qwest's response) Your user ID is dynamic, meaning the IP can change frequently. If there is a connection with the school that means you have an unprotected wireless system that is being used to download these items. It is still your responsibility to protect and secure your computer. This is just the first time that your user ID has been placed into the Qwest Consumer Protection Program, but our policy does allow for permanent deactivation at some point. Please seek outside help if necessary. The entire list of 18 items was also resent to your email address today.

Here is a list of IP that user (REDACTED) has been logged in for the last 30 days: (REDACTED).

Amazon said Sunday that, while it still believes a $14.99 price tag for e-books is "needlessly high," it will have to give in to Macmillan's demands to sell electronic versions of its books at a higher rate than Amazon's usual $9.99.

The announcement comes after Amazon temporarily pulled Macmillan books from its Web site in a dispute over e-book pricing. Macmillan and other book publishers have asked Amazon to increase the sales price of e-books on its Web site. But Amazon stood firm in its contention that anything above $9.99 was too high--that is until now.

"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles," Amazon's statement read. "We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books."

Macmillan books will eventually return to Amazon's sites. And Amazon will charge between $12.99 and $14.99 for electronic versions of bestsellers and most hardcover releases. No time frame was given for the change, but on Sunday afternoon, top sellers from Macmillan--including Jeffrey Eugenides' "Middlesex," Ishmael Beah's "A Long Way Gone," and Michael Chabon's "The Amazing Adventures of Kavalier & Clay"--were still only available from third parties via Amazon's Web site and could not be bought from Amazon directly.

Amazon's statement hints at the precarious position it is in. On one hand, it wants to be known by consumers as a low-cost e-book distributor. On the other hand, if it can't work out deals with all of the major book publishers, it risks being able to offer customers only a limited selection of titles.

Now, as Amazon said in its announcement, "Amazon customers will...decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book."

Like Douglas Rushkoff, I've been an enthusiastic supporter of digital technology for more than 20 years and, also like Rushkoff, I've had some second thoughts as to whether--at least for some people--immersion in technology is doing more harm than good.

Rushkoff is the co-host and co-writer of TV movie "Digital Nation: Life on the Virtual Frontier," which premiers on PBS Frontline Tuesday at 9:00 p.m. The show was produced, co-written and co-hosted by Rachel Dretzin, who also produced "Growing Up Online," a show that aired on Frontline in 2007.

The new program explores the use of technology at home, school, work, and in the military, examining the pros and cons of multitasking, immersion in virtual worlds and even remote warfare.

Digital Nation producer Rachel Dretzin at home with her digital native son.

(Credit: Frontline Digital Nation)

Dretzin begins the program by observing a night in her own household when she was cooking dinner while her husband and older son were using laptops on the dining room table and her two younger children were playing with an iPhone. "It hit me, we're all in the same house but we're also in other worlds. It just sort of snuck up on us, I didn't see it coming."

The 90-minute documentary is by no means anti-technology, but it does cause one to think about some of the unintended consequences technology may be having in our lives. At no point during the program do the producers suggest that we need to move backward. But Rushkoff, in his opening statement, sets the stage when he quips, "I kind of want to push the pause button and everything stops and we can look and say just what's going on here."

Does multitasking muddle our thinking?
Through interviews with MIT's Sherry Turkle, medical history professor David Jones, author Mark Bauerlein, and Stanford sociologist Clifford Nass, the show questions whether multitasking may actually be diminishing students' mental abilities. After saying that she teaches "the most brilliant students in the world," Turkle argues that her students "have done themselves a disservice by drinking the Kool-Aid and believing that a multitasking learning environment will serve their best purposes." In one of Nass' studies, a Stanford student who admits to texting, chatting on Facebook, and watching YouTube while he studies, thinks that he can handle all those distractions until an experiment reveals that he is significantly slower when multitasking. "Multitaskers," said Nass, "are terrible at every aspect of multitasking." He worries that multitasking "may be creating people who are unable to think well as clearly."

Yet, in a subsequent segment, Dretzin takes us to a middle school in the Bronx that, a few years ago, was suffering from frequent fights, gang activity, and only 9 percent of students meeting state standards in math. After a new principal, Jason Levy, provided all students with laptops, violence went way down, attendance went up 90 percent, and scores improved 30 percent in reading and almost 40 percent in math. "There should never be a question as to whether students should have access to technology," said Levy. "It's like oxygen. If anything, we make school make more sense to kids when we provide them with an opportunity to use technology." Students in the school are using Ning and other social-media tools to enhance their studies.

Henry Jenkins, a professor of Communication, Journalism and Cinematic Arts at the University of Southern California, pointed out that there is nothing new about information overload. "The issue has been with us for most of the 20th century and the good news is that we survived it. As a culture, we learned to adapt to it."

"Digital Nation" also shows how IBM and other companies are using virtual worlds like Second Life to bring workers together by holding staff meetings in them, even among teammates from distant parts of the globe who have never met in person.

Bubbe feeds show hosts.

(Credit: Frontline Digital Nation)

There is a charming scene with the 83-year-old host of the Web show "Feed Me Bubbe," where this quintessential Jewish grandmother teaches cooking. Bubbe's a strong believer in tech: "If you don't keep up with it a little bit you're really left behind," but admits that there is at least one downside. "It's easy for my grandchildren to go into e-mail, but I get angry with them sometimes. I'd like to hear your voice. Just call me on the telephone."

In a somewhat chilling segment, the show takes us to Creech Air Force Base near Las Vegas, where drone pilots carry out real bombing missions 7,500 miles away in Afghanistan and Iraq and then go home to have dinner with their families. "This isn't a video game," said Col. William Brandt, "it's a real airplane flying through real airspace." A big difference between operating a drone and playing a game is that the drones are armed with real weapons and aimed at real people. "There is no reset button."

The show goes back and forth with good news and bad news about digital technology. In one segment, college students admit that they now write in paragraphs and are less likely to express complete thoughts, but the interview itself shows that these students are articulate, engaged, and thoughtful. Arguing that video games can improve not just skills but also judgment, author and Game2Train CEO Marc Prensky tells Rushkoff that "technology (if used correctly) increases wisdom." When asked about gaming, he said that people who don't play games often don't see "that there are rules of what to do, strategy of why you would do this, and an environment and a context that you're in."

Both troubling and reconfirming
As I watched the show, I kept revising my sense of my own work as a technology journalist and advocate during the past 25 years--alternating between wondering "what have we wrought?" and confirming that digital technology is helping to create a more connected, more knowledgeable, and more productive world.

What I finally took away is the reaffirmation of a simple truth. Technology is neither good nor bad. It's an ever-evolving set of tools that can be used and misused. While "Digital Nation" raises questions about the future of today's youth, it also provides answers that are at least somewhat reassuring.

After watching it, some will walk away optimistic and others might worry even more about the problems it raises, but we'll all be just a little wiser about how technology is changing our lives and the lives of our children.

After the show airs on national TV, it will be available on the Web. You can watch it in segments, but to get full effect I strongly recommend you watch the whole show in one sitting.

Digital Nation trailer

As Netflix continues to build one of the most formidable online movie services, investors continue to send the company's stock price soaring.

For that reason, Amazon.com may be considering an acquisition of the Web's No. 1 movie rental service, according to a report Thursday in The Wall Street Journal.

Reed Hastings, Netflix CEO

(Credit: Greg Sandoval/CNET)

Rumors that Netflix is an acquisition target are nothing new and the Journal story is definitely long on speculation. But the author makes a good case for why an acquisition makes sense. For the past couple years, Netflix has been one of the tech sector's most compelling growth stories. This week, the company reported another blowout quarter, as profits rose 36 percent to $30.9 million and revenue jumped 24 percent to $445 million. Netflix also boosted the number of subscribers by 1 million, giving the company a total of 12 million.

Since reporting those numbers on Wednesday, Netflix's share price has jumped more than 20 percent. The stock closed trading Friday at $62.25, up from $50.97 on Wednesday.

Netflix has posted a run of good quarterly reports, but what really puts a shine on the Los Gatos, Calif.-based company is that there isn't another service offering consumers a better price or viewing experience. Most of Netflix's Internet competitors can still only deliver films to computers. None of the them have made the leap from the PC to consumers' TV sets as successfully as Netflix--not Apple, Hulu or YouTube.

Netflix staked out the territory from the Internet to the living-room TV by cutting deals to offer its service on almost every major set-top box and several high-profile TV sets, including Microsoft's X-box, Sony Bravia, the Roku Box, and most recently on Nitendo's Wii.

In perhaps the Netflix's most masterful move, the company continues to add to its online film library though Hollywood has long been wary of distributing through the Web rental store. By giving Netflix access to films, the studios run the risk of alienating better-paying customers, such as the cable operators.

Earlier this month, Netflix CEO Reed Hastings stirred controversy by announcing the company wouldn't rent newly released DVDs from Warner Bros. for 28 days. This is intended to help the studio boost disc sales.

In exchange, the studio agreed to give Netflix access to more catalog titles. Pundits and many subscribers howled, arguing that Hastings sold out his customers. What they don't understand, however, is that to continue growing the streaming-movie library, Netflix needs to find something to trade with. If he just pays outright for expensive Internet rights to movies, subscription fees will likely go up. Right now, Netflix provides most subscribers the ability to rent physical discs and stream movies for the same $9.

Netflix's potential problems with its Hollywood suppliers is a potential threat to the company's growth. If Amazon is sizing up for Netflix, one question to ask is whether the service can continue to acquire film rights for the streaming service once bigger players, such as the cable companies, start to wade deeper into Web streaming? Or will the cable companies outbid Netflix for content? And will Hastings stick around after an acquisition?

Who at Amazon or anyone else for that matter has proven to have the kind of deft touch Hastings has in dealing with the studios?

The thing with Netflix is that it has built a large community of supporters by mailing movies to consumers for a low monthly price. What happens to the company when movie viewing goes online and Netflix's massive and expensive DVD-distribution system is no longer a barrier to entry for would-be competitors?

The real question Amazon must ask is whether Netflix can continue to obtain Internet rights while offering all-you-can-eat viewing for a low price? Or will the cable companies muscle their way in and just move their subscription models to the Web?

Though it may have seemed like another of Apple's perfectly timed third-party leaks (and I certainly mistook it for that), McGraw-Hill CEO Terry McGraw's remarks to CNBC earlier this week were nothing of the sort. The publisher tells me that it was not privy to iPad prelaunch details and that to conclude otherwise is a misinterpretation of McGraw's comments.

"As a company deeply involved in the digitization of education and business information, we were as interested as anyone in the launch of the new device, although we were never part of the launch event and never in a position to confirm details about the device ahead of time," Steven Weiss, VP of corporate communications for The McGraw-Hill Companies, said in a statement given to Digital Daily.

Steve Jobs lounges with the iPad at the launch event in San Francisco on Wednesday.

(Credit: James Martin/CNET )

"On Tuesday afternoon, Mr. McGraw appeared on CNBC in a wide-ranging interview to discuss our earnings announcement and growth projections for 2010. His speculative comments about Apple's pending launch, which he shared earlier in the day in a call with investors, were simply intended to suggest that if the new device were to use iPhone applications, many of our education products would be compatible with the technology and could be made easily available on it."

Concluding, Weiss wrote, "Unfortunately, it seems that many mistakenly interpreted his comments as being more specific to yesterday's announcement. It is also important to note that only the products of trade publishers were featured in the launch event. Our digital education programs are not in that category and were never part of those negotiations."

It would seem, then, that contrary to other reports making the rounds, McGraw-Hill was not abruptly excised from Apple CEO Steve Jobs' presentation Wednesday after Terry McGraw's disclosure on CNBC. And indeed, multiple sources close to the situation say that the CEO was not given a demo of the iPad before its launch and that McGraw-Hill was never intended to be part of iPad launch event in San Francisco.

In retrospect, all McGraw really did on CNBC was to recycle and recast some comments made during the company's Tuesday morning earnings conference call. Reading over those remarks, it seems plausible that he was simply excitedly regurgitating the same collection of rumor and speculation we all were during the run-up to the launch event.

"In the near future, you will undoubtedly see a McGraw-Hill e-book for the college market running on an Apple tablet," McGraw said during the company's earnings call. "All our titles on CourseSmart, the industry e-book consortium, are already available to students on an iPhone operating system. That's because CourseSmart developed an iPhone application last summer with support from Apple. The goal was to have core educational content available on the iPhone operating system, which also makes it possible for e-books to run on new Apple devices using that system."

Continuing, McGraw said, "Consider then the Apple tablet computer, which will be introduced shortly. There is a lot of secrecy about the introduction, but many expect that the Apple device will use the iPhone operating system. If that's the case, we are confident that our CourseSmart e-books should run well right out of the box on any Apple Tablet. Stay tuned."

Similar to what he told CNBC, right? Thing is, McGraw spoke with quite a bit more certainty during that interview. He said:

"Yes, they'll make their announcement tomorrow on this one. We have worked with Apple for quite a while. And the tablet is going to be based on the iPhone operating system and so it will be transferable."

Those remarks don't seem entirely speculative to me. Still, what was McGraw saying that we hadn't already heard before? Maybe he reads the rumor sites too.

Story Copyright (c) 2010 AllThingsD. All rights reserved.

A day after Apple announced a new device that some say goes right at the heart of the Kindle e-reader, Amazon--the maker of the Kindle--reported fourth-quarter net income of $384 million, or 85 cents per share, up from 52 cents a year ago. Revenue was $9.52 billion, a 42 percent increase over the year-ago quarter. (Statement)

Wall Street analysts had been expecting earnings of 72 cents per share on revenue of $9.01 billion.

During the quarter, which included the holiday season, the company said that November was its "best sales month ever" and that the Kindle was the "most gifted item ever" on Amazon.com.

Read more of "Amazon earnings: Strong Q4 on holiday season sales" at ZDNet's Between the Lines.

New York Attorney General Andrew Cuomo has launched an investigation into the marketing practices of 22 online retailers, including Staples, 1-800-Flowers.com, and Orbitz.

Cuomo's office said Wednesday it issued subpoenas to the merchants and requested information about the retailers' relationships with three marketing companies, Webloyalty, Affinion, and Vertrue. These firms have allegedly misled consumers for years into joining membership programs and paying monthly fees.

Webloyalty and the other companies are so-called post-transaction marketers that have compiled a long history of consumer complaints and class-action lawsuits. Typically, the three firms present pop-up ads to online shoppers when they're finalizing a transaction. Some consumers have said the ads appear to be a discount coupon from the retailer.

Federal regulators and New York state officials are trying to halt what they say are scam marketing practices by some e-tailers and marketing firms.

(Credit: Greg Sandoval/CNET)

The ads offer discounts or cash-back coupons if the shopper will only provide an e-mail address or user name. Buried in the fine print however, are the full terms, which state that by providing an e-mail address, the customer is agreeing to sign up for a membership program and authorizing their credit card to be charged sometimes as much as $20 a month. How can these marketers charge credit cards without the owners giving them their card information? Simple, they buy the information from well-respected merchants, such as Continental Airlines, Priceline and Buy.com.

Cuomo arrives a little late to what many regard as the biggest scandal ever to hit online shopping. The U.S. Senate Commerce committee launched its investigation last May. Initially, the retailers suggested that their customers were at fault for not reading the ads more carefully. They changed their approach after investigators working for the committee unearthed hundreds of documents that show the marketers know that the overwhelming number of their programs' members don't know they are signed up. Many don't learn about it until discovering the charges on their credit card statements.

The materials produced by the Commerce committee also shows that the marketers know that without the ability to obtain credit card information from merchants, the revenue they make plummets.

Some people go months and even years before realizing that they're being charged. The government's investigation has also uncovered evidence that some of the Web merchants involved are aware their customers are duped into joining. It's safe to say many consumers believe the only way that their credit cards can be charged is if they key in their card information. That's the way it has always worked in the past.

"This online scheme has impacted the finances and tried the patience of tens of millions of consumers nationwide," Cuomo said in a statement. "Well-known companies are tricking customers into accepting offers from third-party vendors, which then siphon money from consumers' accounts."

With the U.S. government and the state of New York bearing down, many of the Web retailers have been severing ties with the marketers, whose leaders have been doing their own backpedaling. All three now say they will require consumers to key in their credit card number before signing them up to a membership.

But that doesn't go far enough, as the marketers have already begun exploiting new loopholes says, Prentiss Cox, a former assistant attorney general for the state of Minnesota and a leading expert in online marketing scams.

Cox said the marketers can still get a credit card's expiration date and the card's three-digit credit security code from retailers. The marketers have also changed up their ads to include wording that obscures the fact that by entering their card number, the consumer is agreeing to be charged monthly.

"Here's the fundamental problem with this industry," Cox said. "They have a product where if you tried to sell it legitimately, nobody would buy it. They have to use these tactics because they wouldn't have a business otherwise."

Cox congratulated the Senate Committee and Cuomo for investigating and pushing the marketers to the "fallback position" of requiring consumers to provide their credit card numbers, which he predicts will sharply reduce their revenue. But he predicted that Webloyalty, Affinion, and Vertrue will go on paying retailers for whatever credit card information they can get until merchants are prohibited from sharing any of their customers' financial data.

"There's no commercially useful reason for one company to be selling a consumer's account information," Cox said. "If you're selling a product then the consumer should have ultimate control over their account information...If you really want to put an end to the problem, we need carefully and well-written laws or regulations."

Netflix has more than a million people to thank for its latest surge in sales and earnings.

After winning 1.1 million net new subscribers in a single quarter, the company announced Wednesday that fourth-quarter profits jumped 36 percent to $30.9 million from $22.7 million in 2008's final quarter. Sales climbed 24 percent to $445 million from $359 million in the year-ago quarter.

The new subscribers added since the third quarter marked a record for the online rental company, which offers DVDs through the mail and streaming content for 12.3 million customers. Netflix also lost fewer customers in the fourth quarter, as the churn rate, or the number of people who don't renew their monthly subscription, dropped to 3.9 percent from 4.4 percent in the third quarter and from 4.2 percent in 2008's final quarter.

The company added nearly 3 million new subscribers over the full year.

The final quarter also saw Netflix strike a deal with Nintendo to provide its streaming video service on the Wii. Nintendo now joins Sony and Microsoft in offering the Netflix service via their game consoles. Netflix's streaming service has also taken off among regular subscribers, prompting the company to forecast that two-thirds of its customers will watch movies that way by the middle of 2011.

For its first quarter of 2010, Netflix expects the number of subscribers to reach up to 13.8 million. It's also forecasting quarterly earnings of up to $32 million on sales of $490 million to $496 million, all higher than analysts have been predicting.

The fourth-quarter surge and outlook for 2010's first quarter combined to push Netflix stock up more than 20 percent Thursday morning.

(Credit: CBS News)

Officials in Massachusetts believe there's been another deadly case of cyberbullying in the apparent suicide of 15-year-old Phoebe Prince of South Hadley, Mass.

Prince moved last year to the area from Ireland. While making the transition to a new town and a new country, Prince, officials believe, became the target of intense cyber-bullying, which may have contributed to her apparent suicide.

Prince was found dead in her South Hadley home on January 14, just days before a big school dance.

Read more of "Officials: Suicidal teen was cyberbullied" at CBSNews.com.