Cashing in on Gangnam Style's YouTube fame

SEOUL, South Korea (AP) — As "Gangnam Style" gallops toward 1 billion views on YouTube, the first Asian pop artist to capture a massive global audience has gotten richer click by click. So too has his agent and his grandmother. But the money from music sales isn't flowing in from the rapper's homeland South Korea or elsewhere in Asia.

With one song, 34-year-old Park Jae-sang — better known as PSY — is set to become a millionaire from YouTube ads and iTunes downloads, underlining a shift in how money is being made in the music business. An even bigger dollop of cash will come from TV commercials.

From just those sources, PSY and his camp will rake in at least $7.9 million this year, according to an analysis by The Associated Press of publicly available information and industry estimates. But for online music sales in South Korea, he'll earn less than $60,000.

Here's how it works.

YOUTUBE

"Gangnam Style" with its catchy tune and much imitated horse-riding dance is the most-watched video on YouTube ever.

The viral video has clocked more than 880 million YouTube views since its July release, beating Justin Bieber's "Baby," which racked up more than 808 million views since February 2010. PSY's official channel on YouTube, which curates his songs and videos of his concerts, has nearly 1.3 billion views.

TubeMogul, a video ad buying platform, estimates that PSY and his agent YG Entertainment have raked in about $870,000 as their share of the revenue from ads that appear with YouTube videos. The Google Inc.-owned video service keeps approximately half.

PSY and YG Entertainment also earn money from views of videos that parody his songs.

Google detects videos that use copyrighted content. Artists can have the video removed or allow it to stay online and share ad revenue with YouTube. In the last week of September when "Gangnam Style" had around 300 million views, more than 33,000 videos were identified by the content identification system as using "Gangnam Style."

But since YouTube can be accessed from all over the world, wouldn't Asia be responsible for a significant chunk of the $870,000? The countries with the second and third-highest views of the video are Thailand and South Korea.

"Ads rates vary depending on which country the video is played. Developed countries have higher ad rates and developing countries lower," said Brian Suh, head of YouTube Partnership in Seoul.

And the country with the most views of "Gangnam Style?" The United States.

LEGAL DOWNLOADS, CDs

"Gangnam Style" has been downloaded 2.7 million times in the U.S. and has been the No. 1 or No. 2 seller for most weeks since its debut, according to Nielsen SoundScan.

The song sells for $1.29 on Apple's iTunes Store, the market leader in song downloads. Apple generally keeps about 30 percent of all sales, so the PSY camp could be due more than $2.4 million.

How much PSY keeps and how much goes to his managers, staff and record label is unclear. South Korean industry insiders said PSY likely gets 70 percent and YG Entertainment 30 percent for U.S. downloads.

But earnings from downloads in PSY's homeland are far from an embarrassment of riches.

South Koreans pay less than $10 a month for a subscription to a music service that allows them to download hundreds of songs or have unlimited access to a music streaming service. That makes the cost of a downloaded song about 10 cents on average. The average price for streaming a song is 0.2 cent.

PSY's cut for downloads is 14 percent. That falls to 7.5 percent for streamed songs. Yes, 7.5 percent of 0.2 cent. And that's before PSY's "Gangnam Style" co-composer take his share. The biggest cut goes to his agent and online retailers.

According to South Korea's national Gaon Chart, "Gangnam Style" was downloaded more than 3.6 million times and streamed around 40 million times as of November. That adds up to a little more than $61,000.

It's likely the fast fading music CD industry generated even smaller revenue. PSY's 9 percent cut from sales of 102,000 CDs in South Korea would earn him $50,000 or more, according to an estimate by Kim Dong-hyun, a senior manager at Korea Music Copyright Association.

As for many other parts of Asia, illegal downloads and pirated CDS are so pervasive that only a small minority are willing to pay up for the legal versions.

TV COMMERCIALS

PSY has been jetting around the world, performing on shows such as "The X-Factor Australia" and NBC's "Today Show," but such programs usually cover travel costs and not much else, said Gary Bongiovanni, editor-in-chief of concert trade magazine Pollstar.

It is television commercials that are the big money spinner for the most successful of South Korea's K-pop stars. PSY has been popping up in TV commercials in South Korea for top brands such as Samsung Electronics and mobile carrier LG Uplus.

Chung Yu-seok, an analyst at Kyobo Securities, estimates PSY's commercial deals would amount to 5 billion won ($4.6 million) this year.

The money is cool. The products not so much. PSY is now the face of a new Samsung refrigerator and a major noodle company.

THE FAMILY

A fact little known outside South Korea is that PSY's father, uncle and grandmother own a combined 30 percent of DI Corp., a company which makes equipment that semiconductor companies use to make computer chips.

It's a stretch to plausibly explain how the success of "Gangnam Style" will boost DI's profits but that doesn't matter to the South Korean stock market. Perhaps inspired by the pure power of pop, DI shares surged eightfold from July after PSY's hit reached No. 2 on the Billboard Hot 100 and No. 1 on the U.K. singles chart.

It was time to cash in for PSY's grandmother, who sold 5,378 shares for about $65,000.

The share price has fallen since then but is still about double what it was before the release of "Gangnam Style."

PSY's agent YG Entertainment has also done well. Its share price is up about 30 percent since mid-July. The value of CEO Yang Hyun-suk's stake has swelled to about $200 million, making him among the richest in South Korea's entertainment industry.

THE FUTURE

The question now hanging over PSY is whether he will replicate the blockbuster success of "Gangnam Style" or end up remembered as a one-hit wonder.

"When this slows down, what comes next for PSY?" said Nielsen analytics vice president David Bakula. "Is it the evolution of a new musical style, something audiences are going to be craving en masse, or is it something that's just a passing fancy?"

Analysts say "Gangnam Style" alone will not be enough to propel PSY into the ranks of musicians such as Adele and may not even be enough to make him the top-grossing K-pop star. That will depend largely on his upcoming album, which PSY said will be released in March.

___

Ryan Nakashima contributed to this report from Los Angeles.

Youkyung Lee can be reached via Twitter: www.twitter.com/YKLeeAP

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The New Old Age Blog: For the Old, Less Sense of Whom to Trust

There’s a reason so many older people fall for financial scams, new research suggests. They don’t respond as readily to visual cues that suggest a person might be untrustworthy, and their brains don’t send out as many warning signals that ignite a danger ahead gut response.

The research, published Monday in the Proceedings of the National Academy of Sciences, is the first to show that older adults’ vulnerability to fraud may be rooted in age-related neurological changes.

Specifically, researchers from the University of California, Los Angeles, found that an area in the brain known as the anterior insula was muted when older people looked at photographs of suspicious-looking individuals. This part of the brain activates gut-level feelings that help individuals interpret the reliability of other people and assess potential risks and rewards associated with social interactions.

In one part of the U.C.L.A. study, both younger and older adults were asked to evaluate the trustworthiness of people portrayed in 60 photographs while undergoing brain scans. When the younger adults (21 altogether, from 23 to 46 years of age) labeled a person “not trustworthy,” their anterior insulas lit up. But this wasn’t true for older adults (23 altogether, age 55 to 80).

“The warning signals that convey a sense of potential danger to younger adults just don’t seem to be there for older adults,” said Shelley Taylor, the lead researcher and a psychology professor at U.C.L.A.

In another part of the study, researchers asked 119 older adults (55 to 84 years old) and 24 younger adults (age 20 to 42) to rate people in photographs as trustworthy, neutral or untrustworthy. Signs they were potentially untrustworthy included people with insincere smiles, averted gazes and postures that “leaned away” rather than toward the camera, among others, Dr. Taylor said.

Older adults were equally adept at identifying people judged to be trustworthy or neutral, but much more likely to miss signs of those who may be untrustworthy and view suspicious-looking people as approachable, the study found.

“We believe what’s going on is that older adults have a bias toward positive emotional experience and this keeps them from recognizing negative cues,” Dr. Taylor said.

This so-called “positivity effect” has been documented through research by Laura Carstensen, a professor of psychology and public policy at Stanford University, and it explains why older adults are, on the whole, happier than younger adults.

Asked to comment about the new study, Ms. Carstensen said in an e-mail that it was “very well done,” and observed that for older adults, “there are likely many benefits of looking on the bright side. However, there are likely some contexts where looking away from the negative and focusing on the positive is not good,” including financial scams and fraud.

Alexander Todorov, a professor of psychology at Princeton University, called the findings “interesting,” but warned that “there is an implicit assumption that these trustworthiness evaluations based on facial appearance are accurate. This is far from clear.”

Dr. Taylor became acutely aware of financial fraud practiced on the elderly almost 20 years ago when her elderly father handed $17,000 to two men who approached him on the street and walked with him to his bank.

“I got descriptions of the two men from someone who lived nearby — one had few teeth, both were dressed in a slovenly manner, and they’d been seen sleeping in doorways and were using the drug rehab center nearby,” the professor explained in an e-mail.

In other words, they would have been viewed skeptically by most people, but weren’t seen in that light by Dr. Taylor’s father.

Statistics show that financial exploitation of the elderly is on the rise. According to a study published last year by the MetLife Mature Market Institute and the National Committee for the Prevention of Elder Abuse, elder financial abuse — everything from fraudulent sweepstakes to bank accounts emptied out by guardians — totaled $2.9 billion in 2010, a 12 percent increase from only two years before.

Earlier this year, the Government Accountability Office weighed in on the issue, noting the inadequacy of existing safeguards and calling for a new national strategy to address the problem.

On Tuesday my colleague Paula Span wrote about a just-published consumer guide, “Protect Your Pocketbook,” intended for older adults and families who wanted to understand what put them at risk, how to prevent fraud, and where to turn for help.

As for Dr. Taylor, she advises that seniors never agree on the spot to a phone offer or a pitch from a door-to-door salesman. “Either hang up or wait and get someone else involved in your life to evaluate what’s being presented,” she said.

With financial fraud, almost half the time seniors end up being taken in by a caretaker or someone posing as a friend. “Make absolutely sure that you’ve carefully checked out the people taking care of an older relative,” or any “surprising new friend” that you’ve never heard of before that’s now on the scene, she tells family members.

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Netflix buys exclusive rights to Disney movies

Netflix Inc. has acquired exclusive U.S. rights to movies from Walt Disney Studios in a deal that catapults the Internet video-on-demand service into direct competition with pay TV giants such as HBO and Showtime.

The three-year agreement takes effect in 2016 and is a blow to the pay channel Starz, which currently has the rights to broadcast Disney movies, including its Pixar animated films and Marvel superhero pictures, about eight months after they are released in theaters.

Starz's sole remaining movie provider is now Sony Pictures. That partnership ends in 2016.

VIDEO: Disney buys Lucasfilm - Mickey meet Darth Maul

Disney has also agreed to give Netflix nonexclusive streaming rights to more of its older titles — including "Dumbo," "Pocahontas" and "Alice in Wonderland" — starting immediately.

Netflix's chief content officer, Ted Sarandos, called the deal "a bold leap forward for Internet television."

"We are incredibly pleased and proud this iconic family brand is teaming with Netflix to make it happen," he said.

Netflix stock soared on the news, rising $10.65, or 14%, to $85.65.

Shares in Starz's parent company, Liberty Media Corp., fell $5.49, or 5%, to $105.56.

Currently, Netflix has nonexclusive rights to movies from Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer via a deal with pay channel Epix, as well as an array of library titles from other studios. Its only exclusive movie rights come from independent studios such as Relativity Media and DreamWorks Animation. It also has a wide variety of television reruns.

Sarandos and Netflix Chief Executive Reed Hastings have long said the company wanted to get exclusive pay TV rights to films from one of Hollywood's six major studios to boost its online entertainment service.

PHOTOS: Disney without Pixar

However, Hastings has also at times downplayed the importance of new movies. Netflix previously had streaming rights to Disney and Sony movies via a deal with Starz. In January, investors expressed their concerns that the pending disappearance of those movies would hurt the service. Hastings said in a letter to investors that Disney films accounted for only 2% of domestic streaming and the loss would not be felt.

Since then, though, the Disney movie slate has become more attractive. At that time, Netflix did not have access to movies from Disney's Marvel superhero unit or the "Star Wars" titles from its pending acquisition of Lucasfilm Ltd.

The end of the Starz agreement accelerated a trend that has seen Netflix evolve into a television company, with reruns of shows such as "Mad Men" accounting for about two-thirds of the content streamed by users.

With several original programs launching next year, including the Kevin Spacey political drama "House of Cards," and a direct connection to a growing number of Internet-enabled televisions, Netflix is on the verge of standing on par with many TV networks.

Netflix charges $8 a month for its streaming service, while premium cable networks such as HBO cost $13 to $18 a month, and that's on top of a monthly bill for other channels that typically exceeds $50. It remains to be seen whether the addition of Disney products and more original programming could lead Netflix to increase its price.

PHOTOS: Hollywood back lot moments

The Netflix spending spree could continue, with Sarandos telling Bloomberg News on Monday that his company would bid for rights to Sony movies when its Starz deal expires.

Netflix might have a tougher time wresting away the rights to Warner Bros., 20th Century Fox or Universal Pictures releases from their current deals with HBO, which like Warner is part of Time Warner Inc. Paramount, Lionsgate and MGM are almost certain to stick with Epix, of which the trio are co-owners.

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Mexico port picks up slack from strike at L.A., Long Beach complex

ENSENADA — This sluggish port city is coming alive.

Standing atop a pier with a hulking cargo ship behind him, dock manager Rogelio Valenzuela Gonzalez motioned Monday toward four cranes as they plucked metal containers from the vessel.

Operators swiveled the cranes toward a line of flatbed trucks. Supervisors in reflective vests and hard hats watched from below, using two-way radios to dispatch trucks as they filled up.

Not even during the peak fall shipping season is this port so busy.

But a strike that has effectively shut down rival ports in Los Angeles and Long Beach has diverted ships south of the border. It has become a windfall for the port located about 50 miles from the border, its workers and the region's struggling economy.

"It's good for the workers' families," said Gonzalez, adding that the extra work will pay for additional Christmas presents. "We all know it's temporary, but it definitely helps out at the end of the year."

The Southern California strike ended its first week Monday, with negotiations continuing but no signs of an immediate resolution.

The strike by the International Longshore and Warehouse Union Local 63 Office Clerical Unit, which handles paperwork for incoming and outgoing ships, has crippled the nation's two busiest cargo ports.

The dispute centers on the charge by the union that employers — large shipping lines and terminal operators — have steadily outsourced jobs through attrition. The union says the employers have transferred work from higher-paid union members to lower-paid employees in other states and countries.

The employers dispute that claim, saying they've offered the workers full job security and generous wage and pension increases. Though the union has only 800 members, the 10,000-member dockworkers union is honoring the picket lines.

Economists estimate the effect of the work stoppage at $1 billion a day in forfeited worker pay, missing revenue for truckers and other businesses and the value of the cargo that hasn't been able to reach its destination. The two ports are directly responsible for an estimated 595,000 jobs in Southern California.

But while thousands of Southern California workers sit idle in Los Angeles and Long Beach, the walkout is giving Ensenada a hoped-for chance to showcase itself.

Collectively, Los Angeles and Long Beach handle 100 times more cargo each year than Ensenada.

Long seen as a backup port, Ensenada is eager to win more business from shippers inconvenienced by the second major work dispute at the L.A. and Long Beach ports in a decade.

"It's a great opportunity to show that the Port of Ensenada presents an alternative method for bringing in products from Asia and the Pacific Rim," said Kenn Morris, president of Crossborder Group, a San Diego consulting firm. "The Ensenada port can really show itself off as being something a lot of people hadn't expected."

Uncertain how long the strike may last, retailers have scrambled to find alternate ways to get their products onto shelves. Given their typically thin profit margins, retailers are concerned about the added shipping costs.

"These blockages are dead-weight losses to the system," said Carl Voigt, an international business professor at USC. "They raise costs for everybody. Everybody's goods and services are more expensive."

Ensenada is used to seeing the occasional cruise ship and maybe half a dozen cargo ships a week. Two ships have made unplanned dockings and unloaded cargo here in the last week. Three others have docked in Manzanillo, a Mexican port city 1,200 miles to the south of Ensenada.

Altogether, 17 ships bound for the L.A. or Long Beach port have been diverted elsewhere, including nine to Oakland, one to Mazatlan, Mexico, and one to Panama.

In Ensenada, dockworkers made quick work unloading 100 cargo containers from the Maersk Merlion. The giant cargo vessel was diverted over the weekend and docked early Monday morning.

Since late last week, Ensenada has been preparing for a hoped-for influx of diverted ships. The port has 200 dockworkers when operating at capacity, and an additional hundred clerical and customs workers.

Equipment is on standby. Workers are at the ready. And trucking lines have been placed on alert that cargo may need to be hauled.

"It's hard to guess how many ships we'll receive, but we are preparing for more," said Juan Carlos Ochoa, the port's trade development manager.

Ensenada is still handicapped by longer-standing obstacles, primarily its lack of railway access to move goods.

And for now, the cargo unloaded from the Maersk Merlion will sit at the port as the shipping line weighs whether to move it by truck to its final destination or have another ship pick up the containers at a later date.

The strike "is an extraordinary situation," Gonzalez said. "But it'll show our clients that this port is a good option. It's efficient, reliable and secure."

ricardo.lopez2@latimes.com

walter.hamilton@latimes.com

Lopez reported from Ensenada, and Hamilton from Los Angeles.

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Court upholds $319M verdict in 'Millionaire' case

LOS ANGELES (AP) — A federal appeals court on Monday upheld a $319 million verdict over profits from the game show "Who Wants to Be a Millionaire" and rejected Walt Disney Co.'s request for a new trial.

A jury decided in 2010 that Disney hid the show's profits from its creators, London-based Celador International. The ruling Monday by a three-judge panel of the 9th U.S. Circuit Court of Appeals found no issues with the verdict or with a judge's rulings in the case.

"I am pleased that justice has been done," Celador Chairman Paul Smith said in a statement.

Disney did not immediately comment on the decision.

The ruling comes more than two years after the jury ruled in Celador's favor after a lengthy trial that featured testimony from several top Disney executives. The company sued in 2004, claiming Disney was using creative accounting to hide profits from the show, which first ran in the United States from August 1999 to May 2002 and was a huge hit for ABC.

The jury found that Celador was owed $269.2 million, and a judge later added $50 million in interest to the judgment.

The appeals court determined the verdict was not "grossly excessive or monstrous" and that it was not based on speculation or guesswork.

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Software Programs Help Doctors Diagnose, but Can’t Replace Them

SAN FRANCISCO — The man on stage had his audience of 600 mesmerized. Over the course of 45 minutes, the tension grew. Finally, the moment of truth arrived, and the room was silent with anticipation.

At last he spoke. “Lymphoma with secondary hemophagocytic syndrome,” he said. The crowd erupted in applause.

Professionals in every field revere their superstars, and in medicine the best diagnosticians are held in particularly high esteem. Dr. Gurpreet Dhaliwal, 39, a self-effacing associate professor of clinical medicine at the University of California, San Francisco, is considered one of the most skillful clinical diagnosticians in practice today.

The case Dr. Dhaliwal was presented, at a medical  conference last year, began with information that could have described hundreds of diseases: the patient had intermittent fevers, joint pain, and weight and appetite loss.

To observe him at work is like watching Steven Spielberg tackle a script or Rory McIlroy a golf course. He was given new information bit by bit — lab, imaging and biopsy results. Over the course of the session, he drew on an encyclopedic familiarity with thousands of syndromes. He deftly dismissed red herrings while picking up on clues that others might ignore, gradually homing in on the accurate diagnosis.

Just how special is Dr. Dhaliwal’s talent? More to the point, what can he do that a computer cannot? Will a computer ever successfully stand in for a skill that is based not simply on a vast fund of knowledge but also on more intangible factors like intuition?

The history of computer-assisted diagnostics is long and rich. In the 1970s, researchers at the University of Pittsburgh developed software to diagnose complex problems in general internal medicine; the project eventually resulted in a commercial program called Quick Medical Reference. Since the 1980s, Massachusetts General Hospital has been developing and refining DXplain, a program that provides a ranked list of clinical diagnoses from a set of symptoms and laboratory data.

And I.B.M., on the heels of its triumph last year with Watson, the Jeopardy-playing computer, is working on Watson for Healthcare.

In some ways, Dr. Dhaliwal’s diagnostic method is similar to that of another I.B.M. project: the Deep Blue chess program, which in 1996 trounced Garry Kasparov, the world’s best player at the time, to claim an unambiguous victory in the computer’s relentless march into the human domain.

Although lacking consciousness and a human’s intuition, Deep Blue had millions of moves memorized and could analyze as many each second. Dr. Dhaliwal does the diagnostic equivalent, though at human speed.

Since medical school, he has been an insatiable reader of case reports in medical journals, and case conferences from other hospitals. At work he occasionally uses a diagnostic checklist program called Isabel, just to make certain he hasn’t forgotten something. But the program has yet to offer a diagnosis that Dr. Dhaliwal missed.

Dr. Dhaliwal regularly receives cases from physicians who are stumped by a set of symptoms. At medical conferences, he is presented with one vexingly difficult case and is given 45 minutes to solve it. It is a medical high-wire act; doctors in the audience squirm as the set of facts gets more obscure and all the diagnoses they were considering are ruled out. After absorbing and processing scores of details, Dr. Dhaliwal must commit to a diagnosis. More often than not, he is right.

When working on a difficult case in front of an audience, Dr. Dhaliwal puts his entire thought process on display, with the goal of “elevating the stature of thinking,” he said. He believes this is becoming more important because physicians are being assessed on whether they gave the right medicine to a patient, or remembered to order a certain test.

Without such emphasis, physicians and training programs might forget the importance of having smart, thoughtful doctors. “Because in medicine,” Dr. Dhaliwal said, “thinking is our most important procedure.”

He added: “Getting better at diagnosis isn’t about figuring out if someone has one rare disease versus another. Getting better at diagnosis is as important to patient quality and safety as reducing medication errors, or eliminating wrong site surgery.”

Clinical Precision

Dr. Dhaliwal does half his clinical work on the wards of the San Francisco V. A. Medical Center, and the other half in its emergency department, where he often puzzles through multiple mysteries at a time.

One recent afternoon in the E.R., he was treating a 66-year-old man who was mentally unstable and uncooperative. He complained of hip pain, but routine lab work revealed that his kidneys weren’t working and his potassium was rising to a dangerous level, putting him in danger of an arrhythmia that could kill him — perhaps within hours. An ultrasound showed that his bladder was blocked.

There was work to be done: drain the bladder, correct the potassium level. It would have been easy to dismiss the hip pain as a distraction; it didn’t easily fit the picture. But Dr. Dhaliwal’s instinct is to hew to the ancient rule that physicians should try to come to a unifying diagnosis. In the end, everything — including the hip pain — was traced to metastatic prostate cancer.

“Things can shift very quickly in the emergency room,” Dr. Dhaliwal said. “One challenge of this, whether you use a computer or your brain, is deciding what’s signal and what’s noise.” Much of the time, it is his intuition that helps figure out which is which.

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A new brand of cyber security: hacking the hackers

WASHINGTON — As head of the FBI's cyber crimes division, Shawn Henry often had to deal with exasperated company executives after his agents informed them that their networks had been hacked and their secrets pilfered.

"By whom?" the company officials would ask. "What have they taken? Where did it go?"

"Sorry," Henry's agents had to reply, "that's classified."

Even though the FBI in many cases had evidence the attacker had been backed by a foreign intelligence agency, agents couldn't disclose it because the U.S. government believed doing so could compromise top-secret sources and methods.

Henry, 50, decided this year that such a dichotomy shouldn't put companies at such a disadvantage. So after 24 years of service, he left the FBI to become president of CrowdStrike, an Internet security start-up in Irvine.

His new mission: to make life difficult for hackers trying to attack American institutions.

CrowdStrike is at the forefront of a new business model for cyber security, one that identifies sophisticated foreign attackers trying to steal U.S. intellectual property and uses the attackers' own techniques and vulnerabilities to thwart them.

The firm is marketing itself as a private cyber intelligence agency, staking out networks to catch infiltrators, assembling dossiers on hackers and fooling intruders into stealing bogus data.

In the process, the firm has waded into a debate about how far companies should go in defending themselves from cyber attack.

"The traditional way of trying to defend your network is just not going to cut it. You have to do something different," said Irving Lachow, who directs the Program on Technology and National Security at the Center for a New American Security.

"One way is to engage the adversary. CrowdStrike represents a new breed of company that is focused on doing exactly that," he said.

When somebody is shooting at you, "you don't ask, 'Is that a 9-millimeter or a .45,'" said CrowdStrike Chief Executive George Kurtz. "You ask: 'Who is shooting at me and why are they shooting at me?'"

The attackers often breach company networks using a tactic known as spear phishing, a practice that gets an employee to download a malware file by disguising it, for example, in an email purporting to be from someone the worker knows. Firewalls and anti-virus software are almost useless against such techniques.

So CrowdStrike uses decoys to lure hackers into a controlled environment so investigators can watch and trace the attack. Sometimes the company feeds hackers false information, as in a case recently when a client was entering negotiations in China and expected to be hacked.

CrowdStrike, which employs Chinese linguists and former U.S. government cyber warriors, also has identified Chinese hackers using clues in their malware. It then profiles them — complete with real names and photos — using information gathered from a variety of sources.

That has helped the company, for example, identify a Chinese hacker who targets financial institutions and tends to seek merger and acquisition information. The company assigned the hacker a code name, Capital Panda, in the profile.

Profiles enable a more targeted defense by helping CrowdStrike know when an attacker is likely to strike, how he communicates, what malware he uses and how he tries to take the stolen data.

Kurtz, a former chief technology officer at security firm McAfee Inc., started CrowdStrike in February with fellow McAfee alum Dmitri Alperovitch and $26 million in financing from private equity firm Warburg Pincus.

Alperovitch rose to prominence last year when he wrote a white paper on what he called Operation Shady Rat, a series of state-sponsored cyber penetrations of more than 70 government agencies, companies and institutions. He didn't say publicly the intrusions came from China, but that was obvious to other experts.

China denies engaging in cyber espionage. U.S. intelligence officials said hackers sponsored by China and, to a lesser extent, Russia, are responsible for what Gen. Keith B. Alexander, director of the National Security Agency, has called "the greatest transfer of wealth in history" by siphoning bid documents, formulas, business plans and other intellectual property from Western companies.

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For dropouts, a way to drop back in

The corner of 4th and Gless streets in East Los Angeles, once a center of prostitution and drugs, now houses a place of soaring dreams.

Inside the gleaming Boyle Heights Technology Youth Center, a classroom of young people battered by hard luck or bad choices is filled with quiet, focused energy.

Marcos Avila, a 19-year-old who was kicked out of high school for fighting, is learning to compare and contrast two essays. Vincent Guzman, 18, who left school after his brother was killed in a drive-by shooting, is puzzling over two-step algebraic problems.

Until recently, the two men were part of a growing epidemic of young people who have dropped out of school, can't find steady work and are disconnected from any path to better lives. According to a study released Monday, the number of Californians ages 16 to 24 who neither work nor attend school has grown to 868,000, an increase of 35% since 2000.

The study by two children's advocacy organizations, the Annie E. Casey Foundation and Children Now, found that the recession had boosted the rates of these young people — particularly in African American, Latino and low-income communities. Many of them were caught in a squeeze between fewer jobs and a demand for higher skills, the report said.

Among African Americans, 45% of young people don't work or attend school; the figure is 39% for Latinos, 28% for whites and 26% for Asians. Young people whose families earn less than $20,000 a year are three times more likely to be out of work or school than those in higher-income families.

"These numbers are eye-opening and unacceptable," said Ted Lempert, president of Children Now, an Oakland-based nonpartisan policy and advocacy organization. "California's next generation is getting off on the wrong start and it's a real precarious situation for their future and ours."

The report calls for more funding for young people, saying federal money is primarily aimed at adult employment programs. The report also promotes a shift from piecemeal programs to a comprehensive effort to get young people back on track through integrated education, training and support services across city, county and school systems. Strong relationships with caring adults are also key, the report said.

That's exactly the approach the city is taking in its new program in Boyle Heights and elsewhere, said Robert Sainz, assistant general manager of the Los Angeles Community Development Department.

The $13-million federally funded program features an unusual partnership between the city and Los Angeles Unified School District. The city has long offered job training programs for dropouts, commissioning a study seven years ago that found nearly 20% of 492,000 Los Angeles residents ages 16 to 24 had left school and weren't working. A follow-up study in 2009 found the problem had not diminished.

"You had basically a small city of people neither at school or work," Sainz said. "When you have a group not progressing socially or academically, you're not going to be developing a work pool of the future."

The new program expects to reach 10,000 young people in a year.

As national attention honed in on the dropout problem, Sainz and his team visited several cities in search of effective programs and decided to shift the majority of their federal workforce development money to this group. But a key issue was trying to find the dropouts, since their names, addresses and phone numbers are confidential school records.

That's when the city and Los Angeles Unified agreed to team up and share the $120,000 annual cost of placing a school counselor in each of the city's 13 youth centers that are hosting the program. With access to school records, the pupil services and attendance counselors can hunt down dropouts and give them an academic assessment on how many credits they need to earn a high school diploma or equivalent credential known as a GED.

That's how Maria Ocampo, 18, ended up at the Boyle Heights tech center. The bright, articulate student hails from a Mexican immigrant family of teachers and nurses, but dropped out of Roosevelt High School in May to take care of her ill mother.

In August, Los Angeles Unified counselor Sara Puma tracked her down — just in time to join the program's first class in September. A strength of the program, students said, is the supportive staff, including a social worker who gives them a mental health assessment and case workers who keep them on track.

Case worker Marie Landeros, for instance, found one young charge who missed class and sternly told him that sleeping in "isn't going to work for me" because the center is paying for his education; he now attends and calls if he's going to be late.

Landeros, who grew up in Boyle Heights, keeps her door open and candy jar filled to develop the trusting relationships that she and others say are important to their success with students.

Ocampo is completing course work for her English composition class and expects to earn her diploma in June after finishing health, algebra and history classes. She said it was easier to focus at the center, where the curriculum is self-paced and there is no peer pressure to ditch class.

But academics are not the program's only benefit. The center also helps students find internships and jobs. Ocampo, for instance, found an internship with the California Democratic Party, where she worked on the successful Proposition 30 school tax initiative. Along the way she met a bevy of elected officials, including former President Clinton, Los Angeles Mayor Antonio Villaraigosa and Los Angeles school board President Monica Garcia.

The experience has given her a new dream: attend Mills College in Oakland and eventually run for elective office.

"This program helps you achieve what you really want," she said.

Avila, who was kicked out of two high schools and left a third, has traded aimless days of video games, basketball and TV for a path to a diploma and what he hopes will be a career as a video game designer. He said his brother told him about the program after hearing about it in a firefighting training class.

He said he was known for his "fists of fury" in high school, but not anymore. "I've cooled down and realize what's more important is school," he said.

Guzman hopes to earn his GED and dreams of feeding his passion for cars as a Mercedes-Benz technician.

Other former dropouts say they want to become electricians, filmmakers, artists.

"A lot of people look at dropout kids as throwaways, but we have the fundamental belief that they can succeed," Sainz said.

teresa.watanabe@latimes.com

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Study shows growth in second screen users

NEW YORK (AP) — Television viewers were once called couch potatoes. Many are becoming more active while watching now, judging by the findings in a new report that illustrates the explosive growth in people who watch TV while connected to social media on smartphones and tablets.

The Nielsen company said that one in three people using Twitter in June sent messages at some point about the content of television shows, an increase of 27 percent from only five months earlier. And that was before the Olympics, which was probably the first big event to illustrate the extent of second screen usage.

"Twitter has become the second screen experience for television," said Deirdre Bannon, vice president of social media at Nielsen.

Social networking is becoming so pervasive that the study found nearly a third of people aged 18-to-24 reported using the sites while in the bathroom.

An estimated 41 percent of tablet owners and 38 percent of smartphone owners used their device while also watching television at least once a day, Nielsen said.

That percentage hasn't changed much; in fact, 40 percent of smartphone owners reported daily dual screen usage a year earlier, Nielsen said. The difference is that far more people own these devices and they are using them for a longer period of time. The company estimated that Americans spent a total of 157.5 billion minutes on mobile devices in July 2012, nearly doubling the 81.8 billion the same month a year earlier.

"There are big and interesting implications," Bannon said. "I think both television networks and advertisers are onto it."

The social media can provide networks with real-time feedback on what they are doing. The performance of moderators at presidential debates this fall was watched more closely than perhaps ever before, because people were instantly taking on Twitter to provide their own critiques.

It also makes for some conflicting information: Twitter buzzed with complaints last summer about NBC's policy of airing many Olympics events from London on tape delay, yet ratings for the prime-time Olympics telecast soared past expectations.

The increase in people watching television and commenting about it online would seem to run counter to another big trend this fall: more people recording programs and watching them at a later hour. Those contrary trends both increase the value of live event programming like awards shows or sporting events.

The Nielsen study also found that 35 percent of people who used tablets while watching TV looked up information online about the program they were watching. A quarter of tablet owners said they researched coupons or deals for products they saw advertised on television

As rapid as the use of social media while on television is growing in the United States, it already lags behind other countries. Nielsen said that 63 percent of people in the Middle East or Africa report using social media while on TV, and 52 percent of people in Latin America.

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Call That Kept Nursing Home Patients in Sandy’s Path

Chang W. Lee/The New York Times

Workers were shocked that nursing and adult homes in areas like Rockaway Park, Queens, weren’t evacuated.

Hurricane Sandy was swirling northward, four days before landfall, and at the Sea Crest Health Care Center, a nursing home overlooking the Coney Island Boardwalk in Brooklyn, workers were gathering medicines and other supplies as they prepared to evacuate.

Then the call came from health officials: Mayor Michael R. Bloomberg, acting on the advice of his aides and those of Gov. Andrew M. Cuomo, recommended that nursing homes and adult homes stay put. The 305 residents would ride out the storm.

The same advisory also took administrators by surprise at the Ocean Promenade nursing home, which faces the Atlantic Ocean in Queens. They canceled plans to move 105 residents to safety.

“No one gets why we weren’t evacuated,” said a worker there, Yisroel Tabi. “We wouldn’t have exposed ourselves to dealing with that situation.”

The recommendation that thousands of elderly, disabled and mentally ill residents remain in more than 40 nursing homes and adult homes in flood-prone areas of New York City had calamitous consequences.

At least 29 facilities in Queens and Brooklyn were severely flooded. Generators failed or were absent. Buildings were plunged into a cold, wet darkness, with no access to power, water, heat and food.

While no immediate deaths were reported, it took at least three days for the Fire Department, the National Guard and ambulance crews from around the country to rescue over 4,000 nursing home and 1,500 adult home residents. Without working elevators, many had to be carried down slippery stairwells.

“I was shocked,” said Greg Levow, who works for an ambulance service and helped rescue residents at Queens. “I couldn’t understand why they were there in the first place.”

Many sat for hours in ambulances and buses before being transported to safety through sand drifts and debris-filled floodwaters. They went to crowded shelters and nursing homes as far away as Albany, where for days, they often lacked medical charts and medications. Families struggled to locate relatives.

The decision not to empty the nursing homes and adult homes in the mandatory evacuation area was one of the most questionable by the authorities during Hurricane Sandy. And an investigation by The New York Times found that the impact was worsened by missteps that officials made in not ensuring that these facilities could protect residents.

They did not require that nursing homes maintain backup generators that could withstand flooding. They did not ensure that health care administrators could adequately communicate with government agencies during and after a storm. And they discounted the more severe of the early predictions about Hurricane Sandy’s surge.

The Times’s investigation was based on interviews with officials, health care administrators, doctors, nurses, ambulance medics, residents, family members and disaster experts. It included a review of internal State Health Department status reports. The findings revealed the striking vulnerability of the city’s nursing and adult homes.

On Sunday, Oct. 28, the day before Hurricane Sandy arrived, Mr. Bloomberg ordered a mandatory evacuation in Zone A, the low-lying neighborhoods of the city. But by that point, Mr. Bloomberg, relying on the advice of the city and state health commissioners, had already determined that people in nursing homes and adult homes should not leave, officials said.

The mayor’s recommendations that health care facilities not evacuate startled residents of Surf Manor adult home in Coney Island, said one of them, Norman Bloomfield. He recalled that another resident exclaimed, “What about us! Why’s he telling us to stay?”

The commissioners made the recommendation to Mr. Bloomberg and Mr. Cuomo because they said they believed that the inherent risks of transporting the residents outweighed the potential dangers from the storm.

In interviews, senior Bloomberg and Cuomo aides did not express regret for keeping the residents in place.

“I would defend all the decisions and the actions” by the health authorities involving the storm, said Linda I. Gibbs, a deputy mayor. “I feel like I’m describing something that was a remarkable, lifesaving event.”

Dr. Nirav R. Shah, the state health commissioner, who regulates nursing homes, said: “I’m not even thinking of second-guessing the decisions.”

Still, officials in New Jersey and in Nassau County adopted a different policy, evacuating nursing homes in coastal areas well before the storm.

Contradictory Forecasts

The city’s experience with Tropical Storm Irene last year weighed heavily on state and city health officials and contributed to their underestimating the impact of Hurricane Sandy, according to records and interviews.

Before Tropical Storm Irene, the officials ordered nursing homes and adult homes to evacuate. The storm caused relatively minor damage, but the evacuation led to millions of dollars in health care, transportation, housing and other costs, and took a toll on residents.

As a result, when Hurricane Sandy loomed, the officials were acutely aware that they could come under criticism if they ordered another evacuation that proved unnecessary.

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