Silicon Alley Insider

Is Barack Obama Losing His YouTube Mojo?

Michael Learmonth — Thu, 24 Jul 2008 07:09:00 EDT

If elections were held on YouTube, Barack Obama would win hands-down -- so far. But the McCain campaign is making inroads on the Web, aided by some good old-fashioned attack ad.

McCain has beaten Obama in terms of viewers on YouTube (GOOG) on three of the last five days, thanks to the success of two attack ads: "Obama Love," a montage of press fauning over Obama, and "Pump", which blames Obama for high gas prices. The former has been viewed more than 176,000 times in two days, and the latter 140,000 times in three days.

To get a sense of how rare this is, McCain has beaten Obama on just two other days in video views since the campaign began: February 11, 2008 and November 29, 2007, according to TubeMogul. Thanks to his clever and aggressive use of video and obvious appeal to the YouTube generation, Obama has owned Web video: His clips have been watched 56 million times since the campaign began; McCain's have been watched 4.5 million times.

But McCain's team seems to be figuring out Web video. Or at the very least, they're having a good week, according to TubeMogul:

Obama's team of 50 video producers shoot thousands of documentary-like footage, and uploading videos at a breakneck pace. The Obama campaign's YouTube channel has 1,177 videos, compared to McCain's 224.

But McCain's videos reflect a big difference in strategy. They consist of speeches and attack ads either made for the Web, like "Obama Love" or repurposed from TV, like "Pump." The old wisdom is that the YouTube generation isn't swayed by over-produced political propaganda. But then, with 83 million unique users, the YouTube generation is starting to look more like America. Here's a look at the two that took down Obama this week:

"Obama Love"

"Pump"

Apple's Secrecy Obsession About To Backfire On The iPhone. Time To Ditch The NDA (AAPL)

Dan Frommer — Thu, 24 Jul 2008 07:00:00 EDT

Apple's iPhone app platform is brand new, so developers have plenty questions they want to ask each other, or tips to share. But they can't -- at least not without violating Apple's non-disclosure agreement.

The NDA, which is threatening to undermine the success of Apple's much-hyped new platform, isn't just for big guys who might get extra advice or help from Apple. It's required of every single developer working on the platform -- and every single person who downloads the iPhone developer's kit:

"You agree that the Developer Software licensed hereunder ... will be considered and referred to ... as "Confidential Information". You agree not to disclose, publish, or disseminate Confidential Information to anyone other than those of your employees and contractors with a demonstrable need to know who have binding, written, confidentiality obligations to you that protect such Confidential Information against unauthorized disclosure. You further agree to take reasonable precautions to prevent any unauthorized use, disclosure, publication, or dissemination of Confidential Information."

Translation: If you ever want to be accepted into Apple's iPhone developer program, sell apps in our store, or get a check from us, shut your mouth. Which means:

- "Pragmatic Programmer" publisher Dave Thomas can't publish his book on iPhone software development, nor can any other publisher.

"So, to write a book about the iPhone SDK, you have to download it. In order to download it, you have to accept the agreement. And the agreement says that the download will contain confidential information that you can't pass on to third parties. That makes it hard to publish the book. And, if that wasn't enough, it also appears that you can't even use the word "iPhone" (for example, in a book title)."

- iPhone Dev Camp 2, scheduled for Aug. 1-3 at Adobe's (ADBE) offices in San Francisco, might not happen, nor might any other semi-formal iPhone coder meetup.

"We are sensitive to the NDA that Apple has in place on the iPhone SDK. It is our hope that Apple will lift this NDA shortly after the public launch of the App Store. iPhoneDevCamp 2 will be held one month after the launch of the App Store. We have no intention of violating the terms that individual developers have in place with Apple on the iPhone SDK."

- And a Stanford Grad student wonders, perhaps facetiously, on Twitter if Stanford will be able to teach its iPhone Application Programming class scheduled for this fall.

"there's an iphone dev course listed for the Fall here...whither nda?"

We understand why Apple would want to have an NDA on its software kit while it was in beta, perhaps so people didn't get the wrong impression if bugs or half-baked apps leaked out. And maybe it even makes sense to have an NDA the first few weeks that the iPhone App Store is up and running, just to keep the lid on things if something blew up, say, a security hole.

But now the NDA has outlived any purpose it once had, and is threatening to hurt, not help. If the iPhone platform is going to be a long-term success, it's going to involve not just software companies with a lot of resources, but thousands of garage coders whipping up inventive stuff. And Apple needs to keep them happy, not tick them off. We are two weeks into iPhone's launch: High time to let developers ask questions, form communities, lease themselves as consultants, write books, share advice, etc. -- and time to get rid of the iPhone NDA.

Walt Mossberg: Apple's "MobileMe" Is a Dog

Henry Blodget — Thu, 24 Jul 2008 05:47:00 EDT

A rare Apple pan from the gadget kingmaker. And a rare flop from the company that can do no wrong. Steve Jobs must be (should be?) demanding someone's head.

Walt:

[It} was a big deal when Apple announced a new service that, for $100 a year, would bring corporate-type synchronization of email, calendars and contacts to anyone. It was even better that Apple promised that the service, called MobileMe, would work on Windows computers as well as on the company's own Macintosh computers, iPhones and iPod Touch hand-helds. To top it off, Apple threw in 20 gigabytes of online storage, a suite of Web-based applications, the ability to synchronize browser bookmarks and an online photo gallery.

Unfortunately, after a week of intense testing of the service, I can't recommend it, at least not in its current state. It's a great idea, but, as of now, MobileMe has too many flaws to keep its promises.

I am not referring to the launch glitches that plagued MobileMe earlier this month, such as servers that couldn't keep up with the traffic and email outages that, for some users, persist as I write this. Those were bad, but they have eased considerably. Apple already has apologized for them and is giving customers an extra 30 days on their subscriptions to make up for the poor start. The problems I am citing are systemic.

The list of problems? Hard to know where to begin:

One big issue is that while changes made on the Web site or the iPhone are instantly pushed to the computers, changes made on computers are only synced every 15 minutes, at best. Apple has admitted that this is a problem, and says it is working on it.

But there's more. The Web site was sluggish, and occasionally calendar entries wouldn't load at all. Sometimes, you have to manually refresh the Web pages to see changes made on your devices. And when I tried to open my Web-based file-storage page directly from the MobileMe control panel on Windows, I got an error message on both Dells.

My MobileMe calendar, which originated on a Mac, didn't flow into the main Outlook calendar, but appeared as a separate calendar in Outlook, which was visible only by changing settings. My address-book groups on the Mac, which are simply distribution lists, didn't show up as distribution lists in Outlook, but as separate address books, and they also weren't immediately visible. Apple blames Outlook quirks for these issues, but in my view, it should have overcome them.

Microsoft Acknowledges Apple (AAPL) Threat--And Changes Strategy To Deal With It

Henry Blodget — Wed, 23 Jul 2008 22:18:00 EDT

Another telling excerpt from today's Ballmer memo:

Apple (AAPL): In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we're changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We'll do the same with phones-providing choice as we work to create great end-to-end experiences.

Steve Ballmer Still Holds Hope For Deal With Yahoo

Henry Blodget — Wed, 23 Jul 2008 22:09:00 EDT

Or so this small excerpt from his reorg memo would suggest:

I want to emphasize the point I''ve been making all along-Yahoo was a tactic, not a strategy. We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo.

If Steve had given up on a Yahoo deal--acquisition or search--he'd probably have just said "we will get there without Yahoo." This wouldn't have been right (we don't think Microsoft will get there), but it at least would have indicated that he was really done.

Of course, the prior sentence ("Yahoo would have helped us get there faster") is in the past tense, so maybe it's more accurate to say, "Steve Ballmer is still schizophrenic about Yahoo."

Another Blow To Microsoft's Online Ambitions: Umpteenth Reorg and Kevin Johnson To Juniper

Henry Blodget — Wed, 23 Jul 2008 19:59:00 EDT

The head of Microsoft's Platforms and Services Business (which includes the online business), Kevin Johnson, is headed to Juniper Networks.

Microsoft is also splitting its online business in half:

Windows Live (Internet Explorer, Hotmail, Microsoft Messenger, Spaces) will now live within the Windows division.
The ad and media assets (aQuantive, ad-serving, search, MSN) will stay in a separate online services division.

A source close to Microsoft says the changes were driven by two factors:

Steve Ballmer's desire to split the divisions
Kevin Johnson's desire to be a CEO.

The bottom line is that Microsoft is once again radically reshaping its online strategy. It is also splitting up online assets that online competitors--namely Google and Yahoo--operate from within the same platform. This will likely make it even more difficult for Microsoft to compete with Google and Yahoo. It also makes it less likely that Microsoft will buy Yahoo outright. (Although buying the company and cutting it in half is presumably still possible).

We suspect the move was driven by a desire to protect the company's crown jewel: Windows. This is supported by Steve Ballmer's memo to Microsoft, which we've excerpted below. It is also an understandable decision: If it works (protecting Windows), it's the right move for Microsoft. Now, however, the online services business is even more of a bastard stepchild within the company: A distracting money pit that has little or no synergy with the rest of Microsoft's business.

Johnson's departure--and the search for a new online business head--also means that Microsoft will now lose more time as it launches a search for a new head of the online business. The new boss will also likely want to weigh in on the division's strategy, and it's likely that his or her vision could conflict with Steve Ballmer's. This could subsequently lead to bureaucratic or political paralysis and/or yet another reorganization.

Microsoft's 13 years of futility in the Internet business are likely to continue. One hopes it can at least fortify its Windows business.

Kara Swisher has the full Steve Ballmer memo. Here's the part about Windows:

Windows: The success of Windows is our number one job. With SP1 and the work we've done with PC manufacturers and our software ecosystem, we've addressed device and application compatibility issues in Windows Vista. Now it's time to tell our story. In the weeks ahead, we'll launch a campaign to address any lingering doubts our customers may have about Windows Vista. And later this year, you'll see a more comprehensive effort to redefine the meaning and value of Windows for our customers.

We also have to drive developers to create rich applications for Windows. With Internet Explorer and Silverlight, we have great tools for creating applications that run everywhere. But we also need to make sure developers have the .NET skills to write unique Windows applications using Windows Presentation Foundation. To keep today's Windows applications alive, vibrant, and exciting, we need both-applications that run everywhere and rich client applications.

And here's the bit about Microsoft's increasingly isolated online services business:

Software plus services: Some people think software plus services is all about search. But it's really about changing the way software is written and deployed. The future is about having a platform in the cloud and delivering applications across PCs, phones, TVs, and other devices, at work and in the home. It's also about driving change in business models through advertising, subscriptions, and online transactions. Software plus services is a huge opportunity for us to deliver new value on the desktop and the server to all of our customers. This year at PDC, you'll hear more about our cloud platform initiatives and the next versions of our Live and Online technologies.

Google: We continue to compete with Google on two fronts-in the enterprise, where we lead; and in search, where we trail. In search, our technology has come a long way in a very short time and it's an area where we'll continue to invest to be a market leader. Why? Because search is the key to unlocking the enormous market opportunities in advertising, and it is an area that is ripe for innovation. In the coming years, we'll make progress against Google in search first by upping the ante in R&D through organic innovation and strategic acquisitions. Second, we will out-innovate Google in key areas-we're already seeing this in our maps and news search. Third, we are going to reinvent the search category through user experience and business model innovation. We'll introduce new approaches that move beyond a white page with 10 blue links to provide customers with a customized view of their world. This is a long-term battle for our company-and it's one we'll continue to fight with persistence and tenacity.

Yahoo: Related to Google and our search strategy are the discussions we had with Yahoo. I want to emphasize the point I''ve been making all along-Yahoo was a tactic, not a strategy. We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo. We have the right people, we've made incredible progress in our technology, and we'll continue to make smart investments that will enable us to build an industry-leading business.

Release:

Microsoft Announces Reorganization of Windows and Online Services Business

Platforms & Services Division to Split Into Two Groups and Report to CEO Steve Ballmer.

REDMOND, Wash. - July 23, 2008 - Microsoft Corp. today announced that the Platforms & Services Division (PSD) will be split into two groups: Windows/Windows Live and Online Services, with both groups reporting directly to CEO Steve Ballmer. Microsoft also announced that PSD President Kevin Johnson will be leaving the company. Johnson will work to ensure a smooth transition.

'Kevin has built a supremely talented organization and laid the foundation for the future success of Windows and our Online Services Business. This new structure will give us more agility and focus in two very competitive arenas,' Ballmer said. 'It has been a pleasure to work with Kevin, and we wish him well in the future.'

Effective immediately, senior vice presidents Steven Sinofsky, Jon DeVaan and Bill Veghte will report directly to Ballmer to lead Windows/Windows Live. The Windows organization recently announced strong annual sales, with more than 180 million copies of Windows Vista sold globally, and it has driven more than 100 million installs of its Windows Live suite. The organization's innovation pipeline includes a new version of Windows Internet Explorer, the next version of Windows and the next generation of the Windows Live product suite.

In the Online Services Business, Microsoft will create a new senior lead position and will conduct a search that will span internal and external candidates. In the meantime, Senior Vice President Satya Nadella will continue to lead Microsoft's search, MSN and ad platform engineering efforts. Microsoft recently announced a strategy to redefine search through innovations in the user experience and business models. As an example, the company's cashback search program, announced in May, is already generating strong momentum among online shoppers and advertisers.

In addition, Senior Vice President Brian McAndrews will continue to lead the Advertiser & Publisher Solutions Group (APS). APS has great momentum, having signed more than 100 new publisher deals in the past year. McAndrews will continue to focus on the display advertising opportunity for Microsoft, driving execution and integration of advertising assets, including recent acquisitions such as Massive Inc., Navic Networks, ScreenTonic SA and YaData Ltd.

'Our Windows business is firing on all cylinders,' Ballmer said. 'We see tremendous opportunity in search and advertising, and we have a clear strategy for investing in success today and growth in the future.'

'Microsoft is a special place and presents opportunity to so many,' Johnson said. 'I have been so fortunate to have experienced 16 amazing years of building Microsoft's business, learning from great leaders in the company and working with phenomenally talented people.'

Founded in 1975, Microsoft (Nasdaq 'MSFT') is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Bezos: More Kindle Titles, More Kindle Titles Selling (AMZN)

Michael Learmonth — Wed, 23 Jul 2008 18:40:00 EDT

We've been guessing for quite some time about sales of Amazon's Kindle e-reader. We have to guess, because Amazon doesn't give out any details about the product's performance. But today Jeff Bezos gave us the smallest morsel of info.

Prodded during Amazon's Q2 earnings call, he offered a single data point: Of the 140,000 titles Amazon sells in both conventional book format and Kindle's digital format, Kindle titles now account for a "low double digit" percentage of unit sales.

We still don't what that means in terms of actual unit sales, or actual dollars. But we do know that's an increase from late May, when Bezos told Walt Mossberg at the D6 confab that the Kindle format accounted for 6% of sales. At the time, Bezos said 125,000 book titles were available for the Kindle.

So that's... more. But we're still a long way from judging the success the $359 device, or being able to figure out its impact on Amazon or the publishing business.

HOPE Hacker Conference To Continue In New York In 2010. We Think

Eric Krangel — Wed, 23 Jul 2008 17:44:00 EDT

Every other year since 1994, hackers from all over the world have converged on New York City for the Hackers On Planet Earth conference. But this year's bash, held last weekend, was supposed to be the final run. HOPE's long-time home the Hotel Pennsylvania was said to be closing, and conference organizers, the editors of Long Island-based 2600 magazine, were calling it quits. They were laying it on pretty thick, too: the con's name was "The Last HOPE," the conference logo was a tombstone, and in the biggest conference room a coffin was set up to commemorate the "death" of the event.

Not so. According to multiple reports from people present at HOPE 2008's closing ceremonies, HOPE honcho Eric Corley (a/k/a "Emmanuel Goldstein") announced that the conference will back in 2010. The conference bulletin board carries a description of the theatrics:

Emmanuel started a eulogy, and then there was some clammering in the back as a procession of pallbearers brought a coffin through the room. Everyone was silent and totally somber. But then Emmanuel, master of language that he is, played with some words and much to everyone's relief (or so it seemed to me) announced that there will very likely be another hope. So you can think of the last hope simply as the last one you attended. I think his last words of the evening were, "See you in two years".

We emailed the notoriously press-averse Corley and haven't heard back, but Corley/Goldstein (or someone using his name) registered the domain name thenexthope.org.

Photo: Eric Krangel / Silicon Alley Insider

F8 Keynote: Our Way Or The Highway

Vasanth Sridharan — Wed, 23 Jul 2008 16:29:00 EDT

Mark Zuckerberg and fellow Facebook exec Ben Ling took the stage and didn't announce anything revolutionary, but the message was clear:

Facebook has a clear vision for what they want the platform and the network to be, and developers better quickly fall in line.

As far as announcements go, we heard everything we knew we'd hear -- the winners of the fbFund grants, the launch of Facebook Connect, a walkthrough of the new design.

One new nugget -- there will be a new developer challenge. A total of $2 million will be handed out to developers via 25 $25,000 awards and finalists will get $250,000 awards. The finalists will be voted on by Facebook users.

Q/A:

Q: Looking forward to seeing a payments platform? When might that happen.

A: I wish I knew.

Q: Anyway that the new platform and Friend Connect will work with Microsoft Mesh?

A: Nothing specific announcing.

Q: Been hearing that some applications like Slide's Top Friends have been punished for things that other apps have done.

A: The way the enforcement process works is not just based on an isolated incident, so it's based on a track record of responsiveness. For the Great Apps, it's not a specific points system.

Q: Copycats in other countries.

A: There are different ways that we will work with companies across the world. But if someone's blatantly ripping us off, that's what we want to make sure doesn't happen.

Q: How will you integrate the iPhone? When will it be available?

A: It will be a Coco framework. Will be available in the fall.

Q: How does Facebook make money?

A: For the next few years, our primary focus is helping people share information and growing the user base. Figuring out how we monetize is going to be another thing that we work on but that's kind of the second thing we work on.

Q: What does Facebook evolve into when you realize this vision?

A: We think that we're building some of the key components of the ecosystem. The feeds structure is a valuable tool for people. Different communication applications.

Q: Joining OpenSocial?

A: Nothing to announce today. We're all pushing the Web forward.

Q: Plans to take a cut of the virtual goods traffic?

A: Not something we'v enever figured out yet. All the questions about monetization -- we haven't figured out the optimal way and we're exploring a number of things.

Q: When will see the Pages' design change?

A: We just have this effort to now go update all the pages. There are some things that are going to be constantly evolving.

Q: Search on Facebook?

A: It definitely needs to get better, we have some ideas. But we're not close to launching it.

Q: Great Apps.

A: We're expecting within the next year or so maybe a dozen or 15.

Q: What's the future with Connect and desktop applications, mobile applications, is it more than just Web apps?

A: It's web apps, desktop apps, mobile apps. We don't have anything (specific) to announce again.

See our preview coverage here.

4:32: No sign of him yet, but people are still filing in, should be any minute now.

4:35: He's on stage to Weezer's Say It Ain't So.

4:36: Last year we started a movement. We've made a lot of mistakes and there's a lot we've had to learn.

4:36: It's important for us (app devs and Facebook) to take a step back. Decide whether what we're doing is for real value.

4:37: Very deeply held purpose. 6 months ago we tried to articulate it to a mission. It wasn't until a few months is. I was off traveling through Istanbul, got a chance to clear my mind. Got to really focus on the exchange and the sharing going on. I really want us to build a product that allows you to really feel a person.

4:39: Most important and interesting information comes from people. It's not out there ready to be indexed. It's only available if the people who have it choose to share it. Facebook's mission is to give people the power to share in order to make the world more open and connected.

4:41: Making the world more open and connected is more than any single organization can do. We want the community to be aligned with us. A lot of the discussion today is going to be how we can do that.

4:41: We had no clue how far the idea (for the platform) would go. The last year has been pretty crazy. A lot of developers and people all over the world are joining this movement.

4:41: Resu;ts: At last year's f8 there were 24 million people using Facebook. Today we're already at 90 million people on Facebook and a lot of them are coming to use all the applications. A lot of this growth has been from outside the United States. Last year we were around 50-50 (US-International). Over this year, the international growth has been larger -- now more than 2/3s international. One guy in Greenland (big applause).

4:44: Canada is most penetrated country. Almost 40% of people in Canada are on Facebook. For translating, we made it so any person on Facebook could offer a translation and users could vote on those translation. Translated to Spanish within 2 weeks, French in less than 24 hrs.

4:44: First announcement: Opening up the translation tool so applications can use the same tool to translate their apps.

4:45: More than 400,000 developers. More than half are outside the U.S. Done "developer garages" all around the world. There are four developer garages happening simultaneously.

4:47: iLike and MySpace Music. The top 5,000 bands have more fans on iLike than on any other fans. Causes' 'Stop Global Warming' has more than Al Gore's Alliance (now the two have merged).

4:48: Flixster raised $6M, Zynga raised $29M, Living Social raised $5M this week.

4:49: So far he's mentioned five developers by name -- Causes, iLike, Flixster, Zynga, Living Social.

4:51: We're trying to see how sharing happens in the real world and map out and bring as accurate of a model as possible so all of the apps can use it to grow successfully.

4:51: Feeds are really powerful because they always surface the most recent and relevant information going on. That drives a lot of traffic and views to the most recent content in the system. "Virtuous Cycle of Sharing"

4:51: Most powerful feed is News Feed. The day that we launched News Feed, pretty shortly after, traffic went up by 50%. The amount of content people were making also increased.

4:53: iLike: One of the ways people were sharing information through iLike was through feeds. Within four days of launching the platform, more than a million people had already used and tried out iLike. One of the things that we're going to be talking about is a new kind of feed. (coming later)

4:54: Also learned a lot this year. When we first released the platform we just tried to get it out there as quickly as possible. As happy as I am with the growth over the past year, there were a lot of mistakes. We need to work more closely with developers so they're building things that will help people actually share instead of just spreading virally.

4:56: Profile boxes produced a lot of clutter. We need to build a more simple and elegant solution that will enable sharing. We've been working with a number of developers to evolve Facebook. Three goals: Give people more power tools to share, reward apps that help people share, simplifiy the site.

4:56: Walking through the new design: Core is a new kind of feed called the Wall. These feeds are a great way to incentivize developers to build apps that are more engaging and help people share information.

4:54: We haven't done enough to reward the good citizens of the ecosystem or punish the bad ones.

4:58: The Wall will give you more control over how you want to display your stories.

5:01: We haven't completely got rid of the concept of boxes. For people who want to keep boxes around, we've added a "Boxes tab." There are also ways to add new tabs for different applications.

5:01: This was just a monumental amount of work to get all of this in good shape. It's a pretty small team working on it. On Saturday the managers of the different groups were just sitting in a room to figure out what we have to do finish this redesign. And we started coding. And they watched the Bill O'Reilly YouTube video when he flipped out on Inside Edition. (He showed the video to all of us).

5:05: Live demo of the new profie: Showing the new homepage. Now that we've gotten rid of the concept of 'adding an applications' it also lifts the restriction of only people who added the application can get stories in their feed from users who have the app. For example, he has a story in his feed of a book review made in Virtual Bookshelf. But he can see it even though he's never touched Virtual Bookshelf.

5:06: Side note: The crowd has been pretty subdued so far, but maybe that's because nothing earth shattering has been launched.

5:08: Demo over. That's the first demo that we've ever had work pretty well.

5:08: That's what we've done inside of Facebook, but more of the world is outside of Facebook than inside of Facebook. But we're going to see the various social networks start to decentralize. The first step of this was the platform introduced last year at f8. The next step is that things are going to decentralize further so that the applications don't have to run inside of Facebook. I think we're at the beginning of a movement.

5:10: Like the beginning of the PC area, when things decentralized from Apple building teh whole stack to Intel building the chip, MSFT building the software, and Dell selling the computer. That's what's going on now. Less of this movement is going to be about Facebook.com and more of it will be about the applications allowing people to share.

5:11: Facebook Connect: Enable developers to build all the same applications that they can inside of Facebook across the Web. Make it so people could use their information anywhere that they want. Make it so people always have control of their information.

5:16: Still walking through Facebook Connect. Making sure that people have complete control over the information that they share. We also want to make it as easy as possible to develop applications on the rest of the Web.

5:16: Demo of Facebook Connect from Digg. Enable people to easily and quickly find and share interesting content from around the Web. All of the 90 million Facebook users are going to be able to join the Digg army with one click of a button.

5:19: Don't have to register for a Digg account, you can authenticate directly in Digg with your Facebook login. Once you've connected to Digg through Facebook Connect, all of your Diggs are posted on your Facebook profile.

5:20: Six Apart: Commenting on blogs, still have the same 'name, e-mail address and Web site.' Integrate Facebook Connect Authentication on Moveable Type. Your security settings on Facebook are automatically ported to Moveable Type. It also puts light blue boxes around your Facebook friends who've commented. This took us about a day and a half to implement.

5:21: CitySearch: CitySearch has been helping people find popular places and new businesses for quite a while now. We're going to be launching a new site, and sharing information is a big part of the puzzle. When you look for a restaurant or a hotel or a spa the most important thing is trusted content. CitySearch has editorial reviews, user reviews, etc., but what could be more helpful and more trusted than user reviews from your friends?

5:24: Again, take your Facebook identity to log in to CitySearch, and you can click on a 'My Friends' Reviews' tabs, and see places your Facebook friends have reviewed. When you review places, you can publish it on CitySearch and on your Facebook feed.

5:26: Zuckerberg back. Couple of big evolutions - the evolution of the site itself, and the second is Facebook Connect, helping people build the apps outside of Facebook that they can build inside. Profile launched Monday. Facebook Connect developer keys will be available starting today.

5:26: Next year I hope that we'll be able to point to a good number of really meaningful social apps both inside and outside of Facebook.

5:27: Zuckeberg off the stage.

5:31: Director of Platform Program Management, Ben Ling: Rich thriving ecosystem. There is over $200 million that's invested in Facebook application companies. 13 different ad networks. Stanford, Berkeley, MIT Harvard have all taught courses on developing on the Facebook platform.

5:33: Guiding principles for great applications: Meaningful, Trustworthy, Well-Designed.

5:33: Meaningful:

Social (Lil Green Patch as an example) applications should leverage the social graph.
UsefuL: Solving real user problems, addressing real user needs (Carpool application as an example). A fifth of Cornell's students use the Carpool application. Addresses a real user need.
Expressive: About sharing and expressing yourself (Graffiti app). Graffiti app has partnered with brands like Dell and BMW where users can submit their drawings
Engaging: Apps that sustain user interest (Playfish). Facebook users using Playfish applications have played 900 million minutes of Playfish games in the last month (1800 years).

5:37: Trustworthy: It's important to maintain a safe and trusted ecosystem.

Secure: Privacy settings, who do I want to share information with? Who don't I want to?
Respectful: Being respectful of users information and time. When I add application Idont want to have to add 20 of my friends, or accidentally send a notification to 20 friends without my knowledge (light applause).
Transparent: Being transparent about what the application does and its features.

5:39: Well Designed:

Clean
Fast: Applications shouldn't take a long time to load. As the site gets faster, users use Facebook more. It's important for all applications to be fast.
Robust: The application should be available to users when and where they want it. Scaling from 5 to 5 million.

2:41: There's been a lot of challenges over the last year. One of the key things that we're doing, we're focusing on partnering more closely with developers. Incorporating your (developers') feedback into our product development cycle.

2:42: Staffing up a full-time partner management and community management organization.

2:43: Keep ecosystem safe for users and fair for developers. Last year we took a pretty hands off approach. Distribution became overwhelming, so we restricted the communication channels. Going forward we're going to be focusing on new programs that help the ecosystem safe and fair.

2:45: Facebook will be taking an active part in communicating on the Wikis and the forums.

2:45: fbFund grant recipients: Challenge, Connected Weddings, Podclass, Mylisto. Trazzler, Zimride (there are more but I couldn't get them all typed).

2:43: We need to help the developers create useful apps.

2:44: For new developers -- we'll provide you with tools and partnerships, program in the languages that you're used to. New and improved developer Web site launching.

2:47: New competition: Submit apps, Facebook selects 25 semi finalists who get $25K, users vote on finalists who get $250K. Total of $2 million.

2:48: Two new programs, verification program: Facebook will verify applications so users will be able to see which ones have got the stamp of verification from Facebook.

2:49: Facebook Great Apps program. All the principles are embodied, and they advance the mission of Facebook. The apps will be more integrated -- like native Facebook apps, and more content. Two inagural partners -- iLike and Causes (no surprises here).

5:51: iLike today is offering free streaming of all music.

5:51: We need to have a relatively robust enforcement system to get rid of apps that don't agree with Facebook's mission or have alterior agenda. We take the takedowns of applications very seriously because they ruin users' trust.

5:54: Communicating principles better, and enforcing based on the principles. It's impossible to write all possible ways that an application is deceptive. We're also going to make efforts to make the process more transparent. The last piece is consistent implementation - the same process is applied to large and small applications.

5:55: Again walking through Facebook Connect. It will be available for Desktop and Mobile.

5:55: Facebook Connect for the iPhone -- access Facebook apps on your iPhone.

5:56: As part of Facebook Connect, like to take a moment to talk about the OpenWeb Foundation. We've open sourced our platform and participated in the data portability. Facebook will be supporting the OpenWeb foundation which will be announced tomorrow.

5:57: The Facebook Hackathon (build an app in 8 hours) starts now.

5:58: Keynote over.

Amazon Q2: Revenue In Line, EPS Boosted By One-Time Gain (AMZN)*

Peter Kafka — Wed, 23 Jul 2008 16:15:00 EDT

Release out: Solid quarter in a weak economy. Revenue in line, EPS through roof once including a $53 million one time non-cash gain from the sale of a European DVD business.

EPS: 37 cents (GAAP) vs 26 cents consensus. We'd originally tried to back out the results of the $53 million sale from this number to get a "real" EPS. But, as a reader gently pointed out to us, we weren't recalculating taxes, etc. So we'll leave this be for now.

Revenue: $4.06 billion, up 41% y/y, vs. $3.96 billion consensus (original guidance $3.88 to $4.07B) Net out $0.18 billion in Forex and sales are up 35%.

Operating income: An impressive $217 million. Guidance was $120 million to $160 million. So even factoring out $17 million in Forex and $53 million for the sale, Amazon still posted OI of $147 million.

Guidance: Q3 Revenues at the high end of current Street expecations: $4.2 - $4.425 billion. Full year a little less aggressive: $19.35 - $20.10 billion.

*We initially misjudged the quarter relative to expectations as a result of the one-time gain. Apologies.

Google Launches Wikipedia Killer "Knol": Everything You Wanted To Know About Toilet Clogs, Tooth Pain, More (GOOG)

Eric Krangel — Wed, 23 Jul 2008 16:10:00 EDT

Jimmy Wales' Wikipedia is the seventh most visited site on the Net (says Alexa), and Google (GOOG) isn't going to let all those pageviews escape its grasp.

Today the company opened its "Knol" user-generated guide-to-everything to the public, encouraging Web surfers to create content on topics ranging from backpacking to lung cancer.

But a few key differences between Knol and Wikipedia stand out. First, articles on Knol are bylined, which should encourage a greater pool of contributors than those willing to anonymously contribute to the greater good of Wikipedia. Secondly, authors get paid. From the announcement:

At the discretion of the author, a knol may include ads from our AdSense program. If an author chooses to include ads, Google will provide the author with a revenue share from the proceeds of those ad placements.

The idea sounds promising, but it's not without its kinks. Copyright/licensing issues may be become more prominent for Knol than Wikipedia, as Google will directly sell ads against some Knol pages. (Google signed an agreement with the New Yorker magazine to allow one cartoon per Knol.) And Google still seems to have no idea how to organize its content: For the big launch, a "featured knol" on the site's main page is "Toilet Clogs: Solutions for the most common problems."

Next time we run into that problem, we'll think of Google.

MySpace Music: Launching In September

Peter Kafka — Wed, 23 Jul 2008 16:09:00 EDT

Yesterday we noted that MySpace Music didn't have a launch date or a CEO. Today they've filled one of those those holes: MySpace CEO Chris DeWolfe has committed to a September launch.

Carl Icahn To Start Blogging More Now That Yahoo Proxy Fight Over

Michael Learmonth — Wed, 23 Jul 2008 15:21:00 EDT

Now that his proxy fight against Yahoo management is over, Carl Icahn says he's going to become a much more prolific blogger. Next post: lobbing a brick back at the Wall Street Journal over a piece suggesting Yahoo "may come to regret its move" to bring Icahn on the board. Blogs Icahn:

As some of you may have noted there was an article on the front page of the Wall Street Journal today. Within the next few days - I intend to answer it on the blog.

In his latest post, "How I Spent My Weekend," he defends his truce with Jerry & Co. (reached at 5 a.m. Monday morning) and decision to take three board seats rather than press for control of the entire company.

By the end of last week, I realized that although many large shareholders supported me and my slate for the board, they were nervous about having a complete change of control. From prior proxy contest experience, I have discovered that a minority position on the board can be also quite effective.

More upside: Now that it's all over, Icahn says he'll have a lot more time to express his views: "Certain constraints concerning my views about corporate governance have been removed and I intend to communicate more frequently in the near future," he wrote.

Now, we've heard Icahn threaten to blog before, but this time we're inclined to take him a little more seriously. He's only got three votes on the Yahoo board, after all, which means he still needs a bully pulpit to complain, and an unfiltered blog is as good as any.

Cisco Buys Software Firm Pure Networks For $120 Million (CSCO)

Dan Frommer — Wed, 23 Jul 2008 15:00:00 EDT

John Chambers' Cisco (CSCO) has purchased Seattle-based Pure Networks, which makes home networking software, for $120 million. Pure Networks will be folded into Cisco's Linksys group, which it already partners with on a product called Linksys Easy Link Advisor, a tool that helps consumers set up and manage their home network.

The company's last announced funding round was a $12.5 million Series B from Bessemer Venture Partners, Ignition Partners, and Mayfield, in January, 2006.

VCs Have It Wrong: No Elevator Pitch? No Problem!

Hank Williams — Wed, 23 Jul 2008 14:32:00 EDT

The accepted wisdom is that every great idea -- or every fundable idea -- has to have a good elevator pitch. In order for an idea to be great, it needs to fit neatly into a one-minute description that knocks people's socks off. Or at least makes them extremely curious.

Bull.

The truth is that for some ideas, an elevator pitch works great. For others, not so much. And there is no direct correlation between ease of explanation and appeal or value in the marketplace. The reason for this is simple: Some things are better seen and experienced than explained. And I suspect many of the best ideas fit this description.

For instance, I'm not a huge Facebook fan. But that doesn't mean it is not a great idea. And I don't think anyone could understand Facebook without seeing it. I don't think Mark Zuckerberg could have sat a VC down who hadn't seen the site and said, "This is my idea, (or this is the idea I stole from the Winkelvoss brothers, or whatever). Please invest in me." I don't think it would fly.

This is pretty straightforward. With consumer-facing products, whether we want to use something is tied to such things as utility, ease of understanding, and social context. And so much of the first two can only come from actually experiencing the product. The Nintendo Wii is a great example of this. You needed to experience the Wii to really get why how fun it is. Even the iPhone fits this description. Most of the features of the iPhone existed in other phones. It's the design that makes it work.

But "seeing is believing" also applies to data-driven products. Visualizing data in one's head is very hard if you have never done it before. People have varying degrees of capacity for spatial visualization, but few of us are good enough to take an abstract description of a data model and to actually imagine what that means. For most people, the significance of the model won't mean much if they're only hearing about it.

But when people are allowed to explore real data in real time, things become much more clear. FriendFeed is a good example of this: It's almost impossible to explain because it is, in essence, a new data model. You need to experience FriendFeed to get it. And once people do get it, they tend to love it.

This means there are great ideas out there with bad elevator pitches. And that means investors must either trust the entrepreneur based on reputation or blind faith, or they must take the time to really try to understand more complicated product concepts. Or worse, they can just avoid any new ideas until they have been developed and tested enough to prove the demand. This is the most common strategy right now in the venture community, but it leaves lots of the best ideas undeveloped -- because there is not enough early stage money to help these ideas out. Paradoxically, I think these are some of the best ideas.

This leads me to an idea that Paul Graham from the YCombinator incubator put forth:

I've tried to explain this to VC firms. Instead of making one $2 million investment, make five $400k investments. Would that mean sitting on too many boards? Don't sit on their boards. Would that mean too much due diligence? Do less. If you're investing at a tenth the valuation, you only have to be a tenth as sure.

It seems obvious. But I've proposed to several VC firms that they set aside some money and designate one partner to make more, smaller bets, and they react as if I'd proposed the partners all get nose rings. It's remarkable how wedded they are to their standard m.o.

We need more money going into more abstract and less obvious ideas, and Paul's idea is the right way to do it. It doesn't take that much money to prove a good idea is a good idea. But often it takes more than an entrepreneur has or can raise. This is particularly true for those ideas that take more insight and time to explain than an elevator pitch affords. Only a relative, or someone who knew the FriendFeed guys were from Google, would have been willing to put money into that. But not every great idea doesn't come from someone with a brand name. Some might say the opposite is true.

So here's my unsolicited advice for VCs. Potentially profitable ideas sometimes take time to really understand, and they may take resources to prove. Spend less time and resources on the obvious and more time and resources nurturing ideas that may take more than an elevator pitch to really appreciate. It should be worth your while.

SAI Contributor Hank Williams is a New York-based entrepreneur. He writes Why Does Everything Suck? Exploring the tech marketplace from 10,000 feet.

CBS.com Adds Even More Shows For Oldsters

Michael Learmonth — Wed, 23 Jul 2008 14:06:00 EDT

CBS doesn't seem too worried about porting its industry-oldest TV demographic online. The network said today it's releasing some more shows from deep in the Paramount/CBS library: "Dynasty" (1981), "Beauty And The Beast" (1987), and "Have Gun - Will Travel" (1957). That's in addition to the last library-dump that included "Hawaii Five-O" and "Perry Mason." CBS's average age online: 39. Average age on TV: 54.

Weirdly, CBS isn't allowing embedding on any of these new (old) series, and seems to have turned off the embed feature for all full-length episodes. We'll check it out. In the meantime, here's a clip from Swingtown, which isn't actually an old show but is set in 70s:

YouTube (GOOG) Dangling New Ad Strategy To Lure Hollywood. Can It Deliver?

Peter Kafka — Wed, 23 Jul 2008 13:44:00 EDT

At least three Hollywood studios are talking to Google and YouTube about deals like the one video site struck with Lions Gate (LGF) last week, CNET reports. That's interesting, but not revolutionary: The LGF pact, which gives the studio a cut of revenue generated when users watch clips from movies like "Dirty Dancing", is itself modeled on other deals YouTube has cut with content producers. Like, say, CBS, which puts up a smattering of clips like this Letterman monologue on its own branded YouTube channel:

Greg Sandoval correctly notes that the more authorized content YouTube can get on the site, the more ad inventory it can sell, which is a good thing. And the pacts also make it harder for the studios to sue YouTube, a la Viacom. Also a good thing. But Greg says Google and/or the studios are considering something much more interesting -- tracking down unauthorized video clips and monetizing them by inserting ads:

Google has also piqued the interest of some in Hollywood with new ad-delivery and content-tracking technology that the company is developing, according to three studio executives who spoke to CNET News. Google could one day enable content owners to insert ads into unauthorized video clips wherever they might be posted online.

This concept also isn't completely new: At one point the big music labels were playing with a similar strategy (download an illegal Madonna track, and you'd get a hectoring message telling you not to steal and/or to go buy the song). But pursuing something like this would seem to be a problem for YouTube.

That's because YouTube insists that it's not violating copyright rules if it happens to host copyright-violating videos -- because it has no idea what's actually on the site. There's lots of reasonable skepticism about that claim -- for instance, if YouTube doesn't know what's on its site, how is it keeping it almost entirely porn-free? And those claims are in large part central to the Viacom lawsuit.

While we we can imagine a scenario where YouTube argues that it doesn't know what videos it's serving ads to -- It's all automated! We swear! -- it's hard to see advertisers going for that pitch. So in order to make this work, YouTube would have to know what clips it's serving ads on, which ends up undermining its original legal defense. So what's going to give: Google's legal defense? Or its desire to make money on its $1.65 billion purchase?

Sirius-XM FCC Approval Down To One After Democrat Adelstein Votes Against (SIRI, XMSR)

Dan Frommer — Wed, 23 Jul 2008 13:20:00 EDT

The FCC's embarrassingly long review of the Sirius-XM satellite radio merger continues. The latest: Democrat commissioner Jonathan Adelstein has voted against the merger, putting it in a 2-2 tie, according to the AP.

Why? Because the absurd conditions Adelstein recommended didn't get any support. Why not? Because they're absurd! As we mentioned yesterday, via the Motley Fool:

Adelstein is looking to freeze subscription rates for six years, with 25% of the channels earmarked for public-interest programming. He also stipulates that any subsidized receivers must also allow for the open reception of HD radio.

We repeat: What are we going to do with 25% of channels serving up public-interest programming? More to the point: Why would we pay for that?

The year-and-a-half-old merger is now up to Republican Deborah Taylor Tate, the lone undecided commissioner. Judging by Adelstein's remarks today, we think she'll approve it. And given the pathetic state of the satellite radio industry, she'd better. Via Orbitcast:

"I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming, better price protection, expanded choices among innovative devices and real competition with digital radio," Adelstein said in a statement. "Instead, it appears they're going to get a monopoly with window dressing. We really missed a great opportunity to reach a bipartisan agreement that would have benefited the American people."