eBay and Craigslist: A fox in the henhouse

A week or so ago, eBay filed a lawsuit against Craigslist, alleging that the controlling shareholders of the classified site — namely, founder Craig Newmark and CEO Jim Buckmaster — had taken certain steps to dilute the auction provider’s minority stake in the company, and thereby had breached their fiduciary duty and injured eBay as a shareholder. Craigslist has now made the statement of claim public, and it reads like a corporate version of a divorce court filing. These two parties are married, but they really don’t want to be, and each one is trying its hardest to get out of the relationship without losing everything.

According to the statement (which obviously has only one side of the story) eBay says that Craig and Jim got mad when Kijiji — the eBay subsidiary that competes with Craigslist — started up operations in the United States, so they took a number of steps to dilute the company’s stake below 25 per cent (including issuing themselves a bunch of shares), and thereby removed a bunch of rights that eBay had as a shareholder. They also, according to eBay, instituted a “poison pill” that threatened to flood the place with cheap stock.

In other words, they did (or are alleged to have done) pretty much what Valleywag and others, including yours truly, thought they did when the lawsuit first emerged. Of course, what eBay is talking about isn’t really a poison pill — pills are typically designed to prevent hostile takeovers, but no one can take over Craigslist because Jim and Craig control it. This pill isn’t so much designed to prevent someone from buying as it is designed to prevent someone (namely eBay) from selling.

Can Craigslist do that? Obviously eBay is arguing that it can’t. And while you might think that the classified site is a private company and so Craig and Jim can do whatever they like, it’s not quite that simple. Ebay does have rights as a minority shareholder — and it argues that even if it did engage in competitive activity, the clause it triggered did not give Craig and Jim the right to prevent eBay from selling its stock to anyone but them. This could get ugly.

Facebook, Wikipedia better in emergencies

According to a study that is to be published in New Scientist magazine tomorrow, Facebook and Wikipedia are better at getting crucial information out during emergencies than either government agencies, emergency services — or the traditional media. The study, done by researchers at the University of Colorado, looked at how Facebook and Wikipedia were used by students during the Virginia Tech shootings, and how Twitter and other social media were used during the forest fires in California. As the Telegraph story describes it:

“During the Virginia shootings, they found the emergency services were slow to update their reports on the latest situation and the names of those killed. Within just 90 minutes of the first deaths, however, a web page accurately describing the events appeared on Wikipedia.”

The study found that dyring the fires in California in October, web users on various websites and those using Twitter were keeping their friends and neighbours informed of their whereabouts and the location of the fires on a minute by minute basis, and were also posting links to Google Maps with which others could track the progress of the fire and mark areas where schools and businesses were shut down as a result of the threat. The media weren’t so useful, however:

“The mass media were unreliable… as they struggled to access remote areas from which website users with an internet connection could easily report. Media sites also focused on the ‘sensational’, such as fires close to celebrities’ homes, which distorted the overall picture.”

Some interesting lessons there, for both emergency services and the media, about information delivery on the Web.

Radiohead: No more free stuff for you

Just as Radiohead’s “pay what you want” download model is being adopted by more musicians and artists — including Nine Inch Nails, Coldplay, The Charlatans UK and others — the band that launched the model says it doesn’t plan to do it again, calling the release of In Rainbows “a one off.” In an interview with the Hollywood Reporter, frontman Thom Yorke said that the offering last year arose out of a particular set of circumstances. “I think it was a one-off response to a particular situation,” Yorke told the magazine. “It was one of those things where we were in the position of everyone asking us what we were going to do,” he said.

Although the band hasn’t confirmed it, there was speculation at the time that Radiohead chose to release its new album online first because it knew that leaked tracks were going to make their way onto the Internet soon anyway. A number of other artists, including Gnarls Barkley, have been either moving up their release dates or offering free samples for the same reason. Yorke also said that he wasn’t sure such an offer “would have the same significance now anyway, if we chose to give something away again. It was a moment in time.”

The band may also have been underwhelmed by the number of people who chose to actually pay for the album: according to a survey by the Telegraph of 5,000 users, about 25 per cent either paid nothing or only a small amount (as little as one pence). Thousands of fans also downloaded the album for free using the BitTorrent peer-to-peer network, although some said they only did so because the official Radiohead download site was crippled by a flood of requests.

Coldplay experienced a similar phenomenon after the band released a track from its new album Viva La Vida or Death and All His Friends as a free download. According to several reports, the site crashed under the strain on Tuesday. More than 600,000 people downloaded the song in less than 24 hours, according to one report. Other artists have also announced plans to experiment with online delivery in some form or another; even Metallica — the band best known for its vocal criticisms of Napster in the early days of downloading — has said that it may look at offering new music directly to fans instead of using a traditional label.

Despite Radiohead’s statement about not offering “pay what you want” downloads any more, Yorke said the band was going to build on its online connection with fans. “We are about that direct relationship (now) because we are big enough to establish that,” he said. Among other efforts, the band has set up a music ‘mashup’ site where people can upload their own versions of one track from In Rainbows, and also has a social network based on Ning.com called W.a.s.t.e. Central, which has about 12,000 registered users.

Marvel: Please don’t watch our movie


Apparently this was all the result of a misunderstanding involving Oracle, who talked to Marvel and was planning a similar screening, and a lack of communication with Paramount. Too bad — I was hoping to see Mike and Marvel go toe-to-toe on this one 🙂

Original post:

In yet another example of how not to do customer relations or PR of any kind, Mike Arrington has a stunning exhibit from a lawyer representing Marvel, the comic powerhouse whose Iron Man character has become a major motion picture. Mike wanted to put on a social event for TechCrunch fans, so he booked a theatre and planned to show the movie for free — although he asked for $1 per ticket to cut down on the no-shows. Wham! That is apparently verboten, according to Marvel’s lawyer.

“You have not been authorized to exhibit, sell tickets to, nor invite the public to an Iron Man screening.”

As Mike points out, the whole process began with a phone call to the number listed on the official Iron Man movie website for “group sales.” So what is the Marvel guy’s problem? Hard to say. Obviously, movie studios and content companies like Marvel have an interest in holding publicity premieres, etc. and also have relationships with movie-theatre chains, who don’t want to see just anyone rent a theatre and go into competition with them. But still — is that any way to handle such a thing? It just makes Marvel look stupid, and mean.

mesh 2008 and meshU: Schedules are live

An update for anyone who might be thinking about heading to mesh ’08 or meshU (the one-day workshop event just before mesh): to help you make up your mind and plan your day, we now have the schedules up for each event. There are still some panels that have to be firmed up with our speakers, but we will be filling those in soon. The sched for mesh ’08 is here, and the one for meshU is here.

On the first day of mesh, we have panels like the Future of Music panel with musician and social-media fan David Usher, as well as Jeff Remedios of the Arts & Crafts label and Graham Henderson of the Canadian Recording Industry Association, moderated by David Gratton of Project Opus. Then there’s the panel on the New Front Page, with Pema Hagen of GigPark, Daniel Burka of Digg and Candice Faktor of OurFaves (moderated by yours truly).

We’ve also got a panel on the idea of Private vs. Public with Nancy Baym from the University of Kansas and the Online Fandom blog, University of Toronto philosopher and author Mark Kingwell and Elizabeth Denham of the federal privacy commissioner’s office. That one is moderated by the lovely and talented Rachel Sklar, who writes the Eat The Press feature for Huffington Post. We also have a panel on Video and the Web with Dana Kaplan of Bliptv, Andre Gaulin of CTV and Guinevere Ortis of the CBC, moderated by video-blogger extraordinaire Amber MacArthur.

Michael Geist will also be doing a presentation about how to use Facebook and other Web tools to build grassroots campaigns. And of course we have two stellar keynotes by Ethan Kaplan of Warner Brothers Records and Matt Mason, author of the book The Pirate’s Dilemma.

On the second day at mesh, we have panels like the Measuring Social Media panel with Alan Chumley, Sylvain Perron and Katie Delahaye Paine (moderated by mesh founder and Tripharbor CEO Stuart MacDonald); a panel about Cultivating Community with George Tsiolis of Agoracom, Derek Szeto of Red Flag Deals and Christopher Jackson, moderated by Jen Evans; a look at Building a Brand Online with Rohit Bhargava, Maggie Fox of Social Media Group and Michael Garrity of CommunityLend (moderated by mesh founder Mark Evans); and a look at some Founder’s Stories with Julia Johnston of mEgo, Leah Culver of Pownce and Ryan Carson of Carsonified, moderated by Paul Kedrosky of Infectious Greed.

We also have a presentation by Mike Masnick of Techdirt about the “economics of abundance,” and two excellent keynotes from Garrett Camp of StumbleUpon and Lane Merrifield of Club Penguin.

meshU has some outstanding speakers as well, including John Resig of jQuery, Avi Bryant of Dabble DB, Kevin Hale of Wufoo, Reuven Cohen of Enomaly, Alistair Croll of BitCurrent and the excellent tag team of David Crow from Microsoft (and DemoCamp) and Leila Boujnane of Idee Inc. You can book your ticket for mesh here, and your meshU tickets here.

iPhone Canada: Pay me now, or pay me later

If you’re an Apple fan who has been waiting for the iPhone — or at least an “official” version of the iPhone — for lo, these many months, your heart probably leaped at the word from Rogers Communications supremo Ted Rogers this morning that he has signed a deal with Apple to launch a maple-flavoured version of the world’s most sought-after handset. If you have ever had a cellular data plan from Rogers, however, your heart probably leaped a little less high, and may even have let out a small sigh or shrugged its heart-shaped shoulders.

Why? Because as more than one person has pointed out, the fact that the iPhone is coming to Canada isn’t really the important thing. It’s important, of course, but everyone knew that it was going to arrive eventually. The *really* important thing is what it’s going to cost when it finally arrives — and not so much the phone itself, but the data plan. Will the word “unlimited” be used in conjunction with the word “data?” And if it is, will it actually mean “unlimited,” or will it mean something else that only appears in that special Rogers’ dictionary?

The nightmare scenario is that the iPhone comes, but the costs for service are so prohibitive — not so much for phone calls, but for data charges, Web surfing and so on — that it makes it ridiculous for anyone but a movie star or possibly a dentist to actually afford. Rogers and Bell are notorious for adding charges that boost even the most normal cellular bill into the stratosphere, especially when the user goes onto that thing called the “Internet” and does stuff with a regular app as opposed to the crippled WAP browser that most devices come with.

These are just the kinds of activities that iPhone users tend to engage in, of course — which is why Ted and the gang are so excited about getting them here, and even more excited that they will only work on the Rogers network. For me, I’d be a lot more excited if there was a reasonable data and Web-surfing plan attached to it.

Twitter: more mainstream than it looks

My friend Kara Swisher has a post up about Twitter, in which she talks about an informal poll she took of some friends at a wedding, and how none of them had ever heard of Twitter. Everyone had heard of Facebook, however, and about half of them had an account. Is that surprising? Not really. I’ve done similar polls of my non-geek friends (yes, I have some), and virtually no one had any idea what I was talking about. But when I described it as being like the Facebook status update crossed with MSN Messenger, most of them totally got it.

It wasn’t that long ago that having a Facebook account was unusual for someone not in university. I can still remember telling people that I had one, and getting nothing but blank stares — and now most of those people have an account, or have at least heard of it. I’m also old enough to remember when a chat application called ICQ came along in 1997, and I quickly became a heavy user, along with some of my close friends. No one else had any idea what we were talking about then either. But by 2000, Microsoft had launched Messenger, and within a couple of years it had hundreds of millions of accounts.

Is the potential market for a “group chat” application like Twitter as broad as the market for instant messaging apps? Probably not — especially with a 140-character limit, which some people might enjoy as a kind of haiku-style restriction, but some would likely see as ridiculous (is there a shortage of electrons?). And it may not be as large as the market for Facebook either. But I don’t think the concept of Twitter is quite as foreign as many people make it out to be — and certainly no more foreign than the idea of “instant messaging” was not all that long ago. And as MG Siegler notes, there are some pretty cool apps being built on top of it.


Mike Arrington has some Twitter stats from a source inside the company.

Multiple-voting shares: good or evil?

Marc Andreessen has an excellent rundown on his blog of the issues and possible outcomes in the Microsoft-Yahoo takeover battle — something that virtually any newspaper I can think of would be pleased to run as an analysis piece. With the help of a couple of corporate M&A lawyers, he outlines the various strategies that Microsoft could use, and the defenses that Yahoo has available, including a series of “poison pills.” But one thing jumped out at me in Marc’s analysis — a reference to how Yahoo would have been better off if it had multiple-voting shares:

Would a dual-class share structure have been a good idea for Yahoo? Yes. If Yahoo did have a dual-class share structure, Yahoo’s cofounders would have been much better situated to block Microsoft from attempting a takeover. You can bet that this is being noticed by the founders of every technology company that might go public from here on out.

Marc points out that Google has a dual-class share structure, which gives the founders multiple votes (Larry Page, Sergey Brin and Eric Schmidt have shares with 10 votes each), the implication being that this is the way other technology companies should go as well. As much as I respect Marc’s point of view, however, I’m going to disagree. I think having multiple-voting shares — or any class of special voting shares that gives a small group of insiders control over the fate of the company — is a bad idea. And not just for investors, but for the company itself.

I think Marc is looking at this issue as a founder and CEO, which is fair enough — and from a founder’s perspective, multiple or special-voting shares seem like the Holy Grail: they allow you to raise money, but don’t require you to give up control. Unfortunately, they also cement control within a small group and make that group virtually impervious to hostile takeovers or any other form of shareholder activism. It’s a little like a dictatorship: a benevolent dictatorship is one of the best forms of government — but also very rare.

For every founder who uses his voting powers wisely, there is another who plunders the company and distorts the business in virtually every way imaginable. Canada has had a love affair of sorts with multiple-voting stock — in part because of a desire to protect broadcasting and media companies, but also because much of the foundation of corporate Canada consists of family-owned entities that pass control on from generation to generation (don’t get me started on Frank Stronach and Magna Corp.). For every example of a company that has been successful with such a share structure, there are a dozen of contrary examples.

For me, dual-class shares are an attempt to get around Darwin’s Law as it applies to the marketplace. Multiple-voting shares protect incompetent, complacent or simply unsuccessful companies that should be taken over and either remade or dismantled. If your company is agile enough and creative enough, it shouldn’t need them.

Clay Shirky and the “cognitive surplus”

Clay Shirky, who teaches and speaks about “new media,” has posted the transcript of a speech he gave at the recent Web 2.0 conference, in which he talks about how TV as a whole is effectively a societal response to a surplus of leisure time — and how much better it would be if those excess brain cycles were used for something valuable, such as contributing to Wikipedia or other forms of “social media.” I really wish that Clay hadn’t written this particular speech. Why? Mostly because then there would still have been time for *me* to write it.

I must admit, the part about the gin never really occurred to me (go ahead and read the speech — I’ll wait). But the rest of it is right on track. Particularly the part where he describes the four-year-old looking behind the TV for the mouse. I’ve spoken to a number of groups about social media, and I always use my three daughters as examples: the oldest uses Facebook more than she watches TV, the middle one loves interactive fiction-writing sites like Gaia Online, and with the youngest it’s Club Penguin and Webkinz. To them, the most interesting kinds of media are interactive media.

Not surprisingly, more than one commenter among the dozens who have responded on BoingBoing’s post about Shirky (since his blog doesn’t have comments) argues that the author is guilty of social-media triumphalism, and that he is merely stating a preference for time-wasting with Wikipedia or Lolcatz as opposed to TV. One commenter says that his speech is like saying “now that we have Oranges no sane person is going to eat Apples, and anyone who grows Apples doesn’t understand how f’n juicy and delicious Oranges are… what a bunch of twits! amiright?”

This point has some truth to it. For every person who thinks that World of Warcraft builds leadership skills and watching TV is one step above drooling and whittling, there is another who thinks that CSI is gripping drama, and anyone on WoW is a brain-damaged geek living in his mom’s basement. There are plenty of ways for human beings to zone out and get very little accomplished — just look at golf, for example (or poker). But Shirky’s point is still a good one, I think: namely, that social or interactive media, however lame or goofy, has an added quality that sitting in front of a box does not. I’ll go along with that.

Twitter raises money, birds fly

Sarah Lacy of Yahoo’s TechTicker show — yes, the same one who did that interview with Mark Zuckerberg at SXSW that was either a train wreck or merely underwhelming, or somewhere in between — has a post up at her blog that spends several hundred words telling us how uninteresting it is that Twitter is raising money. Why is is uninteresting? Because it’s so obvious, Sarah says. Of course Twitter is raising money; anyone with any sense, including Ning and Slide and Glam, has done the same. Why? Primarily because they can, that’s why.

To be fair, Sarah doesn’t say that it’s uninteresting; she says that it isn’t newsworthy, because it’s not surprising. And she has a point. Twitter needs to raise money because it doesn’t have a business model, and so it needs some cash to live off — and to use for upgrading its servers, etc. — until it manages to come up with one, or until it gets acquired. And it can raise that money in part because (as Sarah also notes) VCs are desperate to find the next Facebook. If that takes $10-million paid out to Ev Williams and the gang, then so be it.

The question every one wants the answer to, of course, is whether Twitter (or Slide, or Glam for that matter) are actually worth that kind of money. And the uncomfortable answer is that no one really knows — not the VCs who are providing it, not the partners who are raising it, and certainly not Ev or Biz or the people running companies like Twitter. Did Mark Zuckerberg think Facebook was worth $15-billion a year or two ago? If he did, he probably knew enough to keep it to himself, because if he had said so, he would have sounded insane.

To some, the idea that Facebook is worth $15-billion is still insane. But there’s no question that it’s worth something — and given the kind of activity and devotion it has generated, Twitter likely is as well. In the end, a VC has to make a calculated guess that it will eventually be monetizable. And all they can hope is that the times when they’re right eventually make up for the times when they’re wrong.