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I’m sure there are lots of people who are even now blaming blogs and “new media” and God knows what else for the frenzy of stories about how iTunes sales are “collapsing” or “plummeting” or “hemorrhaging” or (insert sensationalized adverb here), all of which were based on a loose interpretation of a Forrester sales report. The key takeaway for most was that iTunes sales were down 65 per cent.

Great story, right? So great that it turns out to be, well… not exactly true. Or rather, true in a fairly limited sense. Forrester’s report was based on a relatively small set of credit-card data, and the research firm itself warned against extrapolating from that data. So what did The Register do? Extrapolated wildly, put the word “collapse” into the mouths of the Forrester team, and then said iTunes’ sales were “collapsing” in the headline (Bloomberg wrote a story too).

Why did The Register do this? Probably because it made the story sound even more interesting, and because the writer, Andrew Orlowski, wanted to use the data as a springboard for a larger story about the death of DRM (digital rights management) and how the music industry might be forced to go the “blanket license” route.

Is this something unique to online media or the blogosphere? Hardly. Newspapers and TV networks do this kind of thing all the time. Staci at PaidContent is right that Rex Hammock had the best line: “Reporters’ inability to interpret statistics is ‘sky-rocketing’.”

Forrester analyst Josh Bernoff has a post here about the reaction to his initial piece about the report, in which he says that the data set was too small to jump to any conclusions, but that this point “was just too subtle to get into these articles.” It wasn’t too subtle at all — it’s just that some outlets couldn’t bear to let the facts get in the way of a good story.

Sometimes I think that Google has a bunch of pissed-off ex-securities lawyers on staff whose sole job it is to screw around with things and come up with ideas that make Wall Street mad, or confused, or both. They haven’t been that busy since the IPO (Hey, let’s do a Dutch auction! And then not give quarterly estimates!) but they’ve come up with another doozy: why not create an online auction and let employees trade their stock options? Well, why not indeed.

According to Google, the idea is designed to allow employees to see some benefit from their options before they actually vest and can be sold on the open market. For example, if the stock price looks like it is going down and the value of those options is also going to decrease, an auction of tradeable options would give employees the ability to lock in a particular price. This is part of the reason why people like my friend Paul Kedrosky think that the idea is a bearish signal for the stock (he also thinks there isn’t enough transparency).

Bearish signal or not, I think it’s a great idea. One of the difficult issues with stock options — apart from the fact that companies hand them out like candy and then allow executives to reprice and extend them at will, which I’ve discussed here — is arriving at a value for them. Since they only really have value in the future when they are exerciseable, it takes a fair bit of hoop-jumping to arrive at a current value, which quite quickly gets into Black-Scholes pricing theory, etc.

An auction would solve at least that problem, although it’s likely that ways could be found to “game” such a process. But I think it has benefits for employees and also for Google, which could theoretically waste less on the options it does hand out. As the NYT story points out, Microsoft and other companies have done one-off options-buying programs, but this would be the first permanent process inside a company. Don Dodge says he thinks it’s a win-win-win.

It was a few days ago now, but the New York Times’ DealBook blog had a great little item about Craigslist CEO Jim Buckmaster meeting with Wall Street types at the UBS global media conference. Naturally, the analysts wanted to hear a bit about the gazillions of page views that Craigslist gets, and how it is making about $50-million or so a year without even trying.

Jim, however, said the site had no real interest in maximizing revenue. Although he and Craig had looked at running ads, they had no plans to do so, he said, because — get this — users hadn’t said they wanted them. The only reason that Craigslist charges fees at all (to professional real estate agents for posting apartment ads in several cities) is that users complained about the ads, so the fees were instituted as a way of driving them away.

In the DeaBook pieces, Wendy Davis of MediaPost describes the presentation as a “a culture clash of near-epic proportions.” She says UBS analyst Ben Schachter asked how Craigslist planned to maximize revenue. We don’t have any such plans, Mr. Buckmaster said. “It’s not part of the goal.” Mr. Schachter’s response: “I think a lot of people are catching their breath right now.” I’ll bet.

Craigslist currently gets a mind-blowing 5 billion page views or so a month. A premier site like Craigslist — and one that is focused on classified advertising, which is inherently purchasing-type behaviour — would likely command a fairly high CPM rate for ads. Let’s say theoretically it was $10 per thousand. That would bring in $50-million a month (StartupBoy says Craigslist is worth more than eBay, and he doesn’t even include ads).

But Craig would rather focus on the user. Brilliant? Or deluded?

Update:

Kevin Burton of TailRank says that Craigslist should be taking all that money from advertising and giving it to the poor (he expands on that idea here), but that Craig “thinks money is evil” (Craig responds in the comments that that isn’t true). Chuqui says Kevin and others should leave Craig alone and that Craigslist is being true to its vision. The Scobleizer agrees, and so does Nick Douglas at Eat The Press. And Dan Farber and larry Dignan at ZDNet took on this issue back on Dec. 7

From my friend Leigh Himel, CEO of Oponia Networks, comes word that the U.S. Federal Trade Commission has put out a statement on word-of-mouth marketing practices — you know, the kind where someone gives you a phone or something and hopes that you write about it on your blog. The FTC was asked to look into it by Commercial Alert, a non-profit organization that says it tries to keep commercial culture from “subverting the higher values of family, community, environmental integrity and democracy.”

Call this one the PayPerPost rule, after the blog payola company that pays you to write about their clients but doesn’t make you disclose your compensation (I’ve written about them here and here). As the FTC statement puts it (PDF link), the petition from Commercial Alert:

Raised concerns about a specific type of amplified word-of-mouth marketing, specifically the practice of marketers paying a consumer (the “sponsored consumer”) to distribute a message to other consumers without disclosing the nature of the sponsored consumer’s relationship with the marketer.

As the Washington Post story describes it, word-of-mouth marketing is already covered by existing legislation, but the FTC wanted to make a specific statement to the effect that not disclosing the relationship between seller and consumer advocate is misleading, and that “such marketing could be deceptive if consumers were more likely to trust the product’s endorser “based on their assumed independence from the marketer.” Which is, of course, the whole raison d’etre behind PayPerPost.

Dr. Tony at Deep Jive Interests points out that this could have a spinoff effects on affiliate marketing as well. But wait, my friend Stuart says: what about those travel reviews in the newspaper where the writer got a free trip to Cabo? They’d better hope the FTC isn’t reading. According to the statement, “staff will determine on a case-by-case basis whether law enforcement action is appropriate.” Scott Karp at Publishing 2.0 has some thoughts about it too.

Yahoo’s burning desire to acquire Facebook has been the talk of the Web 2.0-sphere for lo, these many months. At one point, there was rumoured to be an offer for $750-million, and then another worth $1-billion — and then, silence. Now, the plot has thickened, thanks to TechCrunch’s publication of the Secret Yahoo Spreadsheets for the project code-named “Project Fraternity” (I guess “Project Please Help Us Compete With Google And Make Up For Not Buying MySpace” wouldn’t fit on a PowerPoint slide).

As Mike Arrington points out with a tiny bit of understatement, the numbers that Yahoo used to justify its valuation — at one point it offered a deal valuing Facebook at a YouTube-ilicious $1.6-billion — look to be based on “robust” user growth. How robust? By 2010, the company projected that the social-networking site could be attracting almost 50 million users, or more than 50 per cent of the combined high school and young-adult population of about 83 million.

And that’s not the only thing that is “robust” about Yahoo’s numbers, as Fred Stutzman notes on his blog. He points out that the projections for Facebook’s revenue — from which the purchase price is derived, as in “6 times revenue at a discount rate of X” — assume that more than 90 per cent of the site’s users are “active users.” That’s not just an aggressive target, it’s right up there in wishful-thinking land.

Was it those kinds of nose-bleed projections that made Yahoo pause in its all-out pursuit of Facebook? Or was it the fact that the Internet giant was being held at arm’s length by Mark Zuckerberg, a guy who won’t get up at 8 a.m. even for a conference call with Microsoft, and who wears sandals to venture capital conferences? Or did weird old Uncle Terry finally put the kibosh on the deal?

Okay, so I thought Mike Arrington of TechCrunch had decided to take some time off to ski and hang out at his parents’ place in upstate Washington, as he described on his personal blog last month. So then who is that doing all the flaming in the comments section at TechCrunch under the name “Mike Arrington?”

As Nick Denton at Valleywag points out, the discussion of the New York Times adding social-bookmarking links to its stories — which TechCrunch described as “surrendering” to social news — degenerates into some name-calling by Mike about news consultant Jeff Jarvis of Buzzmachine and Rafat Ali of PaidContent, amid what appears to be some deep-seated anger at the Times (likely in part because of this).

First, Mike takes a shot at Dave Winer, saying he only supports the NYT because they adopted RSS early on (which Dave admitted in his comment). Then he says that TechCrunch is “an occasional (but always unlinked-to) source of breaking news to the NYT” and calls the newspaper an “ethically-bankrupt institution.” After a relatively mild response from Dave, Mike then says that he, Rafat and Jarvis “are sucking up to them to further your own agendas” and that this “has resulted in outright fabrications” by Rafat and Jarvis.

Then he closed the comments. Mike, I think you should hit the slopes, dude.

Update:

Rafat posts a comment at Valleywag saying he has no clue what Mike is talking about.

Well, this is just sad. I’m a big Google fan, and whenever people at Yahoo start to whine and moan about Google getting press for things that Yahoo already has (*cough* Google Finance *cough*) I always stick up for the poor billionaires at the Googleplex. But Jeremy Zawodny has a pretty blatant example of the Googlers ripping off a Yahoo ad campaign — for the release of a branded version of the Internet Explorer 7 browser. Here’s Google’s version:

And here’s the Yahoo version from back when IE 7 first launched:

That’s just sad. And while some commenters have tried to argue that Microsoft provided the template for the ads and therefore they look the same, it appears that Yahoo created the page themselves, and that the HTML code behind the two is completely different (Google’s apparently sucks). Lame, lame, lame.

Maybe it’s just meant to be “Digg-bait” (as Nick Denton at Valleywag likes to call it), but Jason Clarke of Download Squad has a long post up about Digg and how it is destined for failure. As Jason mentions in the post, Download Squad is part of AOL, which owns the revamped Netscape — a site that was essentially modeled on Digg — so perhaps it’s an elaborate corporate hit-job. I thought Download Squad was all about cool software, but maybe I was wrong.

In any case, Jason’s criticisms are not really all that new. As far as I can tell, his two main points are: 1) Digg’s audience is full of mouth-breathers and low-foreheads who just pile on and flame each other, and digg down things they don’t agree with. And 2) Digg’s traffic, a kind of “flash crowd” that can shut down even the most robust hosting service in a matter of minutes, consists of window-shoppers who come quickly and leave quickly, and if they sign up for something they never actually use it.

Jason says that the Digg community is “rotting from the inside out,” and that “the sheer level of superiority, sarcasm, and general negativity is overwhelming.” As with many other critics of the Digg model, or social media in general — including Nick Carr and Andrew Keen, as well as newcomers Andy Rutledge, who I’ve written about here, and Lee Gomes of the Wall Street Journal, who I’ve written about here — the argument is that the wisdom of crowds doesn’t exist.

The problem with the whole concept of taking advantage of the “wisdom of crowds” is that crowds have no wisdom. Microsoft Windows is an example of an operating system written using the wisdom of crowds… and don’t get me started on the majority of large open-source efforts.

As a commenter rightly points out, the Windows crack is a gigantic red herring. Any problems at Microsoft have little or nothing to do with the wisdom of crowds, and everything to do with corporate hierarchy and centralized decision-making. If anything, they could use a little more Digging. And as for the traffic problems, it’s true that Diggers flood in and then disappear, leading some to wonder how much value they actually bring with them. But couldn’t we say that about Web traffic from plenty of other sources too, like TechCrunch for example?

In conclusion, Jason says:

Social media sites are an unproven phenomenon… I predict that in the near future sites will start to attempt to block digg as a referrer, since getting a link from digg will simply cost them money. And over time I believe users will tire of the constant negativity that characterizes digg… unless digg can find a way to clean up their collective act.

Does Digg have flaws? Sure it does. And so do plenty of other social media sites. But I think Jason (for whatever reason) is being way too negative. What do you think?

Update:

More commentary at the CWS blog, with comments from Diggers.

Among other things, a post today by my friend Scott Karp over at Publishing 2.0 has helped crystallized for me just how inadequate a lot of the terminology is that we’re using for Web services and communities — and not just the obvious kind of cringe-inducing terms like “user-generated content.” In his post, entitled Platforms Are The New Portals, Scott discusses Edgeio and a post that Keith Teare has written about the “de-portalization of the Internet.”

Scott says that “user-centric platforms” such as YouTube and MySpace are acting more like portals, and that Yahoo is an old-school portal because it doesn’t create most of the content it aggregates, and because “it aggregates it by hand, so it’s a closed system and therefore less efficient than the platforms.” In Scott’s view, Yahoo is a portal but YouTube is a platform, in that it allows people to upload things (VC Fred Wilson has written about Yahoo and “de-portalization” here).

But at the same time, he says, “even a platform like YouTube that embraces the distributed nature of the web is still acting like a portal, because YouTube is THE place to upload your videos and THE place to find your videos.” Scott asks why video content owners can’t do what blogs do and publish their content wherever they want, and then with a good search engine “It won’t matter where the video is hosted.”

In conclusion, Scott says: “The challenge for any company that wants to scale in the distributed age is to create a platform that acts as a distributed portal — still a de facto gateway, but one that exists across the web.” This is no slight against Scott, but that sentence made my head hurt. And the more times I read it, the more my head hurt. So you have to be a platform, but one that is a distributed portal; a gateway, but one that exists “across the web.”

The worst part is, I think he’s right. It’s just the language that is making things difficult. What is a “gateway” or a “portal” or a “platform?” If I had to try and imagine something like what Scott is talking about, it would be a new kind of television — one that is hooked up to the Web, and has a powerful search engine, and shows me content not just from the TV networks but from anywhere (like this kind of stuff), using tags and keywords and smart filtering and Digg-style voting and search.

What to call it? A plat-port-way. A way-form-tal. A whatever. I want one.

Update:

Leigh Himel’s friend Peter says the network is the portal.

Rumours continue to fly that some or all of the major TV networks are working on a “YouTube killer” — a video-sharing site that all the big content owners would contribute their stuff to, while simultaneously suing the pants off of Google and YouTube. That way, they could continue to control their content on the Web as well as on the public airwaves. Slam dunk, right? The talk about a possible takeover of Metacafe is just the latest development.

If you’re not laughing yet, you should be. This is exactly the same kind of boneheaded idea the major record labels came up with back when Napster was disrupting the global music industry. Of course, getting all the labels to co-operate was like trying to bring peace to the Middle East, so the industry wound up pursuing just the “sue the pants off” part of the strategy. Then Apple came along with iTunes, and now it has the record labels on a short chain.

Two things are relatively certain about this network-backed “YouTube killer.” Number 1: It will probably never happen, because the networks won’t be able to co-operate, and will spend all their time bickering about who gets what, or the best way to bugger everything up with DRM. And Number 2: If it ever does happen, it will suck. Either it won’t be easy enough, or it won’t include the things people want, or it won’t be easy to share, or it will be clogged up with DRM, or all of the above.

As Say No To Crack (a humour site) says in the comments on Mike Arrington’s TechCrunch post, the networks would probably want to have entire shows, but “online viewers want the freedom to watch hundreds of videos quickly, sift through the mess, and then skip over the ads and junk shows.” The networks would also probably never allow a fast forward button, or would have a mandatory sponsor clip at the beginning, which would wreck it even further. Say No To Crack is right.

What made YouTube popular is that it was free, easy to use, easy to share, and had lots of different kinds of content. Anything the networks could come up with — even using Metacafe as a base — is unlikely to have any of those characteristics, and therefore the odds are it would be a miserable failure. VC Fred Wilson is also underwhelmed by the idea.

Update:

As Rafat Ali mentions at PaidContent, Jon Fine at Business Week was the first to mention this possibility.

(Cross-posted from my media blog)

If nothing else, Jason Calacanis did one thing while he was running the revamped Netscape.com: By hiring away some of the top users at Digg, he ignited a debate about whether to compensate the top submitters to a “social media” site. Digg co-founder Kevin Rose said that he would never pay top Diggers because it would ruin the open and social nature of the site, and I tend to agree with him (I wrote about it here and here).

But now, according to Tony Hung at Deep Jive Interests, some of the top Diggers have found other ways of getting compensated — including getting paid by companies under the table for submitting their pages to the social-media site. Several top submitters have reportedly been approached by companies to submit pages in return for money, and have done so. Some have been paid per submission, others on a kind of retainer, and some have received bonuses if a submission makes it to the front page.

This kind of thing is even more underhanded than PayPerPost, the company that pays bloggers to write about clients, but doesn’t require them to disclose it. But Tony says that some of the Diggers justify their illicit salaries by saying “If Kevin Rose isn’t going to pay me for my time, maybe someone else will.” Tony says that this reminds him of Third World countries where government officials take bribes in part because they are paid so little to do their jobs.

All of this tends (although I hate to admit it) to support my friend Rob Hyndman’s contention that top Diggers should be compensated because what they do is effectively work, and that Jason Calacanis recognized that and rewarded it (Rob’s thoughts can be found in the comments here, and in his post here). My argument has always been that Diggers get rewarded in other ways that are non-financial — they get bragging rights, for example, and the admiration of their peers, which in some cases is worth more than money.

But Rob’s point is that this shouldn’t preclude them getting paid as well. And obviously, some top Diggers agree, to the point where they are willing to take what amount to bribes to submit things. To some extent, this is probably inevitable — if there is a system, someone will find a way to game it. My friend Muhammad Saleem, who is a top contributor to Digg and also a paid contributor to Netscape, has some perspective on this phenomenon that is also worth reading.

Update:

Steve O’Hear, who writes a blog on social media for ZDNet, wrote something asking whether Digg users should be compensated, and then submitted his piece to Digg. It got about 90 Diggs and 40 comments, and made it to the front page — but then it suddenly disappeared.

Jason Calacanis, ex-Netscape supremo, comments on the Digg payola story (finally). Ane now he’s paying people $100 for evidence of Diggers who are being paid by marketing companies.

Maybe if I were working at Yahoo, I would be all fired up by Terry Semel’s carefully calculated “Hey, let’s get all fired up” speech, which Jonathan Strauss has helpfully transcribed on his Yahoo blog. Terry says the media are “full of shit,” and that they all dissed Yahoo five years ago and now they’re dissing it again, but it won’t stop the company, etc., etc. All his speech needed was the soundtrack from the climactic scene in Saving Private Ryan.

It could be just me, but I don’t think Terry Semel makes a very good General Patton, or whoever he was trying to channel in his little tirade. He looks like the kind of guy who wouldn’t say shit if his mouth was full of it — or maybe if someone on the corporate messaging team told him it would make him look like a take-charge kind of guy. Nice try, Terry. I hope for your sake it makes your employees forget how far down all their stock options have sunk.

And Terry “The Tiger” doesn’t do much better in the video clip from CNBC that Mike Arrington has posted over at TechCrunch, in which he tries to deny the rumours of layoffs while giving himself a loophole big enough to drive a tractor-trailer through. As several commenters have pointed out, all Semel denies is that there will be 15 to 20 per cent layoffs, not that there will be any layoffs at all. As for the five years ago comparison, Dave “500 hats” McClure notes on Om’s blog post that

The main difference between then & now is that everybody got hit hard in 2000 / 2001, and everyone had to recover at the same time with equivalent challenges.

This time around, lots of companies appear to be kicking ass — most notably Google — but Yahoo is struggling to keep their stock price afloat while they squander #1 position in users & page views.

No one gets blamed for drowning in a typhoon. but if you can’t swim when the sun is shining that’s a different story.

If things don’t start turning around at Yahoo, not only will they have to take away the exclamation mark, but I have a feeling Terry might be saying shit a few more times — and he might even mean it.

Well, that didn’t take long. It’s only been a few months since Google bought YouTube, and now it is signing deals with broadcasters — in this case, British Sky Broadcasting or BSkyB — to handle a host of video-related functions, including searching within video, feeding ads into video streams and providing a YouTube-style platform for uploaded video content from users.

Of course, Google was working on video search and video advertising for some time before it bought YouTube, but now it has the full package of abilities and tools to offer someone like BSkyB. It’s interesting that the company went with a British broadcaster instead of someone from the U.S. Google said the choice had to do with higher broadband speeds in Britain, but I wonder whether there isn’t some resistance from U.S. networks who think that they can do all of those things themselves, and therefore they don’t need Google.

According to the Financial Times story, the deal involves search and a YouTube-style hosting service to begin with, but will eventually be extended to video advertising on BSkyB channels, with advertisements stored on the broadcaster’s set-top boxes and then fed into video streams by Google based on its algorithms. “This is a really, really big deal for us,” said Google CEO Eric Schmidt. “If it works, it will become our most lucrative deal from the get-go.”

It’s also the first time that Google will be providing the Gmail engine to someone else for use in powering their email — which BSkyB will offer along with the video tools — according to Google Operating System. And the Guardian says that the British network will also be offering Google’s VOIP services, as well as data storage and other services (the much-rumoured GDrive perhaps?). A pretty interesting deal, and possibly the blueprint for similar deals with other broadcasters.

Obviously, the death of CNet editor James Kim — who had spent days trying to find help for his family, stranded in deep snow in a remote valley in Oregon — is a tragedy. But it shouldn’t be blamed on the use of Google Maps. I’ve seen a few sites where that issue has been raised, including the Lost Remote blog and a Wired blog.

This is apparently based on the fact that the Kims took a forest-service road through the Oregon wilderness — called Bear Camp road — that is not plowed or maintained in the winter, took a wrong turn and got lost. According to a local news report, authorities speculated that the Kims might have used Google Maps, since both Yahoo Maps and MapQuest suggest other routes but Google recommends Bear Camp road.

On the Lost Remote blog, one commenter even asks whether a mapping service can be found legally responsible for leading people astray. A CNN story, however, notes that even some printed maps don’t specify that the Bear Camp route is not suitable for winter driving. According to the story, the 2005-2007 state highway map has a warning in red print that says “This route closed in winter,” but a Rand-McNally map doesn’t.

State troopers said the family had been using a printed map, but it wasn’t clear which one. This story says someone warned the Kims that the road was not maintained in winter (Shelley has also written about it). The bottom line is that the Kims could easily have found themselves where they were without being lured there by an online map. Whenever a tragedy occurs, the tendency is to want to find someone to blame, but Google is the wrong target.

Update:

More info on the mapping issue can be found here, here and here (thanks to Mike Pegg of Google Maps Mania for those links). And please read the comments here for some other perspectives and clarification. And according to this story, while the surviving members of the family were rescued by a helicopter hired by the family, they were first spotted by a recreational helicopter pilot who knows the area well.

Update 2:

James Kim’s father Spencer Kim has written an op-ed piece for the Washington Post about his son’s death and the problems that led up to it — from road warning signs being removed and gates left unlocked to media helicopters disrupting the search.

Nick Denton, the Gawker Media supremo who recently took over as editor of Valleywag (former editor Nick Douglas just popped up at Huffington Post’s Eat The Press), loves to take shots at a few people — including Jason Calacanis, who is apparently now an executive with venture group Sequioa Capital — and Mike Arrington of TechCrunch is definitely high up on that list.

Nick loves to use a graphic with Mike’s face and the logo “Red Herrington” (which is a shot on several different levels), and he never misses a chance to try and take the piss — as the British say — by making fun of TechCrunch or Mike’s various other interests. So it’s interesting to see Nick providing some friendly advice to his nemesis in a recent Valleywag post.

The reason for his advice was a comment by Mike in a recent profile in the San Francisco Chronicle, in which TechCrunch is described (somewhat breathlessly) as “Mr. Web 2.0,” a kingmaker among Silicon Valley entrepreneurs.” At one point, when asked whether there is anyone against whom he holds a grudge, he says Nick Denton — because “Nick Denton is evil.”

And the advice from Nick? “If you’re in a good old-fashioned tabloid war, never let them get to you — and never ever let them know they’ve got to you.” In other words, chill out dude (which is exactly what Mike has said he plans to do, taking two months off to rest and ski at his parents’ place in upstate Washington). Or, as old military types like to say: “Illegitimus non carborundum” — which loosely translates as “Don’t let the bastards grind you down.”