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Thanks to Mike Arrington of TechCrunch for pointing me to a post by Yahoo vice-president of product development Ian Rogers. In the post — entitled “Convenience Wins, Hubris Loses” — Rogers recaps a recent presentation he made about the business of digital music, and as Mike notes it is well worth reading.

The Yahoo VP — who used to run the pioneering music company Winamp, after dropping out of university for a year in 1995 to tour with the Beastie Boys — describes the early days of the digital music game, and his surprise at the combination of fear, ignorance and loathing with which the music industry greeted the arrival of mp3s and services such as Napster:

“We were naive to be sure, but we were genuinely surprised by the approach. Suing Napster without offering an alternative just seemed like a denial of fact. Napster didn’t invent the ability to do P2P, it was inherent in TCP/IP. It was like throwing Newton in jail for popularizing the concept of gravity.”

Fast-forward to today, and Rogers talks about how Amazon has finally created a music-download service that is actually as easy to use as a p2p network — in fact, easier. Unfortunately, he says, it has taken eight years of wasted effort and millions of dollars in legal fees:

“8 years. How much opportunity have we lost in those 8 years? How much naivety and hubris did we have when we said, “if we build it they will come”? What did we spend? And what did we gain? We certainly didn’t gain mass user adoption or trust, two prerequisites to success on the Internet.”

As Rogers puts it — before describing the ridiculously convoluted process you have to go through to buy a track and download it through Yahoo Music — “Inconvenience doesn’t scale.” If there is one lesson the music business needs to learn, it is that. It’s true that Apple’s iTunes service has grown to a phenomenal size despite the use of proprietary DRM controls, but think of how much larger the audience for that music could be. As Rogers puts it:

“Platforms which monetize the gigantic scale of the Web are the only way to compete with the control you’ve lost, the only way to reclaim value in the music industry. If your consultants are telling you anything else, they are wrong.”

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The New York Times is reporting that the much-hyped “Google phone” isn’t going to be a dedicated device, but a mobile Linux-based operating system and suite of software that will run on phones made by others. This is more or less what many Google-watchers expected (including me — I wrote a column about the speculation for the Globe awhile back, which is here).

The idea of Google actually getting into the hardware game never made any sense to me, and still doesn’t. The idea of a compact, cross-platform mobile OS with Google software like a free (ad-supported) browser built in, however, makes a huge amount of sense to me. That would pretty much take the war to Microsoft’s doorstep, since it would compete head-on with Windows Mobile — and it’s about time that someone did, since Windows Mobile is still miles away from what it could be.

If Google’s mobile OS is free, light and fast, it could make a serious dent in the mobile market.

Big news in the social-media space: MSNBC has acquired Newsvine, a pioneering news community that has been somewhat eclipsed by Digg and other sites in terms of public profile over the past year or two, but has continued to grow and prosper outside of the spotlight. Newsvine was founded in 2005 by Mike Davidson and a number of other former Disney Group and ESPN staffers, and was arguably ahead of its time in terms of design and interactivity.

I haven’t written about Newsvine in quite a while, but I was impressed by the service when I first tried it out during the beta trials last year, and I am even more impressed by how they have managed to grow and yet stay focused on their core principles — and done so while taking only $1.5-million in funding, as Mike Arrington points out. That is a model that other Web 2.0 companies would be wise to follow.

For MSNBC, the acquisition accomplishes something obvious: it allows the news site to incorporate social and community features without having to develop them itself. For Newsvine, it most likely solves the issue of ongoing funding, and gives the site a much larger community to draw from when it comes to interactivity, and more exposure for the writers that the site has developed.

Rex Sorgatz, who is not only executive producer of MSNBC.com but also the proprietor of the excellent Fimoculous blog, has some thoughts about the deal that are well worth reading. As he puts it:

“[Big media] needs fixing, now more than ever. And fixing it is about finding its roots — news as conversation, as a network, as a platform. By reconstituting media as participation, Newsvine suddenly makes news fun and engaging again.”

I have to agree with Rex, who has also worked for big media for a decade or so: big media is hard. It is resistant to change — and even when it does decide to move, it does so at a glacial pace, for a whole pile of reasons. Many mainstream news sites are trying to incorporate more social features, but it’s not something that comes easily, or instinctively. If buying Newsvine can help MSNBC do some more of that, then more power to them.

MSNBC’s story on the acquisition is here, and Mike Davidson’s thoughts on the deal are here. Rafat Ali at PaidContent says that his guesstimate of the purchase price is between $5-million and $7-million (others think that it could be more), and Richard MacManus has some perspective on the acquisition at Read/Write Web. More coverage and opinion in the New York Times, at Jeremy Wagstaff’s Loose Wire blog (where he talks about the thorny issue of compensation for “user-generated content”), at Newsroomnext and at ParisLemon.

A recent commentary piece by Alice Mathias in the New York Times says Facebook should really be called “Fakebook” — at least for the student users who first made the social-networking site popular. As she describes it:

“Facebook did not become popular because it was a functional tool — after all, most college students live in close quarters with the majority of their Facebook friends and have no need for social networking.

Instead, we log into the Web site because it’s entertaining to watch a constantly evolving narrative starring the other people in the library.”

She describes the use of Facebook as being like online community theatre, with users putting on different masks depending on which groups or individuals they are connecting with, and what impression they want to give of themselves. This aspect of online behaviour may be more prevalent among younger users — as sociologist danah boyd has described in her research into social networks such as Friendster and MySpace — but I don’t think it’s unique to them.

I think we all have different personas we use, depending on where we are and who we’re interacting with, whether it’s work or home, co-workers or neighbours, family or old friends — people who have only known us as adults, vs. people who knew us when we were teenage hoodlums. The tension between those different personas is why some of us feel a little uncomfortable when we run into our boss wearing a grungy old T-shirt and surfer shorts with a two-day growth of beard and a wicked hangover.

Scott Karp thinks that kind of thing is why Facebook may never really work as a business tool. I’m not convinced that’s true — but it’s certainly going to make things a little more complicated (or interesting, depending on your point of view).

The ease with which Craigslist can boost its revenues truly boggles the mind. According to several estimates, the privately-held classified provider controlled by founder Craig Newmark and CEO Jim Buckmaster already has annual revenues of about $150-million — and that’s from charging $25 for job listings in just a handful of cities, and $75 for a listing in San Francisco, as well as $10 for listings by apartment brokers in New York City.

Now Craigslist is adding fees in four more cities — Chicago, Orange County, Sacramento and Portland. So that’s another $25 per listing in all of those centers. And the classified site, which pushes a mind-blowing eight billion web pages or so every month, is already making $150-million or so from seven cities. Even if you assume that places like Orange County and Portland aren’t going to produce as much income as Boston or Los Angeles, I figure that’s still going to boost revenues by close to 50 per cent.

That would put the company’s sales at more than $200-million — and this from a company that consists of about 20 people working in a renovated house in San Francisco, and a couple of hundred servers somewhere. All you have to do is multiply some of those revenue numbers a bit and you get into some pretty amazing territory, as Startup Boy wrote awhile back. And I would expect that even after adding all those cities, costs at Craigslist have barely gone up.

It’s too bad that Jim and Craig have no interest in making billions of dollars, as they continually tell people — including the audience at mesh 2007, where Jim was one of the keynote speakers. Those guys are enough to make a Wall Street broker cry.

Last week, Radiohead dropped a bomb on the music business by announcing that its entire new album In Rainbows would be available for download from the Internet, and that fans would be able to pay anywhere from zero to whatever they wanted for the music. This was quite rightly viewed by many (including yours truly) as a revolutionary move by the band to sidestep the entire traditional music industry structure and go direct to the fans.

What hasn’t gotten quite as much attention since the announcement is the news that Radiohead plans to release In Rainbows through traditional music channels as well, via a record deal with a traditional label — and possibly even EMI, the label that the band belonged to before its contract ran out after Hail to the Thief was released in 2003. Radiohead’s management told a British radio programme that they planned to arrange such a deal to get the wider distribution that major labels can provide. They said:

“The band [are] incredibly proud of this record and feel that it deserves to be brought into the mass marketplace. That’s why we need a record company who have that infrastructure to deliver the CD.”

And EMI — one of the only major labels that has started distributing music in digital form without DRM controls — sounds like it is the closest to shifting the way it thinks about the industry, and therefore probably the best suited to do a deal with the band (although the financier who now owns the company seems to think that “digitalisation” is a word, which is unfortunate).

My first reaction to the news that Radiohead was still planning to go through the regular channels was to think that the whole download announcement was just a big publicity stunt. At the same time, however, I think that it is evidence that the balance of power is shifting. Granted, Radiohead likely has plenty of pull anyway — but the realization that the band could just as easily avoid the label route has to have gotten the attention of record-industry execs.

Mike Arrington noticed the exact same thing I did when I read Wired’s interview with new Technorati CEO Richard Jalichandra. When asked about Techmeme, which just came out with its Top 100 “leaderboard” feature, the new Technorati honcho said it was a “great little site,” but it was clear that he didn’t see it as much competition.

As Mike notes in his post, this comes off sounding awfully high and mighty — and from a company that has surprisingly little to be high and mighty about, when you get right down to it. Technorati has been riddled with performance issues for longer than I care to think about, has launched new features that seem poorly thought out and are already being done better by others (WTF comes to mind), and is in danger of being overshadowed by a website run by a single person, Techmeme’s Gabe Rivera.

Many people have pointed out that Techmeme.com only focuses on a small number of tech blogs, while Technorati covers the waterfront of the blogosphere — and that’s true. But Google blog search already does a far better job of that, despite only having been around a fraction as long. And when it comes to blogs, tech is still a big segment, and Techmeme pretty much owns it as far as I’m concerned (although Digg.com has a chunk as well).

To his credit, Jalichandra responded to Mike’s post in the comments at TechCrunch, and said he didn’t intend to come off as belittling Techmeme in any way. So he’s clearly a good sport. But if there’s one thing the new CEO should know by now, it’s that when you’re in a hole the first thing you should do is stop digging — and his new company is still in one heck of a hole.

My friend Kara Swisher at All Things D needs a hand, so I told her I would reach out to my vast blog readership — are you listening, Mom? — in an attempt to help out. You see, Kara wants to have lunch with Yahoo co-founder and now CEO Jerry Yang. Actually, that’s not the real reason she needs a hand. The real reason is that she has set up a page at DonorsChoose.org, a Web 2.0 charity site that allows you to pick worthwhile school projects that need financing and then let others contribute to the cause.

Apart from the satisfaction of knowing that they are helping to finance educational materials and other projects for needy schools, the contestants in the blogger challenge get a chance at a number of awards from sponsors, including — you guessed it — lunch with Jerry Yang. Kara has set up a page with some projects in both San Francisco and Washington, D.C. and other leading bloggers have set up pages as well, including Fred Wilson and Lockhart Steele from Gawker Media.

The idea of Donors Choose — where individuals decide which worthy projects to fund, and then others can contribute, with each project and the financing thereof monitored by Donors Choose — reminds me of GiveMeaning.com, the site that Tom Williams started a couple of years ago now, which takes the same kind of approach to a whole range of different charitable efforts, from building soccer fields in Rwanda to building schools in Ethiopia.

At the moment, Kara’s competitive blood has to be boiling at the fact that Fred’s challenge is currently in the lead. Beating him would make lunch taste even sweeter, I bet 🙂 An earlier piece that Kara did about Donors Choose getting funded is here.

Update:

Kara has a video plea for donors up now. Check it out.

Thanks to my mesh pal Mike Masnick from Techdirt for pointing me towards a recent column by Jeremy Wagstaff of Loose Wire (and the Wall Street Journal) that I had been meaning to post about. In the column, entitled “The Future of News,” Jeremy writes about how it’s difficult to talk about the future of news without admitting that the idea of what we call “news” has changed, and is continuing to change. As he puts its:

“There is no news. Or at least there is no longer a traditional, established and establishment definition of what is news.

Instead we have information. Some of it moving very fast, so it looks like news.”

This is partly the result of technology, in that more and more people are connected to sources of information than they used to be, even if those sources of information are friends or family on the other end of a cellphone or an MSN conversation, or a news feed. But all those connections have also expanded the definition of news:

“True, if someone hits a tall building with an airliner, that’s news to all of us. The U.S. invades or leaves Iraq; that’s news. But the rest of the time, news is a slippery beast that means different things to different people.”

And as newspapers and media websites everywhere are discovering, the news — the stuff people are really interested in — isn’t always what we put on the front page, or even the second or third page. Sometimes it’s the quirky or human-interest stories that really grab people. And yet, we routinely denigrate those types of stories.

“What we’re seeing with the Internet is not a revolution against the values of old media; a revolution against the notion that it’s only us who can dictate what is news.”

I couldn’t have said it better myself. Read the whole column here.

A ruling has come down in the case of the record industry vs. Jammie Thomas — the single mom who took her file-sharing case to court rather than settle, as virtually every other person sued by the RIAA has done — and a jury ruled that she has to pay $222,000 for 24 songs that she downloaded, even though there was no evidence to prove that anyone downloaded them from her. This is so asinine it’s difficult to put into words.

I’m not going to argue that what Jammie Thomas did was right in a legal sense, because it clearly wasn’t, as Mike Masnick notes at Techdirt. So the RIAA was obviously within its rights to sue. But $222,000 for 24 songs? That’s just ridiculous. It’s a good thing the case only involved 24 songs, and not the 1,700 or so that Ms. Thomas had on her hard drive initially. That would have left her paying about $15-million for that music collection, if the same formula was used. And what was the formula? Something like X times Y, to the power of Z — where X is the lack of a sustainable business model, Y is an aggravated response to a non-existent threat, and Z is the inability to differentiate between customers and thieves.

I don’t know about the geniuses who run the RIAA, but if I was one of the guys in Journey or Aerosmith or Green Day or any of the other bands that Ms. Thomas downloaded and listened to regularly, I would call her up right now and offer to pay her court costs. Lawyer Ray Beckerman at Recording Industry vs. The People calls it “one of the most irrational things I have ever seen in my life in the law” (hat tip to John Paczkowski at All Things D for the link).

Further reading:

Check out these links for more thoughts on the verdict:

• Ed Felten at Freedom to Tinker
• Ashkan Karbasfrooshan at WatchMojo
• Michael Geist on the Canadian angle
• Cynthia Brumfield at IPDemocracy
• Larry Dignan at ZDNet
• Declan McCullogh at CNET
• the New York Times story

 

Update:

Jammie Thomas is appealing the verdict and there is a website set up for donations at freejammie.com. Wired’s Threat Level blog also has an interview with one of the jurors in the case, who more or less says that her defence was unbelievable and that the damages were so high because the jury wanted to “send a message.”

So Dave Winer thinks Techmeme has become a “cesspool,” as he puts it. Why? He says it’s because of the Techmeme leaderboard, and how it’s encouraging people to say all kinds of things in an attempt to game the system. But I think Dave is just pissed that a certain person he doesn’t name — but whose name rhymes with Mason Balacanis — was topping the site for much of the day.

Dave can’t even bring himself to mention J-Dawg’s name, calling him an “idiot who says idiotic things to get attention,” a reference that I assume goes back to Dave’s little contretemps with JC at a conference awhile back. The ironic thing is that by doing that, Dave himself engaged in exactly the same thing he claims to abhor — and got some nice Techmeme juice out of it to boot.

Update:

Mike says that Dave is using tinyURL in his post when he links to Jason, to prevent JC from getting any link juice. I guess that’s pettiness 2.0 (In a comment below, Dave denies that this was his intention). And Scott Karp has some tips for Gabe on how to prevent people from “gaming” Techmeme to rise up the leaderboard. But Scott, that would ruin all our fun 🙂

Humpty Dumpty: “When I use a word, it means just what I choose it to mean – neither more nor less.”

Alice: “The question is, whether you can make words mean so many different things.”

You have to hand it to Jason Calacanis, the diminutive Web entrepreneur behind Mahalo, for completely ignoring all the ink and electrons that have been spilled writing about the concept of Web 3.0 — including conversations like the one I had with Sir Tim Berners-Lee, the guy who invented the Web — and just coming up with his own definition. Not only that, he has the audacity to call it the “official” definition. Official according to whom? Why, to Jason, of course.

Not surprisingly, as Fred Wilson points out in his post, Jason’s definition is also effectively a thumbnail description of Mahalo, the people-powered search/directory service he is trying to build. Web 3.0, he says, is:

“the creation of high-quality content and services produced by gifted individuals using Web 2.0 technology as an enabling platform.”

That’s funny, because every time I’ve heard anyone who actually knows anything describe it, they use terms like “semantic Web,” and talk about adapting the way the Web is built so that information can be aggregated and linked in different ways automatically, as Josh Kopelman describes here. But that kind of definition wouldn’t suit Jason’s purposes, so in effect it doesn’t exist. I think I like the definition Jemima Kiss came up with better.

Further reading:

Brian Solis has some thoughts on what Web 3.0 is at Bubblicious, and so do Alex Iskold at Adaptive Blue, Jeremy Toeman at LiveDigitally, Allan Stern at CenterNetworks, and Eric Berlin at Online Media Cultist.

Update:

Jason has said that his post was just linkbait — to which Gabe Rivera gives the best response I’ve seen yet, in a comment on Jason’s blog (thanks to Megan McCarthy at Valleywag for the link). Gabe says:

“Yeah, I suppose you fooled Techmeme about your sincerity. Note that you also fooled Fred Wilson and Josh Kopelman in the process.

Training your readers to doubt you can be risky. Sometimes you want your posts taken at face value, e.g. those insisting your company is succeeding.”

Jason responds that the post was mostly sincere, and just the word “official” was linkbait — but in a comment on the Podtech blog he says the post was “90 per cent linkbait.”

Classic. The record industry — or at least the big boys in the RIAA — get their first chance to air their sophisticated arguments in court as part of a high-profile lawsuit involving an individual who downloaded music, and what do they say? That even making a copy of a single song from a CD you paid for is theft. Mind-boggling.

This statement came from (no surprise) the chief litigator for Sony-BMG, the same gang that thinks installing a Trojan on your computer is a great business model. When asked whether it was wrong for consumers to make copies of music that they had purchased, Jennifer Pariser said: “When an individual makes a copy of a song for himself, I suppose we can say he stole a song.” Making a copy of a purchased song is just “a nice way of saying ‘steals just one copy’.” I guess we should pull all those law books out of the library and strike out any reference to “fair use” then. Nice work there by the RIAA. Of course as Ars Technica points out, this isn’t the first time they have made that claim, despite the fact that the courts have repeatedly disagreed.

This is almost like a follow-up to my previous post on TechCrunch and CNET (be sure to read the updates, because I added some worthwhile links), but PaidContent has a post up about a new report from Jordan Edmiston Group looking at M&A activity in the media sector: according to the report, the total value of media M&A during the third quarter was $95-billion, up 110 per cent from last year — and the largest single segment was online media, with 232 deals worth a total of $8.3 billion — up from 136 deals worth $5.7 billion last year.

Boy, Henry “I used to be a famous Wall Street analyst” Blodget is sure on a roll — or make that a troll. Today he’s got a post about how TechCrunch could be bought by CNET for $100-million or so. His post is actually a response to one by Doug McIntyre at 24/7 Wall Street, in which Doug hypothesizes about blog networks such as TechCrunch and Huffington Post and GigaOm and how much they might be worth to existing media entities.

Mike has a sarcastic response to Henry’s post here. And there’s no question that $100-million seems like a fairy tale price — a lot like Henry’s $2,000 Google post from yesterday. Still, the idea itself makes sense. TechCrunch or GigaOm would fit as a part of CNET or several other media entities. The ironic thing is that selling would probably be a mistake, because at the moment they are doing far better than most of the companies that would be thinking about buying them.

Update:

Is $100-million nonsensical or not? Let’s look at the numbers: TechCrunch says it has 1.5 million unique visitors a month — although a commenter below says those numbers may be high — and CNET Networks has about 10 million a month, according to comScore (Compete says about 6 million a month). But as we all know, it’s about more than just uniques, right? It’s about monetization.

CNET had revenue last year of almost $400-million, although it only made a profit of $7-million, which is pretty pathetic. No one except Mike knows what TechCrunch made last year (check below for some Valleywag scuttlebutt — I have no idea whether it is even close).

Still, CNET’s market cap is $1.2-billion. If you assume that someone could monetize Mike’s 1.5 million unique visitors better than CNET can monetize its uniques (which wouldn’t be a stretch) then you could easily come to the conclusion that TechCrunch is worth about 20 per cent of what CNET is worth — or about $250-million.

I’m not saying it is, I’m just saying $100-million doesn’t look all that crazy. Oh, and Mike? If you do a deal, Cynthia Brumfield at IPDemocracy has some advice for you.

Update 2:

Dan Farber of ZDNet (which is part of CNET) notes that the rankings at Alexa and (presumably) comScore only measure CNET.com, but CNET’s family of sites get 137 million uniques a month. That’s an order of magnitude larger than the numbers I was using. That suggests TechCrunch might be worth in the neighbourhood of $20-million. Still nothing to sneeze at.