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4:57 PM, October 7, 2008
 Ever watched a video on YouTube and wanted to buy the song? YouTube is counting on it.
The world's most popular video-sharing site is hoping to make money from its huge audience by installing buttons under YouTube videos so that the ability to buy the music and video games featured in the video clip is just one click away.
The "click to buy" buttons, which began appearing in the U.S. today, connect viewers to the product page on Amazon.com or Apple's iTunes. To start, YouTube, which will receive a commission for each sale, is selling songs from two major labels, EMI Music and Universal Music Group, and video games from Electronic Arts. Eventually it wants to expand to sales of other products such as movies, television shows and concert tickets. "This is the first step in a viable e-commerce platform," said Bakari Brock, business affairs counsel at YouTube.
It's another effort by the video-sharing site to figure out how to profit from its popularity. So far, YouTube has mainly focused on advertising as a source of income, including text ads that run along the bottom of videos as they play, contests sponsored by advertisers and home-page video ads. But it has begun to experiment with new ways to take advantage of the site, which attracts nearly 100 million people a month in the U.S.
Google bought YouTube two years ago for $1.65 billion. Google Chief Executive Eric Schmidt has pledged to investors that YouTube will make money once it hits on the right formula. Last month he said Google was being patient. "We are where we should be," he said. Yet revenue this year is expected to be only about $200 million. YouTube declined to talk about the success of its advertising efforts or the revenue the site generates.
YouTube seems to be catching on to an old Web trend called "hotspotting." The classic example: You spot Jennifer Aniston wearing a sweater you must have, and you click on the sweater to buy it. A couple of years ago, LA Times Technology Editor Chris Gaither and former staffer Claire Hoffman wrote about a French clothier that decided to make hotspotting even hotter by letting potential online shoppers click on the clothes that actors were wearing -- just before they took them off and had sex on the small screen.
-- Jessica Guynn
11:48 AM, October 7, 2008
Well, there's one thing that can be said about the new online advertising numbers released by the Interactive Advertising Bureau today: They could have been worse. Unfortunately, analysts say they probably will be soon.
Internet advertising revenue in the U.S. for the first half of 2008 totaled $11.5 billion, up 15.2% from the same period last year. Not so shabby, right? But when you consider that in 2007, revenue in the first half of the year was up 27% from the same period the previous year, and that in 2006, revenue climbed 36% from the previous year, the growth numbers aren't that impressive.
"From what I see, this is a similar pattern to the last slowdown in 2001," said David Silverman, a partner in the entertainment, media and communications practice at PricewaterhouseCoopers, which worked with the IAB to come up with the numbers. Silverman said that the second half of the year typically sees more spending than the first half. But this year, he said, this may be different "given the continuing slowdown and economic conditions."
Search continued to dominate online spending, accounting for 44% of money spent advertising online, up from 41% the previous year. Spending on classified advertising, at $1.6 billion, fell to just 14% of the pie.
Still, online looks positively healthy when compared with other sectors of advertising. ZenithOptimedia today cut its forecasts for the overall U.S. advertising market in 2008 and 2009, predicting growth of 1.6% this year rather than the 3.4% it had initially projected. In 2009, ad spending in the U.S. will grow less than 1%, the firm said.
"All advertising is somewhat depressed, and online advertising has fared better than average," said Joe Apprendi, chief executive of Collective Media, a New York-based online advertising firm. "It's going to grow, which isn't the case with all media."
Meanwhile, media mogul Barry Diller tells the Wall Street Journal that thinking about the online advertising market is a good way to develop a headache. WSJ: Companies have struggled to make money in online video and social networking. What is the outlook for advertising in these areas?
Mr. Diller: You really want to get a headache? Try to understand Internet advertising. Social networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.
-- Alana Semuels
Photo by Ahn Young-Joon / Associated Press
10:32 AM, October 7, 2008
-- Sarah Silverman and other Jewish celebrity voters take their campaigns online. LAT
-- Apple rumored to introduce Mac laptop made of a solid block of aluminum. BusinessWeek
-- Google app prevents drinking and emailing. Ars Technica
-- Disney lands in hot water for using anonymous quotes from IMDb praising its films. Telegraph
-- Pandora makes friends with Chumby. CrunchGear
-- Boston University researchers turn light bulbs into Wi-Fi hotspots. CellularNews
-- Steve Wozniak dishes on Apple. Telegraph
-- AMD dredges up investor money to split itself into two companies, one to design chips and another to manufacture them. NYT
-- Hulu to stream presidential debates. PaidContent
-- Sony Reader e-book has style, but no wireless connectivity. PaidContent
-- Alex Pham
Photo: Sarah Silverman. Credit: Marc Lecureuil / Comedy Central
5:41 PM, October 6, 2008
 There was a time when upstart bloggers with small operations felt like the sky was the limit. Their world seemed immune to the economic pitfalls plaguing old media. It's possible that time has passed.
On Friday, Gawker Media, which runs 12 blogs, announced it was laying off 19 staffers. The New York Times called the layoffs "an early indicator" of a Web advertising slowdown. In a memo to employees, Gawker founder Nick Denton (pictured in a photo montage at right) said that 2009 was going to be "exceptionally difficult" as advertising declines, and said "we have to prepare for the worst, now, rather than when the worst comes upon us."
Not the most optimistic statement for an already rocky week. But some news today calls into question the idea that all blogs are bound to suffer. Today, Giga Omni Media announced it had raised $4.5 million to continue to expand its tech-related blog network, which includes the likes of GigaOm, NewTeeVee and Web Worker Daily. The Huffington Post, which had a record number of unique visitors in September as the presidential campaign has heated up, "has seen no signs of a slowdown," according to Mario Ruiz, vice president of media relations.
Rafat Ali, founder of Content Next Media, which runs sites such as PaidContent.org and is owned by Guardian News and Media Group, is adding to the payroll: His company said today that it had hired two new writers and was looking for a few more. AOL's Weblogs Inc., which owns Engadget and about 40 other blogs, is hiring "more than a handful" of people, according to AOL Senior Vice President Marty Moe.
"We're having the best year we've ever had in terms of both traffic and revenue," Moe said.
Are we seeing a tale of two blogospheres -- one that will survive the coming advertising slowdown and one that won't? Or is Gawker just more realistic than the blogs that say everything is hunky-dory?
Matt Marshall, chief executive and editor of San Francisco-based tech blog VentureBeat, said that some blogs might actually thrive in this economy.
"Even in a downturn, advertisers want to make sure they get a return on their investment," he said. He added that blogs that focus on a certain subject can assure advertisers that they'll reach a certain demographic, making themselves even more attractive to companies with limited ad budgets.
Blogs that are owned by larger companies might be able to hold on a little longer. Content Next's Ali said his company's revenue was being supported by both advertising and the funding from Guardian News and Media Group. Moe of AOL said that "properties associated with a large player like AOL would have an enhanced ability to withstand difficult economic conditions."
But for many blogs, the old way of doing things is changing dramatically. Denton's memo made that clear: We never used to talk about the business side of the operation. Traffic was the only concern; my belief was that juicy news would draw the readers and the advertising would take care of itself. We were patient; even if it took four years for a site to develop the audience that finally registered with advertisers, we had the time. No longer.
Now, Gawker Media blogs that don't generate the ad revenue they need to survive will become leaner operations. That type of thinking may reach other blogs eventually. Until then, don't look for any blogs to be spending money on lavish conferences or swanky trips around the world. That includes Giga Omni Media, despite its newfound cash.
"In the next year, everyone's going to be very cautious about where they spend their money," CEO Paul Walborsky said.
-- Alana Semuels
Photo montage: Nick Denton, founder of Gawker Media. Credit: Civixen via Flickr
4:50 PM, October 6, 2008
Time Warner Cable CEO Glenn Britt has been an outspoken critic of the networks' online efforts, arguing that free, ad-supported TV sites such as Hulu undermine the subscription-TV revenues that the industry depends on. Recently, however, Time Warner Cable has been urging its customers to use those very sites -- and to watch them on their TV sets, no less. Among other things, the company is offering a quick video tutorial on how to connect a PC or laptop to a TV set. And if customers can't figure out how to make the connections on their own, Time Warner employees will provide the necessary cables and help with the installation. Schweet!
You might leap to the conclusion that Time Warner recognized how good online TV was for its cable modem business, which recently ranked third among U.S. broadband suppliers. With broadband growth slowing -- there's only so many homes to convert, after all -- revenue growth will have to come from customers upgrading to higher speeds and premium services (or converting from DSL services that don't offer as much capacity). And high-quality free TV is a pretty good incentive to upgrade. But that's not what's motivating the cable operator, I don't think.
4:39 PM, October 6, 2008
 RealNetworks this weekend suspended selling its RealDVD software in response to the request of a judge who needed time to review the legal issues involving the software, the company confirmed today.
In U.S. District Court in San Francisco on Tuesday, Judge Marilyn Hall Patel will take up two lawsuits involving the software, which allows users to copy DVDs to their computer hard drives. RealDVD went on sale last week, claiming to be the first legal and easy way to copy movies. On the same day, RealNetworks, whose chief executive, Rob Glaser, is pictured above, and Hollywood studios sued each other.
The movie industry says the software violates copyrights, allowing people to “rent, rip and return” movies from a rental store. RealNetworks says the software is meant to be used with DVDs one owns. It sued preemptively so that a court would decide the matter.
Today, on RealDVD's website, a note reads: "Due to recent legal action taken by the Hollywood movie studios against us, RealDVD is temporarily unavailable. Rest assured, we will continue to work diligently to provide you with software that allows you to make a legal copy of your DVDs for your own use."
"Irreparable Harm ... Not," argues Fred von Lohmann of the Electronic Frontier Foundation, who in a blog post takes apart the claims that RealDVD injures the copyright holders. But at AllThingsD, John Paczkowski says that RealDVD "users are on the honor system," which isn't exactly Hollywood's idea of copyright protection.
-- Michelle Quinn
Photo: RealNetworks CEO Rob Glaser in 2001. Credit: Rick Maiman / Bloomberg News
1:02 PM, October 6, 2008
Here's a way to cheer up those of you whose stock portfolio is in the toilet: At least you're not on your way to the dentist's office. (This is not an effective tactic for people who are actually on their way to the dentist's office). With the sharp metal devices used to poke your gums and the disapproving stares for not flossing enough, a visit to the dentist's chair often isn't much fun.
Matthew Leader wants to make the dentist's office a more entertaining place. His New York company, InChairTV, supplies dentists with DVDs for patients to watch as they recline for a cleaning or filling. Leader has even figured out a way for patients to watch TV without having to look at the sharp tools and whirring brushes dentists wield above their heads: through sunglasses with LCD screens that make it seem as if there's a 44-inch TV screen a few feet away.
The DVDs, now shown in 400 dental offices across the country, feature licensed content from Disney and ABC, including shows such as Ugly Betty and Scrubs. During the commercial breaks, patients watch ads for dental procedures such as teeth whitening, a boon for the dentists who are trying to convince patients to spend on cosmetic procedures.
Today InChairTV said it would allow any interested advertiser to run ads targeting the captive audience stuck in a dentist's chair. The cost for 30- and 60-second spots will be similar to that of ads on broadcast TV, Leader says. He thinks advertisers will rush to get their ads on digital screens that consumers actually enjoy watching.
"Many screens out there are there just because it's possible, not because it's a good idea," he said, referring to the digital screens popping up everywhere from the gas station to the elevator. "But we're actually answering a need rather than just putting out something people are going to see because they're looking in that direction."
Dentists pay $499 for the equipment and get free DVDs through a Netflix-like service; they're required to send the discs back every few months so that InChairTV can update the ads and content. Leader says it's worth it -- according to a Nielsen Media Research study the company commissioned, 82% of patients said they'd use InChairTV again and 87% said they'd tell family and friends about it.
"The distractive element totally eliminates the irrational fear of going to the dentist," said Mal Braverman, a New York dentist who uses InChairTV in his office.
Fair enough -- but the question remains: Will the irrational fear of going to the dentist be replaced by a very rational fear of being stuck in the dentist's chair watching ads for toothpaste?
-- Alana Semuels
Photo by InChairTV
9:47 AM, October 6, 2008
 Against the backdrop of an ailing economy, Internet auction house and retailer EBay said today it would lay off 10% of its global workforce, or about 1,000 employees and several hundred temporary workers, in an effort to shore up its businesses. EBay also said it plans to spend about $1.3 billion on acquisitions to pump up its online payment and classified advertising businesses as it tries to brace itself for the spreading financial crisis.
Shares fell as much as 8% in early trading to their lowest level in more than five years. Investors are concerned that EBay's online auction business is vulnerable as consumer spending declines, the U.S. housing market slumps and fuel prices remain high. The auction business has already faced slowing growth over the past few years. Chief Executive John Donahoe warned that economic weakness and the stronger dollar were affecting Ebay.
The San Jose company said the move to cut its 15,000-person work force was unrelated to the potential slowdown in e-commerce. Instead EBay is trying to make its business more competitive in the face of declining profits and stagnant growth.
EBay said it would take a restructuring charge of as much as $80 million in the fourth quarter. It will also eliminate open positions.
It also said it would hit the low end of its revenue forecast of $2.1 billion to $2.15 billion, but exceed the high end of its earnings forecast range of 39 cents to 41 cents per share, before certain items. The company had previously said it would report earnings between 30 cents and 32 cents a share. It will release its earnings on Oct. 15.
EBay had been the subject of layoff rumors for weeks.
The company also announced that it would buy PayPal rival Bill Me Later, an online payments firm based in Timonium, Md., for $945 million in cash and stock. It will combine Bill Me Later with ...
9:09 AM, October 6, 2008
-- NBC seems to get the Web now: It's finally easy to watch "Saturday Night Live" videos. Silicon Alley Insider
-- EBay is cutting 1,000 jobs, or about 10% of its workforce, but plans to shell out more than $1.2 billion to acquire Bill Me Later and two Danish websites. AP via LAT
-- The Wall Street axes have started chopping away at Google's financial forecasts. Silicon Alley Insider
-- No. 4 search engine Ask.com revamps to try to make Web searches more like a conversation. Mercury News
-- The tough economy might keep people on their couches, but it's not boosting Netflix subscriptions. Tech Trader Daily
-- Cutbacks at Gawker Media, Nick Denton's blog empire, signal trouble in the online ad business. NYT
-- Or is it a good time to double down? Giga Omni Media, Om Malik's blog network, raised another $4.5 million in VC funding. GigaOm
-- Movie studios are packing Blu-ray DVDs with Internet-connected extras, including text chat, to boost sales of the high-definition format that hasn't yet taken off. Washington Post
-- A district court put a temporary halt to sales of RealDVD, the software that prompted dueling lawsuits between the movie studios and Real Networks. NewTeeVee
-- Seven things to avoid doing online in order to avoid identity theft. Consumer Reports
-- Chris Gaither
6:17 PM, October 3, 2008
 Sometimes a story can be so gripping that your mind can see where the characters are going. But when you're reading his new novel, "Precious Cargo," Clyde Ford wants to give you a little help.
As more and more people are turning to alternative means of entertainment, it's online media -- video, audio and interactive tools -- that seem to be winning out over the printed word. But Ford thinks he's found the solution: combine them all.
Ford is a writer of nautical-themed thrillers who also happens to be a former IBM software engineer. He spent the Last year developing OnScene, a website that combines satellite imagery with a digital version of "Precious Cargo." Readers can browse sample pages on the website and click on highlighted locations, which then display satellite images along with relevant info, audio or video.
Ford says OnScene is the "bridge" between the novel and digital media. He hopes the convergence can capture a younger demographic of book worms. "We're losing a generation of readers," he said. "We need to find ways to engage young people around traditional forms of literacy."
While "Precious Cargo" is currently the only OnScene-enabled work, he plans to use the technology for his future books and adapt it to some of his older paperbacks. In its current form, less than a dozen interactive pages can be read online, along with a list of locations mentioned in the novel that can be seen via satellite images. But Ford hopes to put entire books online once he establishes a revenue model with his publisher, Vanguard Press.
But it's not just boating books that could benefit from OnScene. One Christian book publisher -- Ford requested it not be named because a deal is still pending -- has already shown an interest in licensing the software, he said. The current version of OnScene doesn't employ any kind of copyright restrictions -- pages can be easily downloaded and redistributed, unlike, say, Google Book Search. But Ford says such locks can be easily added.
(On that note, it's surprising that Google hasn't come up with this. Just mix Google Maps with Book Search, add a bit of YouTube and throw in a dash of Knol, and you've basically got OnScene.)
Ford will appear at the Mystery Bookshop tonight at 7 p.m. (sorry for the late notice) to sign copies of his book -- hard copies only, so leave the laptops at home.
-- Mark Milian
4:31 PM, October 3, 2008
 Dustin Moskovitz, a Facebook co-founder who had overseen engineering, is leaving the social networking start-up to form another.
Moskovitz launched Facebook with Mark Zuckerberg, its chief executive, while they were students at Harvard.
Moskovitz will leave Facebook in about a month with Justin Rosenstein, an engineering manager who joined Facebook from Google.
Rosenstein and Moskovitz, who couldn't be reached for comment, are joining forces to build software they hope will be "to your work life what Facebook.com is to your social life," according to a note on Rosenstein's Facebook page. Moskovitz recruited Rosenstein to Facebook, and the two have been collaborating on software for business users in recent months. Social media is increasingly gaining traction inside businesses, which are experimenting to see if they can increase productivity and communication.
Rosenstein became well known in Silicon Valley circles for his enthusiastic embrace of Facebook as the new "it" company that was "on the cusp of changing the world." After joining in June 2007, he called it "that company that shows up once in a very long while -- the Google of yesterday, the Microsoft of long ago." In his post today, he said, "Leaving Facebook makes me sad, but I feel I have to follow my passion on this."
Moskovitz is the latest in a series of departures of executives from Facebook as the 4-year-old Palo Alto company hires seasoned managers such as former Google executive Sheryl Sandberg, who is now chief operating officer. Moskovitz and Zuckerberg are close friends and confidants.
"Dustin has always had Facebook's best interest at heart and will always be someone I turn to for advice," Zuckerberg said in a statement.
-- Jessica Guynn
Photo: Facebook co-founder Dustin Moskovitz. Credit: Facebook
3:07 PM, October 3, 2008
 As if it didn't already have enough to do, the U.S. Securities and Exchange Commission is investigating the origins of the apparently false report this morning that Apple Chief Executive Steve Jobs was rushed to the hospital after "suffering a major heart attack."
Just before 7 a.m. EDT, an anonymous Internet poster using the pseudonym Johntw published a short item on iReport.com, a community site created by CNN for user-generated news, that Jobs was taken to the hospital "suffering from severe chest pains and shortness of breath." The stock plunged more than 9% between 9:40 a.m. EDT and 9:52 a.m. An Apple spokesman said the report about Jobs was "not true." Apple shares recovered but ended the day at $97.07, down 3%.
CNN says it has been contacted by SEC, which is seeking the identity of Johntw. Did Johntw, in his or her first submission to iReport, just want to play a prank? Or did this person make stock trades on the false information? If so, Johntw, who didn't respond when iReport contacted him or her, could face jail time, says Wired.
It's no secret that information shouldn't be believed just because it appears somewhere on the Internet. But who in this case should be held responsible?
CNN's iReport promotes itself as "Unedited. Unfiltered. News," which should be a warning to anyone who's considering acting on information found there that it isn't exactly solid. The site invites people to post news and asks the community to flag stories that are inappropriate.
A CNN spokeswoman said that iReport.com began as a way for viewers to submit their own material that, if vetted, might appear on the air or on CNN.com. During the Virginia Tech massacre in 2007, CNN received, via iReport, cellphone video taken by a graduate student of people running as shots can be heard. After that, the spokeswoman said CNN was besieged by user-submitted content from around the world. It launched iReport.com as a separate website in February. Since, more than 6,400 iReports have been used on CNN.
IReport.com said in an e-mailed statement that the community vetting process had worked: "The community brought it to our attention. Based on our Terms of Use that govern user behavior on iReport.com, the fraudulent content was removed from the site and the user's account was disabled."
This isn't the first time that Jobs has fallen victim to an erroneous health-related report. In August, Bloomberg accidentally published an advance obituary of Jobs. The CEO made fun of it during his next public appearance last month, standing in front of a large screen with the words: "The reports of my death are greatly exaggerated."
-- Michelle Quinn
Photo: SEC Chairman Christopher Cox. Credit: Charles Dharapak / Associated Press
1:10 PM, October 3, 2008
With consumers feeling the pinch in their pocketbooks, this holiday season may turn out to be more cutthroat than usual for the hundreds of video games set to hit store shelves.
Analysts predict that only top-tier titles and those that are highly rated by critics will thrive as consumers pare down spending in the fourth quarter, when the game industry typically pulls in 40% of its annual revenue.
This will be particularly true of shooter games. The genre is highly sensitive to quality rankings doled out by reviewers, generally on a scale of 0 to 100.
"It is pretty detrimental to sales for a shooter game to achieve a score below 80%," said Jesse Divnich, director of analytical services at Electronic Entertainment Design and Research in San Diego. "Simply put, if you want to make a first-person shooter, aim to achieve quality scores above 80%. If not, don’t even bother."
This is the conclusion Electronic Arts came to earlier this week when it pulled the plug on Tiberium, a science-fiction shooter game that had been several years in development. The chart below shows just how brutal buyers can be when it comes to low scores. Add the current economic fear factor and the pressure becomes even greater.
-- Alex Pham
Chart by Electronic Entertainment Design and Research
10:02 AM, October 3, 2008
-- Steve Fossett's plane slammed into a mountain, say authorities. AP via Wired
-- CNet's founder Halsey Minor sues Sotheby's in auction dispute. LAT
-- HP wants in on the consumer cellphone market. WSJ
-- New Sony Reader comes with an internal light and a stylus, things Amazon's Kindle doesn't have. USA Today
-- Former chief financial officer of Networks Associates was sentenced to a year in prison for his role in overstating revenue and earnings. SF Gate
-- The McCain campaign has endorsed a proposal by prominent Web folks to amend some parts of the presidential debates format. Top of the Ticket
-- Michelle Quinn
Photo: Steve Fossett in 2005. Credit: Charlie Riedel / Associated Press
8:34 AM, October 3, 2008
 An already jittery stock market is so nervous about the health of Steve Jobs that it sent Apple shares down sharply earlier this morning after an anonymous Internet poster reported that Apple's chief executive had been rushed to the hospital with a heart attack.
The report raced around the Internet, elevating "steve jobs heart attack" to the top spot on Google Hot Trends this morning.
Apple quickly responded that the report was not true, and the stock rebounded. It's now up $4.44, roughly 4%.
The post appeared on CNN's iReport site, which allows people to contribute unfiltered, unedited news tips. The post has now been removed. But here is what Johntw, the poster, wrote, according to Barron's:
Steve Jobs was rushed to the ER just a few hours ago after suffering a major heart attack. I have an insider who tells me that paramedics were called after Steve claimed to be suffering from severe chest pains and shortness of breath.
My source has opted to remain anonymous, but he is quite reliable. I haven’t seen anything about this anywhere else yet, and as of right now, I have no further information, so I thought this would be a good place to start. If anyone else has more information, please share it.
Not only should the credibility of citizen journalism sites be questioned, even if they are under the CNN umbrella, says Silicon Alley Insider, but the Securities and Exchange Commission will probably want to look into what happened and find out more about Johntw.
And maybe investors too should draw a lesson: Take a few deep breaths before selling off of sketchy news.
-- Michelle Quinn
Photo: Steve Jobs in September 2008. Credit: Daniel Acker / Bloomberg News
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