Facebook hits 300 million users, says it's cash-flow positive

Photo: Palo Alto., Calif.-based Facebook is the nation's and the world's No. 1 social networking website. Credit: Tony Avelar / Bloomberg.

It took Facebook five years to get to 150 million active users, a lightning-fast growth rate by any measure. But like track phenom Usain Bolt, the world's No. 1 social networking website atomized its own speed record this year by going from 150 million users to 300 million users in a little over nine months. 

CEO Mark Zuckerberg also said today that the company had become cash-flow positive ahead of schedule (he had originally guessed "sometime in 2010") and called the milestone important "because it sets Facebook up to be a strong independent service for the long term."

Facebook makes its money from sponsored advertising as well as from an auction system in which marketers and small businesses pay to target their ads to users of a certain age or geographic region. The private Palo Alto, Calif., company does not disclose its revenues.

Facebook has had a tumultuous childhood, frequently getting in hot water over the way it shares, stores and uses the private information of its large user base. Last month, the company said it was starting a year-long project to clarify and tighten its privacy controls after a Canadian government agency complained about the site's policies.

But Facebook's growth is perhaps the best evidence of its utility and its general appeal to users worldwide. The company says its fastest-growing demographic is now people 35 and older, and in the U.S., the site's nearly 90 million visitors made it the fourth most-trafficked Web property in July. Facebook had 70 million U.S. visitors when it surpassed rival MySpace in May to become the nation's most popular social network.

The company was valued at $10 billion in a transaction earlier this year in which the Russian venture firm Digital Sky Technologies bought $200 million worth of stock in the company. Facebook, which now has close to 1,000 employees, has taken about $600 million in financing.

-- David Sarno

Facebook, take note: Twitter changes terms for the better

Twitter Inc. changed its terms of service today to clarify that advertising on your Twitter page is OK and that users, not the company, own their tweets.

For months, ad services have flourished in certain circles of the social network. Twitter's legal provisions reinforce those companies' legitimacy.

Twitter also inserted sections to the user agreement addressing standards for third-party developers and intolerance for spammers, wrote co-founder Biz Stone on the company blog.

When Twitter announced the changes earlier today, I was having lunch in Hollywood with Ben Huh, chief executive of Pet Holdings Inc., the parent company of Fail Blog and popular kitty site I Can Has Cheezburger. Quite aptly, we were eating cheeseburgers at In-N-Out.

Huh and I joked about how Facebook had gone out of its way in February to say it owned all of the content you upload to your profile -- and had to backtrack -- compared with Twitter going out of its way to assert the opposite.

For the record, Huh prefers Twitter to Facebook but acknowledges that they both have their place -- the latter being good for interactions with real-world friends. Oh, and actress Alyssa Milano agrees.

Facebook can simplify its interface and photocopy Twitter all it wants (cough, Facebook Lite). But it won't convince the world to entrust Facebook with every bit of its personal content as long as the company keeps making blunders like the terms change, followed by the joke of a democratic legal page and the infamous Beacon.

-- Mark Milian

Follow my commentary on technology and social media on Twitter @markmilian.

Original photo by ChrisL_AK via Flickr

More branded entertainment from NBC.com

NBC Universal announced the second show today in its lineup of original online productions, "In Gayle We Trust." The protagonist is "the centerpiece of the town, serving as the sounding board, guru and trusted adviser among the town's idiosyncratic clientele," the network says in its press release. OK, no ground broken so far. She's also an insurance agent. That's what piques my interest.

You see, this year's crop of shows created by the NBC Universal Digital Studio group is "branded entertainment" -- a cross between entertainment and advertising. The sponsors of the shows -- in this case, American Family Insurance -- do more than just buy ads. They're involved in several stages of the production, helping make sure that the characters, script and plot advance their brand's message. The underlying theme of "In Gayle We Trust" is that insurance agents are good, problem-solving people.

I haven't seen the show -- it goes live online Sept. 15 -- so I can't say whether American Family's touch is subtle or ham-fisted. Supporters of the branded-entertainment concept say that viewers will keep the shows honest. If something plays more like advertising than entertainment, people will tune out. But with TV's traditional ad-supported business model undermined by the proliferation of commercial-skipping DVRs, networks are experimenting with all sorts of ways to deliver their advertisers' messages. The line between content and come-on has already been extinguished in kids' TV, much of which exists mainly to sell action figures and card games. The risk for grown-up viewers is that their shows will have their priorities reversed too.

The network's first branded-entertainment series, an amusing workplace comedy dubbed "CTRL," inserts a few obvious promotions for sponsor Nestea into each short episode. It's so blatant, in fact, it's easy to segregate the pitch from the programming (and ignore it, if you want). There's no telling at this point whether the new series will blend the two elements more skillfully, but the sponsor's motives are the same. Here's more from the NBC Universal announcement:

"In Gayle We Trust" is one component in a marketing campaign for American Family Insurance -- integrating entertainment and education to engage consumers with the brand, its products and its agents as uniquely suited to help families protect all the things they love. 
 
The integrated campaign also includes expert personal finance advice on MSN.com and an engaging CBS Radio/Katz Advantage radio promotion, all aligned by a similar theme emphasizing American Family agents role as trusted advisors. Individual websites are digitally linked and provide an American Family agent locater tool.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

AOL taps Garlinghouse for revamp of mobile and e-mail segments

Brad Garlinghouse. Credit: AOL.

As AOL prepares to blast off from parent company Time Warner Inc. in the coming months, the Internet company and its chief executive, Tim Armstrong, are working to fill up the tanks with rocket fuel. 

Late Monday, AOL announced it had hired former Yahoo Inc. executive Brad Garlinghouse as president of Internet and Mobile Communications -- a position that will oversee  some of AOL's best-known properties, including its instant messaging software and its e-mail system ("You've Got Mail"), as the company tries to set a course towards prosperity in an overcrowded digital cosmos. 

At Yahoo, Garlinghouse made headlines when he demonstrated a quality that AOL sorely needs -- a disdain for corporate complacency. In a memo circulated to Yahoo employees in 2006, later known as the "Peanut Butter Manifesto," Garlinghouse called the company's management out in dramatic terms, recommending that Yahoo undergo a "radical reorganization," "blow up the matrix" and "kill redundancies." 

Aggressive thinking is the order of the day for AOL, which has suffered brand and user attrition since its days as a dial-up service, and which is now reinventing itself as a social communications hub. 

"There's no doubt there are challenges ahead," Garlinghouse said by phone Monday.  But that's "one of the reasons I'm excited about it." 

Though Garlinghouse and Armstrong -- also on the call -- spoke mostly in the abstract about what AOL might look like in 2010, the general idea is for AOL to focus and monetize the many communications streams people are now using.

"When you think about the future of messaging -- where you have phone, text, e-mail -- content floats on those same surfaces," said Armstrong, a former senior advertising executive at Google.

And where users and content commingle, advertising wants to follow. "There's a tremendous amount of information and data that gets kicked off of our products and services which allow us to make all of our systems smarter,"  Armstrong added.

Garlinghouse will also be the West Coast point man for AOL Ventures, the company's business incubation arm that will be increasingly looking to acquire start-ups that would fit AOL's growth strategy.

"I think with Tim's heritage at Google and my heritage at Yahoo, we both see tremendous networks of people and companies to tap into," Garlinghouse said.

-- David Sarno

Two Justin Timberlake fragrances disguised as mp3 players

Justin Timberlake fragrance attempts to be hip by looking like a portable music player. Credit: Boing.boing.net

When you walk by the cologne counter at the department store, resist the temptation to lift the new Justin Timberlake fragrance to your ear.

The new man-scent bearing his name, called Play, comes in a bottle made to resemble an mp3 music player, complete with rewind and fast-forward arrows.

Givenchy, which makes the cologne, explains on its site that mobile players are "quintessential objects of modernity and style that have become both everyday objects and icons of our era."

If that language is not tortured enough for you, the company goes on to say its product "is a perfume for a man who is in touch with his era and ready to live his emotions to the full."

It comes in two scents to fit "olfactory emotions." The names: eau de toilette and eau de toilette intense.

You could just image how much fun the "Porky's" movies could have with those.

Or maybe Play is an early prototype of a product that could finally take on the iPod -- a portable music player that makes you smell irresistible.

-- David Colker

Coming to a magazine near you -- video, right on the page

The video player embedded in the magazine is just to the top right of Neil Patrick Harris' head. Credit: YouTube

So much for quiet reading time.

An upcoming issue of Entertainment Weekly will include what's being billed as the first video advertisements ever in a print magazine. According to the Associated Press, a video player with a 2-inch screen will be embedded on heavy-stock paper -- similar to what's used by greeting cards that play bits of music -- and inserted into the magazine.

And as in those cards, the video will start up as soon as the insert is opened. 

The first ads will be for CBS and Pepsi -- they'll appear in the magazine's mid-September TV preview issue -- but not in all copies. The magazine, which would not disclose the cost of the ads, said the insert will only be distributed in the Los Angeles and New York areas.

The video player, made by the L.A. company Americhip, also includes a little speaker. The ads will open with the cast of the show "The Big Bang Theory" joking about the video and explaining how the reader can bring up clips from the network's fall lineup. The soft drink ads are for Pepsi Max diet soda.

A preview of the ad is on YouTube.

The video player supposedly can survive binding and shipping. But can they survive librarians?

-- David Colker

Baseball comes to Roku

Major League Baseball has just added another way for fans to watch games: through Roku's $99 Digital Video Player. Like an earlier deal with Boxee, the agreement enables MLB.TV subscribers to move live webcasts from their PC screens to their television sets. The only charge for Roku's baseball channel is the MLB.TV subscription fee, which is about $35 for the remainder of the current season. The Roku capability makes the league's offering more appealing to baseball junkies, albeit not a huge number of them; the Roku box isn't exactly a mainstream appliance. The bigger winner is Roku, which relies on content deals such as this one to spur sales.

Prior to MLB.TV, Roku had only two online video partners: Netflix, which offers older movies and TV shows to subscribers, and Amazon, which provides newer releases on demand on an a la carte basis. The goal for Roku (and Boxee) is to present the full panoply of online video, or at least all the major sources of programming on the Web. But some top content providers and online aggregators have been reluctant to support this "over the top" distribution model for fear of undermining the revenue the industry collects from pay-TV operators. 

Baseball has no such qualms. But then, the league charges for the privilege of watching games online, which makes MLB.TV less of a threat to the league's traditional TV-rights deals than a free online outlet would be. In other words, MLB.TV was low-hanging fruit for Roku. A larger challenge for the company is persuading ad-supported cable TV networks, such as the ones supporting Time Warner's "TV Everywhere" initiative, to come on board. 

Tim Twerdahl, Roku's vice president of consumer products, said a lot of content owners are "trying to find the right platform" for an Internet-on-TV play. "You'll see us doing more sports with other partners," he added, saying the company expects to offer at least 10 channels by the end of the year. Roku has made a development kit available to programmers who want to customize their online feeds for the Roku player (for example, by converting from a keyboard-and-mouse interface to one that uses a simple remote control). It's also working on enabling targeted advertising through the box, potentially generating more dollars per viewer than programmers can charge for the commercials they broadcast. Targeting reduces the number of viewers reached, however, so such a capability may not be much of a recruiting tool for Roku until it has a significantly larger customer base.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Online ad spending dropped 7% in second quarter, worst not yet over, says IDC

Google grew its online ad business, while the rest of the industry faltered. Credit: David Paul Morris / Getty Images

The worst is not yet over. U.S. spending on online ads, which dropped 7% to $6.2 billion in the second quarter from a year earlier, is poised to drop again this quarter, said technology consulting firm IDC.

"We will continue to see losses in 3Q and 4Q, but the ... loss rates ... will likely begin to improve in the fourth quarter," IDC analyst Karsten Weide wrote. "We believe the industry may have to wait until mid-2010 until we see real growth again."

Worldwide, things weren't much better. Online ad sales slipped 5% to $13.9 billion in the second quarter, down from $14.7 billion a year earlier.

With the exception of Google, the pain was spread among nearly all online ad platforms. Monster.com was smacked with a 31% decline. AOL suffered "both weakness in display ads as well as internal sales problems," Weide wrote. Yahoo saw revenue erode 13% in the second quarter, though it blamed some of the decline on currency fluctuations.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

What is Twitter? Most people still don't know, study finds

Twitter cloud. Credit: respres via Flickr

A new LinkedIn Research Network/Harris Poll found that advertisers believe much more highly in the importance of Twitter than the average consumer. What a shocker, right?

The more interesting tidbit buried within the report is that the majority of common folk surveyed still have little idea of what Twitter is. And here we thought the news media had completely exhausted coverage of the social network.

Of the 2,025 U.S. adults surveyed, 69% said they didn't know enough about Twitter to comment on the service.

Compare that to just 17% of advertisers who admitted to not knowing much about the website -- a group whose colleagues would, if they found out about said confession, probably take them out back "Old Yeller" style.

The minority of consumers who actually knew about Twitter were split on its effectiveness. Some said the short-messaging service would grow, and an equal number of respondents said it was just for kids. The remaining 8% are apparently too cool for the tweets, saying that Twitter is old news and that it's time to find the next big thing.

Twitter acknowledged that its homepage doesn't do much to help newcomers decipher the point of the website. The company plans to unveil a revamped landing page this week for visitors who don't have accounts or aren't logged in.

“You can try it out without having to sign up, so you can get an idea of what Twitter is before you use it,” Twitter co-founder Biz Stone told AllThingsD last week. “We need to do a better job of explaining ourselves to people who hear about us and then have no idea what do to.”

-- Mark Milian

Follow my random thoughts on technology, the Internet and Web start-ups on Twitter @markmilian.

How to opt out of being Facebook's corporate shill with privacy ad settings

Facebook founder Mark Zuckerberg: One face we'd prefer not to be in our ads. Credit: Peter Foley / EPA

Social-media websites are trying to evolve advertising as quickly as they have online communication. Social news sites Digg, Reddit and StumbleUpon all are experimenting with user-ranked ads.

Facebook is taking a different approach by sticking your mugshot directly into your friends' sponsored posts.

Your digital endorsement is only supposed to kick in with your "relevant social actions." But a mix-up last week had third-party Facebook apps randomly serving ads with users' faces.

Buried in the social network's privacy settings is the ability to opt out of being a corporate shill.

If you don't want to lend your identity to Facebook's ad program, log onto the website, go to News Feed and Wall ad tab in privacy settings and set "appearance in Facebook ads" to "no one."

There. Doesn't it feel good not to involuntarily endorse things?

-- Mark Milian

Follow my random thoughts on technology, the Internet and Web start-ups on Twitter @mmilian.