History > 2007 > USA > Internet, Media (I)

Google Stock Barrels Through $700

October 31, 2007
Filed at 10:10 a.m. ET
By THE ASSOCIATED PRESS
The New York Times

SAN FRANCISCO (AP) -- Google Inc.'s stock price barreled through $700 for the first time Wednesday, propelled by a belief that the Internet search leader will become even more profitable as it plants its products and services in new markets.

The Mountain View-based company's shares traded as high as $704.79 in morning trading before falling back to $703.87, up $9.10 for the session. It took less than a month for the stock to leap from $600 to $700, building upon a fervor that has lifted Google's market value by more than 30 percent since mid-September.

During that 6 1/2-week stretch, Google has created an additional $53 billion in shareholder wealth. That dwarves the total $41 billion market value of another Internet icon, Yahoo Inc., which had a 4-year head start on Google.

The latest surge came after Google confirmed plans to become a bigger force in the Internet's social networking scene and amid reports that the company is about to unveil a long-rumored operating system designed for mobile phones so it can make more money by distributing ads to people on the go.

The recent rally has firmly established Google as Silicon Valley's most valuable publicly held company, supplanting Internet networking supplier Cisco Systems Inc. With a market value of nearly $220 billion, Google also is now worth more than Warren Buffett's holding company, Berkshire Hathaway Inc., whose steadfast refusal to split its stock during the past four decades has left its shares at nearly $130,000.

Google co-founders Larry Page and Sergey Brin, who regard Buffett as an inspiration, so far have resisted requested requests to split their company's stock so more people could afford to buy a few shares. Their theory: a high stock price tends to attract more patient and knowledgeable investors who pay closer attention to a company's long-term strategy than its ability to hit short-term earnings targets.

The philosophy has generated impressive returns so far. A $10,000 investment in Google stock's at its August 2004 initial public offering price of $85 would now be worth about $82,000.

Brin and Page, both 34, have been the biggest winners by far, with estimated fortunes exceeding $20 billion apiece. At least two other Google executives, Chairman Eric Schmidt and sales chief Omid Kordestani, are billionaires while hundreds of other employees have become millionaires because of their stock holdings in the 9-year-old company.

Wall Street is betting Google is still in its financial infancy, even though it's already on track for a profit of about $5 billion this year on more than $15 billion in revenue.

The company has made virtually all of its money so far by displaying text-based advertising links alongside search results and other Web content that includes topics related to the commercial message.

During the past year, Google has introduced new online advertising channels featuring video, graphics and other more compelling features while also extending its marketing machine into television, radio and print.

Now, Google appears intent on shaking up the telecommunications industry by introducing inexpensive cell phones that will make it easier for people on the go to use Google's search engine, maps, e-mail and other applications.

If it pans out, the new Google phone presumably will give the company a chance to sell more mobile advertising and further boost its profits.

    Google Stock Barrels Through $700, NYT, 31.10.2007, http://www.nytimes.com/aponline/technology/AP-Google-Stock.html

Google and Friends to Gang Up on Facebook

October 31, 2007
The New York Times
By MIGUEL HELFT and BRAD STONE

SAN FRANCISCO, Oct. 30 — Google and some of the Web’s leading social networks are teaming up to take on the new kid on the block — Facebook.

On Thursday, an alliance of companies led by Google plans to begin introducing a common set of standards to allow software developers to write programs for Google’s social network, Orkut, as well as others, including LinkedIn, hi5, Friendster, Plaxo and Ning.

The strategy is aimed at one-upping Facebook, which last spring opened its service to outside developers. Since then, more than 5,000 small programs have been built to run on the Facebook site, and some have been adopted by millions of the site’s users. Most of those programs tap into connections among Facebook friends and spread themselves through those connections, as well as through a “news feed” that alerts Facebook users about what their friends are doing.

The New York Times learned of the alliance’s plan from people briefed on the matter. Google, which had planned to introduce the alliance at a party on Thursday evening, later confirmed the plan.

“It is going to forestall Facebook’s ability to get everyone writing just for Facebook,” said a person with knowledge of the plans who asked to remain anonymous because he was not authorized to speak on behalf of the alliance. The group’s platform, which is called OpenSocial, is “compatible across all the companies,” that person said.

“Facebook got the jump by announcing the Facebook platform and getting the traction they got. This is an open alternative to that,” the person also said.

The alliance includes business software makers Salesforce.com and Oracle, who are moving to let third-party programmers write applications that can be accessed by their customers. The start of OpenSocial comes just a week after Google lost to Microsoft in a bid to invest in Facebook and sell advertising on the social network’s pages outside the United States. And it comes just before the expected introduction by Facebook of an advertising system next week, which some analysts believe could compete with Google’s.

Joe Kraus, director of product management at Google, said that the alliance’s conversations preceded Microsoft’s investment in Facebook. “Obviously, we would love for them to be part of it,” Mr. Kraus said of Facebook. Facebook declined to comment.

Facebook’s success with its platform has proved that the combination of social data and news feeds is a powerful mechanism to help developers distribute their software. They are now seen as must-have functions for many Internet companies. Other social networks and Web companies, including MySpace and the instant messaging service Meebo.com, have announced plans to open their sites in similar ways.

For now, however, Facebook has become the preferred platform for software developers.

By teaming with others, Google hopes to create a rival platform that could have broad appeal to developers. A person briefed on the plans said the sites in the alliance had a combined 100 million users, more than double the size of Facebook.

The developers of some of the most popular Facebook applications, including iLike, Slide, Frixter and RockYou, are expected to be present Thursday evening at Google’s headquarters in Mountain View, Calif., where they will announce that they will tailor their programs to run on the OpenSocial sites.

The effort faces several hurdles. Developers may not see the advantage to writing programs that run across such remarkably different networks as, for example, LinkedIn, which caters to business professionals, and hi5, which is popular in Central America.

For Google, the effort could breathe new life into Orkut, which is popular in Brazil and other countries, but not in the United States. While the move could also help some rival social networks, Google could benefit from their success, in part, by helping to sell advertising on those sites.

Indeed, that strategy would fit into a model that Google has begun talking about recently. Vic Gundotra, who heads Google’s developer programs, said last week that Google would soon begin an aggressive project to create software tools and give them away free in an open-source format.

The goal, he said, is to improve not just Google’s applications, but any software that runs on the Web. That, in turn, would drive more Internet use, and Google would benefit indirectly by selling advertising, he said.

Google has not been able to establish itself as a force in social networking, and it clearly wants to. “One of the things to say, very clearly, is that social networks as a phenomenon are very real,” Eric E. Schmidt, Google’s chief executive, said in a recent interview. “If you are of a certain age, you sort of dismiss this as college kids or teenagers. But it is very real.”

Google said it has advertising relationships with several social networks, including a $900 million partnership to sell ads on MySpace, which the company said is performing well. Google is also making some money on Facebook, through ads that run inside applications that are used on that network.

A person familiar with Google’s efforts said that those applications have been far more effective for advertisers on social networks than users’ personal pages. “It is early, but those ads work very well, whereas the ads in overall social media platforms have shown less performance,” the person said. Mr. Kraus said that over time Google hoped to bring other social elements to Web applications, whether or not they run inside social networks. Analysts expect other Google services, including iGoogle, to be equipped with social features eventually.

    Google and Friends to Gang Up on Facebook, NYT, 31.10.2007, http://www.nytimes.com/2007/10/31/technology/31google.html

Microsoft beats Google to Facebook stake

Wed Oct 24, 2007
8:30pm EDT
Reuters
By Daisuke Wakabayashi

SEATTLE (Reuters) - Microsoft Corp beat out Google Inc on Wednesday in a battle to invest in socializing Web site Facebook, agreeing to pay $240 million for a 1.6 percent stake in the Web phenomenon.

Microsoft also clinched exclusive rights to sell ads on Facebook outside of the United States as part of the investment that valued Facebook at $15 billion -- on par with the market capitalizations of retailer Gap Inc and hotel chain Marriott International Inc.

Analysts said Microsoft paid a steep price on a bet that the three-year-old company would be able to transform itself into a hub for all sorts of Web activity.

"The only way this works is if Facebook becomes sort of the users' operating system on the Internet -- everyone logs into Facebook every day to get in contact with their friends and use a multitude of future applications that will be developed for it," said Morningstar analyst Toan Tran.

Facebook, a social network that lets friends share information, allows outside developers to create games and other applications for its site.

The popularity and depth of knowledge Facebook has about its users makes it valuable to companies like Microsoft and Google which want to sell advertising targeted to individual preferences.

Founded in 2004 by Harvard student Mark Zuckerberg, Facebook said it registers 250,000 new users a day, 60 percent of whom come from outside the United States.

Kevin Johnson, president of Microsoft's platform and services division, said the $15 billion price tag for Facebook is based on Microsoft's belief that the site could eventually reach 300 million users, who can be targeted for advertising. It has nearly 50 million today.

"You combine the number of users with the monetization opportunities and you can figure out a fairly modest average revenue per user per year and you can very quickly get to this level of valuation," Johnson said in a conference call with analysts and reporters.

Microsoft has stepped up efforts to be a player in the $40 billion market for online advertising, which the company expects to double in size within three years. It paid $6 billion to acquire digital advertising firm aQuantive in August.

Under the Facebook deal, Microsoft would be the exclusive third-party advertising platform for Facebook extending a previous deal for Microsoft to sell banner advertising next to Facebook member profiles in the U.S. until 2011.

GOOGLE VS. MICROSOFT

Google and Microsoft, now rivals for Internet-based audiences and applications, have butted heads before for Internet properties. Google beat Microsoft with a $1.65 billion acquisition of online video sharing site YouTube last year.

Forrester Research analyst Charlene Li said that Microsoft was a better strategic fit for Facebook, since it knew how to work with software developers and build computing environments -- such as its Windows operating system.

"Microsoft is a company that knows how to build platforms, knows how to develop relationships with developers. Microsoft developed the network that is the biggest, most vibrant one out there," she said. "Google didn't bring as much to the deal."

Facebook opened its doors to users beyond an original base of college students a year ago. It also opened the doors to outside developers and there are tens of thousands of developers writing Facebook applications, the company said.

Microsoft was one of many suitors looking to participate in its latest round of financing, said Facebook Vice President Owen Van Natta. The funds will go toward doubling the company's staff over the next year and other growth initiatives.

Google Co-founder Sergey Brin told a meeting with Wall Street analysts at the company's Silicon Valley headquarters that his company could partner with important Web sites.

"We don't feel, at a higher level, that we need to own every successful company on the Internet," said Brin, who later told reporters that Microsoft may have overbid.

Google has a multiyear deal with MySpace, the largest social network, to provide search and advertising alongside MySpace's 110 million user profiles.

Eric Schmidt, Google's CEO, told reporters that its pact with MySpace is performing better than originally expected.

Shares of Microsoft rose slightly to $31.60 from a Nasdaq close of $31.25, while Google ticked down to $675.30 from a close of $675.82.
 

(Additional reporting by Eric Auchard in San Francisco, Paul Thomasch in New York)

    Microsoft beats Google to Facebook stake, R, 25.10.2007, http://www.reuters.com/article/newsOne/idUSN2424560420071025

Murdoch Marvels at MySpace Acquisition

October 18, 2007
Filed at 2:26 a.m. ET
By THE ASSOCIATED PRESS
The New York Times

SAN FRANCISCO (AP) -- News Corp. Chief Executive Rupert Murdoch said Wednesday he had no idea when he bought online hangout MySpace.com two years ago how explosive social networks would become.

Murdoch, a stalwart of traditional media, marveled at the $580 million acquisition and called himself a ''trainee'' still trying to embrace the Internet during a talk at the Web 2.0 Summit in San Francisco.

The three-day conference, which ends Friday, is focused on social networking startups and other companies dedicated to creating new ways to communicate using the Internet.

''We hoped it would do very well, but we never imagined it would do this well,'' Murdoch said at the conference, sitting on a couch in a packed hotel ballroom next to Chris DeWolfe, MySpace co-founder and CEO, during a question-and-answer talk.

DeWolfe said during the talk that he and co-founder Tom Anderson have agreed to new two-year contracts to stay with the company.

Murdoch's talk on social networking sites came amid intensifying interest from venture capitalists to tech giants like Microsoft Corp. and Hewlett-Packard Co. in so-called Web 2.0 technologies.

Since Murdoch added MySpace to his media empire in 2005, the number of registered users on the site has more than doubled, from 90 million to 188 million. MySpace attracts substantially more traffic than rival Facebook, but is facing increasing competition.

A year after the acquisition, MySpace secured about $900 million in guaranteed shared advertising revenues over three years from Google Inc. by making the online search leader the site's exclusive search provider.

This week, MySpace made a series of announcements signaling the expanding scope of the Web site, including a deal with eBay Inc.'s Skype division to allow free member-to-member voice calls over the Internet and one with Sony BMG Music Entertainment to allow users to post artist videos and music on the site.

It's also a time of significant expansion for News Corp., which agreed in July to buy Wall Street Journal publisher Dow Jones & Co. for $5.6 billion, a deal that's expected to close by the end of December.

This week, Murdoch's Fox broadcast network launched its long-awaited new business news cable channel to rival GE's highly profitable CNBC network.

Murdoch declined to talk in much detail about either topic, sticking to his refrain that he hopes to add more general interest news to the Journal and continuing his derision of CNBC, saying the channel will struggle to compete with the Fox Business Network.

    Murdoch Marvels at MySpace Acquisition, NYT, 18.10.2007, http://www.nytimes.com/aponline/us/AP-Murdoch-Web-20.html

Google's stock tops $600 for first time

8 October 2007
By Michael Liedtke, Associated Press
USA Today

SAN FRANCISCO — Google's stock price sailed past $600 for the first time Monday, extending a rally that has elevated the Internet search leader's market value by about $25 billion in the past month.

The Mountain View-based company's shares traded as high as $601.45 before slipping back to $597.13 in morning trading. It marked the sixth time in the past 12 trading sessions that the stock has reached a new peak climbing on the lofty expectations for Google's third-quarter earnings. The results are scheduled to be released Oct. 18.

The latest milestone served as yet another reminder of the immense wealth created since the company went public in August 2004.

Google shares have increased more than sevenfold from their initial public offering price of $85, leaving the 9-year-old company with a market value of $187 billion — worth more than bigger, more mature businesses like Wal-Mart Stores, Coca-Cola, Hewlett-Packard. and IBM.

It took slightly more than 10 months for Google's stock to make the leap from $500 to $600. By comparison, the journey from $400 to $500 required more than a year to complete. The shares hurdled $300 in June 2005 after passing the $100 and $200 thresholds in 2004.

Analysts began predicting Google's stock would reach $600 at the start of 2006 when the shares were still hovering around $420. Some analysts already are advising investors that Google's stock will hit $700 within the next year. The average target price for the stock is $606.61 among 28 analysts polled by Thomson Financial.

The biggest beneficiaries of Google's co-founders have been Larry Page and Sergey Brin, who began developing a new approach to online search, then called "BackRub," in a Stanford University dorm room in 1996. Page and Brin, both 34, now rank among the world's wealthiest men with fortunes approaching $20 billion apiece.

Google's chief executive, Eric Schmidt, and top sales executive, Omid Kordestani, also have accumulated enough stock in the company to become multibillionaires.

Hundreds of other Google employees are millionaires.

Google's stock has reigned as one of the hottest commodities on Wall Street because its search engine has turned into a moneymaking machine as advertisers spend more on the Internet to connect with consumers who are increasingly shunning television, radio and traditional print media. Google's search engine is the hub of the Web's most lucrative ad network.

If it gets its way, Google could become an even more powerful through its proposed $3.1 billion acquisition of ad distributor DoubleClick The deal is being held up while federal antitrust regulators review complaints that the acquisition would give Google too much control over online ad prices and personal information collected from consumers.

The recent enthusiasm surrounding Google's stock contrasts with the mood less than two months ago. Dragged down by a second-quarter earnings report that lagged analyst projections, Google's stock dipped below $500 in mid-August.

But the bulls stampeded back to Google's stock as it became more apparent the company had widened its already formidable lead over Yahoo Inc. and Microsoft in the battle to process the search requests that trigger revenue-generating advertisements.

The more positive sentiment has driven a 15% increase in Google's stock since Sept. 7. For the year, the shares have climbed by 30%, outstripping the stock market's major indexes.

    Google's stock tops $600 for first time, UT, 8.10.2007, http://www.usatoday.com/tech/techinvestor/stocknews/2007-10-08-google-stock_N.htm

For Google, Advertising and Phones Go Together

Record Companies Win Music Sharing Trial

October 5, 2007
Filed at 2:31 a.m. ET
By THE ASSOCIATED PRESS
The New York Times

DULUTH, Minn. (AP) -- The recording industry hopes $222,000 will be enough to dissuade music lovers from downloading songs from the Internet without paying for them. That's the amount a federal jury ordered a Minnesota woman to pay for sharing copyrighted music online.

''This does send a message, I hope, that downloading and distributing our recordings is not OK,'' Richard Gabriel, the lead attorney for the music companies that sued the woman, said Thursday after the three-day civil trial in this city on the shore of Lake Superior.

In closing arguments he had told the jury, ''I only ask that you consider that the need for deterrence here is great.''

Jammie Thomas, 30, a single mother from Brainerd, was ordered to pay the six record companies that sued her $9,250 for each of 24 songs they focused on in the case. They had alleged she shared 1,702 songs in all.

It was the first time one of the industry's lawsuits against individual downloaders had gone to trial. Many other defendants have settled by paying the companies a few thousand dollars, but Thomas decided she would take them on and maintained she had done nothing wrong.

''She was in tears. She's devastated,'' Thomas' attorney, Brian Toder, told The Associated Press. ''This is a girl that lives from paycheck to paycheck, and now all of a sudden she could get a quarter of her paycheck garnished for the rest of her life.''

Toder said the plaintiff's attorney fees are automatically awarded in such judgments under copyright law, meaning Thomas could actually owe as much as a half-million dollars. However, he said he suspects the record companies ''will probably be people we can deal with.''

Gabriel said no decision had yet been made about what the record companies would do, if anything, to pursue collecting the money from Thomas.

The record companies accused Thomas of downloading the songs without permission and offering them online through a Kazaa file-sharing account. Thomas denied wrongdoing and testified that she didn't have a Kazaa account.

Since 2003, record companies have filed some 26,000 lawsuits over file-sharing, which has hurt sales because it allows people to get music for free instead of paying for recordings in stores.

During the trial, the record companies presented evidence they said showed the copyrighted songs were offered by a Kazaa user under the name ''tereastarr.'' Their witnesses, including officials from an Internet provider and a security firm, testified that the Internet address used by ''tereastarr'' belonged to Thomas.

Toder said in his closing argument that the companies never proved ''Jammie Thomas, a human being, got on her keyboard and sent out these things.''

''We don't know what happened,'' Toder told jurors. ''All we know is that Jammie Thomas didn't do this.''

Copyright law sets a damage range of $750 to $30,000 per infringement, or up to $150,000 if the violation was ''willful.'' Jurors ruled that Thomas' infringement was willful but awarded damages in a middle range; Gabriel said they did not explain the amount to attorneys afterward. Jurors left the courthouse without commenting.

Before the verdict, an official with an industry trade group said he was surprised it had taken so long for one of the industry's lawsuits against individual downloaders to come to trial.

Illegal downloads have ''become business as usual. Nobody really thinks about it,'' said Cary Sherman, president of the Recording Industry Association of America, which coordinates the lawsuits. ''This case has put it back in the news. Win or lose, people will understand that we are out there trying to protect our rights.''

Thomas' testimony was complicated by the fact that she had replaced her computer's hard drive after the sharing was alleged to have taken place -- and later than she said in a deposition before trial.

The hard drive in question was not presented at trial by either party.

The record companies said Thomas was sent an instant message in February 2005 warning her that she was violating copyright law. Her hard drive was replaced the following month, not in 2004 as she said in the deposition.

''I don't think the jury believed my client regarding the events concerning the replacement of the hard drive,'' Toder said.

The record companies involved in the lawsuit are Sony BMG, Arista Records LLC, Interscope Records, UMG Recordings Inc., Capitol Records Inc. and Warner Bros. Records Inc.

------

On the Net:

RIAA: http://www.riaa.com

Lawsuit-tracking blog: http://recordingindustryvspeople.blogspot.com

    Record Companies Win Music Sharing Trial, NYT, 5.10.2007, http://www.nytimes.com/aponline/technology/AP-Downloading-Music.html

Why Big Newspapers Applaud Some Declines in Circulation

October 1, 2007
The New York Times
By RICHARD PÉREZ-PEÑA

As the newspaper industry bemoans falling circulation, major papers around the country have a surprising attitude toward a lot of potential readers: Don’t bother.

The big American newspapers sell about 10 percent fewer copies than they did in 2000, and while the migration of readers to the Web is usually blamed for that decline, much of it has been intentional. Driven by marketing and delivery costs and pressure from advertisers, many papers have decided certain readers are not worth the expense involved in finding, serving and keeping them.

“It’s a rational business decision of newspapers focusing on quality circulation rather than quantity, shedding the subscribers who cost more and generate less revenue,” said Colby Atwood, president of Borrell Associates, a media research firm.

That rational business decision is being driven in part by advertisers, who have changed their own attitudes toward circulation.

In the boom years, “there was more willingness by advertisers to assign some value to the occasional reader, the student, the reader who doesn’t match a certain profile,” said Jason E. Klein, chief executive of the Newspaper National Network, a marketing alliance.

But advertisers have become more cost-conscious and have learned how to reach narrowly tailored audiences on the Internet. Sponsors of preprinted ads that are inserted into a newspaper have been especially aggressive in telling papers that some circulation just is not worthwhile.

“The insert advertisers look to flood the area within five miles of their stores or flood certain ZIP codes,” Mr. Klein said. “They’re not interested in hitting a scattering of readers, and they don’t want to pay for it.”

As a result, newspapers have sharply curtailed their traditional methods of winning customers — advertising, cold-calling people and offering promotional discounts. That strategy was always expensive, and it has become more so with do-not-call laws and the rising number of people who have only cellphones. According to the Newspaper Association of America, the average cost of getting a new subscription order, including discounts, was $68 in 2006, more than twice as much as in 2002.

Most of the customers recruited with promotions and cold calls drop their subscriptions when the discount expires, so the cost of pursuing them and putting the news on their doorsteps can exceed what they pay for the paper. And despite falling ad sales, most American papers still make more money from ads than from circulation.

So the industry is accepting that circulation will fall and hoping to find a level that can be sustained with little effort. As a result, the subscription churn rate — the number of people who drop their newspaper each year divided by the total number of subscribers — fell to 36 percent last year from 54 percent in 2000, the newspaper association says.

There are exceptions to the trend; New York City’s tabloids, The Daily News and The New York Post, continue to scrap for as many readers as they can, even if many of them drift away. And some executives and analysts think newspapers have gone too far in cutting investments meant to cultivate new readers, like advertising on radio or distributing papers in schools.

“Newspapers have not spent a lot of money on that kind of self-promotion, and I think that has hindered our long-term growth,” said John Kimball, chief marketing officer at the Newspaper Association of America.

A prime example of the new approach is at The Los Angeles Times, which has lost more circulation in this decade than any other paper, falling to about 800,000 on weekdays in its most recent reports to the Audit Bureau of Circulations, from almost 1.1 million in 2000.

“There is a school of thought these days that you stop actively selling altogether and let the readership seek its natural level,” said Jack Klunder, senior vice president for circulation at The Los Angeles Times. “We’re not at that point, but we’re running far fewer promotions, accepting that some number of people are never going to buy the paper, long run, at full price.”

Like many other papers, The Times has also cut back sharply on advertising itself. “When the profitability stream of the paper is interrupted, you start to look at places to save on the expense side,” including advertising, Mr. Klunder said. “You need to advertise in the long run, but we make a lot of short-term decisions in this business.”

The New York Times’s circulation has held relatively steady in this decade, but that masks two opposing trends. In its home market, circulation is down, as The Times, like others, has cut back on promotions and discounting. But sales are up in other markets where The Times continues to pursue new, mostly affluent readers.

Some large papers have made conscious decisions to limit their geographic range. The most striking recent example is The Dallas Morning News. Last year, it stopped distribution outside a 200-mile radius, and weekday circulation tumbled 15 percent to a little over 400,000. This year, the paper imposed a 100-mile limit. It expects to show another drop in sales when new figures are reported this month.

“We were distributing in Tulsa, Oklahoma City, Little Rock, way down in south Texas,” said Jim Moroney, the publisher and chief executive. “It cost too much money getting the papers to those places, and this clearly wasn’t anything our advertisers were giving us value for.”

Many of the readers who were cut loose complained, “but I have no regrets,” he said. “The people who really want to read The Dallas Morning News can still get it online.”

    Why Big Newspapers Applaud Some Declines in Circulation, NYT, 1.10.2007, http://www.nytimes.com/2007/10/01/business/media/01paper.html

Cash - For - Coverage Alleged at NY Post

May 19, 2007
By THE ASSOCIATED PRESS
Filed at 10:02 p.m. ET
The New York Times

NEW YORK (AP) -- Strippers! Sex acts! Illicit gifts!

A typical day for the New York Post's salacious Page Six -- except this time, the bold-faced names in the widely read gossip column included the paper's owner, its editor and the editor of the column itself.

Post editor Col Allan, according to a one-time Post employee, received sexual favors from the dancers at a well known Manhattan strip club. Owner Rupert Murdoch spiked stories that were bad for his business ventures, the ex-employee alleges.

And longtime Page Six honcho Richard Johnson accepted a cash gift from a Manhattan restaurateur for a favorable mention -- typical, the fired worker claims, of an operation where graft and freebies flowed freely.

The Post acknowledged the last charge was partially true. It said Johnson received a ''Christmas gift'' of $1,000 cash in 1997. He was confessed the gift to Allan and was reprimanded, the paper said. It did not say when Johnson came forward to Allan, who did not take over the Post until 2001.

Allan, meanwhile, insisted that his behavior several years ago at the club, Scores, was ''beyond reproach.''

A Post spokesman said the tabloid would not respond to the other allegations point by point. ''They're branding them generally as false,'' Howard Rubenstein said Saturday.

In an apparent pre-emptive strike Friday, the Post published the charges made in a four-page statement by a former Post reporter, Ian Spiegelman. The rival Daily News jumped on the story in Saturday's paper, with the front page tease, ''Ex-Post Reporter Alleges Seedy Shenanigans.''

Spiegelman's assertions, if true, would bolster any legal action against the tabloid by another ex-Post writer, Jared Paul Stern. The allegations involving billionaire media mogul Murdoch also could complicate his News Corp.'s offer to buy Dow Jones & Co., which owns The Wall Street Journal.

Murdoch specifically spiked any ''unflattering stories about Chinese officials'' over concerns they might have ''endangered Murdoch's broadcasting privileges'' in the country, Spiegelman said.

Murdoch has insisted his reputation as a meddler is overstated and he would preserve the Journal's independence if his bid to buy Dow Jones is successful.

Stern, a Page 6 freelancer, was suspended last year amid allegations he tried to shake down billionaire Ronald Burkle in exchange for favorable coverage. He no longer works for the paper.

Spiegelman, who also worked for Page Six, was fired in 2004 -- a point noted by Allen in his response to the charges.

''Spiegelman's claims are a tissue of lies concocted by an embittered former employee I fired,'' the editor said in Friday's paper. ''His untruths are so outrageous, they would be laughable if they were not so offensive.''

Stern, speaking Saturday, said he had witnessed some of what Spiegelman alleges, including Allan's regular visits to Scores and orders ''that came down from the top'' about sparing certain public figures from bad publicity.

''They're not telling the whole truth,'' Stern said.

    Cash - For - Coverage Alleged at NY Post, NYT, 19.5.2007, http://www.nytimes.com/aponline/us/AP-Page-Six.html

Oprah Winfrey Is TV's Richest Celebrity

September 29, 2007
By THE ASSOCIATED PRESS
Filed at 8:18 a.m. ET
The New York Times

NEW YORK (AP) -- Oprah Winfrey keeps topping Forbes' rankings of the rich and famous.

This is Forbes' third go-round this year at putting Winfrey at the top of some list or other. The talk-show titan took the top spot on Forbes.com's list of ''The 20 Richest Women in Entertainment'' in January; six months later, she topped the magazine's annual ''Celebrity 100 Power List'' for the second time.

Winfrey, 53, now leads Forbes.com's list of the 20 richest celebs on television. It's one of many new celebrity lists being issued by the Web site, which appears to have figured out that ranking boldfaced names is a good way to get some attention.

Winfrey, whose media empire includes a magazine and stakes in syndicated daytime talk shows by Dr. Phil McGraw and Rachael Ray, earned an estimated $260 million between June 2006 and June 2007.

Jerry Seinfeld is No. 2 with $60 million. The comedian, who has a vast Porsche collection, continues to get rich from reruns of his sitcom ''Seinfeld,'' which he partly owns.

Simon Cowell of Fox's ''American Idol'' places third with $45 million. David Letterman, ranks fourth with $40 million, followed by Donald Trump and Jay Leno (both $32 million), McGraw and Judy ''Judge Judy'' Sheindlin (both $30 million) and George Lopez ($26 million).

Kiefer Sutherland, who portrays agent Jack Bauer on ''24,'' landed at No. 10 by collecting $22 million from the popular Fox drama.

He's followed by Regis Philbin ($21 million); Tyra Banks ($18 million); celebrity chef Ray ($16 million); Katie Couric and Ellen DeGeneres ($15 million); Ryan Seacrest ($14 million); Matt Lauer ($13 million); Barbara Walters and Diane Sawyer (both $12 million); and Meredith Vieira ($10 million).

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On the Net:

Forbes:

http://www.forbes.com

    Oprah Winfrey Is TV's Richest Celebrity, NYT, 29.9.2007, http://www.nytimes.com/aponline/arts/AP-Forbes-TV-Top-Earners.html

Google Cashing in on Widget Craze

September 19, 2007
By THE ASSOCIATED PRESS
Filed at 12:33 a.m. ET
The New York Times

SAN FRANCISCO (AP) -- Google Inc. will try to cash in on the Internet's latest craze by distributing ads within ''widgets'' -- the interactive capsules designed to bring more pizzaz to Web pages.

The move, scheduled to be announced Wednesday, represents Google's first attempt to make money off a trend that the online search leader has helped popularize. The Mountain View-based company has for two years offered a platform showcasing small modules, known generally as widgets, that blend data, text, images and software programs.

Google users can now select from more than 14,000 widgets -- or, as Google uniquely calls them, ''gadgets'' -- that can be planted on a personalized version of the search engine's Web site.

Other influential high-tech companies like Yahoo Inc., Apple Inc., Microsoft Corp. and Facebook Inc. also have helped turn the Internet into a widget factory. And Google isn't the first to try to commercialize widgets.

Online photo-sharing startup Slide Inc. in San Francisco last month launched an attempt to include advertising in its widgets, which have become the most widely viewed on the Internet, according to Media Metrix. Slide is relying on users to choose ads and feature them in their widgets.

About 87 million people in the United States used an online widget in June, according to the research firm comScore Media Metrix.

Virtually all widgets are offered for free, raising questions about how Web sites can profit from them.

Google is approaching that challenge by displaying advertising widgets on the thousands of Web sites that participate in its Internet marketing network -- the largest and most lucrative on the Web.

Just as it does with text-based ad links, Google plans to show the commercial widgets only when they carry a message that will appeal to individual Web site visitors.

Advertisers will be able to pick out where they want to display their widgets, based on a Web site's demographics and other factors such as the location of the computer connected to the Internet.

''We view this as a way to create an environment where the Internet is being supplied by truly useful advertising,'' said Christian Oestlien, a business product manager for Google.

The advertisers who participated in Google's early tests with widgets included Pepsi-Cola Co.'s Sierra Mist, Intel Corp. and Honda Motor Co.

The ad widgets represent Google latest attempt to create other marketing vehicles besides the text-based ad links that generate most of its profits.

The company also has started delivering more video ads, primarily on its YouTube.com subsidiary, and it hopes to become a major force in graphical advertising by buying DoubleClick Inc. for $3.1 billion. That 5-month-old deal still must be approved by federal regulators.

    Google Cashing in on Widget Craze, NYT, 19.9.2007, http://www.nytimes.com/aponline/technology/AP-Google-Widget-Ads.html

Are Books Passé? Web Giants Envision the Next Chapter

September 6, 2007
The New York Times
By BRAD STONE

SAN FRANCISCO, Sept. 5 — Technology evangelists have predicted the emergence of electronic books for as long as they have envisioned flying cars and video phones. It is an idea that has never caught on with mainstream book buyers.

Two new offerings this fall are set to test whether consumers really want to replace a technology that has reliably served humankind for hundreds of years: the paper book.

In October, the online retailer Amazon.com will unveil the Kindle, an electronic book reader that has been the subject of industry speculation for a year, according to several people who have tried the device and are familiar with Amazon’s plans. The Kindle will be priced at $400 to $500 and will wirelessly connect to an e-book store on Amazon’s site.

That is a significant advance over older e-book devices, which must be connected to a computer to download books or articles.

Also this fall, Google plans to start charging users for full online access to the digital copies of some books in its database, according to people with knowledge of its plans. Publishers will set the prices for their own books and share the revenue with Google. So far, Google has made only limited excerpts of copyrighted books available to its users.

Amazon and Google would not comment on their plans, and neither offering is expected to carve out immediately a significant piece of the $35-billion-a-year book business. But these new services, from two Internet heavyweights, may help to answer the question of whether consumers are ready to read books on digital screens instead of on processed wood pulp.

“Books represent a pretty good value for consumers. They can display them and pass them to friends, and they understand the business model,” said Michael Gartenberg, research director at Jupiter Research, who is skeptical that a profitable e-book market will emerge anytime soon.

“We have had dedicated e-book devices on the market for more than a decade, and the payoff always seems to be just a few years away,” he said.

That disappointing history goes back to the late 1990s, when Silicon Valley start-ups created the RocketBook and SoftBook Reader, two bulky, battery-challenged devices that suffered from lackluster sales and a limited selection of material. The best selling e-books at the time, tellingly, were “Star Trek” novels.

Hopes for e-books began to revive last year with the introduction of the widely marketed Sony Reader. Sony’s $300 gadget, the size of a trade paperback, has a six-inch screen, enough memory to hold 80 books and a battery that lasts for 7,500 page turns, according to the company. It uses screen display technology from E Ink, a company based in Cambridge, Mass., that emerged from the Media Lab at the Massachusetts Institute of Technology and creates power-efficient digital screens that uncannily mimic the appearance of paper.

Sony will not say how many it has sold, but the Reader has apparently done well enough that Sony recently increased its advertising for the device in several major American cities.

“Digital readers are not a replacement for a print book; they are a replacement for a stack of print books,” said Ron Hawkins, vice president for portable reader systems at Sony. “That is where we see people, on the go, in the subway and in airports, with our device.”

Book publishers also seem to be preparing for the kind of disruption that hit the music business when Apple introduced the symbiotic combination of the iPod and its iTunes online service. This year, with Sony’s Reader drawing some attention and Amazon’s imminent e-book device on their radar, most major publishers have accelerated the conversion of their titles into electronic formats.

“There has been an awful lot of energy around e-books in the last six to 12 months, and we are now making a lot more titles available,” said Matt Shatz, vice president for digital at Random House, which plans to have around 6,500 e-books available by 2008. It has had about 3,500 available for the last few years.

Amazon has been showing the Kindle to book publishers for the last year and has delayed its introduction several times. Last fall, a photograph of the device, and some of its specifications, leaked onto the Web when the company filed an application with the Federal Communications Commission to get approval for its wireless modem, which will operate over a high-speed EVDO network.

Several people who have seen the Kindle say this is where the device’s central innovation lies — in its ability to download books and periodicals, and browse the Web, without connecting to a computer. They also say Amazon will pack some free offerings onto the device, like reference books, and offer customers a choice of subscriptions to feeds from major newspapers like The New York Times, The Wall Street Journal and the French newspaper Le Monde.

The device also has a keyboard, so its users can take notes when reading or navigate the Web to look something up. A scroll wheel and a progress indicator next to the main screen, will help users navigate Web pages and texts on the device.

People familiar with the Kindle also have a few complaints. The device has a Web browser, but using it is a poor experience, because the Kindle’s screen, also from E Ink, does not display animation or color.

Some also complain about the fact that Amazon is using a proprietary e-book format from Mobipocket, a French company that Amazon bought in 2005, instead of supporting the open e-book standard backed by most major publishers and high-tech companies like Adobe. That means owners of other digital book devices, like the Sony Reader, will not be able to use books purchased on Amazon.com.

Nevertheless, many publishing executives see Amazon’s entrance into the e-book world as a major test for the long-held notion that books and newspapers may one day be consumed on a digital device.

“This is not your grandfather’s e-book,” said one publishing executive who did not want to be named because Amazon makes its partners sign nondisclosure agreements. “If these guys can’t make it work, I see no hope.”

For its part, Google has no plans to introduce an electronic device for reading books. Its new offering will allow users to pay some portion of a book’s cover price to read its text online. For the last two years, as part of the Google Book Search Partner Program, some publishers have been contributing electronic versions of their books to the Google database, with the promise that the future revenue would be shared.

The service could be especially useful to students and researchers who find information they need through a Google search, but it is also likely to include material suited for leisure reading. It will be separate from an effort called the Google Book Search Library Project, which is digitizing the collections of some libraries. That program has angered publishers and led to several pending lawsuits over copyright issues.

Both the programs of Google and Amazon are drawing attention, and some skepticism, from traditional book retailers. Barnes & Noble, the largest bookseller in the United States, once invested in early e-book creator NuvoMedia and sold its RocketBook in stores before getting out of the business in 2003.

Stephen Riggio, chief executive at Barnes & Noble, argues that for most people the value of traditional paper books will never be replicated in digital form. Nevertheless, he plans to compete with Google and Amazon. Mr. Riggio said in an interview that the full texts of many books will become available on the company’s Web site over the next year to 18 months. He also said that Barnes & Noble was considering introducing its own electronic book reader — but only when it can sell one at a low price.

“If an affordable device can come to the market, sure we’d love to bring it to our customers, and we will,” Mr. Riggio said. “But right now we don’t see an affordable device in the immediate future.”

    Are Books Passé? Web Giants Envision the Next Chapter, NYT, 6.9.2007, http://www.nytimes.com/2007/09/06/technology/06amazon.html

A Facebook for the Few

September 6, 2007
The New York Times
By RUTH LA FERLA

If more proof were needed that the rich are different, it could be found on aSmallWorld.net, an invitation-only social networking site.

“I need to rent 20 very luxury sports cars for an event in Switzerland on the 6th September,” a member wrote recently on the Forum, aSmallWorld’s popular nucleus. “The cars should be: Maserati — Ferrari — Lamborghini — Aston Martin ONLY!”

Another announced: “If anyone is looking for a private island, I now have one available for purchase in Fiji.”

Founded four years ago, the site, promoted as a Facebook for the social elite, has grown from about 500 members to about 150,000 registered users. At a time when Christina Aguilera has 466,550 MySpace friends, aSmallWorld has attempted to create an Internet niche by cultivating an air of exclusivity.

The site functions much like an inscrutable co-op board: its members, who pay no fee, induct newcomers on the basis of education, profession and most important, their network of personal contacts. Sleeker than MySpace or Facebook, aSmallWorld.net is not the type of site where one is likely to come across videos of amateur motorcycle stunts or girls in bikinis.

Users are mostly young — 32 on average. Many have graduate degrees and a taste for living extravagantly on more than one continent. Sixty-five percent are from Europe, 20 percent from the United States and the rest scattered around the globe.

“We have put together a platform where a definitive group of people are separated by only three degrees,” Erik Wachtmeister, aSmallWorld’s founder, says often and loudly.

Advertisers were scarce at first. But in the last six months, luxury brands have come on board after a push from investors, including the movie mogul Harvey Weinstein.

The site drew a flurry of media attention last year, when Mr. Weinstein purchased a minority stake through the Weinstein Company, projecting that aSmallWorld’s membership could grow to a million within a year or two. SmallWorld is his sole investment in an Internet property.

Mr. Weinstein, who is diversifying beyond the film industry and recently acquired the fashion house Halston, would not say how much he paid, but he is the largest single investor in aSmallWorld. (Other minority investors include the film director Renny Harlin, the media executive Robert W. Pittman, and Alexander Von Furstenberg, an entrepreneur and the son of the designer Diane Von Furstenberg, an early advertiser on the site.)

The draw, Mr. Weinstein said without a shred of irony, is “direct access to some of the world’s most influential tastemakers,” a community he sees as early adopters and a natural market for his films, books and fashions.

“We’re dealing with a group of people that moves in social migration around the planet,” said Joe Robinson, the new chief executive. “From the point of view of a Mercedes-Benz or a Piaget, that makes this an enormous marketing opportunity.”

The Weinstein Company introduced Mr. Robinson, a former advertising executive with Fox Interactive Media, the owner of MySpace, to court advertisers like Lufthansa, Land Rover, Credit Suisse, Moët & Chandon and Burberry. Olivier Stip, the vice president of marketing for Cartier North America, said that an advertisement placed in June generated lively traffic for the jeweler’s Love collection.

Advertising rates are competitive with those of Forbes.com and Style.com, Mr. Robinson said. On average, clients spend $20,000 to $50,000 a month, he said. The company also arranges dinners and tastings where members can sample advertisers’ products. For one recent gathering, Rémy Martin supplied 4,000 bottles of its premium Cognac, valued at $200 each.

But the presence of advertisers raises questions about just whom they are reaching and whether this business model works.

Mr. Robinson said 35 percent of aSmallWorld members log in every day. But Andrew Lipsman, a senior analyst at comScore Network, a company that rates online usage, said that it is hard to track the number of unique visitors because the site is relatively small. “If there are a couple of hundred thousand registered users,” he said, “probably only a fraction are visiting the site regularly.” Compare that with Facebook, which in July had 30.6 million unique visitors, a number that has doubled since last year, Mr. Lipsman said.

Charlene Li, an analyst at Forrester Research in Foster City, Calif., said that for advertisers trying to concentrate on a group of influential people, a special-interest publication makes sense. “I liken advertising on aSmallWorld to advertising in the Harvard Business School alumni report,” she said. “For luxury advertisers, the online options are fairly limited.”

Skeptics are not sure just who is getting the message. “For truly wealthy consumers, time is the ultimate luxury,” said Pam Danziger of Unity Marketing, which researches luxury brands. “These people are not going to waste it hanging about on a social networking site.”

Those who do hang about often use the site to billboard themselves, advertising unabashedly pretentious tastes. A journalist in Vienna shared the news that her favorite Champagne was Henri Giraud — “I particularly like the 95 Grand Cru,” she wrote on the Forum. Another member recommended Eclipse, a bar on Walton Street in London, for its watermelon martini, “a tour de force.”

In reply to a query from a comely young woman searching for a hairdresser in Singapore, a Procter & Gamble executive there responded with a thinly veiled proposition: “I have two bottles of Nice n’ Easy in the cupboard. I’ll do it for free.”

The company does not publish members’ income or net worth, so their actual spending power is difficult to gauge. Hollywood strivers, fashion models, financiers and minor European royalty have been admitted inside its virtual velvet rope. But users also include publicists and party promoters who use the site as a personal database. In theory, they are just a few clicks away from Mr. Weinstein, a member, or boldface names like Naomi Campbell, Quentin Tarantino and Frédéric Fekkai. (Sycophants beware: members who engage in cyber-social climbing may find themselves exiled to the chilly Siberia of a Big World, aSmallWorld’s less-exclusive sister site.)

The site has drawn enough notice to breed its share of copycats. Milton Pedraza of the Luxury Institute, a New York research group, plans to introduce Luxury Ratings.com early next year as an advertising-free, gated online community; members will pay an annual subscribers’ fee of $250. He says members will each have a net worth in the millions or tens of millions. “They are not only resilient,” he said, “they are nearly immune to a housing or stock market downturn.”

Small World loyalists seem content. Laura Rubin, a brand consultant and fashion publicist in New York, uses her personal network of about 170 members to build her business. “It’s like a Rolodex,” she said. Last month she combed that base for guests to attend a fashion party in the glass-enclosed penthouse of Hotel on Rivington on the Lower East Side.

Etienne Deyans, a party promoter from Zaire, mines his network of contacts to toss together weekly galas with international themes in the cavelike basement of Amalia, a restaurant in Midtown. “It’s a civilized way to have people meet,” Mr. Deyans said. “Here, I tell myself, there will be no rudeness at the door.”

Kibum Kim contributed reporting.

    A Facebook for the Few, NYT, 6.9.2007, http://www.nytimes.com/2007/09/06/fashion/06smallworld.html

Who Founded Facebook? A New Claim Emerges

September 1, 2007
The New York Times
By JOHN MARKOFF

PALO ALTO, Calif., Aug. 29 — Mark E. Zuckerberg is considered the founder of Facebook, the popular social networking Web site estimated to be worth upward of $1 billion.

Three Harvard classmates, the founders of ConnectU, have long claimed that Mr. Zuckerberg stole the idea from them, and they are suing him in Federal District Court in Boston.

Both parties seem to have forgotten Aaron J. Greenspan, yet another Harvard classmate. He says he was actually the one who created the original college social networking system, before either side in the legal dispute. And he has the e-mail messages to show it.

As a Harvard student in 2003 — six months before Facebook started and eight months before ConnectU went online — Mr. Greenspan established a simple Web service that he called houseSYSTEM. It was used by several thousand Harvard students for a variety of online college-related tasks. Mr. Zuckerberg was briefly an early participant.

An e-mail message, circulated widely by Mr. Greenspan to Harvard students on Sept. 19, 2003, describes the newest feature of houseSYSTEM, as “the Face Book,” an online system for quickly locating other students. The date was four months before Mr. Zuckerberg started his own site, originally “thefacebook.com.” (Mr. Greenspan retained his college e-mail messages and provided The New York Times with copies of his communications with Mr. Zuckerberg.)

Later the two students, who both graduated in 2004, exchanged e-mail about their separate projects. When Mr. Greenspan asked what Mr. Zuckerberg was planning and suggested the two integrate their systems, Mr. Zuckerberg responded, a month before starting his own service: “I actually did think about integrating it into houseSYSTEM before you even suggested it, but I decided that it’s probably best to keep them separated at least for now.”

Despite Mr. Greenspan’s entrepreneurial ambitions, Mr. Zuckerberg was the first to move to Silicon Valley, raising venture capital and eventually transforming Facebook from a social networking site for college students into one of the fastest growing Internet sites for both social and business contacts.

Indeed, Mr. Greenspan, who is now 24 and moved to Silicon Valley last year to start a company, appears to be a clear example of a truism in this high-technology region: establishing who is first with an idea is often a murky endeavor at best, and frequently it is not the inventor of an idea who is the ultimate winner.

Mr. Zuckerberg declined to be interviewed, saying through a spokeswoman that he was not sure how to respond. He did not dispute the chronology of events or the authenticity of Mr. Greenspan’s e-mail messages. Mr. Zuckerberg is seeking to dismiss the ConnectU suit.

Mr. Greenspan said that Mr. Zuckerberg’s lawyer contacted him this year in connection with the ConnectU lawsuit but that he had declined a request to serve as a witness, fearing that he would become embroiled in the legal battle.

In an interview at a cafe here this week, Mr. Greenspan said he had mostly made peace with the fact that Mr. Zuckerberg will be the first of his classmates to become a billionaire.

If Mr. Zuckerberg did borrow some of Mr. Greenspan’s concepts, he may have simply been working in a grand Harvard tradition. After all, it was a young Harvard dropout, Bill Gates, and his classmate, Paul G. Allen, who almost three decades earlier copied a version of the BASIC programming language, designed by two Dartmouth college professors, to jump-start the company that would grow into the world’s most powerful software firm.

“I’ve had a long time to think about this, and I’m not as bitter as I was a year ago,” Mr. Greenspan said. “Things like this aren’t surprising to me anymore.”

Still, he does not seem to be entirely at peace with the way things have turned out, and he wants to have the last word.

He has described the original creation of houseSYSTEM, ConnectU and Facebook in “Authoritas: One Student’s Harvard Admissions,” a 306-page unpublished autobiography about his adventures as a college student.

“This book is partly a search for justice,” he wrote in the introduction. “You don’t write an autobiography in your early 20s unless there’s something you need to get off your chest.”

In “Authoritas,” he described his collision with Harvard authorities when he first started his system. He also explained his frustration in getting the student paper, The Harvard Crimson, to write about houseSYSTEM, which was then being used by about 100 students.

Mr. Zuckerberg, by way of contrast, had no difficulty attracting the interest of the paper, Mr. Greenspan said. It wrote about him first because he had developed MP3-playing software, called Synapse, as a high school student. The paper then published frequent follow-up articles.

College classmates describe Mr. Greenspan as extremely bright and an unusually productive software designer. Mr. Greenspan and Mr. Zuckerberg had much in common, said William Most, who was a classmate. “They were both computer guys and self-starters.”

Mr. Greenspan remains extraordinarily energetic and envisions ideas for new projects. Indeed, in an effort to find a publisher for his Harvard manuscript he developed an automated system that generated personalized query letters to more than 800 literary agents nationwide.

Although he has yet to find a publisher, he has deployed his system as a commercial Web service for other potential authors as part of CommonRoom, a social networking and business Web site that he established last year.

He attained brief notoriety on several Internet news sites last year when he published an open letter to Mr. Zuckerberg after reports surfaced that Yahoo had offered his college classmate $900 million for Facebook just two years after the founding of the company.

With barely hidden bitterness, he wrote: “Remember the Web site you signed up for at Harvard two days before we met in January, 2004, called houseSYSTEM — the one I made with the Universal Face Book that predated your site by four months?

“Well, I’ve relaunched it as CommonRoom,” he continued, “and just like its predecessor, it has all sorts of features that might seem familiar: birthday reminders, an event calendar, RSVPs, how you know someone, photo albums, courses posters.

“After all, when you saw all of those features in houseSYSTEM three years ago, you called them ‘too useful,’ but I stood by them as valuable. Fortunately, even though I shut down houseSYSTEM, I can still use those same features on Facebook — and I didn’t even have to write any more code!”

Although CommonRoom has just 1,500 users, compared with Facebook’s 37 million, Mr. Greenspan has not given up on the idea of social networking. He is starting his second company — he founded his first, Think Computer, when he was 15 — with a new partner. He said he has been promised venture capital backing for the new company, Qubescape.

“I’ve been doing consulting and software for business for several years now, and I’ve noticed the same problems again and again in business,” he said. “I think there’s a fairly good chance we’ll turn business software on its head.”

Mr. Greenspan says that he has learned some important lessons since leaving school, although he has no love for the thought of becoming one of the serial entrepreneurs common in Silicon Valley.

“I’ve written a lot about Harvard’s motto being ‘veritas,’ ” he wrote recently in an instant message, “and how uncomfortable I was when I discovered that Harvard actually didn’t abide by the ideals of truth at all times. But it’s a good motto. Possibly the best there is, because if you wait long enough, the truth will come out.”

    Who Founded Facebook? A New Claim Emerges, NYT, 1.9.2007, http://www.nytimes.com/2007/09/01/technology/01facebook.html?hp

Google Begins Hosting News

on Its Site

August 31, 2007
By THE ASSOCIATED PRESS
Filed at 5:24 p.m. ET
The New York Times

SAN FRANCISCO (AP) -- Internet search leader Google Inc. on Friday began hosting material produced by The Associated Press and three other news services on its own Web site instead of only sending readers to other destinations.

The change affects hundreds of stories and photographs distributed each day by the AP, Agence France-Presse, The Press Association in the United Kingdom and The Canadian Press. It could diminish Internet traffic to other media sites where those stories and photos are also found -- a development that could reduce the online advertising revenue of newspapers and broadcasters.

Google negotiated licensing deals with the AP and French news agency during the past two years after the services raised concerns about whether the search engine had been infringing on their copyrights. The Mountain View-based company also reached licensing agreements with The Press Association and The Canadian Press during the same period.

Financial terms of those deals haven't been disclosed.

The new approach doesn't change the look of Google News or affect the way the section treats material produced by other media.

Although Google already had bought the right to display content produced by all four news services, the search engine's news section had continued to link to other Web sites to read the stories and look at the photographs.

That helped drive more online traffic to newspapers and broadcasters who pay annual fees to help finance the AP, a 161-year-old cooperative owned by news organizations.

Now, Google visitors interested in reading an AP story will remain on Google's Web site unless they click on a link that enables them to read the same story elsewhere. Google doesn't have any immediate plans to run ads alongside the news hosted on its site.

Although the change might not even be noticed by many Google users, the decision to corral the content from the AP and other news services may irritate publishers and broadcasters if the move results in less traffic for them and more for Internet's most powerful company.

A diminished audience would likely translate into less online revenue, compounding the financial headaches of long-established media already scrambling to make up for the money that has been lost as more advertisers shift their spending to the Internet.

Google has been the trend's biggest beneficiary because it runs the Internet's largest advertising network. In the first half of this year, the 9-year-old company earned $1.9 billion on revenue of $7.5 billion.

Despite Google's dominance in search, its news section lags behind several other rivals. In July, Google News attracted 9.6 million visitors compared with Yahoo News' industry-leading audience of 33.8 million, according to comScore Media Metrix.

Yahoo Inc., along with other major Web sites such as Microsoft Corp.'s MSN and Time Warner Inc.'s AOL, have been featuring AP material for years.

Under its new approach, Google reasons readers won't have to pore through search results listing the same story posted on different sites. That should in turn make it easier to discover other news stories at other Web sites that might previously have been buried, said Josh Cohen, the business product manager for Google News.

''This may result in certain publishers losing traffic for their news wire stories, but it will allow more room for their original content,'' Cohen said.

Vlae Kershner, news director for the San Francisco Chronicle's Web site, backed up that theory, saying Google News mostly refers readers interested in the newspaper's staff-written stories. ''This is going to have a very minimal impact on our traffic,'' he said.

Referrals from Google News accounted for 2.2 percent of the traffic at newspaper Web sites during the week ending Aug. 25, according to the research firm Hitwise.

Caroline Little, chief executive and publisher of Washingtonpost.Newsweek Interactive, said she worries about anything that might erode her site's advertising revenue. ''That's how we make money,'' she said. ''We will be watching this carefully.''

For its part, the AP intends to work with Google to ensure readers find their way to breaking news stories on its members' Web sites, said Jane Seagrave, the AP's vice president of new media markets.

In recognition of the challenges facing the media, the AP froze its basic rates for member newspapers and broadcasters this year and already has committed to keeping fees at the same level next year.

That concession has intensified the pressure on AP to plumb new revenue channels by selling its content to so-called ''commercial'' customers on the Web. Those efforts helped the not-for-profit AP boost its revenue by 4 percent last year to $680 million.

''AP relies on its commercial agreements to help pay the enormous costs of covering breaking news around the world, ranging from deadly hurricanes and tsunamis to conflicts like the war in Iraq,'' Seagrave said.

    Google Begins Hosting News on Its Site, NYT, 31.8.2007, http://www.nytimes.com/aponline/technology/AP-Google-News.html

Dow Jones Deal Gives Murdoch a Coveted Prize

August 1, 2007
The New York Times
By RICHARD PÉREZ-PEÑA and ANDREW ROSS SORKIN

Rupert Murdoch finally won his long-coveted prize yesterday, gaining enough support from the deeply divided Bancroft family to buy Dow Jones & Company, publisher of The Wall Street Journal and one of the world’s most respected news sources, for $5 billion.

For Mr. Murdoch, the verdict represents the pinnacle of his long career building the News Corporation into a $70 billion media empire that already includes more than 100 newspapers worldwide, satellite broadcast operations, the Fox television network, the online social networking site MySpace and many other parts.

Combined with the planned beginning of the Fox business news channel in October, the purchase of Dow Jones makes Mr. Murdoch the most formidable figure in business news coverage in this country, perhaps worldwide.

It also gives a larger voice in national affairs to an owner whose properties often mirror his own conservative politics.

The boards of both companies voted last night to approve the deal.

The decision signals the end of an era for Dow Jones and the Bancroft family, an intensely private clan that for generations had allowed The Journal to operate independently and become one of the nation’s most prominent and trusted newspapers, even as its finances deteriorated.

For four months, some three dozen members of the family engaged in an intense, sometimes tearful debate about The Journal’s future, at times pitting siblings against one another and children against their parents.

The final decision was in doubt well past the 5 p.m. Monday deadline set for the family. In a twist in already tortured negotiations, some family trustees demanded that the News Corporation pay the fees for the family’s bankers and lawyers — which could reach $40 million — in return for their support. After an exhausting night of conferences calls, the deal was made.

James B. Lee of JPMorgan Chase & Company, who has represented clients in some of the biggest deals in history, said of Mr. Murdoch, “nobody else I have ever banked could have pulled it off.”

For the rest of the industry, the deal, which follows the recent sale of Knight Ridder and the pending sale of the Tribune Company, again raises the question of whether newspapers can exist independently of giant media conglomerates, as advertising dollars migrate to the Web and readers have access to vast new sources of online information.

Mr. Murdoch has talked of pumping money into The Journal, bolstering its coverage of national affairs and its European and Asian editions, which could pose a serious challenge to competitors like The Financial Times and The New York Times. That could mean losing money in the short run, something Mr. Murdoch has always been willing to do to attract readers and gain influence.

Some Dow Jones employees see having such a wealthy, engaged owner as an improvement after years of uncertainty. Still, there was no official announcement at The Journal’s newsrooms, where some reporters mourned the loss of independence.

“It’s sad,” said a veteran reporter at one of the domestic bureaus, who did not want to be named because of concerns over his career. “We held a wake. We stood around a pile of Journals and drank whiskey.”

News reports of the deal initiated an outpouring of comments on The Journal’s own Web site, many critical of the News Corporation, and some regrets from other shareholders.

“It’s a bad thing for Dow Jones and American journalism that the Bancroft family could not resist Rupert Murdoch’s generous offer,” James H. Ottaway Jr., a former Dow Jones executive and a major shareholder, said yesterday. “I hope Rupert Murdoch, and whoever follows him at News Corporation, will keep his promises to protect and invest in the unique quality and integrity of The Wall Street Journal, Barron’s and all the Dow Jones electronic news services.”

It will most likely take three to four months for the transition in ownership to take effect. At the family’s insistence, the News Corporation has agreed to retain the top editors at Dow Jones, including Marcus W. Brauchli, the managing editor of The Journal and Paul Gigot, The Journal’s editorial page editor, and has accepted limits on its ability to remove or replace people in those posts.

The Bancrofts hope the arrangement, which they negotiated before the final deal, will restrict Mr. Murdoch’s ability to influence content, particularly in The Journal, but many media experts have said he has circumvented similar agreements in the past.

Mr. Murdoch first made his offer to Dow Jones’s chief executive, Richard F. Zannino, over breakfast on March 29, and made a formal written bid to the board on April 17, but the news did not surface until May 1.

On May 2, Mr. Zannino made a presentation to the Dow Jones board that made it seem to many of them that the company’s prospects on its own were poor and that he favored a sale. He later insisted that he had not meant to give those impressions, but even so, the presentation had a sobering effect, and most of the board clearly thought that the company should accept Mr. Murdoch’s $60-a-share offer.

That breakfast with Mr. Murdoch set in motion a four-month struggle among the Bancrofts. The family, which has owned Dow Jones since 1902, holds 64 percent of the shareholder vote, with most of the stock held in dozens of trusts with some three dozen beneficiaries. But the bulk of the voting power rests with a handful of the family’s oldest generation, and with longtime family lawyers, who are the primary trustees.

Some argued vociferously that Mr. Murdoch would damage the newspaper’s credibility, while others said that his $60-a-share offer — for a stock that was trading around $36 in April — was too good to pass up at a time when the newspaper industry was struggling.

At the outset, most of the elders opposed a sale, and were bolstered by newsroom employees who wrote letters arguing that Mr. Murdoch would wreck The Journal, and by the advice of longtime associates like Peter R. Kann, the recently retired former chairman and chief executive of the company, and Mr. Ottaway.

But many of their children, less wealthy and less steeped in the notion of Dow Jones as a family legacy, were more open to selling. A family Dow Jones stake that had been valued at about $750 million and generated about $20 million a year in dividends, mostly for the older generation, stands to become more than $1 billion even after taxes and could produce several times as much income.

Late last week, it appeared that the family might reject the deal, but then two pivotal family elders who had argued against the deal, Jane Cox MacElree and her brother, William C. Cox Jr., shifted positions; she relinquished voting control of some shares, and he switched sides and decided to support the sale, people close to the family said. That left things too close to call.

While the weeks after May 2 had been spent arguing over principles, the last few days were spent haggling over money. Before the deal had a clear majority in support, a lawyer for the family, Lynn Hendrix, based in Denver, who controlled trusts with 9 percent of the overall vote, insisted that those trusts would oppose the deal unless the News Corporation agreed to pay a premium for the supervoting shares that are mostly owned by the Bancrofts.

On Sunday night, David F. DeVoe, the News Corporation’s chief financial officer and a board member, called Mr. Hendrix, a partner at the firm Holme, Roberts & Owen, to draw a line in the sand.

Referring to the $60 price, Mr. DeVoe said, “I can six-zero-point-zero-zero,” a person briefed on the conversation said, “not six-zero-point-zero-one.”

When Mr. Hendrix kept pushing for more money, Mr. DeVoe made an unusual offer: the News Corporation would consider paying the fees and expenses of the bankers and lawyers advising the trusts. That amounted to an indirect way of sweetening the offer for the supervoting shares without adding much to the cost of the deal. Dow Jones, after consulting with the News Corporation, had already agreed to cover some of the costs of paying Merrill Lynch, the family’s primary financial advisers.

After a marathon series of conference calls that night that ran through Monday, involving Mr. Devoe; Mr. Hendrix; Michael B. Elefante, the family’s primary lawyer and trustee; and Richard Beattie, a lawyer advising the Dow Jones board, a deal was brokered that would allow the Denver trust to vote in favor. The News Corporation agreed to pay advisory expenses for all of the family trusts, a figure that people involved in the talks said could reach $40 million, which translates to about an additional $2 a share for the Bancrofts.

The largest share, perhaps as much as $18.5 million, will be paid to Merrill Lynch, people briefed on the matter said. Another payment of as much as $10 million is expected to be paid to Wachtell, Lipton, Rosen & Katz, a law firm representing the family. Morgan Stanley, which advised the Denver trusts, and a series of law firms are expected to split the rest.

The issue of the News Corporation and Dow Jones paying the family’s advisers has raised questions in some circles — including among some family members, people close to them say — about the advice’s impartiality. Merrill Lynch, in particular, was viewed as an early supporter of the deal and was responsible in large part for making presentations to the family about the current and future health of Dow Jones.

The deal is also a windfall for an army of Mr. Murdoch’s bankers and lawyers. Mr. Murdoch was advised by Mr. Lee, who had helped Mr. Murdoch when he explored a bid for Dow Jones in 2001 and had set up Mr. Murdoch’s first introduction to Mr. Zannino.

Blair Effron, a former banker at UBS who started his own boutique firm, Centerview Partners, spent many nights holed up at Mr. Murdoch’s headquarters, as did Stanley S. Shuman of Allen & Co., the media investment bank.

By late yesterday, people involved in the negotiations said family trusts and family members representing about 40 percent of the total shareholder vote had committed, at least verbally, to support the deal, more than enough to put it over the top in a shareholder vote. Neither Dow Jones nor the News Corporation would officially confirm that, heading into a 7 p.m. Dow Jones board meeting.

To the last, people inside and outside Dow Jones who opposed the sale were trying to arrange alternative deals that would allow some Bancroft family members to sell and others to keep control of the company.

Yesterday, Leslie Hill, a family member and trustee who became something of a patron saint within the Journal’s newsroom for her opposition to the deal, resigned from the company’s board.

Dow Jones Deal Gives Murdoch a Coveted Prize, NYT, 1.8.2007, http://www.nytimes.com/2007/08/01/business/media/01dow.html