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Monday, June 14, 2010

The Latest from TechCrunch

The Latest from TechCrunch

Link to TechCrunch

Online Gambling Company 888 Picks Up Real Dice’s Social Games Studio Mytopia For $18M

Posted: 14 Jun 2010 08:34 AM PDT

Online gambling company 888 has bought the assets of the Mytopia social games development studio from Real Dice. Mytopia, which launched at TechCrunch50 in 2008, is an online social gaming community where people can play casual games together in real time.

The base price is $18 million cash with an additional earn out payment that will be made calculated on the basis of net profit for the calendar year 2011. The total payment to Real Dice for Mytopia’s games is capped at $48 million.

Mytopia sold 12 games in total to 888, which is planning to add microtransactions to the games to monetize the platform. Mytopia also offers a platform that allows developers to write code once and have it immediately distributed and syndicated to various smartphones and mobile operating systems. 888 has licensed this technology along with the acquisition of the social gaming studio.

NPR’s iPad App Downloaded 350,000 Times

Posted: 14 Jun 2010 08:34 AM PDT

NPR always has among the most popular news apps in the iTunes Store. Its latest iPad app has been downloaded 350,000 times, according to CEO Vivian Schiller, who spoke this morning at Wired’s Business Conference in New York City. Considering that only about 2 million iPads have been sold, about one in six iPad owners have downloaded the iPad app.

Asked whether she minds getting links from Google News, as Rupert Murdoch and other news organizations like to complain apparently do, she responded: “I have no problems with that whatsoever. I am not in the camp of Google bashers, Google sends a lot of traffic to us. We want our content to be as easily discoverable as possible.”

Of course, NPR’s mission is to provide free journalism to the public, so she is not a big fan of paywalls either. As listeners shift to the Web, NPR is committed to following them and serving them there as well. Ignoring consumer preference, she notes, would be a “path to destruction.” She estimates NPR’s Website traffic to currently be around 12 million unique visitors per month.

To the extent that other traditional media outlets talk actually start erecting paywalls and blocking Google, NPR and other open media sites will benefit.

Ex-Slingshot Execs (And MySpace Cofounder) Raise $5 Million For Social Commerce Startup BeachMint

Posted: 14 Jun 2010 08:13 AM PDT

In April, we reported that Diego Berdakin and MySpace co-founder Josh Berman, the two heads of News Corp’s incubator Slightshot Labs, were leaving the company. They haven’t wasted any time in launching their next project: today, less than two months later, Berman and Berdakin are announcing that they’ve raised $5 million from New Enterprise Associates and Anthem Venture Partners for a new startup called BeachMint, Inc.

At this point details on the startup are still a little sparse, but Berman and Berdakin were willing to talk broadly about what BeachMint will be doing. The company will be entering the social commerce arena, with plans to launch a suite of sites catering to individual verticals. The goal, Berman says, is to drive people to curated, authentic choices with recommendations from celebrities and other ‘influencers’— think Kim Kardashian’s association with ShoeDazzle, but for numerous different verticals. Berman also noted that these recommendations will be authentic and may come from people who have less high profiles (it sounds like the sites may tap into your social graph).

The company will be launching its first vertical before this holiday season, with plans to announce it by the end of summer. Each new vertical will have its own brand, but all of the site names will likely incorporate the ‘Mint’ branding (e.g. BookMint or WineMint, though Berdakin was quick to point out that neither of these would be part of the company’s initial launch). Berdakin and Berman are well aware of the established competitors like Gilt Groupe, but believe that there’s still a huge opportunity in online retail spending, explaining that only 6% of retail spending happens online.

The Santa Monica-based company currently has seven engineers building out its product. We’ll have more on BeachMint this summer.

Changing TechCrunch Europe Events – How To Partner With Us

Posted: 14 Jun 2010 08:12 AM PDT

We're changing our events policy at TechCrunch Europe. Over the last two years we've developed and run our own events across Europe, thanks to the unwavering and ever professional support of Petra and Rassami of 2pears. But now that the European startup scene is gradually getting its act together, we'd like sort of "open source" our events and are looking to partner with existing events and organizations. So, while we'll continue to work with 2pears, mainly in London, we're looking to work with you wherever your local tech scene is in Europe. So, going forward, please contact our new events and sponsorship manager, Jane Wagstaff, on janeewagstaff[@]googlemail.com for more details about partnering with TechCrunch Europe.

Stay.com: A Killer Domain For A Social Travel Planner With Some Potential

Posted: 14 Jun 2010 08:01 AM PDT

EuropaReiser is today launching the free public beta version of Stay.com, a service that lets people plan their travels and share those plans with others.

Of course, there are lots of websites and applications one can use to find out what to do when visiting a city, but Stay.com admittedly makes things very easy and quite fun for the 50 cities it currently features on the site.

All you need to is enter your destination city, e.g. Brussels, and up pops a list of activites, like museums you can visit or restaurants where you can get some decent food.

At the tap of a button, you can get a downloadable guide (PDF) of activities and venues along with a map, photos, addresses, opening hours and more. You can also customize those guides with items you select from a pre-populated list of venues, hotels, restaurants and attractions, and share your personalized guide with the world via Stay.com, Facebook and Twitter.

Likewise, you can discover custom guides for cities that other people have created before you.

Stay.com also handily integrates content from a range of travel information providers: TripAdvisor for ratings and reviews, and TopTable and OpenTable for easy restaurant reservations, just to name a few.

The startup promises much more is coming now that the service has launched in public beta form; on the roadmap we find user-added venues and places, third-party sharing widgets, full mobile integration, geo-location features, video guides and more. Stay.com promises the site will remain ad-free as the site grows in terms of functionality; the money it makes from hotel bookings from the main website should be enough to build a business, they reckon.

Other services that let you build custom travel guides one way or another include YourTour, Offbeat Guides, NileGuide, TripIt and Dopplr.

Foursquare Begins Testing An “Add To Foursquare” Button With WSJ

Posted: 14 Jun 2010 08:00 AM PDT

One surefire way to know that a service is doing well is when you see their buttons start appearing all over the web. We’ve seen it with Facebook, we’ve seen it with Twitter (Tweetmeme buttons), and now we’re going to start seeing it with Foursquare.

To be clear, the “Add to Foursquare” buttons aren’t designed to be as ubiquitous as some of the other sharing buttons around the web. Instead, this button allows content providers to give readers one-click access to add venues to their Foursquare to-do list. The first such partner that is testing this out is the Wall Street Journal. Beginning today, the newspaper’s site will feature these buttons next to venues featured in articles (specifically, in restaurant reviews and other cultural coverage).

Along with the venue being added to a to-do list on the click of that button, there will also be a tip written by a WSJ editor that gets populated on on user’s Foursquare page. That tip will contain a link back to the article about the venue, so it will drive traffic back to WSJ as well, we’re told.

This button will only appear on WSJ for now, but “we’re definitely interested in finding a way to scale the feature in the future so other brands can take advantage of it,” a Foursquare spokesperson tells us. Foursquare declined to say if this was a revenue producing deal for them.

In some ways, this Add to Foursquare button seems more like Twitter’s new At Anywhere button. As we noted, it’s less about directly sharing, and more about extending the features of the site to the rest of the web. I know that I often read about new restaurants online but never remember to put them in my Foursquare to-do list — so this makes a lot of sense.

Update: You can see the button in action on this page.

The Six Companies Pitching At Open Angel Forum Boston

Posted: 14 Jun 2010 07:45 AM PDT

The Boston edition of Jason Calacanis’ Open Angel Forum is taking place next week in Boston and we have the six startups that will be pitching investors come June 18. Calacanis established the Open Angel Forum (OAF) recently to provide entrepreneurs and startups with free and open access to angel investors. OAF has held sessions in LA, New York, Silicon Valley and Boulder.

Below are the six startup finalists:

Textaurant’s web-based waiting list management technology allows restaurant patrons to get stuff done nearby while they wait for a table. Textaurant will alert people on a restaurant’s wait list via a text message when a table is ready.

Keenkong, which debuted at TechCrunch Disrupt a few weeks ago, helps manage the social media overload for marketers. Keenkong semantically segments the conversations taking place on Facebook and Twitter by topic (what), by intentions (why), by network size and more.

Zazuba is an appointment booking service that allows consumers to view appointment availability at local businesses in realtime.

Venalytica develops an SaaS product, Consumer Preference Analytics, that gives retailers greater insight into the way consumers find and purchase products online and in stores. The product allows consumers to indicate the strength of their preferences for product or service features resulting in a ranked list of choices on a retail or consumer research website.

Tasted Menu aims to provide a centralized, structured destination addressing two of the most pressing questions regularly faced by diners: "What's good to eat here?" and "Where do I find the best…?"

Hello Vino’s mobile apps give consumers custom wine recommendations on the go. Since June of 2009, the app has made over 5 million recommendations.

Abe’s Market Sells Natural Products Online, Scores Angel Funding

Posted: 14 Jun 2010 07:25 AM PDT

Allow me to introduce you to Abe’s Market, a lovely online marketplace where people go to buy and sell all things natural, from kids clothing and toys to snacks and even personal care products. The Buffalo Grove, IL-based company essentially aims to connect buyers looking for great natural products – whose numbers are growing consistently – with the people who make them.

Nothing ground-breaking, but a very well executed and potentially really lucrative venture.

In a lot of ways, it reminds me of another startup I just wrote up: CustomMade, which connects buyers and sellers of artisan-made furniture and whatnot. And like CustomMade, Abe’s Market and its founding managers Jon Polin and Richard Demb have captured the attention of investors who want to help the startup grow its business and profile.

And not just from anyone: Abe’s Market has raised angel funding from Index Ventures / Saul Klein, TAG, former head of Yahoo Europe Toby Coppel, David Honig (Vison Ventures) and Mark Esiri (Venrex UK). On its advisory board, we find people like Doug Galen (SVP of Business Development at Shutterfly), Brian Tockman (former Senior Buyer at Target) and Israel Ganot, President and CEO of Gazelle.

What I like about Abe’s Market so much is the focus on the origin of the products that are on display, and the attention that is given to the story and people behind them.

The startup rightly points out that all too often, modern-day consumers purchase products without knowing or caring who makes them, what is in them and how they are made. Abe’s Market even provides the opportunity for buyers to directly get in touch with sellers if they have specific questions.

Abe’s Market is also counting on the pride of many who use the marketplace from the buying side, by letting people share their purchases with their friends. The startup rewards people who do that with an instant discount on the products in their cart, and by passing that discount on to the people that the purchases were shared with.

Check it out and let us know what you think.

iPhone 4 Pre-Sales At Best Buy Start June 15, In Stores June 24

Posted: 14 Jun 2010 06:39 AM PDT

Best Buy just announced that pre-sale orders of the iPhone 4 can be placed starting tomorrow, June 15. Apple. Pre-sale orders can be placed at any Best Buy or Best Buy Mobile standalone store nationwide.The iPhone 4 will be available for purchase at Best Buy and Best Buy Mobile stores June 24.

The iPhone 4 was announced a few weeks ago during Steve Jobs' keynote at WWDC. Its notable features are, of course, the extremely high resolution screen, video chat capability with FaceTime, and the new form factor.

Walmart will also be carrying the phone come June 24, but will not be accepting pre-order. And you can pre-order your new iPhone through Apple starting June 15. Best Buy was also chosen to carry Apple’s iPad as well.

The new phone, which comes in black or white, costs $199 for a 16GB version and $299 for 32GB. The June 24th date is for the US, France, Germany, Japan, and the UK. The rest of the world will be able to get the device in July.

Sonicbids Acquires ArtistData To Help Musicians Get More Exposure On The Web

Posted: 14 Jun 2010 06:28 AM PDT

ExclusiveSonicbids, a company that operates a website that helps bands get more gigs, has acquired ArtistData, a publishing platform used by musicians to update and publish their content across the Web.

The acquisition and impending integration of the service will enable Sonicbids to not only help musicians book gigs, but also to promote those gigs to fans, social networks, concert databases, local newspapers and more. The terms of the deal were not disclosed.

Sonicbids says more than 245,000 musicians use its solutions to manage their Electronic Press Kits (EPKs) and book gigs around the world, and that it has attracted over 21,000 promoters and licensors from all around the world. Last year, over 71,000 gigs were booked using Sonicbids, the VC-backed company adds.

Founded back in 2006 by Brenden Mulligan, who will be joining Sonicbids as VP Strategic Development as a result of the acquistion, ArtistData counts more than 25,000 independent and signed musicians as members. Those users can go to the website to enter gig-related information from one central dashboard and publish that data across the Web in no time, to Facebook, MySpace, Twitter and nearly 30 other sites.

Sonicbids plans to integrate ArtistData's functionality into its product by the end of this year.

ArtistData's free offerings will continue to be free and as a welcome gift, its premium offerings will also be free to users, from now through September 1, courtesy of Sonicbids.

Both companies have this morning announced the acquisition to their members – check out Mulligan’s letter for ArtistData’s side of the story and Sonicbids founder Panos Panay‘s take on the news (bonus: FAQ).

Consolidation In IT Services Land: NTT DATA Buys Intelligroup For $200 Million

Posted: 14 Jun 2010 04:53 AM PDT

Japanese IT services juggernaut NTT DATA is acquiring US-based Intelligroup for approximately $199 million in cash, followed by a second-step merger to acquire all remaining shares at the same price paid in the tender offer. NTT DATA, through subsidiary Mobius Subsidiary Corporation, will make an offer to purchase all outstanding shares of Intelligroup common stock for $4.65 per share, a 21.1% premium to its average closing stock price over the last three-month period and a 27.7% premium over the closing price of the company's common stock before the weekend.

YouTube, HP And Guggenheim In Search Of The World’s Most Creative Online Video

Posted: 14 Jun 2010 04:35 AM PDT

The Solomon R. Guggenheim Foundation, YouTube and HP have teamed up in search of the world’s most creative online video. In collaboration with Hewlett-Packard and Intel, Google’s YouTube set up a dedicated site section dubbed Play, in an effort to find and showcase the most exceptional talents working in the realm of online video.

In the – international – search for new creative video, everyone is invited to submit their best works, which people can do until July 31st. Anything goes, from straight-up art to animation, music videos, motion graphics, narrative and non-narrative work, or even entirely new art forms (that should be interesting).

A jury of experts comprising people from the worlds of art, design, film, and entertainment will select up to 20 videos to be presented at the Solomon R. Guggenheim Museum on October 21, 2010, with simultaneous presentations at the Guggenheim museums in Berlin, Bilbao, and Venice. The works will also be available to a worldwide audience on the YouTube Play channel.

Nancy Spector, Deputy Director and Chief Curator of the Guggenheim Foundation, eloquently put it this way:

“In the last two decades, there has been a paradigm shift in visual culture. The moving image has been fully absorbed into critical contemporary art practices, and now we are witnessing the power of the Internet to catalyze and disseminate new forms of digital media, including online video.”

Hear, hear. I nominate OMG Cat:

BrightEdge Debuts Powerful SEO Platform For Businesses, Signs MySpace And Others

Posted: 14 Jun 2010 03:09 AM PDT

San Mateo, CA-based BrightEdge is today taking the wraps of its enterprise-class, on-demand SEO platform, after hammering on it for the past couple of years along with some early adopting key customers such as MySpace, Symantec and VMware.

Originally founded in 2007 by former Salesforce.com exec Jim Yu and Lemuel Park, BrightEdge provides online marketers with cloud-based SEO software designed to help them increase revenue from organic search in a measurable way.

Dubbed the BrightEdge SEO Platform, the startup’s solution lets marketers prioritize SEO campaigns based on forecasted revenue, execute coordinated SEO strategies across their entire company and tie everything to clearly defined business metrics. The product also comes with reporting tools that lets large enterprise analyze how their organic search performance stacks up against that of their competitors, and how it can be improved over time.

In other words, the platform is designed to give companies some much-needed insight into the business value of search engine optimization across the board.

Branders is another key BrightEdge customer. The company’s CEO, Jerry McLaughlin, says that BrightEdge not only delivers visibility into the value of SEO projects, but also provides actionable intelligence that has allowed Branders to grow the organic marketing contribution to its business by more than 60 percent.

In fact, BrightEdge claims it already helps manage over $1 billion in organic search revenue for the likes of Branders, MySpace (for over 50 Web properties), Trulia and others today. With the announcement of the platform’s general availability, starting today, the company expects that number to grow significantly in the next few months and years.

BrightEdge is privately held with financing from Battery Ventures, Altos Ventures and Illuminate Ventures (who most recently jointly injected $6.5 million in venture capital into the startup; the previous round was undisclosed).

Aside from Yu and Park, the company’s management team includes some former high-fliers from Salesforce.com, Digg, Google and AOL. Also worth noting: former Google exec Satya Patel (a partner at lead investor Battery Ventures), who helped build the Mountain View company’s AdSense business, sits on its board of directors.

We’re Awarding Goatse Security A Crunchie Award For Public Service

Posted: 14 Jun 2010 02:30 AM PDT

This iPad security breach story from last week continues to spin way out of control, and in our opinion fingers are being pointed in the wrong direction. The FBI is investigating the incident, and a few hours ago AT&T finally communicated with customers to tell them about the breach (I’ve reprinted the AT&T email below).

Here’s what happened: Goatse Security discovered a rather stupid vulnerability on the AT&T site that returned a customer email if a valid serial number for the iPAD SIm card was entered. An invalid number returned nothing, a valid number returned a customer email address. Goatse created a script and quickly downloaded 114,000 customer emails. They then turned all that over to Gawker, after, they say, AT&T was notified and the vulnerability was closed. Gawker published some of the data with the emails removed. Says Goatse: “All data was gathered from a public webserver with no password, accessible by anyone on the Internet. There was no breach, intrusion, or penetration, by any means of the word.”

AT&T is characterizing the incident as “unauthorized computer "hackers" maliciously exploited a function designed to make your iPad log-in process faster by pre-populating an AT&T authentication page with the email address you used to register your iPad for 3G service.”

We don’t see much hacking here, and we don’t see anything really malicious. AT&T was effectively publishing the information on the open Internet, and if there’s an FBI investigation, it should be focused on them, not Goatse. The fact is that Goatse was performing a public service by discovering and publishing the vulnerability – they made the Internet slightly safer by doing so. I agree completely with their blog post responding to the AT&T letter.

Unless additional facts come out suggesting that Goatse has used the information inappropriately, such as selling it, or has otherwise done some bad act hasn’t yet been alleged, they are completely in the right here.

In fact, companies like AT&T should offer people a reward for discovering vulnerabilities like this, although they’d probably ask that the information be given to them privately after discovered. But by shaming AT&T publicly other companies may take security marginally more seriously, which is good for users.

And AT&T customers need to know that AT&T is so careless about security.

Se we’re doing something we’ve never done before – awarding Goatse a Crunchie award for public service – a beautiful 14 inch tall custom designed gorilla statue celebrating technology.

Until now we’ve only given these awards at our annual Crunchies award ceremony.

Here’s the AT&T email:

June 13, 2010

Dear Valued AT&T Customer,

Recently there was an issue that affected some of our customers with AT&T 3G service for iPad resulting in the release of their customer email addresses. I am writing to let you know that no other information was exposed and the matter has been resolved. We apologize for the incident and any inconvenience it may have caused. Rest assured, you can continue to use your AT&T 3G service on your iPad with confidence.

Here's some additional detail:

On June 7 we learned that unauthorized computer "hackers" maliciously exploited a function designed to make your iPad log-in process faster by pre-populating an AT&T authentication page with the email address you used to register your iPad for 3G service. The self-described hackers wrote software code to randomly generate numbers that mimicked serial numbers of the AT&T SIM card for iPad – called the integrated circuit card identification (ICC-ID) – and repeatedly queried an AT&T web address. When a number generated by the hackers matched an actual ICC-ID, the authentication page log-in screen was returned to the hackers with the email address associated with the ICC-ID already populated on the log-in screen.

The hackers deliberately went to great efforts with a random program to extract possible ICC-IDs and capture customer email addresses. They then put together a list of these emails and distributed it for their own publicity.

As soon as we became aware of this situation, we took swift action to prevent any further unauthorized exposure of customer email addresses. Within hours, AT&T disabled the mechanism that automatically populated the email address. Now, the authentication page log-in screen requires the user to enter both their email address and their password.

I want to assure you that the email address and ICC-ID were the only information that was accessible. Your password, account information, the contents of your email, and any other personal information were never at risk. The hackers never had access to AT&T communications or data networks, or your iPad. AT&T 3G service for other mobile devices was not affected.

While the attack was limited to email address and ICC-ID data, we encourage you to be alert to scams that could attempt to use this information to obtain other data or send you unwanted email. You can learn more about phishing by visiting the AT&T website.

AT&T takes your privacy seriously and does not tolerate unauthorized access to its customers' information or company websites. We will cooperate with law enforcement in any investigation of unauthorized system access and to prosecute violators to the fullest extent of the law.

AT&T acted quickly to protect your information – and we promise to keep working around the clock to keep your information safe. Thank you very much for your understanding, and for being an AT&T customer.


Dorothy Attwood
Senior Vice President, Public Policy and Chief Privacy Officer for AT&T

You’re Damn Right I’m A Fanboy.

Posted: 14 Jun 2010 02:14 AM PDT

As we all know by now, comments on the Internet are a fascinating thing. My favorite involve the word “fanboy.” Generally speaking, it means you write (stories, tweets, whatever) about a certain topic with a positive angle. It’s meant to be derogatory, but the truth is that it’s so overused that it’s almost completely meaningless. But for the sake of this post, I’ll play ball. I have a confession to make: I’m a fanboy.

Now, I didn’t say specifically what I’m a fanboy of, because there have been too many titles bestowed upon me over the years. At various points over just the past few months, I’ve been an Apple fanboy, a Google fanboy, a Twitter fanboy, a Facebook fanboy, a Foursquare fanboy, a Gowalla fanboy, and yes, even a Microsoft fanboy. Never mind that most of companies compete with one another, so it would be hard to be a true fanboy of multiple ones without misrepresenting your fanboydom of a few of the others. We’ll just say I’m a fanboy and leave it at that. And that leaves me wondering: why wouldn’t you want to be a fanboy?

To me, the diluted version of the term means that you’re passionate about a certain technology. And isn’t that why any of us do what we do? Sure, you’ll throw the term “objective journalism” at me, but what does that really mean? Is any journalism truly objective? Every human being has an opinion one way or another about everything. Objective journalism is simply the practice of suppressing that opinion. For certain news fields, like politics, I see the value in that (at times). For technology, I’m not sure that I do.

If I’m reading about a new technology, I want to know what the author actually thinks. Take a new tech product for example, I want to know if an author thinks it’s any good or not. Or a new startup — same thing. Or some move a big technology company is making. It’s all the same. If I wanted a completely objective take on the story, I’d read the press release or the spec sheet. Actually, no I wouldn’t. Those are usually more full of bullshit than even the most biased reporting (wait, my laptop is supposed to have 12 hours of battery life on a single charge — it says so right there).

Others will say that the term fanboy doesn’t just mean you love something — it’s that you love something and are unfair against its competitors because of that love. That’s the only way I can explain the angry comments when I write posts with the headlines “An iPhone lover’s take on…” “Your bias is obvious!” the commenters will shout. Well yes, I put it in the title. How observant.

But that’s the funny thing about being a fanboy — you can be a fanboy of anything. You can switch your alliances at a moments notice. There is nothing tying you to the love of a certain product. As I’ve written numerous times before, in the 1990s I would have been called a Microsoft fanboy — I loved Microsoft products and hated Apple ones. Today, I’m called an Apple fanboy. Times change. And they’ll change again.

As always, my only requirement for being a fanboy of a product is that it has to (in my mind) be the best. Right now, in some cases those are Apple products. In some other cases, those are Google products. In some other cases, it’s Twitter. Etc…

Angry commenters seem to want to believe that you can’t actually just like a product. There has to be some ulterior motive. Either you’re paid off, or you’re just blind. Or both. It’s simply an easier (non) argument to make than having an actual discourse.

Make no mistake, those people are fanboys too — but worse. They feel the subject of their adulation is under attack, so they become rabid. But I’ll repeat that I think overall this is a good thing. Balance and all that.

In closing, let me state again for the record that I’m fine with the fanboy label. Apple fanboy, Google fanboy, Twitter fanboy, etc — those are all appropriate and welcomed. But it may be easier (and less contradictory) to just say that I’m a fanboy of good products. And I always will be.

[photo: flickr/terryjohnston]

That Just Happened: A Survivor Of The Natal/Kinect Announcement Tells His Tale

Posted: 14 Jun 2010 01:58 AM PDT

I get the feeling that we have just participated in a dare — or the indulgence of a delusion. What else could explain the utterly insane spectacle that just took place in Galen Center here in LA? We were promised an experience. I experienced something, all right. Not something I’m in a hurry to experience again, I’m afraid.

Those of you who weren’t present for this indecipherable boondoggle are probably wondering what the fuss is all about. The fact is there’s no fuss at all; the Project Natal Experience was a complete non-event — and I’d have said that even if the device, name, and launch titles didn’t all leak a couple hours before the show. But the fact also is that this was just too weird not to share. In detail. Do you like to read? Good.

Continue reading…

Yelp Co-Founder And CTO Russel Simmons Is Out

Posted: 14 Jun 2010 01:14 AM PDT

(Psssst. I’m leaving …)

Yelp co-founder and CTO Russel Simmons, pictured here (left) with fellow co-founder and chief exec Jeremy Stoppelman, is leaving the company. Simmons will be transitioning to an advisor role and take some time off to travel, we’ve confirmed with the company.

Stoppelman and Simmons were both early software engineering employees at PayPal and went on to brainstorm new Internet startup ideas at a business incubator not long after the company was acquired by eBay.

Out came Yelp, which first started as an email recommendation service, was transformed to become a local business review site for the San Francisco area in October 2004 and has now grown into an international network that receives some 31 million unique visitors per month.

Six years later, Simmons is now transitioning to an advisor role at Yelp, we’re told.

Stoppelman says Simmons remains a “significant” shareholder in the company and will continue to provide support and advice as needed. No word on replacement yet.

As for what’s next for Simmons: first, some “much deserved time off to travel” and then probably yet another startup, likely as a founding member.

Yelp has raised $56 million in venture capital to date, from investors like ex-PayPal exec Max Levchin, Bessemer Venture Partners, Benchmark Capital and DAG Ventures. Elevation Partners earlier this year said it would be investing up to $100 million in the Internet company – so far it has injected 1/4 of that.

Late last year, we heard from reliable sources that Yelp was in acquisition talks with Google regarding a whispered $550+ million buy-out agreement. Later, we learned that Stoppelman walked away from the all-but-signed deal to move forward with the company on its own.

(Picture via Fast Company, photograph by Dan Escobar)

Zynga Goes To The Mattresses With Mafia Wars Users

Posted: 14 Jun 2010 12:13 AM PDT

This story fascinates me on so many levels. Here are the basic facts: Zynga has been moving its games off of the Tagged social network and encouraging users to migrate to Facebook. Earlier this month Zynga gave out a special code to Mafia Wars users on Tagged that would give them $120 worth of currency on Facebook when they completed the migration. But Zynga didn’t cap the number of people that could use the code, and the form for entering it didn’t give users much of idea what it was for anyway. So word spread, and tens of thousands of users entered the code and grabbed the loot. Somewhere around 100,000 people used the code.

When Zynga realized what was happening they shut down the code. But then they went one step further and rolled back the accounts for every user who entered it at least 24 hours, removing the free currency but also deleting any actions the users took to move their accounts forward during that period. Users complained on the Zynga forum but those complaints were deleted. Zynga also posted the notice below on their forum and then later deleted that too.

When Zynga continued to ignore users they started emailing us instead. Emails thousands of words long came in containing the kind of bitter passion that you usually only see when we say something mildly critical about the iPhone. Some users are saying that they are going to do a credit card charge back on money they’ve previously spent on Zynga games. Others say they’re leaving to try one of the many competitors. Etc.

What really seemed to make the users angry is the tone Zynga used in communicating with them:

Your account was determined to have attempted to use an unauthorized redemption code that would result in $120 worth of Reward Points.
As a result of this action, your account has been reverted to its status as of 5am PST on Tuesday June 8th.



Our records indicate you have redeemed Rewards Points using an exploit. Please note that future use of exploits may result in disciplinary actions, up to and including the permanent banning of your account.

We will keep your account active at this point, but have rolled back your account to 06/08/2010, the date prior to the redemption of these unauthorized Reward Points.

If you have any questions, please email taggedcodeexploit@zynga.com. We will respond to your inquiry in 72 hours.

Thank you,
The Mafia Wars Team

Remember that this is just fake money to buy fake stuff on Mafia Wars that costs Zynga nothing to create. The code was created by Zynga and distributed without any technical restrictions on its use (meaning anyone could use it).

In other words, Zynga screwed up. But it didn’t really cost them anything since it’s all virtual goods. It seems like the smart thing to do would be to simply turn the code off and move on with their lives. But instead the Zynga team really seemed to think that they had been wronged by their users, and took proactive steps to punish and frustrate them. Instead of seeing passionate users engaging with the game, Zynga saw people trying to take advantage of them and responded by going on the attack. Terrible move. These are your customers, not your enemies.

Another observation: Zynga users are more passionate about this stuff than I thought, and while I don’t understand that it does help me understand that the science and psychology behind these games is very real. They are addictive money extraction machines.

Here’s Zynga’s official statement on this: “Last week we uncovered a technical issue with a Mafia Wars redemption code during the migration process of two of our networks. In order to protect the integrity of the game and level the playing field for the rest of the community, we rolled back those involved users to a previous save. Less than half a percent of Mafia Wars players were affected.”

No, The Internet Won’t Make You Stupid

Posted: 13 Jun 2010 09:25 PM PDT

Nick Carr is worried the Internet is making us stupid. It’s not so much our preoccupation with LOLCat photos or videos of fat girls flying off of swings that concerns him as it is the way we read and consume information on the Internet itself. He thinks the Internet is rewiring our brains, perhaps for the worse, and he’s written a book to warn us all about it called The Shallows: What The Internet Is Doing To Our Brains. Carr also finds links to be too distracting.

Carr raises some good points worth contemplating, but his arguments also strike me as incredibly self-serving. After all, he is an author who makes money writing books. Of course he is going to argue that they make you smarter than the Web, with all of its neurological distractions. Carr is the master of technological alarmism. It sells his books and provokes debate, and this time is no exception. Harvard psychology professor Steven Pinker wrote in the New York Times on Friday that “cognitive neuroscientists roll their eyes at such talk,” and NYT Bits blogger Nick Bilton marshaled some other counter-evidence as well. Carr then responded to Pinker’s Op-Ed at length, claiming that Pinker has an “axe to grind here” because Carr’s point that experiences can change the brain on a cellular level “poses a challenge to Pinker’s faith in evolutionary psychology.” Of, course, Carr has his own axe to grind. Remember, he’s the one pushing the new book.

At the core of Carr’s alarmism is that the Web is simply at odds with deep, contemplative thought and reflection. It’s really a defense of book learning in its most basic form—again, not surprising coming from an author of books who values above all else the printed word. In an Op-Ed in the Wall Street Journal last week, Carr summed up his position:

When we’re constantly distracted and interrupted, as we tend to be online, our brains are unable to forge the strong and expansive neural connections that give depth and distinctiveness to our thinking. We become mere signal-processing units, quickly shepherding disjointed bits of information into and then out of short-term memory.

. . . What we seem to be sacrificing in all our surfing and searching is our capacity to engage in the quieter, attentive modes of thought that underpin contemplation, reflection and introspection. The Web never encourages us to slow down. It keeps us in a state of perpetual mental locomotion.

It is revealing, and distressing, to compare the cognitive effects of the Internet with those of an earlier information technology, the printed book. Whereas the Internet scatters our attention, the book focuses it. Unlike the screen, the page promotes contemplativeness.

Is the Internet really rewiring our brains? Sure, everything we do rewires our brains. That’s how our brains work (On Intelligence by Jeff Hawkins is a good primer). That’s how we learn, through experience and repetition, which gets carved into new neuropathways over time. The Internet is no different.

Is this rewiring somehow detrimental? If it is, then all the bookworms like Carr will end up being smarter than the rest of us and evolution will reward them. But something tells me that is not going to happen. The fact of the matter is that the Internet spreads information more broadly than the printed word ever did. It makes it easier to get up to speed on topics that you otherwise would know nothing about, such as the effects of the Internet on the brain. The reason reading online makes me feel smarter than reading a book is the exact same one Carr says makes us dumber: the pesky link. He writes:

Links are wonderful conveniences, as we all know (from clicking on them compulsively day in and day out). But they’re also distractions. Sometimes, they’re big distractions – we click on a link, then another, then another, and pretty soon we’ve forgotten what we’d started out to do or to read. Other times, they’re tiny distractions, little textual gnats buzzing around your head. Even if you don’t click on a link, your eyes notice it, and your frontal cortex has to fire up a bunch of neurons to decide whether to click or not. You may not notice the little extra cognitive load placed on your brain, but it’s there and it matters. People who read hypertext comprehend and learn less, studies show, than those who read the same material in printed form. The more links in a piece of writing, the bigger the hit on comprehension.

Reading on the Internet is not the same experience as reading a book, no doubt about that. And I do agree with Carr that it is easier to lose yourself in a book than when reading on a screen. But to suggest that reading a book is a richer experience, or that we can’t handle the cognitive load of reading words with links is hogwash.

Personally, I find it difficult now to read texts without links. When guest authors send me draft opinion pieces without any links, for example, they feel barren to me. Links are more than just footnotes that show an author has done the research to back up his arguments. They are what make the written words on the Web alive. An article with links is a living text, which exists in relation to other texts and thoughts on the Web. They let you go as deep down the rabbit hole as you care to go. There is no reason why books shouldn’t be the same, filled with links to be read in a browser on your iPad.

Maybe Carr’s neural pathways are set already and this kind of experience is too jarring for him. But I kind of doubt that—he is quite adept at the ways of the Web. I have another theory. Maybe what he really finds objectionable is a world where readers are no longer content to let the full waterfall of an author’s words wash over them, and then sit and contemplate the genius of those words in isolation from any other words, and how fortunate they are to have gotten a glimpse into the author’s mind for only the $18 price of a hardcover from Amazon.

iOS 4 Is Going To Up The Ante For Location-Based Startups

Posted: 13 Jun 2010 09:09 PM PDT

Yesterday, Robert Scoble wrote a post about “Foursquare’s Yelp problem.” It’s an interesting read, with some good thoughts about how Foursquare can withstand feature-copying from a much larger rival. He asked for my thoughts, so I figured I’d jot some down here. Most importantly, his post got me thinking about the next phase of location, which I think we’re just about to enter.

First, Scoble’s thought that Foursquare might be in trouble because Yelp copied its check-in badge idea seems a bit premature to me. It was a much bigger deal when they added the whole check-in concept back in January, but the fact that Foursquare has started growing faster than ever since that point shows they have an advantage over Yelp in the realm. That advantage is that they have a social graph built for location, Yelp does not (yet).

As we all know, Yelp was built as a rating and review system for local restaurants. It has a social graph, but most people on it are connected to other people because they’re interested in their food/restaurant reviews. It has nothing to do with wanting to see which of their real friends are nearby (which is what Foursquare is all about). That’s why I think it would have been smarter for Yelp to partner with Foursquare (or Gowalla, or Loopt, etc) in the same way a service like Hot Potato has (using APIs). Yelp + Foursquare would have been a formidable power play in the location space. Instead, Yelp’s check-in offering is still pretty weak, while Foursquare’s is still pretty small.

Scoble also mentions that it might be wise for Foursquare to buy another service to bolster its offering. That’s not a bad idea, especially when they close that round of funding they’re working on. Scoble specifically menions Foodspottinga service I like a lot — and that makes a lot of sense. But it may be wiser to think beyond that (or buy Foodspotting and extend their services). Foursquare needs a way to upload pictures and make comments on check-ins (and pictures). Basically, they need to copy the functionality Gowalla has right now. There’s always a fine line between keeping a service simple and cluttering it up with feature creep, but Gowalla’s mixture of check-ins, comments, and pictures is pretty damn perfect in my view right now.

Another idea Scoble brings up is a “check-out.” I love this. He talks about it from customer loyalty perspective, which is a good point, but I think it goes beyond that. One problem I have with Foursquare is that it’s too often populated with inaccurate (old) information. That is, I may go somewhere check-in when I get there, but 30 minutes later I’m gone. Someone who shows up 15 minutes after that (after seeing my check-in on Foursquare) will have missed me. This happens quite a bit. Sadly, the only way to “check-out” of a venue is to check-in to another one. That’s no good.

The problem with a check-out is that it’s total feature-creep. And I would bet that only a small percentage of those that check-in would ever explicitly check-out too — it’s simply asking users to do too much. That leads me to my main point. I think we’re on the verge of location services getting even more interesting thanks largely to one thing: iOS 4.

Apple’s new mobile operating system (formerly known as iPhone OS 4), which is launching in about a week, brings with it the ability for third-party applications to run in the background for the first time. One of the allowed functions is background location. Here’s how I see this working with Foursquare: you go to a venue, you load up Foursquare and check-in. The app then stays open in the background for a set period of time, notes when your location changes, and checks you out of the venue when you move far enough away.

Obviously, this would auto check-out would need to be opt-in, but it seems like the perfect initial use of the new iOS with background location. The next step is the auto check-in — but that’s a bit more complicated, and I think users may not be ready for it yet. Still, it would be a cool option to have. The app could track you location in the background and if you stop at some place for long enough, it could ask you if you’d like to check-in there.

By now, you Android fanboys have probably already left several comments along the lines of ”but Android has been able to run location in the background for 2 years.” That’s true, but let’s be honest: it’s the iPhone that’s going to help this type of activity take off (just as it was the iPhone that helped background location take off in the first place). Foursquare, Gowalla, Loopt, etc still see the vast majority of their activity on the iPhone. Android may be able to extend upon these new location ideas, but it will be the iPhone that puts them in the mind of most consumers.

And this is just the most basic functionality made possible by the new iOS. I bet we see a new range of location service pop-up this year thanks to the background location-functionality. And I still bet that a lot of those companies get snatched up by the bigger players looking to compete. And the location turf wars will heat up even more.

Jive’s New Features and Management: Finally a Serious Enterprise 2.0 Play?

Posted: 13 Jun 2010 09:01 PM PDT

There are few people I would get up to meet on a Sunday morning after spending five weeks on the road and mired in China-to-SFO jet lag. There are also few people I would believe when they said they were building a great "Enterprise 2.0" company. Tony Zingale is one of those people.

We'll get to why in a moment. But first the news: Jive Software—a nine year old company that Zingale became CEO of in February on an interim basis—is launching two new products today and continuing a big press push that's tantamount to announcing they are a serious, next-generation enterprise software company. (He's also recently dropped "interim" from his title, the CEO equivalent moving out of beta.)

The company operates fully-featured social networks for businesses that change how people inside the company work and communicate, and how they interact with their external partners and customers. Bolstering the news are some impressive partnerships: Jive will integrate LinkedIn profiles into the site, license the full Twitter firehose of Tweets and offer a free month trial of its service in Google's App Marketplace. Jive is funded by Sequoia Capital; our previous coverage is here.

Feature-wise the company is launching a App Marketplace (who isn't?) and a "What Matters" product that's like a corporate news feed. Data from existing business collaboration tools not to mention LinkedIn and Twitter will be pulled up and the most relevant pieces of data will be abstracted from the what-you-had-for-dinner-last-night noise.

I am incredibly skeptical about the whole "enterprise 2.0" shtick but Zingale isn't screwing around with some feel-good freemium model. He's doing sales in the range of $75,000-$150,000 per company, on average, but the dollar amount is increasing. He's done ten $1 million deals and four of those came in the last two quarters. The company has 3,000 customers, 15 million users, and will end the year on a $100 million run-rate. Considering that a few years ago open source darlings like Jboss were valued at hundreds-of-millions of dollars when they were doing less than $50 million in revenue, that's a decent software business.

The other reason I'll give Jive the benefit of the doubt is Zingale. He is a man who has proven the difference between being lucky and being good. Sure, he benefited from the glory days of the business software boom early his career—when a lot of people looked smarter than they were because the world had billions to spend on Greenfield software opportunities. But he's also
navigated a lot of unforeseen challenges. He was the no. 2 guy at Cadence Design Systems back when it had its worst quarter in history and some of its employees stole its core software to start Avanti. In 1997 he came into turn around CRM company Clarify and sold it to Nortel for $2 billion. He could have ridden off into retirement after that. Instead, in 2004 Zingale inadvertently took on his most brutal challenge yet.

He'd just become President and COO of Mercury Interactive with the understanding he'd become the CEO in about six months. The company missed the first quarter in 2005. Uh oh. Then it barely made the second quarter. Not great, but could be worse. These were not exactly enterprise software's glory days. Then, SEC investigators showed up. Oh, shit. Mercury was proven to be one of the egregious abusers of the options backdating scandals that rocked the tech markets in 2005 and was made one of the biggest scapegoats. Zingale had nothing to do with this— he was on the board of the company but not when it went happened. But he didn't abandon ship. He quickly fired the people who'd hired him, and he took the CEO job over a few months earlier than anticipated.

I called him for an interview when the November 2005 Mercury bombshell hit. I was covering software for BusinessWeek and this was one of the hottest stories of the week. Most CEOs would have said “No comment.” But Zingale—who I'd met just once at an industry dinner— invited me in and we had a frank face-to-face conversation about the situation. He looked me in the eye, told me he had nothing to do with this and how he was going to save this company, and I believed him. He spent much of the rest of the year having the same come-to-Jesus meetings with every shareholder and major Mercury customer. Less than a year later, he sold the company to Hewlett Packard for a $5.1 billion—a 50% premium. Meanwhile a host of hot 1990s software companies who hadn't had Mercury's legal troubles were walking dead.

Simply put, Zingale is a bad ass. He is one of those rare old-school software salesmen who also comes across as genuine. And he's beyond battle-tested, pulling a de-listed, radioactive company back from the dead to be worth $5 billion.

It'll take someone like that to actually create a company out of all this Enterprise 2.0 hype. And I hope he can pull it off, because Silicon Valley is desperately in need of an enterprise software resurrection.

One thing is certain: Jive will either be raising more money in the future or filing to go public as soon as it can. Zingale has a big vision here and building a real enterprise software company takes cash.

This Is How You Do a Global Meetup [Video]

Posted: 13 Jun 2010 06:18 PM PDT

From Bangalore, India, to Sofia, Bulgaria, to Los Angeles, California and back to San Francisco, our network of readers threw an unforgettable, global, TechCrunch birthday bash. As a thank you and tribute to our readers, we’ve put together a brief video to highlight your efforts. Video above.

According to Meetup, the final tally was 360 meetups on Friday, with more than 4,400 attendees.

There was no dominant format. Some featured full-blown agendas complete with panels and startup presentations, others offered TechCrunch Jeopardy and many, simply featured beer. American Fork, Utah, which did not offer beer or Jeopardy, was still home to possibly the largest TechCrunch event with more than 500 attendees, according to organizer Dan Garfield (manager of online marketing for OrangeSoda).  The meetup, which featured musical acts, the consumption of more than 1200 hotdogs and sausages and a dancing man in an orange, full-body spandex suit, was part-barbecue, part-block party, and all held in OrangeSoda’s parking lot. You can find their full video here.

Meanwhile, more than 8,000 miles away, underneath a section of scaffolding in Bangalore, India, nearly 150 people gathered to discuss the latest technologies and listen to presentations from local startups. Further south, in Jakarta, Indonesia, 99 attendees showed up, including representatives from Admob and Yahoo Indonesia, to discuss Yahoo’s recent acquisition of Koprol, the investment climate, and how to do business abroad.

In Brussels, Belgium more than a dozen readers gathered at a bar named Au Soleil, while in Tokyo, attendees celebrated a man (who for one reason or another, that may or may not be related to TechCrunch) dressed as a storm trooper, and finally, in New York, attendees took advantage of a four-foot tall ice luge.  Yes, it was strange, yes, it was wonderful, and yes, this post doesn’t have a lot to do with “technology news,” but we can’t wait to see what you guys come up with next year.

NSFW: Content Is King! Rest In Peace, Content

Posted: 13 Jun 2010 05:44 PM PDT

“Can Tim Armstrong make AOL king of content by 2010?”Blog headline

If it were done when ’tis done, then ’twere well / It were done quickly”Macbeth

There’s something about the idea of “New York Internet Week” that I’ve always found inherently funny; like “Saudi Arabia Bring Your Daughter To Work Day”, or Greenland being called Greenland.

Ironically for a city that’s always been so adept at branding itself, New York has always struggled to articulate its place in the worldwide web, and Internet Week is the clearest manifestation of that identity crisis. Name an industry that the Internet is disrupting: newspapers, publishing, advertising, banking – and you’ll find its heart in Manhattan. Despite the best efforts of Mayor Bloomberg and, uh, Dennis Crowley to paint New York as the place to do business in Web 3.0, the fact is that billions of advertising and investment dollars continue to flood west, never to return. And yet New York, bless it, continues to try to stay relevant – for one week a year at least – to the industry that’s bleeding it dry.

Witness the Webbys – the awards ceremony that congratulates New York based celebrities who have learned to tweet – witness the awkward panels filled with mismatched home-grown personalities (“Julia Alison meets Jeff Jarvis“) and witness (if you can’t avoid it) the week-long parties where thousands of identically unique hipsters cram into lofts to drink booze sponsored by one or all of the east coast’s four successful start-ups.

Even when they invite west coasters to get involved, the effort manages to come off more weird than wired: I was flown to town, on the kind of handsomely subsidised meal ticket only New York can offer, to moderate a panel on “Internet dating in a web 2.0 world” for an audience of feature writers from women’s magazines. This despite the fact that asking me to help navigate the minefield of online dating is like asking Rudolf Hess to give guided tours of Dachau. Nice try, New York.

And yet. While it’s easy for me to mock New York Media’s bewilderment over the Internet (see!), there was a marked change in atmosphere during this year’s Internet Week, compared to last year’s. A definite uptick in confidence, not all of which can be put down to the fact that Dennis made it on to the front cover of UK Wired. No, the change in attitude in New York towards the Internet can more fully be attributed to one word: content.

New York is a content town and, thanks in large part to AOL and Yahoo, content is once again king. Speaking at Disrupt last month, AOL’s Tim Armstrong boasted that AOL “is planning on being the largest high quality content producer for digital media”. Yahoo is taking a similar – if less clearly defined – approach, purchasing Associated Content for somewhere in the region of $100m and now, if rumours are true, eying up the Huffington Post. For the New York media crowd, this is great news – great news for journalists who are being laid off left right and centre, great news for newspapers and publishers who smell lucrative content syndication deals and great news for pro blog networks who might finally see an exit. If content really is king, then New York is its ready-made kingdom.

And yet. And yet.

The way that the likes of Tim Armstrong use the phrase “content is king” conjures up a noble image. An image of professional journalists and highly-skilled writers, possibly wearing crowns, slaving over hot typewriters to produce 1000 words of crisp copy for an eager online audience; or perhaps of sharply-written web video, a la College Humor’s original programming, or the New York Times’ daily video podcasts. For ‘content’, New York media folks read a web 3.0 of professionally produced news, analysis, entertainment – the antithesis of web 2.0′s user generated horse-shit. No wonder they’re salivating.

But that’s a very east coast – with its proud history of newspapers and publishing – interpretation of the word. Over on the west cost (and note: I’m using that term in its laziest sense to cover all Internet companies including those who, by accident of birth, have offices back east), “content” means the precise dictionary definition of the term: “something contained, as in a receptacle”; generic filler to pack inside an empty box to make it attractive to advertisers. Low-paid, illiterate swill, commissioned by the ton to provide SEO ad inventory. Just consider Associated Content and how it describes its goals post- Yahoo acquisition…

“Associated Content is now a part of Yahoo! – the world’s largest online company, with more than 600 million unique visitors a month. Yahoo! plans to leverage our content to extend its leadership and build upon their global properties to deliver personally relevant content in a scalable and efficient manner.

I mean, kudos to the company for not using the words ‘writing’ or ‘journalism’ to describe what their crowd-sourced hacks do, but it’s still hard to imagine a more mercenary way to describe the craft of writing. These are not writers, or journalists; these are self-confessed generators of content in the much the same way that horses are self-confessed generators of glue.

At least the Huffington Post employs real writers – assuming your definition of ‘employs’ doesn’t require there to be payment or any meaningful editorial support and if your definition of ‘writers’ includes the authors of stories like “Sex Tapes Of The Past Decade: A Look At The Noughties’ Naughtiest” and “Indonesia’s First Celebrity Sex Tape Scandal” and “Kendra Wilkinson’s Sex Tape RELEASED, NSFW Preview” – all examples from the past few weeks.

Even the web editions of respected offline brands are going the same way. The editorial focus of Forbes Online – a mish-mash of celebrity slideshows and tacky lists of ‘Americas best paying blue-collar jobs‘ and ‘hottest summer convertibles‘ – couldn’t be more different from its print counterpart which still has ambitions to be a serious news magazine. (Truth is, today’s Forbes Online is a pale shadow of even its own glory days: this is the online publication which saw Adam Penenberg break the Stephen Glass story).

Of course, the relationship between editorial content and advertising has always been strained, in a cant-live-with-it-cant-live-without-it way. But in traditional media – for the most part – the lines were respected: editorial staff did their job, advertising staff did their job and somehow the relationship chugged along.

In new media, however, editorial content exists to serve only one purpose; as a hook on which to hang advertising. When an Internet company commissions content, their measure of success is quantitative not qualitative: does the block of words pack in enough high-buzz keywords to rope in a hundred thousand or so Google searchers? And can it be spread out over enough pages to provide half a dozen ad impressions for each of those users? If so, great: now they just need the users to click on one of those ads and GTFO, which probably explains why so much online content peters out within 30 seconds of the headline.

Jeff Levick, president of global advertising at AOL, sums up the company’s editorial policy thus: “we have insights into our audience, and can produce content they want, which leads to engagement, which leads to what advertisers want.” Therein we see the critical difference between the old media attitude towards content and the new media alternative.

The old model favoured originality: break a story that no-one else has covered or write a fresh new take on the world and the audience would come, bringing with them advertising and sales. Under the new model, originality and exclusivity are the kiss of death. SEO-driven advertising depends on knowing what people are already looking for, and delivering content that satisfies that desire; nothing more nothing less.  SEO-driven content is the opposite of journalism and creativity, just like New York’s interpretation of the phrase ‘content is king’ is the opposite of Silicon Valley’s.

It’s a depressing truth, but an important one for anyone in New York media – or elsewhere – gets too excited about the idea of a content revival. Before Harry Potter, no-one knew they were looking for books about wizards; before the Washington Post broke their most famous story, no-one knew they were searching for information about a robbery at the Watergate building, or the subsequent money trail to the White House. Put simply: if Ben Bradlee were an editor at one of today’s Internet companies, instead of the Washington Post in the 1970s, he’d almost certainly have spiked the first Watergate exclusive in favour of a slideshow of cats who look like Nixon.

“We know there’s a market for that shit. I’ve seen the numbers!”

5 Tips To Transition From A Free To A Paid Service

Posted: 13 Jun 2010 04:34 PM PDT

Editor’s Note: This post is written by Dave Schappell, Founder and CEO of TeachStreet. In it, he talks about his company’s transition from a free to a paid service, and shares five tips that may help other startups make the leap as well.

Over the course of the last two-plus years, I’ve worked with a team that has lived the web service transition from free to paid, as TeachStreet has evolved from a place to find local classes in Seattle, to a global supplier of online and local classes (I’ve included a high-level timeline of our full 2-year transition, at the bottom of this post).

The discussions around freemium and the like are numerous — I won’t bore you with additional words on those topics.

I’ll assume that:

  • you agree that ultimately your revenues need to exceed your expenses
  • you’re able to build something that delivers value for your customers, and some of them are willing to pay for that value
  • turning on fees won’t destroy your business (in our case, we were a class/course marketplace; we needed to be sure that fees wouldn’t cause our inventory of classes, that we had built up since April 2008, to disappear)

Finally, I’ll assert that there are many reasons to offer a product for free (e.g. it may be an incomplete product in the early days; free is an excellent way to allow customers to try your product and gauge the value delivered; free may help with distribution/spread; and many more totally valid reasons)

The big question is, “how do you transition your free customer base to a paid customer base, without upsetting/losing all of them?

Here are 5 tips to help you transition customers to a paid service:

1) Give your customers plenty of notice, and give them a (real) chance to comment/contribute feedback.

Remember that many customers are not only willing to pay, but deem for-pay services to be of a higher quality. When we pre-announced our pricing changes, we had our share of negative responses. But, we also received positive public replies, and many private mails telling us that they were excited about the change (because it would reduce the clutter/competition for their classes; they wanted us to be around over the long-term; it would mean we’d have money to advertise for even more customers; etc.)

The response from customers also told us that we had been doing a very poor job of communicating our value to them. Many said that we’d never delivered customers, but when we looked at their teacher dashboards, we saw large volumes of visitors, and leads delivered. We realized that we had forgot to set up and communicate that value with a regular metrics mail! Thus, we prioritized building and delivering that communication before we turned on fees.

Several teachers also asked why they couldn’t ‘earn listings’ by doing things other than paying money. We thought that was a wonderful idea, and built a way to do just that (see #3 below).

A recent example where a fee increase was initially handled poorly was at ZenDesk. Initially, their announcement led to a huge customer backlash; happily, they made changes to the pricing proposal that grandfather'd in existing customers. As a long-time ZenDesk customer, I'm glad they listened and made changes, but I'd bet they could have handled this better with some more open customer discussions.

An example where I think this was handled very poorly was when Ning changed their fees — it seems like they just threw many customers out to the curb, with no input, and no negotiation.

2) Price it ‘fairly’ (probably still at a deep discount)

The price obviously needs to work for your income statement as you look out 6-12 months. But, it really needs to work for your customers. If the alternatives are much more attractive, expect to see customers flee.

In our case, we priced new listings at $3 — those listings last 30 days, or until we deliver 10 customer leads (whichever comes first). Many in the lead-gen industry scoff at this $0.30/lead pricing, but we had to look at free alternatives such as Craigslist and Twitter. Ultimately, we know that we’re a lot more than just a listing tool — we deliver strong SEO benefits, reviews/ratings, payments, UGC tools and more. And, all for less than a cup of (Seattle) coffee. If we can’t make that pricing work, then we’ll just have to deal with the ramifications. It seems fair.

Results to date are very promising – our number of teachers paying for listings, subscriptions and featured fees have grown by 6-7x since before the change – in order to continue their support, we know that we'll need to deliver them value (i.e. student leads):

Will we have to raise prices in the future, or adjust the # of leads? Of course, that’s a possibility. But, we don’t expect to do so in the next year. We’ll continue to review the service/benefits, and we’ll do our best to be transparent with our customers.

3) Offer your customers a way to get your product for free

Money is one of many forms of compensation. In our business, high quality content (articles, Q&A, etc) are equally or more valuable, as they help search engines to find our site, and in turn, help people discover great classes/courses, and teachers/schools.

We ended up creating a virtual currency model where a teacher earns a ‘point’ for each article written, or question answered. And five points can be redeemed for a free class listing. A teacher can quickly find five questions to answer, and thus earn a free listing in less than 10 minutes. Within a week of launching our virtual currency, 9% of all our listings that week were paid for with points. This helps us (great keyword-rich content for search engines), but also helps the teacher, as we automatically merchandise their class listings around any articles and answers that they provide. And active teachers have their classes show more highly in search results. We see this as truly a win-win, and we don’t miss the $3 at all!

Many businesses could do a better job with this. I like how Flickr handles it, as I’ve fluctuated often between a Basic and Pro Flickr member. I know that I’ll always return as a Pro, but there are times when it’s less necessary. Thank you to Flickr for making it so easy. I wish Netflix would do a better job of this, giving me continued access to my movie wish list, and recommendations, as I frequently transition from paying to non-paying customer, as my free time fluctuates. But, they lock me out of my movie list when I’m not paying — why?

4) Provide Grandfather’d Pricing for long-time customers, or give them exclusive benefits

If you have a free service, this one is quite difficult, because there are bills that need to be paid. But, if you’re a service that has decided that you need to raise prices, you should seriously consider locking in the old pricing for your existing customers. Or, gradually increase prices. Or, provide them with a generous allotment of credits (you get the idea).

In our case, we created a promotion, offering 6 months of Pro Member benefits for $10 per month (compared to $29.99/month). The weeks prior to this promotion our Pro Member subscribtions were relatively flat; two week after running the promotion our subscriber base increased by 152%. We were psyched to see the level of redemptions on this offer, and hope that we can continue to earn their trust/business over the next 6 months. If we don’t, we didn’t deserve it to begin with.

Some other examples:

  • SEOMoz is probably the best source of SEO advice/tools on the internet. They used to be free, but have gradually introduced monthly/annual memberships. The current cost is $799/year (I think), but when I joined in 2006, it was $299/year. What’s cool is that they still honor the $299/year fee. At that price, I’ll never go away — and, I continue to rave about them to my friends! And, while I know it’s a steal at $799, I still may balk at it, because I know what I paid once upon a time. Great job, SEOMoz, for thanking those who helped you get where you are today.
  • Airlines do a TERRIBLE job of this — how many of us have been lied to by airlines with their frequent flyer programs? They tell us 20k miles will get us a free flight. Then they limit the seats. Then they have offers for 40k and 60k miles. Then they shut down the programs entirely. I’m OK if they change the rules going forward, but to change the rules for the miles that I earned under their earlier offer is just wrong.

5) Make the transition gradual, if possible — people should only pay if you’re delivering value

In our case, we decided that teachers should only have to pay to re-list a class if we’ve delivered a lead to them in the preceding 30 days. So, if a teachers lists a piano class or a photography lesson and we don’t get them a customer phone call, message, or enrollment in the next month, we simply re-list the class for free. That way, they don’t need to think about re-paying until the point where we’ve delivered value. And, we grandfather’d in our existing listings in a similar fashion. This served a double-benefit — for teachers, they’re guaranteed value (it’s another way of saying ‘thank you’ for being early supporters) and for TeachStreet, it maintained class selection, which is good for search engine traffic. In fact, we've grown our overall listings significantly since before the change in fees.

Other businesses will have their own unique characteristics — you could slowly implement fee increases for existing customers (as discussed above), provide transition pricing, or convert past-activity into benefit/tier levels, to name a few. But, you get the idea.

Moving from a free service to a paid service without scaring off customers can be done. With better quality data on TeachStreet we have been able to increase the number of leads to teachers by 25%, students are receiving faster responses from active teachers, and our operational revenue has doubled since launching our paid service.

In closing, remember that making the free-to-paid transition gracefully is just good business. Not only are these your longest-time customers, who have helped you in myriad ways (feedback, patience, content, etc.) but the impact of making this transition poorly can be disastrous and/or long-lasting, with negative PR, ruined relationships, and unpleasant employee morale issues.

I hope the list above is helpful — and, I’m sure that I missed some things. Please contribute ideas in the comments.

This is a high-level view of TeachStreet’s product/pricing history:

  • April 2008 – launched site for classes, courses, teachers, schools (TeachStreet) in Seattle with ~25k classes, courses, schools and teachers – teachers could add unlimited classes, and students could contact teachers. The product had limited functionality, but it let us demonstrate value, work on our user-generated-content tools, and learn from customers (100% free)
  • August 2008 – April 2009 – expanded to ~7 additional cities, and significantly expanded tools for teachers (phone tracking via twilio, teacher metrics dashboard, and much more) (still 100% free)
  • July 2009 – introduced Student-to-Teacher payments (powered by PayPal), so that enrollments and payments could be processed on the site. Note that it took us 15 months to launch this feature — you could argue that we shouldn’t have launched without this, but we believed that we needed to demonstrate other value-add first. Students paid a small booking fee (to cover payment processing costs) and Teachers paid a commission (still 100% free to create class listings, but some fees coming from enrollments)
  • September 2009 – introduced Pro features for teachers at $29.99/month. Gave them extra on-site promotion, additional marketing tools, free payment processing, and more. (still 100% free to create listings, but revenues are building from services)
  • September 2009 – April 2010 – tested/optimized/weblabbed the site – implemented additional lead-tracking and lead-measuring improvements – we knew that if we didn’t deliver value (more, new students) to teachers/schools that we’d never earn their business. (still 100% free to create listings, but revenues are building from services)
  • April 7, 2010 – we “pre-announced” the introduction of fees for all new class listings
  • April 27, 2010 – we “turned on” listing fees for all new listings (100% of new listings are paid; All Listings are Revenue-enabled)
  • May 12, 2010 – last day of $10/month promotion to “Go Pro” (6-months at $10/month; compared to regular $29.99/month rate) (100% of new listings are paid; All Listings are Revenue-enabled)
  • June 6, 2010 (at present) — Traffic’s been growing, Revenue has ramped sharply, and we’re 100% sure that we’re going to have to keep pivoting. Because that’s what startups do.

Like Unvarnished, Duedil Is A Reputation System For People

Posted: 13 Jun 2010 04:32 PM PDT

We've seen how Unvarnished is setting out to create a kind of "Yelp for people" where you get reviewed as a person whether you like it or not. Now a new startup has appreared hoping to do something similar, but this time within a network that will give it significant traction from the word go: LinkedIn. Here's how it works: A user of Duedil will be able to submit comments or "reviews," whilst other users will be able to "reply" to them by deeming them "fair" or "unfair." In other words it's a kind of 'karma reputation'. Since the reviews themselves are subject to the scrutiny of other users, the reputation system itself becomes the focus of the system, rather than the object of the reviews (you).


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