Param Tech Reviews

An interesting report hit the Financial Times today, indicating that Apple is working with all of the major music labels on a way to boost album sales. But the report is confusing in a number of regards, and is propelling new rumors that Apple’s new large form iPod touch, or tablet (which itself is naturally still a rumor, though an increasingly likely one), could be rushed to be out in time for the holidays — this year.
But let’s take a step back for a second here. FT seems to go back and forth between tying this new Apple/music label effort, which is apparently code-named “Cocktail”, with this new device. At first, it indicates that it’s separate (emphasis mine):
The talks come as Apple is separately racing to offer a portable, full-featured, tablet-sized computer in time for the Christmas shopping season, in what the entertainment industry hopes will be a new revolution.
But it goes on to say (emphasis mine):
The device could be launched alongside the new content deals, including those aimed at stimulating sales of CD-length music, according to people briefed on the project.
Okay, except that it then goes on to say (emphasis mine):
The labels and Apple are working towards a September launch date for the project, which aims to boost interest in albums by bundling liner notes and video clips with the music.
So the Financial Times seems to be both suggesting that Apple’s tablet is closely tied to this new Cocktail project, which could launch in September. Or, the tablet is a separate project and will launch in time for the holiday shopping season (typically late November). Of course, reports last week had Apple working hard just to get the tablet device done for Q1 2010. So what gives?
Here’s what it sounds like is happening. The music industry people that FT talked to are excited about the prospects of their new project with Apple, but they’re even more excited about this new tablet device. As I’m reading it, project Cocktail sounds pretty ho-hum by itself (um, liner notes as an incentive, again, really?), but this is the key part:
Consumers would be able to play songs directly from the interactive book without clicking back into Apple’s iTunes software, executives said.
So it sounds like project Cocktail could offer special functionality that may be optimized for this tablet (and perhaps the iPhone and iPod touch). And so that’s why they’re probably talking up the new device, which they may or may not have even seen, as is indicated by the FT report still not knowing the actual screen size.
All of this is also interesting because it’s Apple apparently working closely with the record labels — two sides which have had plenty of disagreements in the past. And this seems to be all about album sales, something which you could easily argue that iTunes is responsible for hurting with its per-track structure.
But the labels just recently got their way and forced Apple to up the price of many songs on iTunes. At the same time, album prices largely stayed the same (though some went up). So now it appears that the labels also want to make more off of albums, by not only giving users a reason to buy them, but I would imagine also charging more for these special Cocktail albums.
But will it work? From the way this story reads, it seems like it may be contingent on this new Apple device. I don’t know about you, but I could care less about liner notes that the albums on iTunes already have. If anything, I’d prefer not to get them, as they just clutter up my music library. And iTunes already has plenty of “special” versions of albums that have bonus music videos and other goodies. So unless this story is about nothing, it would seem that FT just isn’t describing Cocktail very well for the most part, and instead we should look to the description of it as a highly interactive experience for music.
But then the report jumps back to being about the tablet — and it reads like the device will matter more for movies, than music:
The entertainment industry is hoping that Apple, which revolutionised the markets for music players and phones, can do it again with the new device.
“It’s going to be fabulous for watching movies,” said one entertainment executive.
Or maybe books:
Book publishers have been in talks with Apple and are optimistic about their services being offered with the new computer, which could provide an alternative to Amazon’s Kindle.
In all likelihood, Apple is probably targeting all three (music, movies and books) with the new device, but it’s hard to follow here.
Most importantly, how likely is it that we’re going to see such a device in just a couple of months? Probably not too likely.
[photos: flickr/ginsnob and TECHcocktail]
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“Archive video has clearly exploded all over the internet, but live video hasn’t. We think it’s because more flexibility is needed that no single product can meet, but an open platform can.” That’s what Justin.tv VP of Marketing Evan Solomon tells us in announcing the opening up of the service’s API.
The API, which has been in closed testing for about a month now, will now be available to anyone who wishes to use it, for free. Justin.tv can do this because they’ve made live video cheap to serve. Their internal network has capacity for some 100 million hours of video viewing per month, we’re told. For some perspective, that’s roughly 2.5% of media giant Comcast’s capacity, but Justin.tv is run at a fraction of the cost.
And it’s not like it’s totally free with no strings attached. The initial launch of the API will be supported by ads. And eventually, a payment platform will be built-in to the API as well for developers who wish to service live video ad-free. In those cases, there would be revenue sharing with Justin.tv, we’re told. Still, the ad-supported free model makes it very compelling next to Stickam’s StreamAPI and Ustream’s offerings, both of which charge per view hour.
But costs aside, the key here is the access to the live video. Justin.tv is just one company and needs to maintain its core product, which means side projects like Camtweet, which was unveiled at our Real-time Stream event earlier this month and was built using this new API, aren’t going to pop up everyday. But with developers given access to the same tools, now Justin.tv doesn’t need to worry about doing all the work, it can have the community help is making cool new live video applications.
And just to give developers so ideas of what they can do with this API, Justin.tv internally made a few simple live video apps besides Camtweet. They are:

A group chat application that allows an arbitrary number of broadcasts to be displayed on a single page as people join
A Mac OSX dashboard widget that plays live video, allows search and includes a chat room–you can download this here, but please don’t share the URL http://soda.berkeley.edu/~kfb/jtv_dashboard.zip
An automated event widget that can be embedded anywhere–once you setup an event the widget shows a countdown timer, automatically switches to a live video broadcast and then creates and displays a highlight clip after the event ends
A baby monitor that alerts you when something happens in the broadcast–you can try this one out here http://www.slumbervision.com/

You can get access to these, dig into them, and get documentation on Justin.tv’s API wiki found here. You can also find the source code for Camtweet, which has been open-sourced, on Github here.
I suspect we may see the other live video services follow suit with free, ad-supported APIs. We watched them all rush to serve live video on Facebook’s platform last month, but opening it up to any app developer on the web for free is potentially much more interesting.
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Sandwiched neatly between the RealTime is God and RealTime Who Needs It crowds is a new group that embraces both positions while moving forward rapidly. These folks include Brett Slatkin of the PubSubHubub effort and Dave Winer of rssCloud.org. Slatkin and fellow conspirator Brad Fitzpatrick demoed the PSHBB architecture at the RealTime Stream Crunchup, and Winer quickly jumped in with his own implementation.

While Winer attacked PSHBB as a Google (and TechCrunch) conspiracy, the rhetoric seemed mostly in service of his own plans for a decentralized open platform not controlled by bigcos. The charges don’t make sense — PSHBB is not a Google effort but rather one started by Fitzpatrick and Slatkin on their own — and like Winer’s, proposed and delivered as an open architecture that can be spacross multiple players. In other words, they’re saying the same thing.

Digging deeper, it could be that Winer’s concern is that adoption by Google or other platform players will create a bandwagon effect that could lock out smaller independent developers. There’s certainly some truth to that dynamic, as PSHBB is already running in a number of cooperating platform implementations including FeedBurner, WordPress, and even FriendFeed, where Slatkin is active in tracking user issues. But ironically, by offering a competing framework, Winer takes away the argument of unfairness. If developers and publishers want to adopt one platform over another because it’s got more mainstream adoption, they’re free to do so. In the past, Winer has been the beneficiary of just such choices, with RSS 2.0 proliferating in no small part due to support from Microsoft on the platform side and the New York Times on the publishing side.

As if AT&T wasn’t already bad enough. In an act that is sure to spark internet rebellions everywhere, AT&T has apparently declared war on the extremely popular imageboard 4chan.org, blocking some of the site’s most popular message boards, including /r9k/ and the infamous /b/. moot, who started 4chan and continues to run the site, has posted a note to the 4chan status blog indicating that AT&T is in fact filtering/blocking the site for many of its customers (we’re still trying to confirm from AT&T’s side).
Reports of the blocking began to surface on reddit this afternoon, and a number of blogs are beginning to pick up on the story, though it doesn’t seem like any have managed to get a comment from AT&T (we’ve reached out to the company and will update once we hear back).
4chan has been called many things, most of which aren’t particularly flattering. Some parts of the site are almost entirely unmoderated, leading to a wild-west, highly NSFW environment where irreverance, mischief, and lewdness thrive (I like to think of it as the Mos Eisley of the web). But that doesn’t mean the site isn’t extremely influential on web culture. Many of its exploits are famous, including taking over the Time 100 list, and it’s also where some of the Internet’s most famous memes got their start, including the Rick Roll and LOLcats. It’s also known as the main hub for Anonymous, a group that has held a very public campaign against Scientology.
In other words, AT&T has just opened perhaps the most vindictive, messy can of worms it could have possibly found. Blocking any site is an extreme breach of user trust, but the decision to block 4chan in particular just seems stupid. Expect the web equivalent of rioting if this doesn’t change soon.
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A lot of readers were incredulous over last week’s news that Ning raised another $15 million in venture capital from Lightspeed Venture Partners at a $750 million valuation. That comes despite the fact that Ning traffic appears to be flatlining, and revenue to date is likely very small.
A typical comment to that post: “What an ASTOUNDING way to waste money.” Others pointed out that venture capitalists typically invest hoping to at least have a chance at a 10x return - and in Ning’s case, it seems unlikely that the company will be worth the necessary $7.5 billion any time soon. So, why’d they invest?
Marketing.
Lightspeed doesn’t have an investment in a big name social networking startup right now. In fact, their entire Internet portfolio looks a little sleepy and dated. Competitors like Greylock can show investments in Facebook and LinkedIn, two of the hottest pre-IPO startups in Silicon Valley (as well as Pandora and SGN, both of which are getting lots of press attention and fast user growth).
Lightspeed needs to get itself back in the game. And Ning was willing to take the money. A match made in heaven.
Do they expect to see a big return on the investment? Almost certainly not. But they also haven’t put their money at extreme risk. They likely have a liquidation preference that lets them get their $15 million out of the company before others can take part of the pie. So effectively they just bougtht themselves a bunch of marketing with their limited partners’ money.
Of course, the LPs don’t really mind, since they look at returns on the fund, not individual investments. And it may work out well for them. When Greylock invested $25 million in Facebook in 2006 at then-absurd valuation many of the same criticisms were leveled at them, too. But they had a stake in the hottest startup around at the time, and increased their profile in Silicon Valley. Likewise, Microsoft’s investment in Facebook at a $15 billion valuation, was done not in the hope of making money on the investment, but to lock up a search marketing deal.
So at the end of the day Ning gets some much needed additional capital in exchange for a tiny amount of equity, and Lightspeed gets its name associated with the Ning and Marc Andreessen brands. And while they won’t expect to make much of a return on that investment, they will almost certainly get that money back, at least. Everybody wins.
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Not sure which question is more appropriate here: why or why not? We’ve already witnessed the renewed interest in URL shortening services with the rise of communication platforms where brevity appears to be the norm rather than a side effect (Twitter!).
It was little surprising to see a custom one pop up that focuses specifically on iTunes links.
iTunes links are inherently long, non-sexy and practically unsharable web addresses that lead people directly to Apple’s media management software program where they can download applications for their iPhone or iPod Touch in a section called the App Store, à la http://ax.itunes.apple.com/WebObjects/MZStore.woa/wa/browserRedirect?url=itms%253A%252F%252Fax.itunes.apple.com%252FWebObjects%252FMZStore.woa%252Fwa%252FviewSoftware%253Fid%253D321041850%2526mt%253D8.
(In case you’re wondering, that one goes to the Swimsuit Models app from Sports Illustrated. You’re welcome.)
What Appsto.re does is let you take those long URLs and turn them into custom links such as http://appsto.re/AreYouAMoron and … no that’s basically all it does, even if the team that built the app felt the service actually required its own manifesto. For something that can already be done with the tons of other URL shortening services out there.
I’m leaning towards the first question: why?
Update: as commenters have pointed out, the reason is that the developers of the service insert an affiliate link when shortening the URL and pick up a piece of the revenue generated from paid apps sales. They don’t mention this anywhere, but you can see it for a split second when you open the short URLs (the team told me the main benefit is for iPhone app developers to better brand links to their apps and in the future track conversion for clicks/sales).
Update 2: Tim Dorr tells us iPhone apps already have short URLs, e.g. http://itunes.com/apps/scavenge. Who knew?

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Those little green reweet buttons you see across the web on sites like this one have helped TweetMeme rise in popularity. The buttons are now so ubiquitous that the service has seemingly become the de-facto retweeting mechanism for content on the web. But it looks like it’s about to get a challenger, with a killer name, Retweet.com.
Retweet.com currently only has a a landing page saying that it’s “coming soon,” so it’s hard to know exactly what it is from that. But there are plenty of clues around the web pointing to it being a TweetMeme competitor. The main hint comes from a design contest taking place at 99designs. The prize is over $1,000 to design the site, and all of the mockups look very similar to TweetMeme (which, to be fair, takes a lot of its look from sites like Digg).
And there’s more. The group behind Retweet.com, Mesiab Labs (which seems to have a poor reputation among the Twitter community for products like Hummingbird, that some have accussed of spamming others), has a few sites related to Retweet.com that are already live. One is the URL shortener RT.nu, which will clearly be used to send out the retweets from Retweet.com. Another site, Checkretweet, scours Twitter for retweets for any user. Each of these play into the bigger strategy of the site, according to this blog post. And here’s the key nugget from that post, “Together, these systems allow us to detect and deliver breaking news faster than any other media outlet at present.”
So it looks like they’re setting up Retweet to take on not only TweetMeme, but also Digg, Google News, Techmeme and the new service that Bit.ly is working on. They key to all of this is obviously the links that are getting tweeted out and then retweeted. And because the latter word is entering the lexicon of the web, Retweet.com has a pretty awesome domain for trying to come along with a new service in this field.
That little trademark sign in the upper right hand corner of the logo is also interesting. It may just be for the logo, because it seems like they might have a hard time trademarking the word “retweet.” Though, that would be a potentially very scary situation for TweetMeme and all those little green buttons.
Let’s not get ahead of ourselves though, Retweet.com still has to execute — and launch. But this is probably something to watch.

[thanks Orli]

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Retweet.com

Twitter

TweetMeme

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Who knew statistical computing competitions could be so cut throat? Since we reported on the contest last night, two teams in the Netflix Prize have spent the last few hours jumping back and forth on the Netflix leaderboard as the three-year-long competition ticked into its final moments, with last minute sniping submissions coming from both sides. Finally, the results are in: The Ensemble has managed to come from behind to upset BellKor’s Pragmatic Chaos with a top submission of 10.10% — an improvement of .01% — only 4 minutes before the contest closed.
It’s been a long road to get here. Over the last three years computer science teams around the world have been vying for the Netflix Prize — a competition that invited teams to try to improve on Netflix’s movie recommendation algorithm by 10%, with a reward of $1 million to the best submission. Since then teams have gotten progressively closer to the magical 10% mark, but it wasn’t until last month when a number of top teams joined forces to form BellKor’s Pragmatic Chaos that the barrier was finally broken, with a score of 10.08%. However, their announcement kicked off a 30 day last call period where other teams were invited to make their final submissions.
Last night, a team called The Ensemble managed to one-up team BelKor with a score of 10.09%, less than 24 hours before the close of the competition. Things were looking bad for team BellKor (some suggested that they might be out trying to drown their sorrows). But the team was clearly still hard at work — it managed to tie the Ensemble with a score of 10.09% with only around 24 minutes remaining in the competition. But they were to be foiled once more: with only four minutes left, The Ensemble struck back with a score of 10.10% to regain the top spot on the Netflix leaderboard. Soon thereafter a notice went up on the Netflix homepage stating that there were to be no more submissions.
This is all very exciting, but there’s a reason that Netflix has not yet annouced the winner, even though the leaderboard is quite clear. That’s because the Netflix prize is actually based on two sets of data. The first is called the Quiz set, which is used to publicly display how a team is faring to the public and to determine when the contest would kick into its 30 day last call mode. But the set that really matters, the Test set, is still a secret, and nobody knows if The Ensemble or team BellKor performs better. Netflix will make the final contest announcement in the next few weeks.
Update: Yehuda Koren of BellKor’s Pragmatic Chaos has posted on the contest’s forums that BellKor came out with the lowest Test score, though it appears that Netflix has yet to confirm this.
Thanks to Almir Karic for the tip.

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Last week saw an unusual burst of acquisition activity among Web companies. Yahoo bought email add-on Xoopit for about $20 million, Nokia bought social address book provider Cellity, and overshadowing them all was Amazon’s $928 million purchase of Zappos.
But the week started off with another acquisition which quickly got lost in all the subsequent news. Advertising network Adknowledge bought KITN Media for its flagship virtual currency product, Super Rewards. The acquisition price was undisclosed, but Eric Eldon at VentureBeat noted that the rumored price was $30 million (he also noted that AdKnowledge disputed that number as “patently inaccurate.”)
I heard the same number the night before the acquisition was announced. It was being floated by one of AdKnowledge’s competitors. When I asked Adknowledge and Super Rewards about it, they gave me the same line: that it “was incorrect and it would be a material misrepresentation of the transaction.” I dug around a little more and found out that the price was actually more than $30 million. A source with direct knowledge of the deal told me that it was closer to $50 million. When I ran this new number by Adknowledge CEO Scott Lynn, he wouldn’t confirm it. But he didn’t deny it either like he did the earlier figure.
How does a company most people have never heard get a $50 million exit? Super Rewards started in the back room of KITN Media founder Jason Bailey’s house three years ago with a single computer and no funding. Within six months, it had made its first $1 million in revenues and was profitable. Today, its annual revenues are more than ten times that size.
Super Rewards helps grease the wheels of the virtual economy on social networks and gaming sites by offering app developers an easy way to convert their virtual currency into real cash or advertising subsidies. Super Rewards provides a white-label virtual currency system to more than 1,000 apps and games (such as Mob Wars) on Facebook, Hi5, Bebo, Tagged, and other social networks.
But the real action is in the ad sponsorship model, and is the reason AdKnowledge bought the service. Super Rewards connects those 1,000 app developers with 4,000 advertisers. While many players pay directly for the virtual currency to advance in games, buy better gear, or obtain virtual goods, the majority accept virtual currency from advertising sponsors in return for signing up for a product or filling out a form. For instance, Netflix might offer $$20 in virtual currency for someone to sign up to Netflix. For the consumer, it is an even swap. They still pay $20, but they get the virtual currency for free. Netflix ends up paying $25, with Super Rewards pocketing the difference and Netflix chalks it up to customer acquisition costs.
What is happening is that the advertisers are subsidizing the virtual currency and converting it to real cash for app developers (and Super Rewards). In other words, they are effectively paying lead generation fees directly to consumers in the virtual currency of their choice. Super Reward’s biggest competitor is Offerpal, and it is doing the same thing.
At a time when conventional ads on social networks still aren’t hitting the mark, virtual currency is a small, but quickly growing, bright spot. Industry estimates peg the size of the virtual currency economy coursing through social networks at $100 million last year, going to $600 million this year. Adknowledge believes the size of the overall market will be several billion dollars within a few years. And it is not just social networks. Mobile apps on the iPhone and elsewhere are going to tap into virtual currency as well. If Super Rewards can maintain a 20 percent margin and remain one of the top virtual currency platforms, that $50 million price is going to look like a bargain.
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News aggregator site and Digg-competitor Mixx had a rough June. Traffic to the site took a 68 percent nosedive in the U.S. from May to June, according to comScore (see chart). Compete shows a similar trend.
Wondering if Mixx had maybe been paying for traffic and had now stopped, I asked CEO Chris McGill if this was the case. Absolutely not. He replied: “We have never paid for traffic… Not once. How could we? … We have operated for two years on almost no money.” Hard to argue with that. Mixx has only raised $3.5 million to Digg’s $40 million, and is “nine guys sitting in a boiler room.”
So what happened? McGill admits, “We had some performance problems in the month of June.” A database problem and a DNS change ended up temporarily blocking Google. Traffic was only down 30 percent, says McGill, and has almost fully recovered in June. He sent me a screen grab from Google Analytics (below) showing that in the first half of July, unique visitors tripled to 1.5 million compared to the first half of June. For the full month of June, he sent me a Google Analytics page showing 1.8 million total visitors. (comScore’s estimate for U.S.-only unique visitors in June was 337,000, but it typically under-reports traffic for small sites).
If Mixx’s drop was just a technical issue (and I have no reason to doubt McGill’s explanation, he was very upfront with me), then comScore and Compete should pick up the site’s rebound in their July numbers. I hope that’s the case because Digg needs competition. For instance, in April, Mixx started experimenting with showing ads based on user voting, a great idea which Digg then started taking seriously in June. And just yesterday, it launched TweetMixx to tap into hot links appearing on Twitter.

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