DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Facebook Comments: Not the End of Anonymity, Just a Blow for Civilityhttp://www.dailyfinance.com/2011/03/08/facebook-comments-end-of-anonymity-blow-for-civility/http://www.dailyfinance.com/2011/03/08/facebook-comments-end-of-anonymity-blow-for-civility/http://www.dailyfinance.com/2011/03/08/facebook-comments-end-of-anonymity-blow-for-civility/#commentsFiled under: , , , , ,

An online firestorm has erupted over popular blog TechCrunch's adoption of the Facebook Comments plug-in. TechCrunch (which like DailyFinance is owned by AOL) decided to start using the Facebook system in part to control the volume of virulent, useless and nasty comments on its site, which had become a favorite playground for the worst sort of online trolls.

Now, users who want to comment must log in with a Facebook account, something that few trolls are willing to do because Facebook accounts are easily connected to real people and have a very low degree of anonymity.

Critics -- and even TechCrunch's own writers -- have noted that the once vibrant comments sections have become perhaps too civilized, and there has been a drop in comment volume of roughly 50%. In a response of sorts to TechCrunch's move, entrepreneur and techie Steve Cheney penned a widely read post inveighing against the social network titled How Facebook is Killing Your Authenticity.

A Long Way from Thomas Paine

As for me, I'm all too happy to see this sort of transparency come to the Wild Wild Web. I'll cry only crocodile tears for the trolls who'll truly miss the ability to graphically profane the mothers of any poor sap who makes a moderately genuine and unsnarky comment on TechCrunch or other prominent blogs.

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Let's be clear. Anonymity is essential online, just as it is offline. The history of impactful anonymous political commentary, such as Thomas Paine's Common Sense, is long and robust. Likewise, anonymous reviews and pen names have held a storied place in literature and journalism. But what has evolved over the past decade on the Web is a level of anonymity that has allowed the Dark Side to prevail.

Anonymous memberships on review sites such as Yelp and TripAdvisor have made it far too easy to game those systems, which in turn casts doubt on the quality of their reviews (a subject I've written about for DailyFinance before). Anonymous reviews on Amazon (AMZN) have allowed companies to manipulate the product-ranking system by paying a pittance for people to write and post positive reviews.

And anonymous commenting sections on sites such as TechCrunch cater to the most base human instincts -- after all, what kind of person posts flippant, insulting reviews while hiding behind a false identity? A person who would rather not have his mother read what he (or she) is writing on TechCrunch, most likely.

Far From Perfect

Fundamentally, anonymity makes it easy for people to ignore the principles of the Golden Rule, and in so doing, it breaks powerful unspoken social covenants that dictate appropriate behavior. That's why I welcome the rise of log-in systems and commenting modules that force people to reveal their identities. People who want to keep their names secret but still have a voice can easily do so. Google's (GOOG) Blogger service, for example, makes no effort to force people to reveal their actual names.

To be sure, Facebook commenting is far from perfect. Robert X. Cringely points out, correctly, that users who sign up for Facebook Comments risk posting all their comments to their own Facebook wall, and could display their friends' pictures on other sites without realizing it. But this is largely besides the point, and it's hardly, as Cringely suggests, the "Death of Online Anonymity."


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]]>amazonanonymityanonymousbloggersColumnsfacebookfacebook commentsgoogle bloggerHow Facebook is Killing Your Authenticityonline commentsRobert X. CringelySteve CheneytechcrunchTripAdvisortrollsyelpAlex SalkeverTue, 08 Mar 2011 11:40:00 ESTApple's 'Joint Venture': A Smart Play for Small-Business Tech Supporthttp://www.dailyfinance.com/2011/03/04/apple-smart-play-for-small-business-tech-support/http://www.dailyfinance.com/2011/03/04/apple-smart-play-for-small-business-tech-support/http://www.dailyfinance.com/2011/03/04/apple-smart-play-for-small-business-tech-support/#commentsFiled under: , , , , ,

Beyond Apple's parade of slick, game-changing products, the company boasts a highly successful retail strategy. One key part of that strategy's foundation has been the combination of the Genius Bar and Apple Care, a unique program that allows Apple (AAPL) customers to meet one-on-one with support techs in the nearest Apple Store, virtually on-demand. Countless numbers of customers have decided they're more comfortable going with Apple products precisely because they know they'd always be able to talk to a live person -- in person -- quickly, if they needed help.

And that's why the launch of Apple's new Joint Venture is interesting.

Joint Venture is a new marketing push by Apple to provide lightweight technology consulting services to small businesses. Pricing details are somewhat murky, but the offering appears to run $499 to handle info-tech support and configuration for five Apple users and their devices. Naturally, this includes Genius Bar support. The move could take more business away from the Apple Consultant Network, a cadre of mom-and-pop shops that have traditionally filled the gap for Apple with small-business clients.

Apple has traditionally lagged in the enterprise marketplace. Yes, coders at Facebook and Google (GOOG) are given a choice of Apple or Windows when they get their work computers, but most of Corporate America, and the world, still runs on Windows. The iPhone and its halo effect have opened the door a crack because many corporate IT departments have agreed to allow iPhone users access corporate networks from their handsets. The iPad is likely to increase demand further for business users.

But Apple is targeting Joint Venture at small companies, the sort that may not be tech-savvy and may have one person on staff, or a part-time consultant, who handles their chief information officer duties. This is actually a multibillion dollar market (exact figures are hard to come by, but it encompasses roughly 6 million small businesses that employ people beyond their owners, according to the U.S. 2005 Census) and a highly coveted one for IT hardware and software providers. That's because these businesses pay a higher premium for IT gear compared to big corporations, which can negotiate sweetheart deals through their volume purchases.

A Foot in the Door With Creative Shops

Taking aim at the small-biz market is smart for other reasons. Smaller businesses are much less likely to be running Microsoft (MSFT) Exchange Server, a product that serves as the ultimate lockout for the Redmond company. Yes, Apple products work with Exchange, but the fit is never perfect. (That's not a knock on Microsoft -- naturally, Windows is its higher priority.)

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Those businesses are more likely, in turn, to use Web-based email, a configuration that makes it much easier to run Macs, because all you need is a fast Internet connection. True, it's entirely possible to have an Exchange server hosted by someone else or even by Microsoft, and that option has been quite popular.

Another key factor is the preponderance of small businesses using Apple hardware that are creative in nature. Design shops, advertising firms and other similar operations are more likely to spend more for higher-performance -- and more profitable -- software and hardware than other businesses. By consulting directly with these businesses, Apple can get a foot in the door and not only sell its services, but also more products.

Not to say that Apple hasn't tried to do things like this before. It has long had dedicated teams trying to enterprises. But this effort seems to signal a new, more concentrated push for the lucrative small-biz segment and extend Apple's reach into the offices of America, and perhaps eventually the rest of the world.


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]]>Appleapple careApple Consultant NetworkApple Joint Venturegenius baripadiphoneIT servicesIT supportJoint Venturemacintoshsmall businesstech supportwindowsAlex SalkeverFri, 04 Mar 2011 15:30:00 ESTLook Out, Rosetta Stone: Memrise Has a New Vision for Learning Langaugeshttp://www.dailyfinance.com/2011/02/25/memrise-rosetta-stone-language-learning-tool-best/http://www.dailyfinance.com/2011/02/25/memrise-rosetta-stone-language-learning-tool-best/http://www.dailyfinance.com/2011/02/25/memrise-rosetta-stone-language-learning-tool-best/#commentsFiled under: ,

In my life, I've studied four foreign languages, two of them thoroughly enough to attain near fluency, and the early part of that trajectory was always pure drudgery. A big stack of flashcards, many mugs of coffee or tea, and lots of repetition.

Sure, some companies have done things that make the process of learning languages more contextual and conversational -- and supposedly fun. But putting the basic building blocks in place remains a royal pain. That's in part because learning languages is something better done by younger brains.

It's also something that we do very visually when we're younger, but more with symbols as we get older. Spoken language practice, where one can actually visualize the speaker pronouncing the words, is a small fraction of language training.

Memory Science and Athletics

So, last week, I tried the language learning tool offered by a new company called Memrise and was blown away. The Oxford, England-based outfit was founded by Greg Detre, a PhD neuroscientist from Princeton University, and Ed Cooke, a Grandmaster of Memory -- you know, like the memory freaks profiled in this amazing New York Times Magazine article last week.

This duo came together to tap into the latest research findings about how to learn quickly and effectively. Detre provided the science, while Cooke provided the chops that come from being a professional memory athlete (yes, there is such a thing), a bizarre life form that thrives on learning massive amounts of information and performs astounding tricks with mental imagery to ensure near total recall.

The basic premise behind Memrise is simple. The free website turns rote symbolic learning into more dynamic image recall and recognition by converting words and written characters into entertaining, highly memorable pictures. Think of the representations of the constellations like the Big Dipper and you have the general idea.

Tapping Into the Strong Visual Mind

To test out the system, I elected to learn basic Chinese characters.

For my first word, Memrise took the pictogram that signifies the word "woman" and overlaid it with a nice Flash motion graphic of a woman with her arms outstretched, which fit perfectly into the footprint of the pictogram. This embedded in my mind the image of the woman with the pictrogram laying out the outline.

It was ingenious, tapping right into my visual recognition capabilities, something all humans have in spades as part of our evolution of facial recognition and other pattern-recognition skills that were required before the rise of writing.

I blew through a few more similarly constructed pictogram/graphic combinations and was sorry such a tool wasn't available back when I was learning Russian with flashcards. Memrise also provides assistance in writing with short videos of a hand writing the words or pictograms that are covered in its drill sets. The site even has group features that allow you to make friends with others learning languages and "socialize," an idea pioneered by another learning site I love, Grockit.com. (Thanks for the GMAT help, guys!)

Here's a nice description of the motivations and goals of Memrise from the site:

From the science of memory, Dr. Detre brings an acute understanding of how best to strengthen memories, by testing and reviewing them over time in the most efficient manner. From the art of memory, Grandmaster Cooke brings an understanding of how learning rejoices in anything that is pithy, colourful, humorous, fantastical, attractive, scary, important, unusual or vivid.We think that learning can be a special kind of creative pleasure, and we're building impeccable learning products that will help you learn quicker and more creatively than you ever thought possible.

At present, Memrise offers only a limited subset of language learning modules, but I imagine it's planning to add many more in the near future, if resources permit. It's too early to say what this will mean for other online language tools and, more important, for Rosetta Stone (RST), the publicly traded company that has dominated the e-learning business for languages. Based on my experience, I'd say that companies charging big bucks for premium language-training products are likely in for a rough ride.


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]]>Columnse-learningforeign+languageGreg DetrelanguagelearningmemorizingmemoryMemriserosetta stonetutorialvisualvocabularyAlex SalkeverFri, 25 Feb 2011 11:30:00 ESTDoes IBM's Watson Offer the Future of Search? Not Yethttp://www.dailyfinance.com/2011/02/22/ibm-watson-future-of-search-not-yet/http://www.dailyfinance.com/2011/02/22/ibm-watson-future-of-search-not-yet/http://www.dailyfinance.com/2011/02/22/ibm-watson-future-of-search-not-yet/#commentsFiled under: , , , ,

IBM's Watson on Jeopardy!In the past month, some leading voices have disparaged Google (GOOG), Microsoft's (MSFT) Bing and other search engines for producing results they claim are polluted with spam from content farms like Demand Media (DMD) and Yahoo's (YHOO) Associated Content. Some of these voices hailed the victory of IBM's Watson over human Jeopardy! champs as a forerunner of a new type of more intelligent, useful and less spammy search.

Prominent technology guru and author Vivek Wadhwa spins a vision for a search engine that would be more like a really useful Q&A service that knows your friends, your preferences and your location and can respond quickly and accurately to your queries as they relate to you, personally.

In Wadhwa's world, these new and useful search offerings would rely heavily on a searcher's "social graph." The theory is simple: Trusted recommendations and collective knowledge from groups directly associated with a person should return better information than recommendations and knowledge from random sources, such as Demand Media or Associated Content.

Oodle.com founder Craig Donato has commented on the rise of social commerce, a world where purchasing decisions about goods and services are most strongly influenced by recommendations from those nearest to you in the social graph. This echoes what Web 2.0 Conference curator and search expert John Battelle has long called the Semantic Web. I've also covered peer-to-peer search engine Wowd, which in theory could go a long way toward Wadhwa's vision.

Quickly Diminishing Returns

I have to admit, though, while I find the concept intriguing and possibly even Utopian, I don't think it will happen. My reasoning? TripAdvisor and Yelp. Both are extremely popular Web properties for reviews, probably the two leaders. Both have done excellent jobs of aggregating user-generated content. But for me, each has a key problem that points to the potential difficulties of leveraging the social graph for search.

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TripAdvisor is by far the largest repository of hotel and travel reviews. And it works well for really large hotels and really popular destinations. But once you look at reviews of smaller hotels and lesser-known destinations, the number of current reviews often falls off precipitously. And what are the chances of someone in your social graph having made those reviews or even having visited those places? Probably not very high, considering that TripAdvisor has such low response rates to off-the-beaten-path locations.

Likewise, Yelp reviews don't match up with my social graph. And even more important with restaurants, what if that person who is in your social graph doesn't share your tastes? This limits the relevance of the social graph-related reviews even more.

The upshot? In my mind, the perfect search will continue to be an amalgam of curated content, professionally produced content and, to a greater degree, social content coming from a searcher's social graph. Results from the content farms will start to get screened out more aggressively as the incumbent search engines see this as essential to improving search quality.

So, Watson is an interesting exercise, and it may offer in a raw form the logic and technology side of a vastly improved search engine. But we've got a ways to go before the social graph can be the primary power behind search.


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]]>associated contentColumnscontent farmscontent spamCraig DonatoDemand Mediajohn battellesemantic websuperComputer WATSONvivek wadhwawatsonwatson jeopardyweb searchAlex SalkeverTue, 22 Feb 2011 09:30:00 ESTIt's Crunch Time for Google's Battle Against Content Spamhttp://www.dailyfinance.com/2011/02/14/google-battle-against-content-spam/http://www.dailyfinance.com/2011/02/14/google-battle-against-content-spam/http://www.dailyfinance.com/2011/02/14/google-battle-against-content-spam/#commentsFiled under: , , , , ,

Google search pageOver the past few weeks some high-profile web personalities have vented their wrath at Google (GOOG) for what they claim were extremely spammy search results, particularly related to research on anything that can be purchased.

For the most part, I agreed with them. Like Paul Kedrosky, I had thrown up my hands and paid to get access to Consumer Reports when I needed to research a washer-dryer combo after finding the top pages and results in Google and other search engines awash in content that provided no insights. I also started using Blekko, Rich Skrenta's upstart search engine for some topics that I knew would be spammed out on the mainstream search engines.

I was also somewhat disappointed in Google's response to these concerns. It's main spam cop, Matt Cutts, basically said Google results were actually better than ever and that it would take some actions against the content farms that have usurped so much of prime search real estate with poorly written copy and advice articles that fail to provide any useful information. That's heartfelt and perhaps accurate in aggregate, but not enough to assuage the angry masses.

The Evolution of Google Search

But I guess that's why Cutts is more of an engineer while Don Dodge, another top Google manager, is considered an evangelist. And boy is he good at it. In an extremely well thought-out blog post, Dodge counters claims that Google's search results have remained the same for a decade and that the company has failed to innovate on search.

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He can talk about this, in part, because he was an executive at AltaVista, the leading search engine in the pre-Google era. With a series of screenshots, Dodge walks us down Memory Lane to the days when Google results only included text links, and then he proceeds through a series of subtle interface changes that slowly added more and more information including images, news stories, local phone numbers, maps and, most recently, real-time changes in results.

Dodge's contention? Google search rocks, and the changes have been so fluid and incremental that even the search mavens, let alone the general public, have barely noticed.

It's an interesting argument, and he tells a fine tale. And, to a degree, he's right. Two years ago I wouldn't have used Google Maps to search for directions to a meeting or for restaurant reviews or street views. A friend of mine who is a PR executive tells me Google Maps eliminated most of the complexity involved in scheduling media tours by enabling simple, multistop directions.

I used to go to AOL's (AOL) Moviefone to search for movie times. Now I can find them just as easily in Microsoft's (MSFT) Bing or Google. Image searches in Google and Bing are phenomenal and fast. So yes, we've seen huge improvements in providing specific types of information that is very easy to define and validate.

A Huge, Hairy Problem

Where the trouble still lies is the quality of information, and this is a thorny problem due to the subjectivity of "quality" in general. Search engines of all stripes fail to differentiate on quality. They do some policing of content spam, but the JC Penney incident reported by The New York Times illustrates clearly that even low-grade efforts to game search engines, if applied with enough brute force, can still gum up the system.

I'm not faulting Google or any search engine on this, either. Policing quality is a huge, hairy problem -- particularly since that's precisely what Google's original PageRank algorithm was designed to do by assigning quality votes to inbound hyperlinks.

It worked really, really well for a long time. It still works pretty well, but I'm hopeful that it can be substantially improved in the near future. Blekko is betting that human curation combined with a PageRank-style algorithm will create purer results. Google has traditionally not supported any type of curated solution, always betting on elegant computer code.

In the arms race against the spammers, the next few years could be crucial for the incumbent search leaders as pressure builds to build a better search mousetrap.


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]]>AOLBingColumnscontent farmscontent spamDon Dodgematt cuttssearch engine optimizationsearch enginesseoweb searchAlex SalkeverMon, 14 Feb 2011 10:45:00 ESTYour Doctor Could Soon Be Reading Your X-Rays on an iPadhttp://www.dailyfinance.com/2011/02/14/mim-mobile-x-rays-on-ipad/http://www.dailyfinance.com/2011/02/14/mim-mobile-x-rays-on-ipad/http://www.dailyfinance.com/2011/02/14/mim-mobile-x-rays-on-ipad/#commentsFiled under: , , , , ,

Mobile MIMOn Feb. 4, the U.S. Food and Drug Administration announced it had approved the first diagnostic radiology application for mobile devices. The app is called Mobile MIM, created by Cleveland-based MIM Software, and it's part of a wave of mobile applications aimed at making life easier for doctors and nurses by delivering more timely information virtually anywhere on any device. And the image quality is extraordinary.

The app makes it possible for doctors using Apple (AAPL) iPhones or iPads to measure distances on images and measure image intensity values as well as to annotate an image before transmitting it back to a hospital's or doctor's secure medical-records network.

That is, Mobile MIM lets docs do just about everything they would need to do with an x-ray without having to sit down at a big monitor or a workstation. "This important mobile technology provides physicians with the ability to immediately view images and make diagnoses without having to be back at the workstation or wait for film," said Dr. William Maisel, chief scientist and deputy director for science in the FDA's Center for Devices and Radiological Health, in the press release.

Other Players Are Rolling Out Apps

With medical costs continuing to skyrocket in the U.S., the field is one of the favorite targets of technology companies aiming to take the staid and conservative field (most docs still use paper records) digital. The U.S. government, via Medicare, is heavily subsidizing electronic medical records (EMR) installations at hospital and doctors offices, provided they can show "meaningful use" of the systems.

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And some of the big public companies in this market, such as AllScripts, have discussed using iPads as delivery vehicles for the various software and software-as-a-service products that AllScripts makes for physicians. A startup called ClearPractice released this fall an EMR product for iPad use. Called Nimble, the app has gotten strong reviews.

Mobile MIM's product works on iPhones. But I think that Apple's iPad could well be the device that blows the field wide open. Why? It has a big-enough display to be useful for even very high-resolution applications (such as reading x-rays), a fast-enough processor and a powerful-enough CPU to be extremely responsive. Plus, it's still small enough to be carried easily.

Companies have built medical software for iPhones, but they haven't gotten as much adoption as hoped, in part, I believe, because of the relatively small display. There's a ton of money to be made in upgrading America's medical info-tech infrastructure, so keep a close eye on this trend as more products based on iPads or tablet PCs aimed at serving doctors get launched.


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]]>Columnsdoctors with ipadsiPadipad appiPhoneiphone appmedical appsMIM MobileMIM Softwaremobile diagnosisx-rayx-ray readerAlex SalkeverMon, 14 Feb 2011 08:30:00 ESTHow LawPivot Aims to Help Lawyers Build Up Their Businesshttp://www.dailyfinance.com/2011/02/13/lawpivot-aims-to-help-lawyers-build-business/http://www.dailyfinance.com/2011/02/13/lawpivot-aims-to-help-lawyers-build-business/http://www.dailyfinance.com/2011/02/13/lawpivot-aims-to-help-lawyers-build-business/#commentsFiled under: , , ,

George Clooney as attorney Michael ClaytonFor lawyers, business development and lead generation have long been duties relegated to the glad-handing partners or to sporadic appearances in local media or in trade publications. But the Great Recession savaged the legal business, and now lawyers are starting to realize that they need to come up with better ways of bringing in new business. Or at least that's the bet of LawPivot.

The startup, which was funded last month by Google Ventures (GOOG) and is currently housed in the incubator at the GooglePlex, is a Q&A site that aims to connect businesses seeking legal advice with attorneys seeking clients. "A lot of firms have not really had a technology-based lead-generation strategy beyond buying AdWords or online ads," says Nitin Gupta, the company's co-founder and vice president of business development (and a former attorney).

How Will It Make Money?

In fact, all three of the key executives at LawPivot are lawyers with rockstar pedigrees. Gupta previously worked at Applied Materials and was an intellectual property litigator at Townsend & Townsend & Crew, a top national IP law firm. Co-founder and CEO Jay Mandal was the lead mergers and acquisitions attorney at Apple (AAPL). VP of Engineering Steven Kam, who worked as a litigator with Gupta, holds a law degree from the University of California, Berkeley, and a masters in computer science from Stanford.

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LawPivot isn't the only legal referral or Q&A site around. LawGuru and LawQA are among the numerous sites offering some manner of legal Q&A. Like Quora, however, LawPivot hopes to offer a unique combination of top-tier answers and top-tier users focusing on business and IP legal advice. Most of the other Q&A sites are focused on providing lead generation for local lawyers, something that LawPivot decidedly isn't pursuing.

How will LawPivot make money? One of two ways. It plans to charge a membership fee to attorneys to gain access to the question stream and to charge potential clients for answers to their questions. LawPivot may also take a cut of subsequent work the attorney does for the firm, although that part of the monetization strategy isn't fleshed out yet.

For now, LawPivot is focused on serving startups. The company is still in beta but has hundreds of attorneys registered on the site answering dozens of questions per day. Those attorneys come from some of the bluest of the blue-chip firms as well as from highly qualified solo practitioners and midsize firms. "We want to make sure we are a viable option for the big firms as a means for them to locate potential clients, particularly in the startup world," says Gupta.

A Well-Timed Move?

From the company site:
"Companies will benefit from using LawPivot in the following ways: significantly reduce the costs in receiving answers to legal questions, receive confidential answers to sensitive legal questions by multiple lawyers, which a company can personally select, quickly find the best lawyers on LawPivot to answer questions and address other specific legal needs. LawPivot addresses the needs of a company that has no lawyer, has an outside lawyer, or has an inhouse lawyer as a primary or supplementary solution to find legal answers. For a lawyer, LawPivot is a highly efficient business development tool to directly connect with key decision makers at companies who are specifically seeking that lawyer's advice and expertise."

This could be a case of good timing. Q&A sites haven't enjoyed the best reputations in the past, and search engine results for legal questions are heavily spammed with cut-rate Q&A offerings as well as content-farm fare . Likewise, the social recommendation system that now produces as much traffic as search engines for many applications could give LawPivot a lift and help it gain critical mass.

That said, even if LawPivot never leaves the startup niche, it could be a nicely profitable business and a mainstay in Silicon Valley, Boston, Boulder, Austin and other tech Meccas.


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]]>Columnslaw firmLawGurulawpivotLawQAlead generationlegal advicelegal affairsquoraAlex SalkeverSun, 13 Feb 2011 21:00:00 ESTThe Nasdaq Hacking Case Raises Big Red Flags for Exchangeshttp://www.dailyfinance.com/2011/02/06/the-nasdaq-hacking-case-raises-big-red-flags-for-exchanges/http://www.dailyfinance.com/2011/02/06/the-nasdaq-hacking-case-raises-big-red-flags-for-exchanges/http://www.dailyfinance.com/2011/02/06/the-nasdaq-hacking-case-raises-big-red-flags-for-exchanges/#commentsFiled under: , , ,

Hackers and cyber-crimeRevelations over the past few days that hackers had penetrated certain systems at the Nasdaq stock exchange are reverberating throughout the financial world. Indeed, the case is shaking some bedrock assumptions of a digitized, high-speed, globally connected stock market run essentially by computers with minimal human interaction. Nasdaq officials say the computer systems that actually execute buy and sell orders for the Nasdaq OMX Group (NDAQ) were not compromised.

Instead, they say the hacking allegedly affected Nasdaq's Directors Desk service, a subsidiary that offers Web-based tools to make it easier for boards of directors to prepare for, participate in and follow up on board meetings. Part of the service includes document-sharing tools for things like preliminary drafts of earnings reports and other key data and documents.

Directors Desk's roughly 10,000 clients include a Who's Who of top publicly traded companies. The concern is that enterprising hackers could have gleaned key details from board meetings if they gained full access to the service, allowing them to possibly trade on nonpublic material information. On the Directors Desk website Nasdaq says the service offers "The highest level of security available to protect confidential board communications."

Going Where the Money Is

Equally troubling are allegations that the first hacker penetrations of Nasdaq systems were reported to the Securities and Exchange Commission in October and November of last year, according to The Wall Street Journal. Other sources have said the hackers may have persisted in the Nasdaq servers for a full year.

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Had the exchange been located in California, it would have been forced to report these penetrations immediately to all affected customers due to the Golden State's laws covering data-security breaches. But for Wall Street, these revelations in an age when the majority of trades are executed by high-frequency trading operations totally reliant on computerized algorithms could cause a decrease of confidence that stock exchanges can safeguard the interests of investors large and small.

Whether these particularly hackers were simply out for a thrill or were seeking to gain inside information to make ill-gotten games is more or less irrelevant. The possible hacking of Nasdaq is a sign that cyber-criminals are going to where the money is. Previously, hackers had concentrated on getting into databases or stealing credit card information for identity thefts. But a serious band of cyber-crooks could cause untold financial damage if it were to penetrate an exchange's trading operations.

Other Exchanges React

A favorite ploy of hackers who specialize in wide-scale identity theft is to add small charges to credit cards of many thousands of card-holders. A similar tactic could be used on investors, say, by adding a small amount to each offer or bid for a specific group of securities and capturing the differential over millions of trades in a manner that could go undetected for long periods and possibly forever. In coverage of this incident, sources close to the incident are reported to have said it appears the hackers weren't able to take any information from Directors Desk.

But this begs the question: If a serious group of hackers set their sights on Directors Desk, would they actually leave a trail? Possibly not. Regardless, the revelations apparently have rattled other financial exchanges. The NYSE Euronext shut down its own version of Directors Desk for undisclosed reasons.

Now the news of the hack could possibly draw more copycat attacks or highlight the juicy targets that are becoming more ubiquitous as the financial exchanges -- and the tools they offer public companies -- get increasingly digitized.

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]]>Columnscyber-crimeelectronic tradinghackinghigh-frequency tradinginside informationinside tradingNASDAQNasdaq hackNYSEAlex SalkeverSun, 06 Feb 2011 23:40:00 ESTPush Pop Press: Apple Alums Launch Digital Book Makerhttp://www.dailyfinance.com/2011/02/02/push-pop-press-apple-alums-launch-digital-book-maker/http://www.dailyfinance.com/2011/02/02/push-pop-press-apple-alums-launch-digital-book-maker/http://www.dailyfinance.com/2011/02/02/push-pop-press-apple-alums-launch-digital-book-maker/#commentsFiled under: , , ,

The ailing print-book industry has gotten a shot in the arm from the rise of e-books, which cost little to distribute and can be sold far more profitably than their dead-tree brethren. Several old school media companies have tried to ride the e-tide as well, launching iPad versions of news products designed to take advantage of the full audio and visual capabilities of tablet computers. Now a new player, Push Pop Press, is about to enter the game.

Push Pop Press was founded in February 2010 by a team that includes Mike Matas, who joined Apple (AAPL) as a designer at the youthful age of 19. The new digital book maker aims to push the envelope on what electronic books can do. That means a relatively new way of interacting with the media, centered on lots of hand gestures, pinching, and other actions now familiar to users of Apple's iOS devices.

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The San Francisco-based startup says it will allow people to ". . . explore photos, videos, music, maps, and interactive graphics, all through a new physics-based multi-touch user interface." That's fairly cryptic, but physics-based implies algorithms that enable new ways for gestures to manipulate content. The company expects its first book will be available for iPads and iPhones later this year.

Matas will be joined at Push Pop by Kimon Tsinteris, formerly a senior engineer on the iPhone team, and Austin Sarner, an applications developer who created AppZapper and Disco, among others. The Push Pop Press team is tweeting news about its products and it just got a rave review from Apple blogger John Gruber of Daring Fireball (the company purchased a promo note on the site but Gruber went out of his way to praise the startup effusively).

Push Pop Press is one of a number of startups populating the nascent digital books space, including Inkling, founded by another former Apple executive, Matt MacInnis. AllThingsD reported that Push Pop appears to have some sort of deal with Melcher Media, a New York book publisher.

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]]>applee-bookse-publishingIOSiPadMike MatasPush Pop Presstablet computersAlex SalkeverWed, 02 Feb 2011 11:45:00 ESTLinkedIn's IPO Is Another Step in the Social Takeover of the Webhttp://www.dailyfinance.com/2011/01/31/linkedin-ipo-social-network-takeover-of-web/http://www.dailyfinance.com/2011/01/31/linkedin-ipo-social-network-takeover-of-web/http://www.dailyfinance.com/2011/01/31/linkedin-ipo-social-network-takeover-of-web/#commentsFiled under: , , , , ,

LinkedInSo, LinkedIn is set to go public in an offering that would place the company's value at $2 billion. Back in the early 2000s when I was at BusinessWeek, I regularly got emails from a then-somewhat obscure entrepreneur named Reid Hoffman plugging his latest startup. Hoffman had made his initial bag of shekels on PayPal and its impressive sale to eBay (EBAY) before launching LinkedIn, a social network designed to foster professional networking.

I was skeptical. Friendster had just blown up after a mountain of hype, and Friendster for business was how I viewed LinkedIn. And so I watched over the years as Hoffman continued to send me emails -- and as his creation continued to grow from the tens of thousands of users into the hundreds of thousands and then into the millions.

About 2003 I joined LinkedIn and realized I had missed the boat on one of the great startup stories of the Internet Era. Today, Hoffman's creation stands poised to disrupt the entire recruiting market as it shifts the focus of recruiting from mass casting calls for resumes to more focused hunts for people with specific skills who are gainfully employed, as often as not -- the Holy Grail of "passive" job hunters that all recruiters drool over.

News of LinkIn's IPO filing helped send shares of leading job-board company Monster Worldwide (MWW) southwards by over 25% in a single session.

Digital Watering Hole

The power of LinkedIn is clearly the capability it affords to users and recruiters alike to peer into organizations, sift through histories, evaluate social ties and, perhaps most important, parse recommendations from peers past and present. Investment companies used LinkedIn for due diligence. Loads of groups converse virtually on LinkedIn in conversations on topics ranging from green tech to boosting sales to small biz.

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A digital watering hole for link-minded folk, LinkedIn also charges users to send messages to people they're not directly connected to. And LinkedIn bills recruiters at a stiff premium to gain unfettered access to its member base.

A nascent but likely interesting part of the company's business is its "connect" platform, which allows users to log into or register for sites across the Net using their LinkedIn credentials. Similar to Facebook Connect but far less widespread, this LinkedIn feature could easily morph into a powerful targeted-advertising network that taps into LinkedIn profiles to finely target ads by geography, title, industry and skill descriptions.

To me, this is the part of LinkedIn that most analysts have failed to account for -- and possibly the part that could generate the biggest scalable revenue growth in the future.

Hard-to-Dislodge Revenue Stream

Should we expect LinkedIn to rival Facebook in its IPO firepower and future growth? Not really. LinkedIn users spend far less time on the site than do Facebook users. Facebook is definitely more woven into the daily fabric of users' lives and more of a dominant force on the Web. The Facebook Connect service is nearly ubiquitous. And LinkedIn doesn't have the same robust ecosystem of third-party applications as Facebook, which has attracted literally thousands of programs specifically designed to function as appendages of the social network.

Regardless, unlike low-cost content farm Demand Media (DMD), which could easily get squashed by a Google (GOOG) algorithm tweak, LinkedIn is well established and has a highly sticky, hard-to-dislodge revenue stream. That makes for a bright future for its shares as LinkedIn continues to play the role of professional networking sandbox for the online set.








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]]>Columnsexecutive recruitmentheadhuntersjob huntinglinkedinLinkedIn IPOrecruitingsocial mediasocial networkingAlex SalkeverMon, 31 Jan 2011 09:45:00 ESTNetflix Ranks Internet Speeds, and Canada Leaves America in the Dusthttp://www.dailyfinance.com/2011/01/28/netflix-ranks-internet-speeds-and-canadian-isps-clean-our-clock/http://www.dailyfinance.com/2011/01/28/netflix-ranks-internet-speeds-and-canadian-isps-clean-our-clock/http://www.dailyfinance.com/2011/01/28/netflix-ranks-internet-speeds-and-canadian-isps-clean-our-clock/#commentsFiled under: , , ,

Netflix Ranks Internet Speeds, and Canadian ISPs Clean Our Clocks One benefit of being the largest video-streaming company in the world is that you can easily track download speeds on different North American broadband Internet service providers -- which is just what hyper-technical Netflix (NFLX) did. The company posted a chart on Thursday showing its findings for streaming speeds, and ISPs in Canada, on average, handily beat their U.S. counterparts.

Canadian customers enjoyed download speeds of 2.5 megabits per second to well above 3 megabits per second. U.S. networks delivered speeds ranging from just above 1 megabit per second to around 2.7 megabits per second. By some measures, the U.S. ranks 32nd in average broadband download speeds.

Stuck in First Gear

The relatively slow speeds of the U.S. networks compared to the rest of the world made sense, but the speed rates reported by Netflix looked too slow to me. After all, Verizon's (VZ) FiOS network has extremely fast download speeds due to its architecture of pulling a fiber optic cable to each subscriber. So why didn't Verizon rank higher?

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Because, apparently, Verizon still has plenty of DSL customers left (digital subscriber line technology is a far slower service). And many cable Internet providers in the U.S. can't seem to get it out of first gear, despite all their advertising campaigns about blazing speeds.

Complaints that U.S. broadband networks lag far behind those of other countries aren't new, and Canada is a mild example. in most surveys, South Korea, Japan, Finland and even former Eastern Bloc countries such as Romania run rings around U.S. networks.

Here's what interests me most about the Netflix analysis: Most U.S. broadband providers advertise download speeds of higher than 3 megabits per second as their entry-level product. All the cable connections that I've purchased lately have claimed to offer speeds of 5 megabits per second or greater.

Granted, the fine print states "speeds up to" rather than, say, "average speeds of." But the Netflix numbers make me question whether there's any real difference between the different speed tiers that ISPs sell. The top tier generally costs $20 to $25 per month more than the lowest, and that price differential is probably pure profit for the big ISPs.

Broadband as a Competitiveness Factor

None of this would really be an issue at all if the U.S. had crossed the threshold that assured enough bandwidth to households to alleviate any issues with supersize downloads and high-definition video streaming. Far be it from me to describe a policy or economic structure that would bring us to that point.

But perhaps, as the U.S. government seeks ways for the nation to maintain its competitive advantage, it could put some effort into figuring out a way to kick up broadband speeds a notch. Catching up to the rest of the world on high-speed Internet infrastructure couldn't hurt America's chances of maintaining the economic edge everyone fears this country is losing.


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]]>bandwidthbroadbandBroadbandAccessBroadbandSpeedcablecanadaclock speedColumnsComcastdownloaddslfioshdtvinternet service providerinternet speedisprankingunited statesvideo streamingAlex SalkeverFri, 28 Jan 2011 11:20:00 ESTHipmunk: A Big Step Forward for Travel Searchhttp://www.dailyfinance.com/2011/01/27/hipmunk-the-next-huge-travel-site/http://www.dailyfinance.com/2011/01/27/hipmunk-the-next-huge-travel-site/http://www.dailyfinance.com/2011/01/27/hipmunk-the-next-huge-travel-site/#commentsFiled under: , ,

Earlier this week a small travel startup called Hipmunk got what was reported to be a $6 million venture round. I wasn't surprised. A friend had turned me on to Hipmunk a while back, and I loved it.

Aside from the whimsical name and catchy ads, Hipmunk is actually a new take on the stodgy business of travel search now populated by Kayak, Orbitz, Expedia and many others. Hipmunk provides travel search results with key twists that make it much easier and faster to find flights focusing on travel factors that really matter.

This is a second-act startup for founders Steve Huffman (co-founder of social news site Reddit) and Adam Goldstein (founder of BookTour with Chris Anderson, editor of Wired magazine). The team also includes Alexis Ohanian, another co-founder of Reddit. Hipmunk is one of many promising Internet startups helped along by Paul Graham, founder of the Y Combinator tech incubator. Graham may be the most powerful Internet venture capitalist on Earth.

You Can Even Sort by "Agony" Level

Hipmunk's appeal is simplicity and ease of use. The drop-dead simple homepage input section asks users to fill out origin, destination and dates. That's it. The flights are then returned in an incredibly simple-to-read stacked grid that lets you sift by price, departure times, arrival times, stops, duration and agony.

What is agony, you ask? It's a brilliant feature that accurately predicts the comparative comfort of a flight combo. A red-eye with three stops going into airports with high levels of delays tops the agony scale, while a nonstop in the daytime is judged to be quite comfortable. This is a very clever way to capture a key piece of information that often helps determine my flight plans.

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Other nice features include persistent search results during a session -- meaning you don't have to reload your trip data every time you hit the "back" button -- and nice use of color-coding, with night flights shown as darker color bars, to improve readability. Two separate tabs for departures and arrivals make picking the right time combination far easier.

For now, Hipmunk is linking back directly to flight listings on the websites of airlines. This has allowed it to gain the approval of American Airlines (AMR) to post flight listings. American famously pulled its listings from Orbitz and Expedia earlier in January -- and may soon do the same with the third big travel search engine, Travelocity.

The reported $6 million round could go a long way toward helping Hipmunk scale into a bigger player. Final monetization strategies remain something of a mystery, although it's likely Hipmunk will work quite well as a pure commission player should it gain sufficient traction.

Hipmunk already has a deal with travel information provider ITA for flight listings, and that could presage an eventual acquisition of Hipmunk by Google (GOOG), which is in the the process of buying ITA, pending antitrust investigations.

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]]>american airlinesColumnsexpediagooglehipmunkITAkayakorbitzstartupventure capitalY CombinatorAlex SalkeverThu, 27 Jan 2011 10:30:00 ESTIs Google Ready to Send 'Content Farms' Out to Pasture?http://www.dailyfinance.com/2011/01/24/google-to-cut-off-content-farms-out-to-pasture/http://www.dailyfinance.com/2011/01/24/google-to-cut-off-content-farms-out-to-pasture/http://www.dailyfinance.com/2011/01/24/google-to-cut-off-content-farms-out-to-pasture/#commentsFiled under: , , , , , ,

GoogleOver the course of January (and since last year) a slate of Web luminaries have criticized search giant Google (GOOG) for declining search quality and the growing inclusion of content spam in search results. Paul Kedrosky detailed how hard it was to find good information about dishwashers because spammy sites had snowed Google, burying real reviews and consumer information so far down in search results that Kedrosky gave up and paid to read ConsumerReports.org.

And independent Web traffic monitors have shown Google losing market share to Microsoft's (MSFT) Bing search engine, something that observers gleefully attributed to the same problems with search quality that Kedrosky and TechCrunch columnist Vivek Wadhwa had decried.

So, it was hardly a surprise that on Jan. 21 Google finally responded with a blog post from Matt Cutts, the engineer in charge of search results quality at Google. While Cutts said Google's search results haven't gotten more spammy, he did acknowledge the outcry. Further, the post was Google's most direct warning that it would be tweaking search algorithms to punish cheap producers of Web content that either copied or scraped information from other publishers.

We Hear the People

Cutts specifically referred to "content farms." That's a derisive term for the dozens of Web sites that copy content whole-cloth from more reputable publishers and then attempt to game Google to get good search results and higher page views. Said Cutts:
"As "pure webspam" has decreased over time, attention has shifted instead to "content farms," which are sites with shallow or low-quality content. In 2010, we launched two major algorithmic changes focused on low-quality sites. Nonetheless, we hear the feedback from the web loud and clear: people are asking for even stronger action on content farms and sites that consist primarily of spammy or low-quality content."
Critics of this trend have often included in the content farms category fast-growing as sites such as Demand Media, Yahoo's (YHOO) Associated Content and AOL's (AOL) Seed (DailyFinance is owned by AOL). Interestingly, this sort of cheap content creation has been a darling of big venture capitalists and considered to be a beacon of hope in the Web's monetization wilderness.

The post from Cutts leaves unclear whether his warning applies also to these entities, which do not directly copy content from other publishers but instead leverage an army of low-paid freelancers to produce short, often-cursory articles to fill specific niches in Google and other search-engine results.

A Tide Change at Last?

The big loser in all this? One will likely be Demand Media. It has filed for an IPO and is ramping up to go public. It has stated clearly in its prospectus that a huge percentage of its revenues come directly from Google search results. After the Cutts post, it's hard to imagine that Demand will escape Google's algorithm tweaks.

More broadly, we could be witnessing a tide change as cheap content, which has overwhelmed algorithms, has become so painful to searchers that the outcry elicits dramatic changes in what's considered acceptable or useful online.

Which could be very good news for purveyors of so-called higher-quality content, the type of well-researched information that has all too often been exiled to the dark recesses of search results. And with Larry Page coming in as CEO to shake things up at the Googleplex, this could be just one highly public crusade that will seem almost irresistible because, let's face it, no one likes content farms except for their investors, and no one would miss them if they went away.

Ultimately, this could meant the jig is up for the purveyors of cheap content that have for so long relied on search engines for traffic and revenues.


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]]>AOLassociated contentColumnscontent farmsDemand Mediasearch enginessearch resultsweb spamAlex SalkeverMon, 24 Jan 2011 11:40:00 ESTiPhone vs. Android: Google May Be Winning the War in Chinahttp://www.dailyfinance.com/2011/01/24/iphone-vs-android-is-the-smartphone-race-in-china-already-over/http://www.dailyfinance.com/2011/01/24/iphone-vs-android-is-the-smartphone-race-in-china-already-over/http://www.dailyfinance.com/2011/01/24/iphone-vs-android-is-the-smartphone-race-in-china-already-over/#commentsFiled under: , , , , , , , ,

One of my favorite Wall Street technology analysts is Jonathan Goldberg of Deutsche Bank. He combines his big-picture analysis with ear-to-the-ground sentiment reporting, meshing the virtues of a beat reporter with a series number cruncher. In the Jan. 18 edition of the Digits newsletter, Goldberg dropped what felt to me like a bombshell about Google (GOOG), considering all the positive press that Apple (AAPL) has gotten from its most recent earnings and gains in the Asia Pacific region.

Namely, Goldberg's sources in China say Google's Android operating system has already pulled away from the pack there and assert that it'll be the big winner in the Middle Kingdom and, most likely, in Asia as a whole. "Our latest visit to China made it clear that Android has become the faraway leader in mobile operating systems [OS]," wrote Goldberg.

An Explosion of Opportunity

That's particularly interesting because Asia is likely to be the largest market in the world for advanced smartphones for the foreseeable future. That Google is pulling away in this critical geography not only lends credence to the search giant's decision to get into the operating system business but also hints at a real explosion of Android-related revenue opportunities in the not-so-distant future.

Apple is now pulling in at least $2 billion per year from App Store sales. The potential upside for Google could be far higher due to the sheer vastness of the addressable market. Incidentally, Goldberg reported that phones running Android likely outsold the iPhone in Asia in December. His prediction is that Android devices will outsell both the iPhone and the iPad during 2011 and pull further ahead in 2012.

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Equally important, Goldberg ran into strong evidence that Android had gained real traction in a huge swath of the OS market for a wide range of devices. Said Goldberg of the time he spent talking to tech firms in China: "Every company highlighted that Android was being used in far more than phones and tablets. We saw or heard of Android laptops, set-top boxes and ATMs among other categories."

In other words, Google has a real shot at controlling vast chunks of the technology landscape and, by extension, inserting its advertising network into those devices, either via hooks in the Android operating system or via sales of applications for Android devices of various flavors.

Goldberg isn't writing off Apple's iPhone or Research In Motion's (RIMM) BlackBerry. Both will have sizable niches in Asia. But it's shocking that, by his count, the mobile application competition is already decided: Google will continue to gain steam as more handset companies produce designs that can easily incorporate Android -- not to mention all the other types of Android devices on the horizon.


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]]>advertisinganalysisanalystandroidandroid tabletapp storeasiaAsian marketsATMBlackBerrychinaChina MobileDeutsche BankDigital WorlddigitsdroidiPadiPhonejonathan goldbergMobile OSoperating systemset-top-boxsmartphonetablettablet pcAlex SalkeverMon, 24 Jan 2011 09:00:00 ESTQuora: Finally, a Killer Online Q&A Service Comes Togetherhttp://www.dailyfinance.com/2011/01/19/quora-gets-a-quorum-finally-a-killer-qanda-service-comes-togethe/http://www.dailyfinance.com/2011/01/19/quora-gets-a-quorum-finally-a-killer-qanda-service-comes-togethe/http://www.dailyfinance.com/2011/01/19/quora-gets-a-quorum-finally-a-killer-qanda-service-comes-togethe/#commentsFiled under: , ,

Much of the online buzz of recent weeks has focused on Groupon and its big funding round and Facebook's move with Goldman Sachs to boost capital. But further under the radar, a little social networking company called Quora has started to go ballistic.

For the uninitiated, Quora aims to create a social watering hole where interesting and sophisticated questions are asked, and intelligent answers are provided, generally by people who have deep knowledge of the domain under discussion.

This has been tried online before: It was the initial goal of Yahoo! Answers and several other question-and-answer startups that soon foundered under the weight of inane ripostes and spammy answers when their services grew more popular and gained traction with users. But this Q&A service, launched by two Facebook alums, Charlie Cheever and Adam D'Angelo, may yet solve the classic Groucho Marx conundrum -- how to create a club that they actually would want to be a member of.

For said club to be a viable, venture-backed (by Benchmark Capital, no less) investment, Quora needs to grow quickly. And that it is doing. Its user base has ballooned from only a few thousand early this fall to a conservatively estimated 200,000-plus today. Quora's founders executed flawlessly their strategy of allowing in the tech elites who dutifully seeded Quora with loads of top-notch answers -- often more informative answers than those found anywhere else online on a topic.

Witness this in-depth post about the economics of red-hot online luxury goods vendor Gilt. Eliciting this sort of user-generated content is hard in the first place. Keeping Quora a temple of knowledge and minimizing the chaff will likely be an Augean stables type of task.

A Site for Answers, Not Arguments

To their credit, Cheever and D'Angelo have built in some interesting features that, oddly, make the site remind me of a Quaker meeting. A user may post questions, but can't answer their own questions -- though you may clarify your question with a comment. A given user may answer a question only once, after which they can't post again on that Q&A thread.

In other words, Quora is designed to give you your say in a somewhat limited fashion, but to discourage the obnoxious back-and-forth, tit-for-tat troll fests that pop up at many other Q&A sites -- and on any site where commenting is freely allowed. Samil Shah has a great summary of the features and other interesting things about Quora in this TechCrunch post.

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This doesn't mean spam isn't already finding its way into Quora. One question I posted was answered by a marketing contractor clearly promoting a client, and in a manner that seemed to ignore my initial wording. But if Quora can manage to keep even a modicum of quality control, it could become The Economist of Q&A sites, thanks to the existing deep well of content it has generated -- some of which has been good enough for media sites to repost whole-cloth. (Quora allows and encourages reposting of its content, as long as the repost links back to it.)

It's clear that Quora is experiencing a major growth spurt. Over the past two weeks, my in-box has been flooded with notifications that people are now following me on Quora (this is how you watch what someone is doing, saying or reading).

Reminiscent of Twitter

In fact, I knew Quora had truly hit steroidal levels of growth when both Web 2.0 Conference mogul (and Federated Media CEO ) John Battelle and angel investor/Mahalo.com founder Jason Calacanis followed me on Quora. Calacanis, who also founded the This Week in Technology webcast, is known for embracing social media and mass-following lots of people as part of his information assimilation strategy. Battelle is someone I know and have spoken with a number of times as a journalist and blogger.

Some are saying that Quora's growth is reminiscent of the flash adoption of Twitter en masse by the tech universe in the wake of the South-by-Southwest Conference of 2007. If the pattern holds, look for Quora to become the next big valuation startup to spark a private sector bidding war.

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]]>Adam DAngeloanswersbidding warCharlie CheeverColumnsfacebookgrowthJason CalacanisJohn Battelleqaquestion-and-answerquorasmarttwitterUser Generated Contentuser-generated-contentYahoo AnswersAlex SalkeverWed, 19 Jan 2011 10:30:00 ESTRdio Rising: Skype's Founders May Have a Hit Music Servicehttp://www.dailyfinance.com/2011/01/18/rdio-skype-founders-hit-streaming-music-service/http://www.dailyfinance.com/2011/01/18/rdio-skype-founders-hit-streaming-music-service/http://www.dailyfinance.com/2011/01/18/rdio-skype-founders-hit-streaming-music-service/#commentsFiled under: , , , , , , , ,

Rdio streaming music serviceLast week Rdio, the online music-streaming service launched two years ago, announced it would be adding 1.75 million new tracks from independent bands courtesy of a deal it had struck with Merlin Network, a nonprofit organization that polices and negotiates for the rights of indie bands. As anyone who follows music knows, indie bands are no longer marginal players, and adding acts such as album-rock sensations Arcade Fire to its playlist gives Rdio a big boost. Among San Francisco Bay Area's trendsetters, Rdio is definitely rising fast since it launched in August, 2010. All in all, it looks like Rdio is going to make a serious play in online music.

I was a big fan of Lala.com, a music-streaming service that allowed users to buy the right to play music streams on any device for 10 cents per track. Apple (AAPL) bought Lala, and the service was shut down. I'm also a huge fan of Pandora and am a premium subscriber.

But lately I've been playing around a lot with Rdio, which is a somewhat different streaming-music service. Users pay about $10 per month and can access any of the hundreds of thousands of available songs at any time. The service is easy to use, and I really like it. I think it's going to be one of the next really big Internet business hits. And it emphasizes something I liked about Lala -- the ability to discover new music by following people who seem to have interesting taste or by following curated music collections.

Timing Looks Better This Time

Rdio was envisioned and launched by Janus Friis and Niklas Zennstrom, who had founded Skype, formerly an EBay (EBAY) subsidiary. The duo hit a home run with Skype but have logged notable failures in peer-to-peer music service KaZaa (which was ultimately shut down after music labels accused it of fostering piracy) and Joost, an ill-fated online TV and video content startup that has lagged behind Google's (GOOG) YouTube, Netflix (NFLX) and big broadcaster-owned Hulu.

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However, a confluence of trends should give Rdio a nifty lift. Wireless broadband has gotten much faster, enabling easier and higher-quality music streaming to handsets or vehicles (cars are the Holy Grail for online music ventures since so much music gets consumed on the road). Equally important, wireless broadband is scheduled to get much faster with the rollout of a next-generation of wireless technology called LTE (for Long-Term Evolution).

A plethora of very smart smartphones like the Apple iPhone, various flavors of BlackBerry (RIMM) devices and numerous phones running Google's Android are now well esconced in the mainstream, so high-powered mobile apps like Rdio finally have an addressable audience that can support a true subscription model.

Internet Rock Stars

Naturally, Rdio is positioned to benefit from paths already cleared by Apple's iTunes store and by Pandora. Collectively, this dominating duo has breathed life into the formerly moribund online music market, and both are turning into nice profit centers. All of these are merely precursors to success, of course. Zennstrom and Friis will get loads of free press and good will because -- let's face it -- they're Internet rock stars. That will help online radio become commonplace.

The two founders also have hired an extremely strong development team that has created a nice interface that's very simple to navigate and highly social -- a key attribute because music sharing clearly leads to music consumption.

The online music field is, of course, quite crowded. Last.fm has a strong user base and remains a real player. GrooveShark also has a big following. Rdio is pretty tight-lipped and user numbers, which are likely pretty small because the service has, until now, struggled due to its limited catalog. But tune in for a rocket ride up the charts with this startup.



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]]>BlackBerryColumnsGroovesharkHuluiphoneiTunesjanus friisLalalast.fmniklas zennstromOnline Musiconline radiopandorardioskypesmartphonestreaming musicAlex SalkeverTue, 18 Jan 2011 07:00:00 ESTIndia Has Its First $1 Billion Dot-Com: Is 2011 the Year of the Indian Internet?http://www.dailyfinance.com/2011/01/12/india-billion-dollar-dotcom-2011-internet-predictions/http://www.dailyfinance.com/2011/01/12/india-billion-dollar-dotcom-2011-internet-predictions/http://www.dailyfinance.com/2011/01/12/india-billion-dollar-dotcom-2011-internet-predictions/#commentsFiled under: , , ,

India Has Its First $1 Billion Dot-Com: Is 2011 the Year of the Indian Internet? A little over a year ago, I issued five tech predictions for 2010. Looking back, it turns out my track record was pretty good, though really, only two of my predictions were bold and out there.

One was that Google would finally buy Twitter: Wrong, wrong, wrong. But my other bold prognostication was that India would see its first blockbuster technology startup emerge from its nascent tech sector. And on that one, I was right on the money.

I had actually forgotten about my prediction until my friend, entrepreneur and academic Vivek Wadhwa, sent me a message congratulating me on my prescience. An online travel company called MakeMyTrip.com (MMYT) had gone public on the Nasdaq and risen over the course of the year to a market capitalization of more than $1 billion.

Not Just Outsourcing Anymore

What's particularly interesting about this story is that MakeMyTrip is primarily focused on travel within India, or to and from that country, and the majority of its users are Indian nationals. While Internet market in China has seen more than its fair share of blockbuster IPOs and high-flying companies, India has long lagged behind its neighboring giant in the consumer Internet.

This is true for a number of reasons, but primarily because India's middle class hadn't grown as quickly as China's. That's not to say India isn't growing quickly, in part due to the torrid pace of growth in technology jobs. As Vivek has pointed out on numerous occasions, the Indian tech sector has morphed from a business based on outsourcing to a font of innovation, buoyed by businesses performing core R&D and product development for big, leading multinationals like Cisco (CSCO), GE (GE), Google (GOOG), and Microsoft (MSFT).

But that hasn't yet translated into growth in the country's consumer Internet segment.

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That's going to change in a hurry in 2011. In fact, it's already changing. Witness moves by Intuit (INTU) to build a beachhead in India for its online personal finance offerings. (When I interviewed Aaron Patzer, head of Intuit's personal finance unit, in late 2009, international expansion was on his mind.) And earlier this week, Groupon reportedly made its first India acquisition.

Most of the major U.S. venture capital firms have had India presences for several years, and they've been doling out money in multimillion dollar doses to Indian startups that inhabit many of the same online niches as U.S. startups.

So here's another prediction: In 2011, India will go from bit player to major market as more of those Web startups morph into billion-dollar companies, riding upward on the twin tides of rising interest in online and a rapidly improving economy with a growing middle class. No, it won't be China 2.0 -- but, finally, after a long warmup, the Subcontinent will start to get its due.


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]]>blockbusterChinaColumnsIndiaInternetinternet startupsmakemytripPredictionspredictions 2011Predictions and Trendstech startupsventure capitalVivek WadhwaWebAlex SalkeverWed, 12 Jan 2011 12:00:00 ESTIt Takes a Community to Repay a Loan: The Lessons of Prosper.comhttp://www.dailyfinance.com/2011/01/11/prosper-microloans-peer-to-peer-lending-problems-default-community/http://www.dailyfinance.com/2011/01/11/prosper-microloans-peer-to-peer-lending-problems-default-community/http://www.dailyfinance.com/2011/01/11/prosper-microloans-peer-to-peer-lending-problems-default-community/#commentsFiled under: , ,

Just before Christmas, the peer-to-peer lending site Prosper.com decided to eliminate high-risk borrowers from its site after a high percentage of them failed to repay their loans. Launched and initially funded by e-Loan founder Chris Larsen, Prosper Marketplace was one of a number of peer-to-peer lenders that aimed to democratize the lending process and allow anyone to seek loans from strangers or friends via the Internet, without dealing with banks, risk managers or underwriters.

The theory was that high-risk borrowers wouldn't actually be such terrible risks, based on the idea that micro-loans in the developing world had proven to be safer than traditional measures would have predicted.

Exhibit A in that argument was the Grameen Bank, a micro-credit lending operation founded by Muhammad Yunus. This non-for-profit institution gives small loans to the poorest people on Earth to help them to better their lives through purchases of small items -- things such as livestock or small appliances or even a couple of buckets. But what works in Bangladesh doesn't always work in Kansas, and this latest bumpy patch for Prosper could portend similar problems for other peer-to-peer lending companies.

A Decent Return and Helping My Fellow Man

Back in 2006, I wrote an article about Prosper.com for Inc. magazine, titled Brother, Can You Spare a Dime? -- after one of the most famous songs from the Great Depression -- and was smitten by the peer-to-peer lending concept. Gung-ho to do well and do good, I sank a small four-figure sum into a portfolio of roughly 20 loans. My borrowers ranged from single parents seeking to start small businesses to college students consolidating credit card debt. Here, I thought, was a way to earn decent 7% or 8% annual returns, on average, between high-risk and low-risk borrowers, and to help my fellow man at the same time. Little did I know.

Soon after my initial investment, things started to go wrong. Within the first few months, I noticed that a significant portion of the borrowers in my portfolio were missing payments. Worse still, under Prosper's model, lenders weren't allowed to contact borrowers to request payment. The company told us to leave that to the collection agencies we selected when we signed up. The actual effect of this contact prohibition was the elimination of any sort of social ties connecting borrowers to lenders, the sort of (admittedly weak) human interaction that might cause a person to feel more obligation to repay their loan.

Mind you, the borrowers were allowed and encouraged to contact lenders to ask for loans. And some borrowers sent along updates of their progress, something that I'm certain Prosper.com hoped would happen en route to the construction of a true virtual lending community. Whenever I got a notification that another borrower had fallen behind on payments, I would look at their profile. Was there anything I should have seen, but had missed? How were the delinquent borrowers different from those who paid on time?

A Lack of Social Ties

Was there a pattern? I couldn't really detect one, but I did begin to feel that the reason so many of these borrowers had decided to bail on their debts was that the penalty they faced, in all likelihood, was minuscule. They probably had bad credit already. They would take another credit hit by skipping out on a Prosper.com loan, but the impact would be minor. And they certainly didn't know me from Adam.

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In retrospect, my peer-to-peer lending experience would soon be replayed on a much grander stage. The ability of banks to quickly package and sell mortgages meant that community banks no longer held the notes for many of their borrowers. Those borrowers, in turn, felt little or no social stigma for failing to repay their loans. On the other side of the equation, remote and massive lenders holding mortgages couldn't even conceive of trying to work out problem loans, in part because they had no social ties to the debtors.

Banks didn't know borrowers, and really didn't want to know them. Contrast this with Kiva.com, a social lending site that not only encourages contact between lenders and borrowers but also makes it a far more important part of the process. Kiva also has a roughly 98.5% payback rate -- far higher than anything I experienced on Prosper.com.

This is not to say Larsen didn't have the idea of the social bond in mind at Prosper, but the reality is, such ties simply didn't take hold in the system he created.

Exit Strategy

The moral of this story for the future health of the world economy? Lend money to people you know or people who are socially invested in repaying you. Likewise, borrow money from people you know or people who want you to succeed and want to participate in your success over the long-term.

I took a moderate haircut on my stake in Prosper.com and stopped participating as soon as my last loan was paid off. Yes, Prosper.com's peer-to-peer lending concept is a wonderful idea, and it may yet turn the corner. But whether the bank is virtual or bricks-and-mortar, it takes a village to repay a loan.

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]]>bad creditbanksborrowersColumnscommunity bankscredit riskGrameen Bankhigh riskkivalendersmicroloansmortgage backed securitiesmortgage crisismortgage defaultspeer to peerpeer to peer lendingpeer-to-peerpeer-to-peer lendingpoor credit historyprosper.comrisksocial contractAlex SalkeverTue, 11 Jan 2011 13:30:00 ESTLivingSocial Cuts Off the Aggregators. What's Up With That?http://www.dailyfinance.com/2011/01/10/livingsocial-cuts-off-the-aggregators-whats-up-with-that/http://www.dailyfinance.com/2011/01/10/livingsocial-cuts-off-the-aggregators-whats-up-with-that/http://www.dailyfinance.com/2011/01/10/livingsocial-cuts-off-the-aggregators-whats-up-with-that/#commentsFiled under: , ,

Salkever's Valley on LivingSocialLast week, No. 2 group-buying company LivingSocial sent out an email announcing a new policy that it will stop paying commissions to daily-deal aggregators like Yipit, DealGator and Dealery. These affiliate fees have so far been the aggregators' lifeblood and their only real revenue stream. The people I know who run smaller group-buying sites say the aggregators are by far the best source of new customers and new traffic.

And last time I checked LivingSocial, while big and valued at $1 billion, it was still a whole lot smaller than the big kahuna Groupon. So why would LivingSocial take this tack?

This is particulary mystifying because Groupon itself continues to offer affiliate deals. On the face of it, LivingSocial likely feels it's big enough, has enough money and enough momentum that its own marketing efforts can sustain torrid growth. The company has said it plans to double in size over the next year.

Is It All About Amazon?

In the wake of a $175 million capital injection from e-tailer Amazon (AMZN), LivingSocial also hired a new chief financial officer, indicating it's ready to make a serious run for either additional capital or an initial public offering (which is unlikely, considering the Facebook situation). Yes, LivingSocial can certainly count on aggregators to continue listing its deals in the short term, but as the number of daily-deal sites continues to proliferate, users of aggregators likely won't even notice if LivingSocial drops off the list.

Unless, of course, the Amazon tie-up is about to yield exactly what my DailyFinance colleague Kevin Kelleher suggested in a previous column -- namely, that Amazon would allow LivingSocial to promote its offerings via the e-tailer's enormous email newsletter offerings, which reach many millions of customers. If that's the case, then LivingSocial could well end up giving Groupon a serious run for its money.

Even though Groupon is growing furiously, it has begun to slow as the group-buying phenomenon has reached near-saturation in major markets like New York, San Francisco and Los Angeles. As I noted earlier, merchants are now getting deluged with group-buying sites trying to sign them up for their service. And some other big guns with huge, loyal customer roles and millions of email recipients, like ratings site Yelp! and restaurant reservations site OpenTable (OPEN), are also plowing into the group-buying scene.

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Still, I would bet that LivingSocial will be forced to reverse its decision as the market grows even more mature. The simple fact is that everything moves to aggregation after the novelty of these types of services wear off. Even the biggest players in e-tailing offer affiliate deals. Witness Amazon, which boasts an enormous affiliate program that puts its listings into nearly every major shopping search engine and e-commerce aggregation site. Amazon, of course, is known as the savviest merchant online. So if Jeff Bezos & Co. did the math and decided affiliates were a good deal, they probably had good reason.

Watch closely, also, whether this affects LivingSocial's subscriber growth in any way. A quick glance at Google (GOOG) search results indicate it might. LivingSocial is already getting a lower search ranking in many major metro areas that mom-and-pop group-buying startups target. Yes, LivingSocial is buying the top AdWords results on those pages. But that's a very expensive marketing strategy to pursue considering the likely cost of these placements -- and that these costs will probably escalate further.


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]]>Columnscoupone-tailersGroup BuyingGrouponlivingsocialAlex SalkeverMon, 10 Jan 2011 11:20:00 ESTVerizon iPhone Buzz Is Building: Five Things It Could Meanhttp://www.dailyfinance.com/2011/01/09/verizon-iphone-buzz-is-building-five-things-it-could-mean/http://www.dailyfinance.com/2011/01/09/verizon-iphone-buzz-is-building-five-things-it-could-mean/http://www.dailyfinance.com/2011/01/09/verizon-iphone-buzz-is-building-five-things-it-could-mean/#commentsFiled under: , , , , , , , , ,

Verizon is set to announce an iPhone on TuesdayThe Apple (AAPL) blogosphere is buzzing with what seems to be solid evidence that Verizon (VZ) will finally be offering an iPhone to run on its network. A number of prominent Apple bloggers and writers have apparently gotten invites from Verizon to an event on Tuesday. The invitations are nontransferable, which implies that a select audience is desired and, therefore, that a big announcement is in the wings. So what would an iPhone for Verizon really mean? Here are five:

1) Verizon's network is going to be tested. iPhone users are notorious data hogs. Many bloggers have slammed AT&T (T) for failing to provide good data and voice service on its network, even though AT&T has consistently claimed that its network is the fastest in the country. Both sentiments could well be true. But Verizon, which everyone agrees has built a very good wireless network, will certainly struggle to keep up with the massive usage habits of iPhone users.

One feature of Verizon's CDMA-based network will probably work heavily in its favor, though. The network doesn't support simultaneously phone call and data network operation. So, at least when Verizon users are talking, which is a relatively data-light application, they won't also be Web surfing.

2) Verizon will likely surpass AT&T in number of subscribers. This competition is currently neck-and-neck, with Verizon just a million shy of AT&T. But Verizon, which will probably put extensive sales muscle behind the iPhone and will feature the handsets in its stores, should gain enough momentum to surpass Ma Bell in total subscribers. That's big because Verizon has struggled to keep up with AT&T as the latter rode the iPhone to rapid subscriber growth.

3) Apple should see an additional bump in sales and profits. How could it not? The iPhone is highly profitable for Apple -- not quite as profitable as its computers but more so than any other product in its lineup. What's more, additional iPhone users will feed into Apple's fast-growing revenues from its highly popular App Store for the iPhone. Those revenues could hit $2 billion in 2011.

That's a drop in the bucket of Apple's total revenues, but it's pure profit, for the most part, since the incremental cost of operating the App Store is relatively low at this point. It's also likely that a number of new iPhone users, introduced to Apple by Verizon, will end up buying Apple computers. All told, it's a win-win-win for Apple CEO Steve Jobs.

4) Apple could turn its phones loose on Verizon's superior LTE 4G network. Verizon is the first mobile carrier to roll out a network using a technology called LTE. While other carriers are running networks they call 4G -- most notably Sprint (S) -- LTE is supposed to be a real speed demon and have the capability to handle much higher data throughput. No doubt, Jobs would love to see what happens when Apple's iPhones start running at warp speed, which Google's (GOOG) Android phones are already doing on Verizon's LTE network (and something Verizon is hyping big-time with its "Download a Song in 4 Seconds" ad campaign).

AT&T is also pursuing an LTE network but at a more stately pace. So, expect Apple to come out with an LTE-ready phone, perhaps this winter or perhaps in the summer. But no doubt, it's coming.

5) Verizon's data plan structure will determine the future profitability of the mobile data business. The Wall Street Journal is reporting that Verizon will offer an unlimited data plan to iPhone users. AT&T started out that way but moved away from unlimited data offerings, partly because some people used so much data it slowed down the network. AT&T, clearly, is trying to create a more finely grained tiered-pricing structure. But unlimited data is a powerful marketing tool. With unlimited data, however, comes unlimited risks and, potentially, an unlimited appetite for bandwidth as more and more rich mobile applications suck up more network time (like TV, streaming apps and music, among others).

For Verizon, this could be a very smart move. With its LTE network and possibly knowing an LTE-ready iPhone is in the pipeline, it could use its faster network and unlimited data plan to take subscribers from AT&T. Whatever the case, a future with unlimited data is likely less profitable for mobile carriers.

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]]>4g4G NetworkandroidATT networkColumnsiphoneLTEmobile phonesteve jobsunlimited dataverizon iphoneverizon networkwirelessAlex SalkeverSun, 09 Jan 2011 20:20:00 EST