Microsoft is now censoring US-based blogs that might (OK, probably) offend the Chinese government.

MSN is censoring Michael Anti's blog, which has been irritating Beijing for some time. Microsoft's excuse--"Most countries have laws and practices that require companies to make the internet safe for local users"--doesn't square with what they did. They are censoring Michael Anti not in China, not in packets bound for China, but in America for Americans.

The Internet has always lived under the shadow of corporate censorship. So far, it still possible to find spaces where we can be free. But the noose has also been tightening for some time. In this case, we have one of the largest corporations anticipating the needs of one of the world's most repressive governments, and taking care of business before it's even asked to do so.

The problem isn't Microsoft, although they do seem to be pretty forward-thinking in this regard. The truth is that Google, despite its understandable desire not to be evil, will be confronted at some point in the not-too-distant future to perform an act of pure evil or its shareholders will find a management who will. You can take that to the bank. Literally.

Corporations are amoral. Corporations are made up of people, but they are not people. Their only imperative is to maximize shareholder value. That can be a pretty good system as long as you recognize its limitations and plan accordingly.

Knight-Ridder, publisher of the San Jose Mercury News, bought the company that publishes the San Mateo Daily News, and four other free papers in Burlingame, Redwood City, Palo Alto, and Los Gatos. This is a significant media shift, both in the Bay Area and nationwide.

The big monopoly metro dailies are facing death from a thousand paper cuts, from the Internet as well as from free dailies and weeklies. The NY Times just bought into a free paper that competes with its own Boston Globe. The SF Examiner has launched a new edition in Washington, DC. This probably marks the beginning of the end of big papers' strategy of using zoned editions to compete in suburban markets.

In the corporate press release, Hilary Schneider, senior vice president/operations for Knight Ridder, said, "These newspapers are widely embraced by the communities they serve. They provide the kind of 'micro-local' coverage that larger metro dailies often do not, but that many consumers and small advertisers clearly seek."

Significantly, the newly-acquired company will report to Hilary Schneider at the corporate home office and not the San Jose Mercury News. I expect to see KR provide the capital to expand this mini-chain throughout the Bay Area, both deepening their coverage in Santa Clara County, the Mercury News' home market, and broadening it in San Mateo County, where the Chron and ANG (SM County Times, Pacifica Tribune) are dominant.

In northern California, KR also owns the Contra Costa Times and the Monterey Herald. I worked for the Mercury News in the mid-nineties, as one of the architects of their Web site.

I just received a note from Hallmark apologizing for the poor performance of their site on Valentine's Day. Apparently, despite their best efforts to prepare, they got twice as much traffic as they expected.

This is good news for every in online publishing, but especially those of us who specialize in connecting people to one another. Soon, we may be hearing more about Metcalf's Law than Moore's Law.

We owe you an apology. First, the most important three words of this letter - WE ARE SORRY.

This Valentine's Day, our site was up and down all day. For many of you, that meant frustration and wasted time when you were simply trying to send or retrieve an e-card.

We thought we were ready to handle a huge amount of traffic on Valentine's Day. Obviously, we thought wrong. We were surprised by double the amount of traffic we expected. And we cringe at the disappointment we caused to some of you.

In short, we made promises to deliver that were not kept. And for those of you who experienced that disappointment, we are so sorry for any frustration we may have caused.

Rest assured this experience will serve as a lesson for us. We are now challenging our team to reevaluate every step we took to prepare for Valentine's Day...because it wasn't enough.

With our deepest apologies, The Hallmark.com Team

The National Newspaper Association (the trade association for small-town newspapers) has some stern words for WalMart, which has mounted a public relations and advertising campaign to fend off its critics:

So why is it that community newspapers in America are good enough to help you fend off critics with free PR, but we're not good enough for your paid advertising?

You can't have it both ways.

Based on a number of previous conversations I've had with newspaper publishers and editors across America, I don't think you will find very many who are willing to give you the requested free PR space to fend off attacks from your corporate critics.

In other words, if you want us to run your free PR, you have to be an advertiser. There is no other way to read this. They're not saying, "We wouldn't carry your puff pieces even if you were an advertiser." They're saying, "Take out an ad and then we can talk about communicating your message with a little free coverage on our news pages."

I love Netflix. Their service is remarkable. In my town, where there is no video store, I see their unmistakable red envelopes everywhere.

However, I was cheered to hear that Amazon might get in the market and would be prepared to switch tomorrow, given the opportunity. I'm sure I'm not alone.

After months of price increases, Netflix has announced that they're lowering their price by nearly 20%. Amazon is already having a positive effect on Netflix customers.

"We started hearing rumors about two weeks ago, and we were able to confirm them," [Netflix founder Reed] Hastings said in an interview. "We think we will compete successfully with them because we have great scale, we ship 3 million DVDs a week, and we have five years of experience in this market.

What I really want is a way to find movies. Netflix has the worst site of any major ecommerce player. Try to find movies by director. Try to get decent recommendations based on your past rentals. Try to find a list of recent releases that isn't larded with garbage. Try to find critics' recommendations that aren't laundry lists of the greatest films ever made.

There' is no question that I'm missing movies I really want to see because they aren't top of mind when I'm on Netflix. I can't wait for Amazon to get into this market with their recommendation software and with the Internet Movie Database.

I would pay $5 more per month just to not deal with Netflix's crappy web site.

Friday, Jon Stewart broke through the curtain on CNN's Crossfire. If you haven't seen it already, you must view one of the streams of Stewart's appearance.

He did something that no one approved for appearance on TV has been willing to do: he told the truth about the corrosive effect of cable TV news on our democracy. It was only a couple of minutes in 24 hours that day, but you could feel the refreshing breath of fresh air.

What's amazing is that you don't see this more often. Everyone's a media critic and if you're paying attention, you know this already. But if you're not paying attention, you're not getting this message.

To continue stating the obvious, to say that the Daily Show is the best show on TV is like saying that 30-year-old Talisker is the best way to get drunk.

Tim Porter asks if there is a name for news stories whose newsworthiness depends on what's happening in the media, and not the event itself.

It is a news media story about alleged lies made to the news media by a man whose notoriety depends solely on the news media. Accompanying the story, is a picture of the news media (in the person of Diane Sawyer) interviewing Peterson. Calling rhetoricians: Is there a word for this type of circular coverage? I call it informational incest.

How about "meta-journalism"?

Yahoo's revenues are up to $356 million from $249 million. What's especially interesting is that despite Yahoo's stated desire to increase subscription and user fee revenue, advertising is driving this growth:

• Marketing services grew 48 percent to $245 million.
• Yahoo's branded advertising sales grew 20 percent.
• Fee revenue (e.g. personals, e-mail and Yahoo/SBC broadband access) grew 38 percent.
• Listing fees rose 26 percent.

A lot of their fee revenue (personals and listing fees) should be considered advertising.

The WSJ says that the SBC/Yahoo Internet service is a success, but it's unclear how much of that success is due to Yahoo's fancy broadband portal and how much is due to good old fashioned competitive pricing and a greatly improved installation process:

With a joint venture called SBCYahoo, the two companies together offer a package of a DSL along with a customized Web portal, priced at $29.95 a month -- and as little as $26.95 per month when part of a package with other SBC services -- well below the monthly fees charged by rival cable broadband operators

In any event, it's debatable whether the SBC revenue should be considered subscription revenue or a licensing fee, since SBC is doing the selling and Yahoo is doing the developing and branding.

That's one problem with bundling, sometimes it's hard to know if it's the bundle or an individual component that is driving sales.

Comcast say that email is not included in its broadband Internet service, according to this item on Macintouch:

I am involved with the swing dance community, and periodically need to send out between 250 - 1000 emails, to let swing dancers know of upcoming events. I have been doing this for the past five years with no problem until now. I called Comcast, and was told that "..in order to keep their servers from being used for sending spam, all residential accounts were now subject to a 10 message limit."

Comcast gave no notice of this policy, and it cannot be found on their web site. They also told me that this was not really a change in service since "Comcast has never sold you email service. All we are selling you is connection to the internet. The email service has just been provided for free."

The customer service person said I could get Comcast Business Service, which is unavailable in my area. Business service costs a minimum of $155. Today I was told that my only option was to buy an "Enhanced Messaging" package, which requires a $50 setup fee and costs $25 per month to be able to send 150 emails at a time.

Comcast classifies email with ten or more recipients as a business service requiring a much larger fee. To make this policy stick, they will have to either deny their users access to POP, or charge extra for it.

This is an excellent example of the kind of tiered service we can expect from the access duopolies if the FCC gets its way and declares Internet access is not a telecommunications service. Fortunately, the Supreme Court has put a temporary stop to Michael Powell's sophistry.

Comcast is threatening "abusive" users with disconnection if they don't reduce their use, but won't tell them what level of use triggers such a warning. This story follows less than a week after BT has sent up a trial balloon for charging users by the bit.

Vin Crosbie (who knows more about this than I do) says that the Web didn't kill Editor & Publisher as a weekly. He blames by poor management by VNU.

I confess, I haven't read E&P since 1996. So, I was alarmed to read Vin say that the magazine declined under the management of VNU. Really alarmed. In the 90s, before they were bought by VNU, E&P was arguably the worst trade magazine in America.

He then makes two excellent points:

• Circulation declined under VNU.Surely a big part of this circulation decline is due to the Web. I'm not the only person who has stopped reading the weekly trades because they no longer contain any news.
• Advertising was decimated by too-high ad rates and advertiser migration to the production-specific magazine Newspapers and Technology. I can hear the pitch now: "Why waste money to reach an audience who don't have any purchasing authority over presses/paper/computer/services? And why pay to reach them four times a month?" I'm already reaching for my checkbook. That a humble industrial trade like Newspapers and Technology can bring low the mighty journal of journalism itself is a symptom of the decline of newspapering as a American endeavor.

There is no reason for E&P to be weekly. That didn't serve its readers and it didn't serve its advertisers. E&P barely has any reason to exist as a monthly, now that the industry is milling about waiting for permission to become a subsidiary of the NAB.

E&P has been drawing dead for a decade or two. It would have been doomed by the consolidation of the industry even if the Web hadn't made weeklies irrelevant, or VNU hadn't stepped in to manage its decline. But today, every weekly trade in America needs to think about whether they're on the right frequency.

The will be difficult for newspaper publishers to ignore. The industry's trade magazine, Editor & Publisher is moving from weekly to monthly publication, moving its news to the Web and using print for features, analysis, and commentary.

Steve Outing (an E&P columnist) notes that this is part of a long-term trend in magazine publishing. The Net killed weeklies years ago, and we're just waiting for the bodies to drop. All the computer weeklies have been struggling to find a reason to exist for years.

How much longer can newspapers ignore the impact of the Web on their own publications? I'm still waiting for the first big daily to drop stock price listings.

Yesterday, I said that the telcos would make us pay by the bit for Internet access if they could. Today, PaidContent pointed up an article that shows BT, the UK's access monopoly, wants to charge by the bit.

it's based on the specious argument that a few heavy users are being subsidized by everyone else:

It sounds like a good idea, as no-one wants to pay over the odds for unused services.

"All consumers are not equal," says Mr Gadekar. "You have some of the heavy users who are using so much of the network that a user who wants to do a simple video stream or talk to someone over the internet suffers.

Rafat Ali at PaidContent suggests this is because Europeans have a "socialist" desire to make heavy (presumably rich) users subsidize light (presumably poor) users. Of course, per-bit pricing will limit the communication options of the poor, defeat creative applications of the net, and result in higher charges for everyone. But you can bet that the access monopolies will appeal to our sense of fairness when they're selling this dangerous nonsense.

The FCC chairman has changed the direction of his spin lately.

He's saying that we must lift the limits on how many stations a single company can own so that we can save free television.

To survive, free TV must improve its competitive position against pay television and find a way to innovate and offer personalized television experiences that today's viewers have come to enjoy and expect. The future of free television is, at best, uncertain and, at worst, in peril.

The shift to pay television and the value it has brought to the television viewer over the course of the last 20 years begs a question -- do we even need free television? From a public policy perspective, I believe the answer is yes -- we absolutely need to maintain a viable free television service for the welfare of our citizens. Free broadcast television remains an important service for those citizens that cannot afford pay television. Additionally, free television continues to play a vital role in informing the public during national and local emergencies and in serving the interests of their local communities.

That's why this past June, the FCC passed a new set of broadcast ownership limits, modernizing a regulatory regime that was made for the bygone era of the big three to reflect today's dynamic media marketplace. Those rule modifications were made, in part, to strengthen free television to give it a chance to remain viable for our citizens to enjoy for decades to come. For example, by setting a slightly revised national television ownership limit, the FCC will help the networks attract and maintain quality programming, from the World Series and Olympics to the next great TV series like "Everybody Loves Raymond" or "The West Wing." Other rule changes, such as allowing cross-ownership or the ownership of more than one local television broadcast outlet in some markets, will bring consumers more and better quality local news coverage and will help fund the transition to high definition digital television , potentially giving free television the ability to provide new innovate services to the public well into the 21st century.

These changes have been under attack from some in Congress. A rush headlong into re-regulating free television is afoot, and if successful, would prove disastrous . Bringing free television into a more hostile regulatory environment will continue to drive investment to pay television and drive more sports and creative programs to pay television. It may just drive free television to pay television altogether, as Bob Wright, CEO of NBC, once suggested that he might shut down NBC and simply move it to cable.

While I'm certain that Michael Powell wants to ensure we can see "The West Wing", this may not be the best use of the spectrum.

There are multiple free-market answers to the question "What should we do with this spectrum?" It's far from clear that the best solution is to give that spectrum to networks who also control the cable channels and the producers. That sounds like flouting the public interest.

Why not let local programmers and spectrum licensees decide how much network product to deliver to their communities, instead of leaving that decision to network employees?

As far as I know, it's not the FCC's mandate to assure our access to "Everybody Loves Raymond".

AOL Europe is now growing a lot faster than its US counterpart, after years in the doldrums. AOL Europe is growing faster because they were forced to separate physical networking from Internet access.

Until they merged with cable company Time Warner in 2000, AOL fought hard to assure equal access to high-speed networks.

Without those open access rules, the AOL service in the United States has struggled to make affordable deals to package its service with network connections from cable companies.

[...]

But in Europe, AOL kept pressing the case for open access. In the last two years the company has won guarantees of equal wholesale prices for broadband telecommunications capacity to sell to consumers in Britain, France and Germany. The rules have played a pivotal role in helping AOL Europe solidify positions in Germany and France and come from far behind to vie for the biggest share of the British market, where it now makes all of its slender profit.

In the US, AOL Broadband has been forced to go it alone as a content service. That strategy has the stench of desperation because ever since AOL is an access company that dreams of being a content company.

Yahoo bought Overture for $1.6 billion or so.

I've always thought that OVER was underpowered and overpriced. Their margins are plummeting. Their revenue is too dependent on a few large customers (especially Yahoo). And any idiot could build their own paid search business if push came to shove.

But Overture is probably worth more to Yahoo than to anyone else. Yahoo will save a lot of money over the next couple of years by not having to pay commissions to Overture. Add to that the savings of not building a paid search business and the strategic advantage of keeping Overture from MSN and Google.

In a sense it was inevitable.

The FCC has voted to allow the trading of spectrum licenses. While this will certainly improve the efficiency of spectrum use, it seems to have some real problems.

• It ties up unused spectrum that could be used for commons-oriented applications.
• It muddies the idea that a license is not owned, but only borrowed from the public for a limited period.
• It creates more entrenched interests with a financial stake in preventing creative use of spectrum.

Aside from one good piece by David Reed, I don't understand why we haven't heard more about this plan from the spectrum geeks.

Twenty-four hours after I praised Verizon for competing on features and price, and not with lawyers and lobbyists, the WSJ runs a story that says Verizon's suing to keep the creditors from reanimating the corpse of MCI.

I commented on Verizon's whingeing about this earlier, but it turns out they're deadly serious. They've hired a former Attorney General to drive a stake through the heart of the the undead long distance company. They've enlisted a posse of state attorneys general -- who should be looking out after the interest of consumers, not monopolists.

Undoubtedly corrupt Republican congressman Billy Tauzin is representing the Direct Marketing Association, and not the citizens of Louisiana, with his new "anti" "spam" bill.

According to participants in at least three meetings in recent weeks, e-mail marketers prevailed in adding provisions that would supersede tougher state anti-spam laws, would prohibit consumers from suing spammers and would give companies the right to send e-mail to anyone who has done business with them in the past three years.

"If I thought that everything that was legal under this bill would end up in my mailbox, I'd jump off the Capitol building,"

The bill would also require citizens opt out of mailing lists individually.

The so-called federalists are all for devolving power to the states when it decreases the rights and protection of citizens, but when states attempt to limit the rights of the corporations who employ them or happen to have them in a database, the ninth and tenth amendments must be preempted.

Also, why is it that the Republicans invoke the first amendment only to protect corporate political contributions, media consolidation, and advertising?

Using its payphones as hubs, Verizon is set to blanket Manhattan with a WiFi signal and offer the service free to its DSL customers. And this is after cutting the price of DSL to $35.

This is amazing. A telco is competing in the Internet access business on features and price, rather than in the legislatures, regulatory agencies, and central offices. Verizon doesn't exactly have a history of this kind of behavior, so it's a refreshing change.

It's also interesting that Verizon can set up a hotspot in a payphone for $5,000 and 1,000 of these -- only $5 million invested -- is enough to cover Manhattan. I don't know Verizon's margins on DSL, but this should be able to pay for itself in two years if less than 10,000 people sign up for DSL to get access to Verizon's WiFi network.

Overture still looks like a loser, as new competitors enter its indefensible niche and its customers drive harder bargains. [Thanks MarketingFix]

Since [last year], Overture's traffic acquisition costs have skyrocketed from about $40 million in the first quarter of 2002 to just over $120 million in its most recent quarter.

What's more, Overture's Ebitda profit margins have decreased from about 23 percent in the first quarter of 2002 to slightly north of 10 percent today

If Overture is to survive as an independent company, it's going to have to pull off one of the greatest transformations of the Internet era. Overture will have to transform itself from ad company to search company. It will have to move from thinking of its customers as advertisers to thinking of its customers as consumers looking for information.

WorldCom (now MCI) is now virtually debt-free, thanks to the fact that they've declared bankrupcty and the creditors own the company. According to today's Wall Street journal, investors believe that the telcos face some tough decisions now that MCI is no longer shackled by a need to price its service based on the cost of its past bad investments. [Subscribers only, alas!]

"We're appalled," says Randall Stephenson, SBC's chief financial officer. "After committing massive fraud, WorldCom emerges out of bankruptcy with most of its debt wiped out." Verizon Chairman Ivan Seidenberg said at a news conference Monday that, in WorldCom's case, "crime pays."

Yeah, right. Worldcom's shareholders made the ultimate sacrifice for all that borrowing and fraud. Don't expect Verizon's and SBC's shareholders to do the same any time soon.

I can't wait until creditors get control of one of the wireless carriers.

The LA Times says Apple (i.e. Steve Jobs) is seriously considering buying the world's largest record company, Universal Music.

People close to Jobs say he is convinced that the music industry is about to turn a corner in the copyright war. With the government shutting down pirate Web sites and the record industry now going after individuals for alleged piracy, the Apple chief believes digital theft will become increasingly more complicated, prompting fans to migrate to legitimate services, sources said.

Yikes.

I normally think this kind of consolidation destroys shareholder value. After all, Sony and Time Warner have found nothing but negative synergies in their music divisions. But Jobs can probably add more value to Universal Music than anyone, and Apple's focus is probably more on consolidation of its (tenuous) position than any sort of monster growth trajectory.

I hate that Apple might take its eye off the ball of building better computers and improving OS X. But I love the idea that they're developing a new music service and feel strongly enough to about it to own a record company. Apple is already refocusing on the consumer computer market. This will hasten their transition to becoming a consumer electronics company.

I don't know if Apple can do it. But this is the best hope we've had in years that the music industry could overcome its innovative inertia.

This is late, but NY Times links are working again.

Dave Winer has posted a cryptic note about what's going on: "Martin Nisenholtz, CEO of New York Times Digital, ... brought me up to date on what's going on. I agreed not to talk about it until we're finished talking. I've talked with a few other people who I trust to try to make this come out right for the Times and for the Web."

(I'd link to it, but this item's permalink is broken.)

It's going to be a long, long time before 3g goes anywhere, if this story is the norm for how content makes its way to mobile phones:

• SmartServ Online made a deal with a big, unnamed handset manufacturer to include the company’s financial news and data application inside some of the manufacturer’s Java-capable phones. The press release says, "The agreement contains three revenue components: upfront development fees, licensing fees and a share of recurring subscription revenue from wireless carrier subscribers."
• Summus Inc. said its photo messaging service available through AT&T Wireless Services Inc. now supports the Panasonic GU87, Nokia 3650 and the Sony Ericsson T306.
• Verizon Wireless announced it will offer The FOX Sports On-Court Live Basketball game developed by Sorrent using Verizon’s BREW application download service.
• Boost Mobile announced it will offer snow reports from SnoCountry.

Apparently, to offer content on 3g phones, you have to make a deal with each mobile carrier, each handset manufacturer, and then customize your application for individual phone models. If that's not discouraging enough for developers, you must pay upfront development and licensing fees.

When will the mobile carriers (and their suppliers) realize that having nondiscriminatory access to content is more compelling to consumers than a few exclusive content deals? Probably about the same time they realize that lack of number portability is costing them more money by limiting their market than it's saving them in churn.

I can't believe that Boston.com have pimped up their logo with pictures of a product and links to an advertiser (Long's Jewelers).

This site it produced by a company (The Boston Globe, a NY Times subsidiary) that would never consider anything even remotely like this in print. [Thanks, Adam Gaffin for posting to Online News and Adrian Holovaty for reminding me.]

The mobile carriers' balance-sheet pricing and ignorance of network economics have made SMS a non-starter in the US.

SMS messaging hasn't taken off in the United States because, according to The Economist, (1) better alternatives (land-line calls, mobile calls, instant messages) are available at flat rates, (2) the mobile carriers resisted connecting their SMS networks, (3) the mobile carriers's have overpriced SMS-capable phones, encouraging their customers to hang on to their old phones. [Thanks Marketingfix]

As long as the mobile carriers base their pricing on debts they incurred in the nineties and not on what they cost to deliver or what they're worth, they're going to retard the development of the mobile Internet in the US. By they time they (or their receivers) wake up to the what's happening, the wireless nearlynet will own the market.

The NY Times has every right to charge for their old stories, but I wish they hadn't.

I've been collecting links for a couple of weeks in preparation for a series of posts on media and the broadband access monopolies. It turns out that the Times moved a bunch of really useful stories behind the barrier. If you want to read them, they'll cost $2.95 each, which I doubt you're willing to pay.

I think most publishers would get a higher NPV if they just gave their archives away, but the Times is a special case -- at least in 2003. I'll be more careful in the future about linking to them in the future. The SF Chronicle's Gate doesn't charge (for now), so I'll try to give them a little more link action.

On Lawrence.com, the blogs are more popular than the content created by the pros. This is the kind of site that the dailies keep talking about, but not creating: tons of information on local bands, mp3's, venues, concerts, restaurants, bars, and ... blogs! And it's published by the Lawrence Journal-World.

Until last week, I only knew Lawrence, Kansas as the setting of the nuclear war TV movie The Day After. Then I saw Rob Curley present Lawrence.com at the New Media Conference at Berkeley and was impressed with the site. Lawrence is a college town with a thriving local music scene and Lawrence.com does a remarkable job of laying it all out.

AT&T's prepaid card for selling content is a confusing idea. In an excellent interview on PaidContent.org, Mike Palumbo, sales director of AT&T pre-paid services, says, "We did not want to get in the "Visa space"...so we stumbled into online content."

The business of prepaid calling cards has a certain logic: the variable cost of the product is very low, prepaid cards allow the selling to disguise the real cost of a call, the typical buyer is less likely to have a credit card or a relationship with a long distance company. But for these reasons, the prepaid calling card business is pretty grubby, perhaps a step up from the check-cashing business.

The prepaid business has some distinct competencies, such as charging for small transactions, managing millions of "accounts" with stored value, and retail distribution. But there are a lot of reasons why Web content is a poor match for them:

• Too many middle men: Because they're not selling their own content, they're adding two middlemen (themselves and the retailers) with high margin expectations compared to those of credit card companies, the traditional single middlemen for content transactions.
• Retail friction: So far, AT&T has two retailers for this business. For Shockwave.com, it's a chain of convenience stores. For Vindigo, a chain of truckstops. How many cards do they have to sell to justify the space that they would normally devote to Slim Jims and Tic Tacs?
• The big disconnect: So, you're on Shockwave.com and you want one of these cards. Do you bike over to the Quik-E-Mart with a couple of twenties, or do you surf over on to another site? Same deal for the busy executives targeted by Vindigo. Meanwhile, prepaid calling cards are sold by establishments and vending machines that are just few steps from a pay phone.
• The wrong target: This is a product, AT&T admits, that is aimed at people who either don't have a credit card or don't want to use one online. What's the overlap between these people and the market for online content?

Both Vindigo and Shockwave.com's Gameblast seem like good candidates for selling "content". AT&T's Prepaid Web Cents card doesn't seem like a very good way to pay for it.

People are beginning to make the distinction between content and services.

AtNewYork has a good article from the Jupiter Online Media Conference that says, "Forget Content, the Money's in Services":

• Vindigo has moved from providing free information to selling information services to PDA users. They don't create the information, but their subscribers pay to use it on their PDA's. Vindigo is adding value through aggregation, software, and distribution.
• Homestead has moved from ad-supported web site creation, to selling hosting and site-building tools. A lot of folks are in the hosting business, and their software keeps them from being a commodity.
• Yahoo, of course, is depending on selling services like email, hosting, and personals for its future. It's content revenue strean (e.g. Yahoo Platinum) is unproven.
• PlanetOut tried and failed to make money with premium content. But now, most of their revenue comes from personals.
• Weather.com plans to sell a "Weather Geek Tool" for weather freaks.

Making the distinction between services and content is a critical strategic skill for online publishers. The Online Publishers Association and Jupiter both include such services as personals and greeting cards in their definition of content.

This is not simply a matter of semantics, because there is a proven market for selling online services, but very little market for online content. Making money from online content may require rethinking it as a service. Turning content into a service requires more than a subscription charge. It means predictably and reliably solving real problems for your subscribers.

A Canadian site , YellowTimes.org, had to remove content deemed offensive (a photo of an American POW and a photo of a dead Iraqi child) by the company that provides Internet access to their host. [Thanks, Politechbot]

The upstream provider, Level 3 Communications [Hoover's capsule] of Broomfield Colorado, is a multi-billion-dollar company.

Our communication infrastructure should not be in the hands of a few huge companies who can take the content or nature of our communication into account when deciding what to charge or even whether to allow us to use the Net.

Another Internet filtering company is warning corporations that their employees might be wasting resources checking the news, especially now that we're on the brink of war. [Thanks, PaidContent.org]

ABCnews.com has an additional problem with their subscriber-only streaming news service. Many corporate firewalls block streaming media by default, regardless of content

This is not the first assault on workers' use of news by a filtering company. The online news industry still needs to come to grips with this issue if they're serious about exploiting at-work use as a market segment.

The big news isn't that Overture's stock dropped 10% on a rumor that Yahoo was set to buy a European competitor. The big news is that Overture's stock price has dropped 50% in the last two months. The ostensible target of the takeover denies the rumor, but why was the market surprised that Overture is vulnerable to a change of heart on the part of Yahoo?

Both comScore and Nielsen//NetRatings announced daypart media planning tools yesterday. However, the dayparts themselves are still a subject of debate.

Meanwhile, Forbes is promoting a survey of 11,000 executives and senior managers that says the Web is an excellent tool for reaching C-Level executives (these are not executives who earned a gentleman's C at Yale and then attended Harvard Business School):

management-level workers actively use the Web in the early part of the day, with nearly half (46 percent) going online before leaving for work. In comparison, 38 percent said they read a newspaper before work. Of so-called "C-level" executives (CEOs, CIO, CFOs, etc.), the numbers were even greater, with 53 percent going online before work and 41 percent turning to the paper.

...

In even better news for advertisers, executives are surprisingly willing to engage online advertising: nearly half of respondents (47 percent) said they click on advertising of interest. E-mail marketing fared less well, with 26 percent saying they read work-related promotional e-mails.

This recognition of daytime Web users as an audience that is valuable and hard to reach is long overdue -- if we can only figure out how to count them.

AOL is promoting cruises in conjunction with Health magazine, according to the Atlanta Journal-Constitution:

AOL Travel has launched its first-ever AOL "Caribbean Cruise To Fitness" with Health Magazine. AOL members can get a cabin on the one-week cruise for $599 and up. Members who have participated in AOL's online weight-loss support group are targeted for marketing.

Never heard of Health magazine ? Neither had I. It's part of Southern Progress, an AOL/TW division that has a deal with Disney which includes an agreement to publish happy stories about Epcot..

Apparently, AOL may have put you on a list of fat people.

The Children's Internet Protection Act hits the Supreme Court today. The Bush administration is appealing a ruling that reads in part: "The filtering software mandated by CIPA will block access to substantial amounts of constitutionally protected free speech whose suppression serves no legitimate government interest.''

From the Reuters story:

The government appealed the decision, saying libraries are not forced to carry pornographic movies and magazines and should not be forced to make similar materials available online.

"A public library may exercise content-based judgments in deciding what information to make available to its patrons without violating the First Amendment,'' the government wrote in its appeal.

Indeed they may exercise judgments, but not if the Federal government requires them to do something else.

This is especially troubling in light of the fact that libraries and schools are the only source of Internet access for many Americans.

The top ad-supported sites' revenues are growing quickly and they are beginning to run out of space. Meanwhile, smaller sites can't seem to unload their inventory.

This imbalance has existed since the earliest days of the web, but it is now clear that the recovery will not be evenly distributed.

There is an opportunity to arbitrage this gap in the price of exposures to the same people from different sites. Some of this will be resolved as advertisers get smarter about the way they buy online advertising. Also, a lot of the slack will be taken up by keyword-oriented advertising systems from Overture, Google, and a few late entrants.

Unfortunately,this still won't solve the revenue gap for most mid-sized web sites.

In the past 24 hours, the unnamed product that has "cluelessly' tried to harness blogging for promotional purposes has moved from #19 to #5 on Popdex. No doubt this has been hastened by an item on Slashdot.

Steve Outing says, "Get to know the blog culture before trying to profit from it." It looks to me that they've got us pretty well figured out.

I strongly recommend a long piece exploring the people, ideas, and dynamics of this phenomenon over at Chronotope. [Thanks, MarketingFix]

Prediction: When we look back on this history of weblogs, this incident will play a bigger role than Google's purchase of Blogger.

How's this for an ironic sequence of events:

• A big consumer products company announces they plan to market their latest concoction by using "blogs."
• Newsweek runs a story, quoting a top blogifier: "It seems ironic that a company would want to manipulate a phenomenon that's so generally bent on exposing things," says alpha blogger Doc Searls. "In my view blogs are the antidote to viral marketing."
• He blogs it at 4pm on Sunday, March 2.
• More bloggers decry the cluelessness of said marketers. By 4pm on Monday, March 3, it's number 19 on popdex. I'm already sick of hearing about it.

Boy, were they stupid to think they could manipulate us into promoting their stupid product.

The web site of the Financial Times, FT.com is breaking even.

Of course, that's an operating profit, not a net profit. Pearson has invested a staggering £200 million in this site. FT.com has struggled with changes in organization and business model since the beginning. It has evolved from a decentralized free site to an integrated paid site. Despite the subscription barrier on much of the site's content, the number of people using the site has grown 30% to 3.5 million.

Meanwhile, the FT itself is losing money, which raises some question about whether the site, which gets its content free from its parent, can be said to be profitable.

What does it mean when the telecom monopolies get everything they've been asking for, and the Chairman of the FCC become apoplectic in his rage that it's not nearly enough, and Congress holds hearings into why they didn't get more?

Billy Tauzin, undoubtedly corrupt chairman of the Energy and Commerce Committee has labeled the swing vote in this FCC decision a "renegade Republican."

Tauzin is expected to introduce a bill to scrape TR's face off Mount Rushmore later this year.

Sterling Hughes thinks more of Overture's strategy than I do:

I disagree with Barry's assement. Had Yahoo! not bought Inktomi, than I would most certainly hold the same opinion. However, I don't think Microsoft (MSN) is happy that one of their major competitors now owns their search provider. Barry is right, traffic is important, not search: search is a commodity. That's Overture's advantage. Yahoo! threatens to steal traffic from the customers Inktomi powers; they are biting the hand that feeds them.

I'd be pessimistic about any company whose strategy is to be the partner of last resort for AOL and Microsoft--two companies not known for making their partners rich in the long run.

NOTE: For some reason, I get a ton of spam as comments on this particular message. I've decided to close comments on this message for a while to see if whoever has marked this a a good place to spam will go away. [Posted 7/12/04]

Despite the fact that Overture's net profit margin has dropped from 20% to 5% and their quarterly net income has dropped from $30 million to $5 million, they're on a buying spree. Overture spent $400 million to buy a couple of search companies, one failed and and one for people too cool to google.

The speculation is that Overture plans to offer "algorithmic" search to their paid search customers. What they plan to do with Altavista and Alltheweb, which now compete with their customers, is less clear.

Despite what others may think, the problem is that Overture's relationship with its customers is asymmetrical. Overture needs its customers a lot more than they need it. That's why Overture's margins are collapsing and why they've pulled this stunt. Search and ad sales are commodities. Traffic is not. Yahoo, MSN, AOL, and Google have traffic. Overture has search and ad sales. You do the math.

Cable operators don't want to be required to offer impartial access. They say they "have no intention of blocking access to content", despite existing contracts which permit forcing pop-up ads on users and permit differential access to preferred sites. In an unintentionally chilling statement, they continue:

"Regulation of the sort proposed by Amazon.com that purports to prohibit restrictions on such access would inevitably be used to thwart legitimate business practices and arrangements [emphasis added. Implications: alarming] that have nothing to do with blocking access to content. These efforts would deter investment and innovation [emphasis added. Interpretation: figleaf for doing nothing] in the provision of high-speed Internet services."

Access monopolies must be treated as common carriers.

Ron Rivest has come up with a new way to handle micropayments.

By paying every Nth randomly-selected payment at N times the amount of the transaction, he says he can reduce the overhead of lots of little transactions to a single transaction. It's also significantly less complex than some earlier solutions.

That seems to be pretty cool. I'm less sure of the advantages over simply aggregating transactions and clearing them in bulk. Also, it doesn't seem to address the inherent behavioral issues of micropayments.

Finally, while selling music on the net seems to be an ideal application for micropayments, I'd hate to start a company whose success depends on waiting for the recording trust to do it right.

Apparently Tivo is now automatically tuning in the Discovery channel when it's turned on. This reminds me of the way that hotel room TV's take control when you turn them on.

Combine this with Tivo's ability to update its own software, download unrequested programs to your hard disk, and upload information about how you use your TV, and you begin to wonder how much control you'll have over your media use in the future.

[Thanks, Adam Greenfield!]

I have no idea what Google gets from buying Blogger that they couldn't get for free. Judging from the response, I'm not alone. Blogging will never be a mass-market phenomenon (Blogger has 200,000 active users). The protocols that underlie blogging are so open that there are no obvious technical synergies. Giving preference to Blogger customers would throttle Google's golden-egg-laying goose.

Dave Winer says it's Google can offer blogging to their enterprise customers, but it's not clear to me why that adds value to Google's enterprise services. Mitch Ratcliffe says "The acquisition of Blogger gives Google a channel to put its automated searching capabilities into people's hands...[it] also raises Google's potential to reshape the Net by focusing on how links are made and managed." But I don't understand why they have to own Blogger to do that. Three years from now, Blogger will be a neglected subsidiary--not a strategic asset.

There are plenty of interesting grass roots efforts to make sense of blogspace, but we haven't seen anything yet from the masters of extracting information from links. Buying Blogger seems like a step in the wrong direction.

At the low end, Google/Blogger's combination of ease of entry, low price (free), simplicity, brand, and distribution is unbeatable.

At the high end, Moveable Type's combination of power, reliability, low price (free), and reputation is very strong. And Ben and Mena Trott seem to be positioning themselves for a breakout with MT Pro. If only it were less intimidating to install.

Radio UserLand increasingly occupies the troubled middle ground that marks strategic doom for most companies.

It seems to me that more and more of my must-read blogs are on MT. This week, the number-two Manila site moved to Moveable Type. Radio seems more and more like a kludge every day. I'd be very interested to know what the conversion rates are for these tools. I'd bet few are converting from MT to Radio or Blogger, but lots of people are going the other way.

I don't mean to disparage Blogger, which I genuinely admire. On the other hand, using Radio made my head hurt.

Why is USA Interactive doing well? Well, they're not trying to establish synergy among their properties. And they are all in a business that works well on the Web: bringing people together and making markets. Their properties include Expedia, Hotels.com, Match.com, Ticketmaster (which includes CitySearch). No wonder they're smug.

OK, so there's a lot of synergy between Expedia and Hotels.com. Real we're-in-the-same-business synergy.

Some of the markets they're interested in include [online] classified [ads], financial services, and we've looked at real estate. Rumored takeoever targets include Google, Overture, Cruise.com, MovieFone (now part of AOL's synergistic house of cards), and Overstock.com.

Overture's revenue is up and its profits are down.

In fact, Overture's net profit margin has declin ed steadily quarter-by-quarter over the last year from 20.6% to 4.8%. This is not terribly surprising because what they do isn't very special. Yahoo clearly intends to integrate into Overture's business and Google has already done so.

There will probably always be a role for Overture in the marketplace, but Overture's business is going to look a lot more like that of an ad rep firm or network.

The problem is that it's just not that hard to do what they do. The hard part is building the traffic in the first place and therefore it's the site carrying the ad and not Overture that should be rewarded. As their revenues are squeezed and it becomes easier to build than to buy, Overture will increasing need its partners more than they Overture.

The first time I saw a building wrapped in an ad (in Los Angeles), I had a sense that I was an extra in Blade Runner. According the one company who does this, it's "an unusual and interruptive way to reach people." Yes, interruptive.

Of course, everyone is talking about the company that wants to put their ad on your forehead. It's perfect. The guy who gets paid doesn't have to look at the damn thing. The firm that came up with the idea, Cunning Stunts, gets a perfect 10 for their own name. It's not a hoax, exactly. It's even better. All they have to do is issue the press release and everyone is talking about them: "Cunning Stunts, Cunning Stunts..."

SBC is thinking about buying DirecTV. The presumed theory is that SBC needs to be able to offer Local+Long Distance+DSL+TV to compete with the cable companies offerings. This is Michael Powell's wet dream: megacorporations slugging it out like giant Japanese robots in the marketplace.

It was the ideal of one-stop communications shopping that doomed AT&T. SBC is currently running baffling ads in California which tout the principal benefit of buying local and long distance from the same company as the convenience of having a single bill. It turns out that consumers didn't want one bill for all their communications services, because once they saw the bill it was too damn big.

This strategy also failed in the banking industry, where it was known in the eighties as "the financial supermarket".

It may make sense for the cable co's to use as much of their coaxial cable to offer lots of services. But there is no logic in SBC buying a shaky company in an industry about which they know less than nothing. Unfortunately for them, there is no competitive symmetry. SBC would be better off if Rupert Murdoch bought DirecTV and kept Comcast execs awake at night.

I wonder if SBC had anything to do with DirecTV deciding to get out of the DSL business.

The Direct Marketing Association is suing to prevent the institution of a single, national opt-out list for direct marketing. Apparently, they believe they have a first amendment right to talk to people who do not want to talk to them. Protecting telemarketers and Nike's right to lie are apparently all the first amendment is used for these days.

Gator must be relieved, now that they no longer define the bottom of the barrel in marketing practices. Slashdot summarizes the Wired story:

"Following the same devious footsteps of the infamous Bonzi Buddy, Gator, and Comet Cursor "enhancements", Xupiter now has their own self-installing toolbar for IE. There are many claims that if you leave your security preferences at their default level, it will install itself without your express permission. And once on your system, it's gracious enough to reset your homepage to xupiter.com, forward all your searches to their search engine, download and automatically launch applications (like gambling applets), and blocks all attempts to set these back to normal. Removing it isn't trivial either - it automatically checks for updates upon reboot, where it constantly changes the registry settings it uses, making the jobs of spyware removal programs like AdAware or Spybot Search & Destroy much harder. No word yet if it collects and forwards personal data."

While marketers continue to sue Gator and its advertisers for usurping their advertising rights, no one wants to take on these companies for taking over our computers without fully disclosing what they're doing.

Until then, Gator, Xupiter and others will be in a race to answer the question "How low can you go?"

Now that the RBOC's have used their control of your telephone lines to eliminate nearly all their competition for the DSL market, they're using us their control of DSL to keep competitors out of the local market. SBC, Verizon, and BellSouth customers who sign up for competitive local service are losing their DSL service.

"I would like to have the business," but there's no way to do it, says Zeke Robertson, senior vice president of SBC's DSL division. "Few people understand the complexity of doing two services over a single line."

Yeah, right. The WSJ story points out that you can still buy competitive DSL service (where it still exists) if you keep the RBOC as your local phone carrier. It probably doesn't hurt that DSL services are sold with annual contracts, which phone service (so far) is not.

This is a business practice that only a monopoly can get away with.AT&T Broadband charges more for high-speed Internet service if you don't buy cable TV service from them.

Spam is a tragedy of the commons, says Len Ellis of Wunderman, a direct marketing agency. I agree. After admitting that spam is wrecking direct marketing and that technical solutions are imperfect and temporary, his conclusion hints at (but fails to demand) a real solution:

While we curb despoilers and secure our own commercial freedoms, we must make it our business to exercise those freedoms to create an online commons worth protecting. We all share at least one common purpose: to secure a terrain where innovations and ambitions in information exchange between companies and consumers can be productively pursued. If we don't properly cultivate our commons, spammers will deservedly prevail.

Huh?

Why won't anyone in the industry admit that "free market solutions" fail unless consumers have have (a) information and (b) power. Yesterday, I proposed a partial solution. but I think the gentleman from Wunderman will hate it.