All Things Digital

As part of AllThingsD’s ongoing effort to make your world more laden with information about All Things Digital, we’ve decided to introduce a new “Weekend Update” feature.

This is our first installment:

• Microsoft abandoned its nonsequitur Seinfeld advertising strategy this week for a nonpartisan one–in which the spots themselves are watermarked “made on a Mac.” Meanwhile, Google did some advertising of its own, launching a new site solely to allay fears about its advertising partnership with Yahoo (and quoting BoomTown out of context for good effect). That won’t help advance its case, though, with the American Antitrust Institute, which believes the deal “could end up as a black hole that swallows up Yahoo.”
• Speaking of Google, Walt Mossberg offered the first comprehensive look at the Google G1, the Android phone, declaring it a contender, with many appealing features (cut-and-paste! real keyboard!), but not quite up to the iPhone’s polish.
• Seems Silicon Valley is adopting a cautious approach to tenuous economic times. As Digital Daily’s John Paczkowski wrote earlier this week, the Valley’s unemployment rate rose for the fourth consecutive month to reach a four-year high in August. Sound familiar?
• In that vein, Yahoo CEO Jerry Yang released a memo outlining upper management’s intention to make the company “disciplined” and “fit.” Its fitness evaluator? Management consultants Bain & Co. No word yet on layoffs, but that doesn’t mean they’re not on the way. For your convenience, BoomTown has decoded Yang’s memo.
• During the inaugural meeting of Yahoo’s new board, first on the agenda was a discussion of AOL and its availability. While according to BoomTown, this only confirms that talks have been going on for a while now, Digital Daily opines out that a merger would be like combining two louts to make a cretin.
• Finally, Digg.com raised a $28.7 million dollar round of funding–a surprising announcement for a company recently rumored to be the object of a bidding war. Digital Daily asks: “Is Digg worth it?”

Digg, the social news site that’s long been rumored to be up for sale, has raised $28.7 million in a Series C venture round led by Highland Capital Partners. Existing backers Silicon Valley Bank, Greylock Partners and the Omidyar Network also participated.

“Today is a big day for Digg,” CEO Jay Adelson wrote on the company blog. “We’re announcing a major expansion effort–the largest we’ve undergone in our history. With a new round of funding, we’re accelerating many of the programs that we’ve been working on over the past several months, including investments in infrastructure, new feature development, international expansion and hiring all the people we need to get there.”

As noted by Adelson, Digg will put some of the funds toward the rollout of an international growth strategy in early 2009.

Not exactly the sort of announcement you’d expect from a company rumored to be the prize in a bidding war between Microsoft (MSFT) and Google (GOOG). But then maybe it’s trying to drive its asking price back up to $300 million from the more realistic $200-$225 million figure recently batted around.

Question is: is Digg worth that much?

The Apple rumor mill has such a hair trigger, that even passing mention of an unreleased product can set it into yammering motion. As happened today after Digg founder Kevin Rose offered up some purported insider information about the focus of Apple’s “Let’s Rock” media event in San Francisco next Tuesday. If Rose is correct–and his record on handicapping Apple (AAPL) announcements is decidedly mixed–Apple will announce updates to its entire iPod line, including the rumored “tall” iPod Nano. Not exactly a tough call considering that XSKN is already selling cases for them and purported photos of the device — like the one below — are showing up on Alibaba.

More interestingly though, Rose says that Apple will uncrate iTunes 8, the first major overhaul of the software since iTunes 7 launched two years ago. Rose claims that iTunes 8 will boast some significant enhancements, among them HD-quality TV show downloads, a new “grid view” browsing feature and a playlist recommendation engine called Genius. “iTunes 8 includes Genius, which makes playlists from songs in your library that go great together,” Rose writes. “Genius also includes Genius sidebar, which recommends music from the iTunes Store that you don’t already have.”

Notably absent from Rose’s list of new features: iTunes Unlimited–the $129-a-year all-you-can-eat subscription service that Apple has been rumored to be considering for some time now.

Like all such reports, Rose’s should be taken with a grain of salt, if not an entire salt lick. Rose was, after all, the guy who erroneously claimed Apple’s first iPhone would feature a slide-out keyboard, dual batteries and CDMA, and GSM support.

“The majority of good applications will soon come from outside Facebook, not within it.” This according to Facebook CEO Mark Zuckerberg, who announced the social network’s new “Connect” service at the company’s f8 conference today. Connect essentially allows Facebook users to authenticate into third-party Web sites using their Facebook accounts. So, for example, users could log onto a site like Digg with their Facebook identity without ever creating a new profile on Digg. “From the largest online destinations to the most obscure blog, Digg surfaces the best content as voted on by its community of 26 million,” said Digg founder Kevin Rose. “Facebook Connect will help us promote more conversations on Digg by giving Facebook’s 90 million users an opportunity to sign in to Digg with their Facebook accounts and become part of the active Digg community. This allows both Facebook and Digg users to more easily share the content they care about with the people they care about.”

Developer keys for Facebook Connect are available today. Apps should be rolling out soon.

With less than three months to go before Apple’s Worldwide Developers Conference, Apple (AAPL) observers are slowly being swept up in that most hallowed of Mac faithful traditions: the futile guessing game.

Last Friday, Digg founder Kevin Rose, whose “Diggnation” videocast has become a sort of Psychic Friends Network for Apple rumors, claimed the next-generation iPhone would include two cameras and support for video chat. A few days later he added that the device will also run on a faster 3G network, include GPS and ship in June.

Now Gartner Group analyst Ken Delaney has joined in the handicapping, speculating that the device will boast an organic light-emitting diode display that will make it thinner and reduce power consumption. Delaney says the iPhone’s somewhat disappointing performance in Europe has forced Apple’s hand, inspiring it to fast-track the 3G phone and place an order for 10 million of the devices from its manufacturing partners in Asia.

Could it be that Apple is planning to announce the 3G iPhone at WWDC, with an eye toward an official release on June 29, the first anniversary of its predecessor’s debut?

If Digg founder Kevin Rose is right, Apple’s next generation iPhone will include not one, but two cameras–the second a front-mounted video camera designed for iChat AV.

During a recent episode of his weekly Diggnation vidcast (see above), Rose claimed that the new iPhone reportedly being prepped by Apple (AAPL) for a summer release will enable video conferencing over AT&T’s (T) high-speed 3G wireless network.

Like most such predictions, Rose’s should be taken with a grain or two of salt. His last iPhone premonition, which had the device featuring slide-out keyboards, dual batteries and CDMA and GSM support, was laughably inaccurate. That said, he did accurately predict the debut of iPod nano ahead of its 2005 debut. So there may be something to his latest claim. Certainly, it sounds plausible.

Digg has decided to get out while the getting is still good. The social news site is said to be the prize in a bidding war that includes potential purchasers Google and Microsoft, along with two unnamed media companies. (Gee I wonder who those are?)

Anyway … Digg has reportedly hired New York investment bank Allen & Co. to help it find a buyer and has tempered its hopes for a $300-million sale price to a more realistic $200 million to $225 million. Microsoft, it’s worth noting, is said to be mulling a price even lower than that, which makes perfect sense since the software behemonth is already the exclusive provider of display and contextual advertising on the site. Course, Microsoft had a similar deal with Facebook, and that didn’t stop the company from taking a $240 million stake in it that valued Mark Zuckerberg’s little Harvard project at $15 billion.

UPDATE: According to Digg, this rumor is–like others that have gone before it–utter nonsense. In a post on the Digg blog, CEO Jay Adelson writes, “Normally our policy is to not comment about things like this, but this morning’s rumors about a bidding war involving Google and Microsoft have created such a stir we feel compelled to tell you all directly that they are completely inaccurate. Sorry to burst any drama theories, but they aren’t true. We remain focused on improving Digg and rolling out great features.”

We have taken the proposal Microsoft (MSFT) delivered to us very seriously. We made a public statement why we have not accepted the proposal. In many ways it has been a galvanizing event for all of Yahoo.”

–Yahoo CEO Jerry Yang, Feb. 25

A galvanizing event, indeed. Jerry Yang has about 20 days to convince Yahoo (YHOO) shareholders that they’re better off saving the company than selling it, and he is pulling out all the stops.

Last night Yahoo officially launched Buzz, a social news service where “buzz-worthy” articles are ranked according to user interest. It’s essentially Digg (if Digg was purple), redundant and three years late to the social news market.

“You cast your vote on the most interesting Web stories, images or videos about anything and everything–from a late-breaking political story on a major news site, to the coolest photo of the lunar eclipse, to a shocking celebrity-gossip blog post that shouldn’t be missed,” Yahoo’s Tapan Bhat explained in a post to Yahoo Anecdotal. “The best part is that the stories with the highest Buzz Scores–determined by combining your votes with organic search popularity rankings–may be featured on the Yahoo! homepage, giving you the power to influence what millions of people see on Yahoo!.” (And, yes, that us a Yahoo Buzz! icon appended below. Be sure to click it on your way out and “Buzz” this post up to Yahoo’s homepage.)

Also debuting from Yahoo today, Search Monkey–a set of open-source application programming interfaces (APIs) that allow publishers to annotate search results for their sites. “… Our intent is clear–present users with richer, more useful search results so that they can complete their tasks more efficiently and get from ‘to-do’ to ‘done,’ ” Vish Makhijani, senior vice president and general manager of Yahoo Search, wrote in a post to Yahoo Anecdotal. ” … So instead of a simple title, abstract and URL, for the first time, users will see rich results that incorporate the massive amount of data buried in Web sites.”

So essentially, it’s like Google’s Subscribed Links, but purple and two years late to the market.

At this midday panel, TechCrunch40 co-host Jason Calacanis moderated a discussion with Jay Adelson (Digg), David Sacks (Geni), Roelof Botha (Sequoia Capital), Sumant Mandel (Clearstone), George Zachary (Charles River Ventures), Hank Barry (Howard Rice), and Jeff Clavier (SoftTech VC).

(Quick aside: Before the panel begins, the woman sitting next to me is investigating the contents of the TechCrunch40 schwag bags, which apparently include AOL CD cases recovered from an intern-led archaeological dig at the company’s Dulles, Md.Va., campus.)

After introductions, Calacanis poses the first question to the VCs on the panel: How does somebody best get into your office?

Mandel: A referral or introduction from a colleague.

Zachary: An introduction or a very simple email.

Clavier: Introductions, but he admits–perhaps foolishly–that being mobbed at conferences does sometimes work. (Start-up pig-pile on Jeff in the Demo Pit everyone!)

Botha: Likes the simple email idea as well.

Calacanis asks Adelson about his approach to raising capital. “Do you just call the same people and ask for money?” Adelson says you seek out capital from the people most likely to offer it in support of the business you’re pitching.

Same question asked of Sacks. He says Geni did its series A round as an idea and its series B as an actual product. Suggests aspiring entrepreneurs focus their early efforts on the refinement of your idea and your vision. That’s the best way to guarantee a good VC valuation.

Question: How do you determine valuations? Is it all based on your perception of a start-up as bankable and the idea of owning the next five years of its life?

Mandel seems to agree that there’s a logical aspect to these decisions, but insists that there’s also an emotional one as well.

Botha agrees and notes the recent insanity around Facebook’s valuations.

Clavier, a long-time angel investor, then announces a $12 million seed fund. Its focus will be the consumer side of the Internet, with a few dozen deals, ranging from $100,000 to $500,000, over the next 3 years.

Question from TechCrunch40 co-host Michael Arrington: Wonders if VCs are peeved that the angels are swooping in and taking companies that they would have liked to fund away from them.

Botha says of course. But adds that this all contributes to the ecosystem of innovation, yadda, yadda … competition is desirable. ….

Panel descends into pure VC 101 tedium. And then ….

What’s the stupidest thing an entrepreneur has done to get your attention?

Clavier: Clipping your nails during a meeting.

Clearly the high point of the panel. Time to find coffee.

Counterterrorism officer extraordinaire Jack Bauer would have solved this one with a bullet to the temple, so Jorge Romero should consider himself lucky. On Friday, the FBI filed a criminal complaint against Romero for allegedly uploading the first four episodes of the sixth season of “24” to LiveDigital.com, well in advance of their prime-time debut. According to the complaint, Romero downloaded shows from a peer-to-peer service, uploaded them to LiveDigital, and then posted them to Digg.com, apparently in an ill-starred effort to boost his profile on the social-news service. Of course, the only thing he succeeded in doing was to make himself easier to track down, which the FBI did in short order.

Now he faces a three-year prison sentence and the prospect of Hollywood waving his piked head about as a warning to all would-be copyright violators. “The FBI makes this a different ball game,” said Jay Cooper, an attorney at Greenberg Traurig who specializes in intellectual-property issues. “The public doesn’t seem to get that it’s wrong, and maybe a message like this has to get out there so people realize there are criminal penalties.”

As lost causes go, few are more futile than the entertainment industry’s quest to lock down its content with Digital Rights Management. DRM is an increasingly outmoded technology protecting an ever-evolving content medium. And so it came as little surprise when the Advanced Access Content System, Hollywood’s latest DRM poster child, was cracked last December and more fully this past February.

What is surprising is that the result of those cracks, the AACS key, would inspire a digital revolt on a popular social news site after being widely available online for so long. Yet, that’s what happened Tuesday when administrators of Digg.com began deleting story submissions that pointed to the AACS key (the publishing of which could be a crime under the Digital Millennium Copyright Act). In a matter of hours, Digg’s users rebelled, flooding the site with posts referencing the key. Turned out Digg Inc. doesn’t entirely control Digg.com. Crowdsourcing does have its disadvantages. Just look at the Digg mob running the asylum.

Finally, Digg’s leadership conceded. In a post published on the site’s blog, Digg founder Kevin Rose said the site would no longer censor stories containing the AACS key. “We had to make a call, and in our desire to avoid a scenario where Digg would be interrupted or shut down, we decided to comply and remove the stories with the code,” he wrote. “But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.”

(BusinessWeek cover courtesy ILoveKetchup)