All Things Digital

This morning, Peter Chernin, the chief operating officer of News Corp. (NWS) (which owns Dow Jones and this site), acknowledged that Fox Interactive Media, which includes MySpace, will fall short of its goal of generating $1 billion in revenue for fiscal 2008. A surprising shortfall for a division that operates the strongest social-networking offering on the Web.

But not to worry, MySpace has a solution for that. It’s just one that lacks an obvious monetization strategy. It’s called Data Availability and it’s a way for MySpace members to share and sync profile data across partner sites–starting with Yahoo (YHOO), eBay (EBAY), Twitter and Photobucket. “The walls around the garden are coming down–the implementation of Data Availability injects a new layer of social activity and creates a more dynamic Internet,” enthused Chris DeWolfe, CEO and co-founder of MySpace, in a statement. “We, alongside our Data Availability launch partners, are pioneering a new way for the global community to integrate their social experiences Web-wide.”

That’s all well and good. But how about pioneering a new way to, you know, make money off that integration? Data portability is wonderfull and all. But so is revenue. And right now, MySpace’s Data Availability initiative doesn’t include any advertising deals.

When Jerry Yang said Yahoo’s (YHOO) board was “continuously evaluating all of the company’s strategic options,” he wasn’t kidding. On Wednesday afternoon, Yahoo announced a two-week trial advertising partnership with Google (GOOG), an alliance that - should it blossom - could herald Yahoo’s concession of search advertising to Google and perhaps a postponement of the seemingly inevitable sale to Microsoft (but nothing more). Then, just a few hours later, The Wall Street Journal reported that Yahoo is nearing a deal to combine its Internet operations with Time Warner’s AOL. The deal would see Yahoo acquire AOL in exchange for the media conglomerate taking 20% stake in the resulting monstrosity. Yahoo will no doubt spin such a combination as one that would bolster its domestic market position. But rather than a synergistic powerhouse, a merger of these companies is more like two louts coming together to make one cretin. Not exactly a proven formula considering recent history. AOL+Compuserve = FAIL. AOL+Netscape = FAIL. AOL+Time Warner = FAIL. AOL+Yahoo? Good luck pitching that one to your shareholders, Jerry. Especially if Microsoft manages to convince News Corp (NWS) to mount a joint, and presumably sweetened, bid for Yahoo.

Asked during a February earnings call whether News Corp. might entertain the idea of a MySpace-Yahoo alliance, company Chairman Rupert Murdoch replied: “I think that day has passed, but you never know.”

Well, now that he’s had about a month to think about it, Murdoch seems more certain that day has passed. In remarks at the annual Bear Stearns media conference today, Murdoch said News Corp. has no plans to battle Microsoft (MSFT) for Yahoo (YHOO). “We’re not going to get into a fight with Microsoft, which has a lot more money than us,” Murdoch said.

Assuming Murdoch’s on the level, this is lousy news for Yahoo, which had been discussing a partnership with the media company in the hopes that it might thwart Microsoft’s unsolicited takeover bid. With News Corp. bowing out of discussions, Yahoo’s already limited options for avoiding a Microsoft takeover have dwindled to two: cut a deal with AOL or go to the mat with Microsoft in a proxy battle.

Cue the Jerry Yang sad trombone effect …

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.”

I think that day has passed, but you never know.”

–News Corp. Chairman Rupert Murdoch comments on a possible MySpace-Yahoo alliance during last week’s earnings call.

Yeah, you never know.

You’d think that News Corp. (NWS) would be a little too busy with the integration of a certain other multibillion-dollar property to consider adding another one to its plate, but Chairman Rupert Murdoch, as we all know, is a man of healthy appetites.

So it’s not all that surprising to hear that News Corp. and Yahoo (YHOO) are discussing some kind of alliance that would allow the beleaguered Internet major to rebuff Microsoft’s hostile bid once and for all. Sources close to the companies tell The Wall Street Journal that under the terms of the deal being discussed, News Corp. (owner of this site) would take a 20% stake in Yahoo and combine it with MySpace and other News Corp.-owned online properties.

If Yahoo is looking for a deus ex machina to resolve its seemingly insoluble difficulties, it best not look to News Corp.

The company, which just acquired Dow Jones (owner of this site) and which posted a moderate rise in fiscal second-quarter profit yesterday, has no plans to yank Yahoo from the jaws of Microsoft. “We are definitely not going to make a bid for Yahoo,” News Corp. Chairman and Chief Executive Rupert Murdoch said during a conference call to discuss the company’s earnings. “We’re not really interested at this stage.”

So who is interested? Well, apparently no one. Comcast has declined to make an offer, NBC Universal Chief Executive Jeff Zucker dismissed rumors that NBC was considering a bid during a conference call with JPMorgan analysts earlier this week, and the financing and operational risks are likely too high for a private-equity bidder. Seems the $44.6 billion price tag Microsoft’s slapped on Yahoo has given everyone a bit of sticker shock.

Everyone but Google, that is. And Google can’t really make an offer for Yahoo. With its absolute dominance of the search market, the “troubling questions” a Yahoo-Google alliance would raise are far, far more troubling than the “troubling questions” Google claims Microsoft’s hostile bid for Yahoo raises.

So what are these “many options” Yahoo claims to be evaluating? There are only two, it seems:

1. Accept the deal.
2. Turn it down flat and then accept under duress after an acrimonious shareholders meeting.

It’s not often that one emerges from a Steve Jobs negotiation with anything more than a warm glow–especially members of the entertainment industry.

So it’s surprising to hear that Apple may have agreed to raise the average price of the movies at its iTunes Store. According to a report by Pali Research analyst Richard Greenfield (viewing requires registration), the company is courting 20th Century Fox (a division of News Corp., which is buying Dow Jones, owner of this site) with a plan to boost the average wholesale price of a movie to $15–just $3 below the average selling price of a DVD. Also under discussion: a new Apple-friendly “premium” DVD that would offer a version of the included film optimized for iTunes. Price: $3 or $4 more than the average DVD.

“While we suspect Fox will be the first studio other than Disney to fully embrace iTunes, we believe others will quickly follow suit,” Greenfield wrote, noting that studios are eager to prove to big-box retailers like Wal-Mart that iTunes significantly undercut their business. “The last thing the movie industry needs is pressure on new-release DVD wholesale pricing, although the studios probably make more money on an iTunes wholesale of $15-plus than most DVDs at $18, due to returns.”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns on Monday.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Bienvenue, iPhone: France Telecom has begun selling Apple’s cellphone at selected Orange stores in Paris and other cities. The device itself will cost about $1,106 with no plan attached, or 399 euros (about $590) with one of four “Orange for iPhone” plans, Computerworld notes, adding it will cost 100 euros ($148) to unlock the handset.
2. FCC Says ‘Uncle’: A proposal by Federal Communications Commission Chairman Kevin Martin to tightly regulate the cable TV industry has been “drastically” trimmed, reports the New York Times, which noted that Martin had sought more diverse programming and reduced cable costs.
3. Amazon: 1; Feds: 0. The federal government has lost its bid to compel Amazon to release details about the book-buying habits of thousands of its customers, according to Declan McCullogh on his blog, The Iconoclast. The Justice Department sought the information to prove its case against a former Madison, Wisc., city official accused of evading taxes in selling used books online.
4. Google, Online Snitch? The search colossus has voluntarily given the IP address of an Israeli blogger who used “Google Blogger” to allegedly slander municipal council members running for reelection, the Israeli Web site Globes Online reports, calling the move “unprecedented.”
5. YouTube, Censor? The popular video-sharing site has suspended the account of a well-known Egyptian anti-torture activist who posted videos of alleged brutality by a number of Egyptian policemen, Wael Abbas told Reuters, claiming that about 100 images he had sent were no longer available on YouTube.
6. But It Doesn’t Mind those CondéNet Vids: CondéNet is announcing today that it will distribute videos from its various consumer-interest Web sites via YouTube, The Wall Street Journal reports, adding that the deal is the latest in a series for Condé Nast Publications’ digital division.
7. LinkedIn Link to News Corp.? A “well-placed source” has told VentureBeat that News Corp. (owner of this site) is in talks to buy business-networking site LinkedIn. But LinkedIn CEO Dan Nye told Fortune’s Adam Lashinsky that “It would take a helluva lot” to get him to sell.
8. The Earth, Updated: Google Maps is updating its features, prompting Duncan Riley at TechCrunch to wonder if the new features won’t ultimately send Google Earth down the path of the dodo.
9. Feeling Insecure: Web applications and holes in Windows Office are the top concerns of Internet users, according to the annual security report by SANS, a computer training and security organization, in its Top 20 risk assessment for 2007.
10. How Green Is My Gaming? Greenpeace has released a report slamming Nintendo and Microsoft for making their video-game consoles with toxic chemicals, reports BusinessWeek, noting that the enviro group’s latest ranking of electronics firms this week also highlights questions over the environmental impact of the products and how much consumers care about them.

–posted by Associate Editor John Sullivan

Why Hulu? Objectively, Hulu is short, easy to spell, easy to pronounce and rhymes with itself. Subjectively, Hulu strikes us as an inherently fun name, one that captures the spirit of the service we’re building.”

–Jason Kilar, CEO, Hulu

Hulu.com, the News Corp./NBC Universal video service that sounds like it was named by the Web 2.0 Bull—t Generator™, went into private beta today, and while critics continued to snicker at the name, most admitted the ad-supported service was, by and large, pretty decent. ”I am impressed thus far,” wrote BoomTown’s Kara Swisher. “I will, of course, reserve judgment until I get to test-drive it for a while, but in concept and tone and aims–that is, more open than I ever expected the service to be–it is off to a good start.”

Over at GigaOm, Om Malik, who ridiculed the service this past summer, reversed course and called it brilliant. “From the moment I learned about the new company, I was skeptical,” he wrote. “And now, after spending three hours or so on the service, I am ready to eat crow. And not just any crow, but rotten, six-month-old crow: I have never been more wrong. … Hulu doesn’t seem like a YouTube (GOOG) competitor. (This is yet another thing I was wrong about.) What it really is trying to do is time shift–and place shift–television on a massive scale. It’s basically an attempt to counterbalance the tight control that cable and satellite networks have over distribution. [Hulu] is the kind of service that should scare start-ups trying to develop their own distribution platforms, such as Joost. It is also the kind of service, if it can attract enough viewers, that could succeed in relegating YouTube and others like YouTube to the ‘user-generated content’ world, at least in the U.S. market.”