All Things Digital

“We feel that we have recreated the mass media.” That’s how Google’s Kim Malone Scott, in a moment of Zuckerbergian modesty, described the company’s video syndication service that will debut this fall and, shortly thereafter, transform online content distribution.

Working with Seth MacFarlane, creator of the “Family Guy” animated series, Google (GOOG) will in September begin distributing “Seth MacFarlane’s Cavalcade of Cartoon Comedy,” a series of digital shorts
to be embedded on Web sites as free, ad-supported streams.
About two minutes in length, the shorts–which MacFarlane describes as “animated versions of the one-frame cartoons you might see in The New Yorker, only edgier”–will be syndicated through Google’s AdSense advertising system, which will target them at MacFarlane-friendly segments of the Web. Some will be accompanied by standard pre- or post-roll ads, some by “brought to you by” tags, and others by original commercials created by MacFarlane.

The shorts are essentially like little Assisted Ad Delivery Devices, intelligently targeting advertisements at those receptive to viewing them. “We believe the revenue could be formidable,” said Karl Austen, a lawyer who worked on the deal. “What is exciting is that this is a way to monetize the Internet immediately. Instead of creating a Web site and hoping Seth’s fans find it, we are going to push the content to where people are already at.”

Soon Nokia mobile phone users will be able to tell people who don’t particularly care what they’re doing, where they’re doing it — not that they cared in the first place.

This morning Nokia (NOK) acquired location-based services venture Plazes, which has developed a sort of social GPS that allows users to tell one another where they are and what they’re doing. For Nokia, the acquisition is a way to add the elements of place and time to its Mosh social network. And for Plazes, which has no business model of which to speak, it’s a quick and easy way to get one.

“If all goes well, in the near future Plazes will be made available to millions of Nokia customers both online and on millions of mobile devices,” Plazes CEO Felix Petersen said in a post on the company’s blog. “Nokia is a perfect partner for us because they share our product vision and have the muscle to bring locative presence to hundreds of millions of people all over the world.”

Presumably the “They were actually willing to buy us” is implied.

Apple’s (AAPL) iTunes digital media store has now sold more than 5 billion songs since its 2001 debut. And with downloads of digital movies having reached 50,000 a day, Apple says the service has become the leading purveyor of online music and videos.

What’s more, it’s now the largest music retailer in the states. Which means it’s bested Wal-Mart (WMT) for the top music-retailer spot.

Apple offered up this news with a bit of a reality-distorted caveat, though. The latest NPD Group data on which its claims are based was culled from the research outfit’s MusicWatch survey, which counts one CD as representing 12 tracks.

As of this writing Wal-Mart’s list of 10 top-selling CDs includes many that feature more than 12 tracks–some with more than 20, and one that boasts more than 35.

An afternoon with the chairman of the Senate Judiciary Committee’s Antitrust Subcommittee. What a miserable way to celebrate a special occasion.

Yet that’s exactly how Jerry Yang marked his one-year anniversary as CEO of Yahoo (YHOO). Yesterday Yang paid a visit to Capitol Hill in the hopes of tempering antitrust concerns over the Internet company’s proposed search-advertising pact with rival Google (GOOG).

During his one-day visit, Yang met with Sen. Herb Kohl (D., Wisc.), who chairs the antitrust subcommittee and has raised concerns about the long-term implications of Yahoo’s proposed deal with Google. Yahoo maintains its venture with Google won’t have an anticompetitive impact on the online-search market because it involves only a portion of Yahoo’s search business. But others (read: Microsoft [MSFT]) disagree and argue it’s the beginning of a process that will end with Yahoo outsourcing all of that business to Google and consolidating, oh say … 90% of the search-advertising market in the search sovereign’s hands.

“On the surface, it may be a compelling argument,” Rebecca Arbogast, an analyst at Stifel Nicolaus, said of Yahoo’s claim that the deal is benign. But she added: “Over time, what this is doing is setting up a trajectory where [advertisers] move over to Google and they become the only game in town.”

As in search, in Web video Google (GOOG) is the one to beat.

Though U.S. viewers watched half a billion fewer videos in April than they did in March, they watched most of them on Google (GOOG) sites, according to the latest metrics from comScore. Of the 11 billion videos viewed in April, nearly 38% were viewed on Google properties. And 98% of those were viewed on YouTube, which continues to dominate the online video space. The remaining 61.2% was split among nine properties led by Fox Interactive Media and MySpace (NWS), which ranked a very distant second to Google, with just 5.1% of videos viewed. Each of the remaining eight sites didn’t even hit 5%.

So who’s watching all this video?

Answer: nearly 135 million U.S. Internet users–almost 75% of Americans with Internet access. On average they spent 228 minutes watching an average of 82 videos each in April. And they rarely spent more than 2.8 minutes on any one video, which makes perfect sense when you think about it. “Dramatic Chipmunk” is just five seconds long, and I’m told it’s the greatest video on the Internet.

Clearly the big take-away here, if there is one, is that Google–for the time being, anyway–is king of all the video we survey. If only it could figure out a way to monetize it.

(Image Credit: Robbie Conal)

Despite their best efforts, Microsoft, Yahoo and Ask.com just can’t seem to narrow, even slightly, Google’s massive lead in online search.

Google’s (GOOG) share of the U.S. search market increased to 68.29% in May from 67.9% in April and 65.13% a year ago, according to market research firm Hitwise. Meawhile, Yahoo’s (YHOO) share fell to 19.95% from 20.28% a month ago and 20.89% a year ago. Microsoft (MSFT) didn’t fare much better. Market share for its search service fell to 5.89%, from 6.26% in April and 7.61% a year ago.

Clearly, the search wars are over–at least for the time being. If search is a natural monopoly business, then Google would appear to be its presiding monopolist.

Apple’s much lauded iPhone captured 28% of the smart-phone market in the States by the fourth quarter of 2007–just six months into its launch. Today it holds something less than that–about 19.2%. But to look at the headlines, you’d think it controlled the market in its entirety. A quick search on Google returns 19,035 results for “iPhone”– from Jun. 2, 2008 to today. Why? Because in a few hours, Apple CEO Steve Jobs will address the company’s Worldwide Developers Conference in San Francisco, at which he is expected to unveil the next version of the company’s iPhone.

And for Apple’s (AAPL) sake, I hope he does. Because with expectations running this high, I’d hate to see what happens if he doesn’t. Although the new Apple Store housed in a life-size replica of the Golden Gate Bridge pictured in the invite would certainly take some of the heat off …

Anyway, I’ll be live-blogging from inside Moscone West in San Francisco starting at 10 a.m. PDT. Here’s something to read while you wait …

• From Moscone West: This is crazy. They just opened a single door to let cameras in and the media rushed the gate. Its like that 1979 Who concert in Cincinnati.



• The hall in Moscone West is filling quickly to the sounds of Jerry Lee Lewis. From the looks of it media and developers are here in equal numbers.
• Jobs takes the stage. I’m sitting about 20 rows back, but even I can see he’s looking pretty thin from here. He gets right into it, pulls up a slide of a stool and describes Apple as a three-legged company. Macs, music and the iPhone.
• Jobs will spend the morning talking about the iPhone. This afternoon Apple will discuss OS X “Snow Leopard.”

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Microsoft’s unsolicited acquisition bid for Yahoo is apparently looking more attractive to the now-minor Internet major, especially since Carl Icahn has mounted a full-fledged fight for the nine seats now on Yahoo’s board.

Sources close to Yahoo (YHOO) say the company would likely agree to an acquisition if the price is right. Trouble is, Microsoft (MSFT) doesn’t seem to be interested in one anymore.

Or at least that’s the way it would like to be perceived. Speaking at an event in Moscow, Microsoft CEO Steve Ballmer once again feigned disinterest in an outright acquisition. “Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business,” he said. “We will spend money on some acquisitions. You can do a whole lot of things with $50 billion.”

You sure can. Like spend $47.5 billion of it on Yahoo, just as you planned to last month–even though, as BoomTown’s Kara Swisher reports, Chairman Bill Gates harbored little enthusiasm for buying Yahoo.

But that may happen yet. Some inside Microsoft say the software company would still like to acquire Yahoo, it just doesn’t want to pay the $37-a-share or so Yahoo CEO Jerry Yang and Co. are reportedly demanding. And it may not have to, if Icahn and other ornery Yahoo investors like Legg Mason Capital Management (LM) force Yahoo’s hand.

Dear Friends; Please do not take this for a junk letter. Bill Gates sharing his fortune. If you ignore this, You will repent later. … When you forward this email to friends, Microsoft can and will track it (If you are a Microsoft Windows user) For a two weeks time period.

For every person that you forward this email to, Microsoft will pay you $245.00. For every person that you sent it to that forwards it on, Microsoft will pay you $243.00 and for every third person that receives it, You will be paid $241.00. Within two weeks, Microsoft will contact you for your address and then send you a check.”

–Excerpt from the Microsoft giveaway hoax

My God … Bill Gates really is sharing his fortune. But not with folks who help out with that infamous Microsoft email “beta test.” He’s sharing it with consumers who use Microsoft’s Live Search engine to find and purchase products online.

Today, Microsoft (MSFT) will announce “Live Search Cashback,” a sort of search-engine loyalty program that rewards users with rebates on certain purchases of products found through Microsoft’s live.com Web search. “We want to earn your loyalty and reward it with cashback savings for your everyday online shopping,” Microsoft enthuses on the Cashback site. “We are ‘The Search That Pays You Back!’”

Cringe.

Like Microsoft’s hostile bid for Yahoo (YHOO), this new service is yet another effort to bolster its laggard search service, which has long been a very distant third in the search market. Question is, will it work? Gartner (IT) analyst Van Baker says maybe. “Assuming that the rebate amounts are enough to be appealing to people, which it sounds like they are, that definitely could attract a fair number of consumers,” Baker told the Seattle Post Intelligencer. “But what they may do is just go to that site when they’re thinking about buying something, and use Google the rest of the time.”

It took nearly a decade, but Napster’s finally managed to license music from all the major labels.

This morning the company, which once terrorized the music industry with free peer-to-peer file sharing, launched what it claims is the world’s largest MP3 store. An OS-agnostic shop, Napster’s new storefront offers more than 6 million tracks encoded at 256Kbps and priced at 99 cents apiece. The tracks are free of digital rights management protections and playable on virtually any device–including the iPhone and iPod.

With 6 million songs, Napster (NAPS) has the largest DRM-free catalog of any online retailer. Its selection is about three times the size of Amazon’s (AMZN), and while Apple’s (AAPL) iTunes also boasts a catalog of over 6 million songs, only a fraction of those are offered free of copy restrictions.

But really, does that even matter? Because as compelling as Napster’s new MP3 store might be, it doesn’t have nearly the reach or mindshare of iTunes–which, at last check, was among the most ubiquitous pieces of software around. And how do you compete with ubiquity? Certainly not by failing to support Apple’s Safari browser, that’s for sure.

The only difference between Yahoo (YHOO) CEO Jerry Yang’s latest all-hands memo and the last one he broadcast is that “Carl Icahn” has been substituted for “Microsoft” (MSFT). Other than that, it’s another tired restatement of the capitalization-free “try not to get too preoccupied with the ongoing assault on our company” missives that Yang has issued at least twice before.

Anyway, here it is in all its keep-your-head- in-the-sand glory.

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Good thing so rarely a correlation exists between a company’s public announcements and its corporate actions. Otherwise, it might be tough to parse Microsoft’s recent comments about future acquisitions in light of some rumors floating around Silicon Valley today.

While touring Japan this week, company Chairman Bill Gates told a news conference that Microsoft (MSFT) isn’t likely to pursue other deals following its withdrawal of its ill-starred takeover bid for Yahoo (YHOO). Said Gates, “Now at this point Microsoft is focused on its independent strategy.”

Windows Live General Manager Brian Hall echoed that sentiment at an analyst meeting yesterday: “We’ve withdrawn the offer and moved on, and now are focused on how we grow as fast as possible organically.”

Seems this whole Yahoo debacle has put Microsoft off acquisitions entirely. Or has it? As first reported by BoomTown’s Kara Swisher, Microsoft recently contacted Facebook to gauge the Internet company’s willingness to sell it the 98.4% of the company that it doesn’t yet own. No word on what Facebook’s reply was, although CEO Mark Zuckerberg has long said he’s not interested in selling the company. And even if he were, Facebook doesn’t exactly solve the problems that Yahoo would have. It’s hardly a viable source of online advertising …

As one of the original 13 colonies, you’d think that New York State would have a particular antipathy toward things like “taxation without representation.” And perhaps it does, just not when it’s the one doing the taxing.

The state recently passed a so-called Amazon Tax, a new law compelling out-of-state online retailers to start collecting New York sales tax. The law, designed to recover sales taxes potentially lost to Internet purchases, requires any e-tailer with even a single affiliate site with a New York State address–say, a blog that earns a referral fee for sending customers to Amazon (AMZN)–to collect sales tax on all goods sold in the state, even those not sold through the affiliate.

Its authors say it will contribute about $50 million to the state’s budget, and it might, if Amazon doesn’t get it declared unconstitutional first. Earlier this week, the company filed a suit challenging the law because it imposes tax-collection obligations on retailers, online and off, with no physical presence in the state. Worse, it does so based on nothing more than advertising in New York, a definition that includes retailers with even the slightest connection to the state.

Said Amazon: “This statute was intended to impose tax-collection obligations on out-of-state Internet retailers such as Amazon. Nonetheless, the statute, as drafted, on its face would also impose tax-collection obligations on non-Internet out-of-state retailers who pay New York print media, television or radio outlets to advertise their products and thereby refer New York customers to buy them.”