28 June 2010

U.S. Unveils Plan to Make Online Transactions Safer

Associated Press

In the murky world of the Internet, how do you ever really know who you're talking to, who you're buying from or if your bank can actually tell it's you when you log in to pay a bill?

Amid growing instances of identity theft, bank account breaches and sophisticated Internet scams, the government is looking for ways to make those transactions in cyberspace more secure.

But officials must tread carefully, as efforts to create identity cards, personal certificates or other systems of identifiers raise privacy worries and fears of Big Brother tracking its citizens online.

In a draft plan released Friday, the White House laid out an argument for a yet-undeveloped, voluntary identification system and set up a website to gather input from experts and everyday Internet users on how it should be structured.

The website was already getting votes, snipes and suggestions Friday afternoon - underscoring the incendiary nature of any discussion of Internet regulation or formal structure.

"The technology that has brought many benefits to our society and has empowered us to do so much has also empowered those who are driven to cause harm," said White House cyber coordinator Howard Schmidt in a blog posting Friday outlining the need for better security online.

The plan, he said, envisions a future in which people would be able to get a secure identifier - such as a smart identity card or a digital certificate - from a variety of service providers. Customers could then use the card or identifier to prove who they are as they make their online transactions.

"Digital authentication has been the holy grail of Internet security policy since the early '90s," said James Lewis, cyber security expert and senior fellow at the Washington-based Center for Strategic and International Studies. This latest effort, he said, has a better chance of succeeding than previous tries, "but we need to see how much opposition it runs into and whether people will actually use it even if it gets deployed."

Ari Schwartz, vice president at the Center for Democracy and Technology, said the unfettered openness of the Internet is what allowed it to grow and prosper but also created security gaps that need to be addressed. But any move to improve identity systems raises many concerns.

"The whole thing is very difficult to do and privacy is one of the more difficult pieces of it," said Schwartz, adding that the system has to balance efforts to maintain privacy while still finding out enough about someone to ensure his identity.

The government, he said, is correct to try to plan ways to move toward better security, rather than letting it just happen with no coordination.

But cyber security experts also argued that the technologies for creating such identifiers already exist and are already used in different ways by businesses, particularly banks.

"The vision they put forth is already realized and commercially available," said Roger Thornton, a cyber security expert and chief technology officer for California-based Fortify Software.

He noted that banks already use sophisticated fingerprinting processes to identify a customer who signs in. The system knows if a customer is using a different computer and will often require additional identification if that computer has not been used for the banking website before.

But many companies don't bother with the more expensive or complex identification systems.

So, said Thornton, "the opportunity is there to make things more interoperable and more uniform."

The draft plan is part of an administration effort to promote cyber security both within the government and among society as a whole. Lawmakers have introduced a number of bills aimed at furthering those goals, and the White House plan was met with initial support from one of the authors of Senate computer security legislation.

26 June 2010

Internet Bosses set to Approve .xxx for Porn Sites


The Internet Corporation for Assigned Names and Numbers (ICANN), which oversees the Internet on behalf of the U.S. government, has in the past resisted creating a .xxx generic domain name system akin to those for .com and .net.

It has in recent years repeatedly rejected a request by U.S. company ICM Registry Inc. to sign off on the .xxx domain.

But members of ICANN's board have argued that in order to maintain neutrality in dealing with domain name assignations, it should create .xxx and allow websites with sexually explicit content to start using the suffix on a voluntary basis.

"If expedited due diligence results are successful, then staff will proceed into contract negotiations with ICM (over .xxx)," ICANN's general counsel John Jeffrey told delegates at a week-long ICANN meeting in Brussels on Thursday.

Online pornography is a vast industry. Figures collated by Internet Pornography Statistics suggest more than $3,000 is spent on Internet pornography every second, with "sex" the number one search term in the world, accounting for 25 percent of all Internet searches.

With an estimated 370 million pornographic websites on the Internet, .xxx could become one of the largest domain name repositories, as big if not bigger than .com.

But some members of the adult entertainment industry oppose .xxx, saying it will invite censorship and harm their business. Members of the American religious right also oppose its creation on moral grounds.

ICANN is expected to make a formal announcement on its decision on Friday.

23 June 2010

Hulu Said to Be in Talks With CBS, Viacom for Shows as Paid Service Nears


Hulu LLC is in talks with CBS Corp., Viacom Inc. and Time Warner Inc. to add their television shows to the video website’s planned paid subscription service, people with direct knowledge of the discussions said.

CBS, the only one of the four major U.S. broadcast networks without an ownership stake in Hulu, may begin providing programs after the TV season starts in September, said one of the people, who asked not to be identified because the talks are private.

Hulu, which now lets users watch programs for free and gets its revenue from advertising, is seeking new shows to attract paying subscribers. The Los Angeles-based website will also need to renew rights to programs from owners such as NBC at the end of 2011, according to Laura Martin, a Needham & Co. analyst. Hulu’s audience shrank in April after Viacom pulled “The Daily Show with Jon Stewart” and “The Colbert Report.”

“Charging a subscription is possibly Hulu’s best way to improve its library of TV shows and films,” said Tony Wible, an analyst at Janney Montgomery Scott LLC in Philadelphia.

Christina Lee, a Hulu spokeswoman, said the company doesn’t comment on negotiations. Keith Cocozza, a spokesman for Time Warner, declined to comment, as did Kelly McAndrew, a Viacom spokeswoman.

Much of Hulu’s TV programming comes from the broadcast divisions of its owners: News Corp.’s Fox and General Electric Co.’s NBC, the co-founders; and Walt Disney Co.’s ABC. The networks also offer shows on their own websites.

Cable networks, including channels belonging to Hulu’s current owners, have been slower to make shows available online because they don’t want to upset pay-TV operators that provide the bulk of their revenue, Wible said.

“In its current form, Hulu isn’t just a threat to the cable operators, but also to the cable networks,” Wible said.


The website, a distant second to Google Inc.’s YouTube in online viewers, would share subscriber income to encourage TV programmers to join, said the people, who have taken part in negotiations or were briefed on the talks. When the service begins, Hulu may offer paying customers a deeper catalog and also insert more ads in free shows, the people said. The company has expressed a willingness to increase commercial minutes.

To be successful, Hulu must meet the programmers’ financial demands and not exceed what subscribers will pay, said Barton Crockett, an analyst at Lazard Capital Markets Ltd. in New York.

Viacom, the New York-based owner of MTV and Comedy Central, and Time Warner, parent of TBS and TNT, are seeking arrangements that don’t threaten existing businesses or limit other opportunities, said the people. Time Warner, also based in New York, is focused on TV Everywhere, a service to let cable and satellite pay-TV customers watch shows online at no added cost.

Programming Loss

Hulu, founded in 2007, hasn’t fully recovered from Viacom’s March decision to pull the two cable shows from the service. The site averaged 12.2 million visitors in March and 13.1 million in April, down from 14.1 million in February, before the programs were removed, according to Nielsen Co. data.

The $9.95-a-month service is expected to be called Hulu Plus, the Los Angeles Times reported in April.

New York-based CBS, home to eight of the top 10 scripted shows in prime time, including “CSI” and “NCIS,” would be likely to sign up if there are no demands for online exclusivity, one person said. Hulu and CBS have held on-and-off talks since the site started.

“We have a profitable, non-exclusive distribution strategy on the Web and in the mobile arena,” CBS said in a statement. “We’re in constant discussions with partners and entrepreneurs about how to generate incremental revenue for getting our content to consumers when and where they want it.”

Ad-Supported Model

In a May 5 conference call, CBS Chief Executive Officer Leslie Moonves stressed the importance of maintaining control over the use of its programs, including on its own TV.com site.

Hulu CEO Jason Kilar has said the site’s ad-supported model is profitable on a cash-flow basis.

The website garnered $52.4 million in net revenue in February, with 72 percent going to the content owners, according to estimates from research firm SNL Kagan. That left Hulu with $14.7 million in revenue, $12.6 million in costs and a $2.04 million profit, SNL Kagan calculates.

A subscription fee would address concerns among investors that TV programmers are cannibalizing their businesses by offering shows for free online with fewer ads.

Martin, the Needham analyst in Pasadena, California, says Hulu shows have four minutes of commercials per hour, compared with 16 on broadcast TV.

“Consumers should not be retrained that premium TV content is cheaper on any platform, especially the Internet,” Martin wrote in a June 1 report.

A subscription would put Hulu in more direct competition with Netflix Inc., which supplies online and mail-order access to movies and past-season TV shows starting at $8.99 a month.

Older film titles provide Netflix’s streaming service with an advantage, said Crockett.

“You may still remember a movie that was released 20 years ago and still want to see it,” Crockett said. “Far fewer TV shows fit that description.”

22 June 2010

Pakistani Lawyer Petitions for the Death of Mark Zuckerberg

The Register

Facebook founder Mark Zuckerberg is being investigated by Pakistani police under a section of the penal code that makes blasphemy against Muhammad punishable by death.

BBC Urdu reports — according to a Google Translation — that Pakistan's Deputy Attorney General has launched a criminal investigation against Zuckerberg and others in response to Facebook hosting a "Draw Muhammad" contest on its site late last month. On May 19, Pakistani authorities blocked access to Facebook over the contest, and this ban was lifted on May 31 after Facebook removed the page in Pakistan and other countries.

Asked to comment, a Facebook spokeswoman told us the company does not comment on legal matters.

Last month, according to English-language Pakistani newspaper The News International, a Pakistani High Court judge summoned the police after lawyer Muhammad Azhar Siddique filed an application for a First Information Report (FIR), claiming that the owners of Facebook had committed a heinous and serious crime under Section 295-C of the Pakistan Penal Code. In essence, an FIR launches a criminal investigation. But no charges have been filed.

According to the paper, Section 295-C of the penal code reads: "Use of derogatory remark etc, in respect of the Holy Prophet, whoever by words, either spoken or written, or by visible representation, or by any imputation, innuendo, or insinuation, directly or indirectly, defiles the sacred name of the Holy Prophet Muhammad (Peace Be Upon Him) shall be punished with death, or imprisonment for life, and shall also be liable for fine."

So, peace be unto Muhammad. But not unto Mark Zuckerberg.

According to two reports — one at Boxcrack.net, a kind of citizen journalism site run by Privacy International, and another at Pro Pakistani, a Pakistani Telecom and IT news site that lifted the news from BBC Urdu — the Deputy Attorney General has indeed lodged an FIR against Zuckerberg, fellow co-founders Dustin Moskovitz and Chris Hughes, and "Andy", the German woman who initiated the Draw Muhammad contest under a pseudonym.

According to Pro Paskistani, petitioner Muhammad Azhar Sidiqque said he's waiting for the police to contact Interpol about making arrangements for the arrest of Facebook's owners and "Andy". The site also says that the Deputy Attorney General told the High Court that Pakistan’s United Nations representative has asked to escalate the issue in the UN General Assembly.

21 June 2010

FCC: Do Media Ownership Limits Make Sense?

Associated Press

Even the news industry's free fall probably will not be enough to wipe out complicated federal rules designed to restrain the power of media companies.

For decades, the Federal Communications Commission has imposed strict limits preventing any company from controlling too many media properties in the same market. These limits were established to ensure that communities have choices of newspapers and local TV and radio stations.

Congress requires the FCC to take a hard look at the rules every four years to determine whether they still serve the public interest. If they don't, the FCC has to rewrite them.

Now, as the FCC kicks off its latest review, it faces calls to pare the limits because traditional media companies are no longer the almighty players that they were when the ownership rules were first enacted.

Newspaper readers and advertisers have migrated to the Internet, where a lot of content is free and advertising costs less. As a result, newsrooms have shrunk and newspapers have sought bankruptcy protection or shut down. Television broadcasters are suffering too as cable, satellite TV and the Internet splinter audiences and siphon ad dollars - forcing stations to seek new revenue streams and even raising questions about the future of free, over-the-air TV.

Against this backdrop, media companies argue that the FCC's ownership limits no longer make sense and should be relaxed, or even scrapped, so that the companies can get bigger in order to better compete and survive.

"These rules need to fall away," says Jerry Fritz, general counsel for Allbritton Communications, an Arlington, Va., company that owns eight TV stations in seven markets, a cable station in Washington, D.C., and Politico, a successful online and print publication that covers politics. Allbritton is also launching a local news website to cover the Washington region. "The FCC rules make no sense anymore," Fritz says.

But the FCC is unlikely to toss out media ownership restrictions entirely. The agency is also under pressure from public interest groups that support strong limits. Andrew Schwartzman, head of the group Media Access Project, argues that such rules remain critical because democracy relies on a vibrant press with many voices.

These groups have a key ally in Michael Copps, one of the three Democrats on the five-member FCC. FCC Chairman Julius Genachowski has said little publicly about his views on the existing rules, and his staff has promised a fresh look at the entire media ownership framework. But Genachowski was an architect of the Obama campaign's technology platform, which included a pledge to encourage diversity in media ownership.

Complicating the situation: Even as the FCC launches the 2010 review, the agency still is tied up in a legal battle in the 3rd U.S. Circuit Court of Appeals over the media ownership reviews of Genachowski's Republican predecessors.

The case goes back to the 2002 review under then-FCC chairman Michael Powell. Powell tried to raise the caps on TV and radio station ownership and relax the so-called "cross-ownership" ban, a rule adopted in 1975 that prohibits common ownership of a broadcast station and a newspaper in the same market. (Holdings in some markets, such as Chicago, where Tribune Co. owns WGN radio and TV and the Chicago Tribune, were grandfathered in.)

But Powell's plan drew legal challenges from public interest groups that said he had gone too far and media companies that said he had not gone far enough. So the 3rd Circuit sent the matter back to FCC, telling it to rewrite the rules. And that led Powell's successor, Kevin Martin, to try to ease the cross-ownership ban in the 20 largest media markets. That drew more challenges from both sides.

After Genachowski came to the FCC last year, the agency urged the 3rd Circuit to hold off on considering the case because Martin's rules would soon be superseded by the 2010 review. For a time, the court complied and prevented those rules from going into effect. But in March, the court got tired of waiting for the agency to act and allowed Martin's rules to take force, which could pave the way for cross-ownership deals in the biggest markets. So now, the FCC must decide how to respond in court to the challenges to Martin's actions - even as it launches its own media ownership review.

On both fronts, public interest groups are pushing to roll back Martin's cross-ownership rules and leave the rest of the restrictions in place. Meanwhile, media companies are fighting to lift the cross-ownership ban entirely. They also want some relief from rules that prohibit one company from owning more than one TV station in smaller markets and more than two TV stations in larger markets, including only one of the top four.

Such rules, opponents say, reflect a time when the news business was dominated by just three TV networks and local newspapers - before cable, satellite and the Internet transformed the media, providing outlets for all sorts of viewpoints and voices. Indeed, some of the current ownership rules date in some form to as early as the 1940s. So why, critics ask, should the FCC continue to measure competition by counting broadcast stations and newspapers in individual markets?

"I don't think the average consumer sees the market the way we regulate it," Powell says. "This isn't the way Americans consume media."

Critics also say the rules do more harm than good by artificially inflating the number of media outlets fighting for a limited pool of readers, viewers and advertisers in individual markets. Allowing consolidation, says Harold Furchtgott-Roth, a former Republican FCC commissioner, would let media companies build larger audiences to attract advertisers and spread hefty newsgathering costs by repurposing content across more platforms.

"If we want robust local news, we need to give media companies the opportunity to achieve scale, since producing local news is not cheap," says Rebecca Duke, vice president of distribution for LIN Media, a company based in Providence, R.I., that owns 29 TV stations.

Lifting the rules could help save struggling newspapers or TV stations looking for a buyer, Furchtgott-Roth adds, because often the only potential suitor might be the other major media outlet in town.

One irony not lost on media executives is that the FCC and the Justice Department are expected to approve Comcast Corp.'s proposal to buy a majority stake in NBC Universal from General Electric Co. That deal, which would give the nation's largest cable TV operator control of NBC's media empire, would dwarf the types of local media mergers prohibited by the FCC's current rules.

Still, Corie Wright, policy counsel for the public interest group Free Press, insists there is not enough competition in most markets to permit consolidation. Even as cable and the Internet offer many more choices for general news and commentary, most local reporting is still done by newspapers and TV stations, she notes.

Georgetown Law professor Angela Campbell, who represents several public interest groups defending strong ownership limits, fears more consolidation would lead to newsroom layoffs as media companies combine operations and feed the same content to different outlets.

"Every time you have one of these deals, at the end of the day it means one newsroom closes, another lost voice, less local coverage and less diversity of perspective," says FCC Commissioner Copps.

Schwartzman, head of Media Access Project, is also skeptical of the argument that the industry's troubles justify deregulation. After all, he noted, the economy is still emerging from a deep recession that has hit major advertisers in the auto, real estate and retailing sectors particularly hard. As those sectors recover, he says, media companies may recover too.

"I am concerned about enacting policy changes based on temporary economic conditions," Schwartzman says. "We don't know what the new normal is."

But whatever the new normal turns out to be, it figures to look very different from the traditional media landscape. That's why some observers are asking whether all the debate over media consolidation may be beside the point, given the huge problems facing the industry.

"Media companies are struggling and the government is standing in their way," says Kenneth Ferree, a former FCC official who pushed to relax the ownership limits under Powell and is now a senior fellow with The Progress & Freedom Foundation, a free-market think tank. "But even if the FCC got rid of the rules, would it matter anyway? That's the $64,000 question."

Looking at the Media Rules under FCC Review

Associated Press

Congress requires the Federal Communications Commission to review its media ownership rules every four years. The FCC's 2010 review will look at five rules:

- The newspaper/broadcast cross-ownership rule. It forbids common ownership of a broadcast television or radio station and a daily newspaper in the same market. However, the rule can be waived in the top 20 metropolitan markets, so long as the TV station is not ranked among the top four and there are at least eight independently owned and operated media outlets.

- The local television ownership limit, commonly called the duopoly rule. It permits an entity to own two TV stations in the same market. But that can happen only if at least one station is not among the top four in terms of audience share and there are at least eight independently owned and operated stations in the market.

- The local radio ownership rule. It permits an entity to own up to eight commercial radio stations in markets with at least 45 stations; up to seven such stations in markets with 30 to 44 stations; up to six stations in markets with 15 to 29; and up to five stations in markets with 14 or fewer.

- The radio/television cross-ownership rule. It lets one entity own up to two TV stations and up to six radio stations in a market with at least 20 independently owned and operated media outlets. Or a company can own up to two television stations and up to four radio stations in a market with at least 10 independently owned and operated media outlets.

- The dual network rule. This prohibits a merger of any of the top four broadcast networks - ABC, NBC, CBS and Fox.

Less May Be More for Murdoch, New York Times as Newspapers Put Up Paywalls


The Times, the London newspaper owned by Rupert Murdoch’s News Corp., is offering free tickets to Toy Story 3 or the chance of a weekend at the Grosvenor Hotel in Dorset to persuade readers to pay for news online.

The newspaper this week began closing down its free website and will charge for access, mirroring a long-standing practice at the Financial Times and the Wall Street Journal. The New York Times Co. plans to do the same next year. Both concede the step will mean fewer readers. A drop in advertising revenue is forcing them to seek other, more steady, sources of income.

“We don’t expect or require that all the people who do now will still look at it,” said Daniel Finkelstein, executive editor of the Times in London whose online fee will be 2 pounds ($2.89) a week. “What’s left is still a vast market.”

Among the first general newspapers seeking to charge for online content, the Times and the New York daily are betting that a smaller number of committed, paying online readers may allow them to extract subscription fees and bigger advertising sales. Print ads in the U.S. last year slid 29 percent to about $24.8 billion, the lowest since 1984. With online ad sales holding up better, newspapers want to capture a bigger piece of that pie, even as they lose some readers.

“Obviously a huge number of casual readers will get their news elsewhere,” said Paul Richards, an analyst at Numis Securities Ltd. in London. “What you’ll have left is a core of readers that you can target more effectively with advertising and services. If you know who your readers are it’s easier to monetize them.”

Hard to Do

While the Financial Times has had some success with the strategy, the ability of general interest dailies to carry it off is less obvious, industry experts say. Luring paying online readers may be harder with news that is more easily available for free on the Web.

“They’re not going to convince people to pay for news, because people weren’t paying for news,” said Nelson Phillips, professor of organization and management at Imperial College in London. “The big brands may be able to do it. But if you’re a mid-level paper, what do you have that’s not available on the Web for free?”

Murdoch’s News Corp., which this week offered to buy the rest of U.K. pay-TV operator British Sky Broadcasting Plc for 7.8 billion pounds ($11.5 billion), is pushing a business model with clients paying for content as a driver of revenue growth. He’s using that same strategy at the Times and the Sunday Times. The Times is now offering paying subscribers access to free events and discounted products through its ‘Times+’ service in an effort to build customer loyalty.

Volume Battle

News Corp. shares dropped 1.5 percent to $14.16 in Nasdaq Stock Market trading yesterday. The stock has risen 3.4 percent since the start of the year.

In May, the Times said it would cut its editorial budget by 10 percent, leading to the departure of as many as 50 staff. Editor James Harding said the newspaper’s “losses are unsustainable.”

Revenue at Times Co.’s News Media Group, owner of the New York Times, tumbled 23 percent between 2007 and 2009 to $2.32 billion. The company as a whole reported a $20 million 2009 profit, after a $58 million loss in 2008.

Charging for online content is among efforts at the two dailies to boost sales.

“If you want to get into a battle on volume, Facebook has already won,” said Rob Grimshaw, managing director of Pearson Plc’s FT.com, alluding to the world’s largest social-networking site. “You can gain a lot more on yield,” and by offering advertisers information on paying visitors, he said.

Striking a Balance

The Financial Times, which has a daily circulation of about 390,000, began its current system for access to its FT.com site in 2007. The site has about 126,000 subscribers, each shelling out at least 3.29 pounds a week in the U.K., and two million more registered users, who provide basic personal information in exchange for 10 free stories a month.

While the site usually charges about 35 to 40 pounds in fees from advertisers for every 1,000 views of a story, some parts of FT.com command “much higher” rates, according to Grimshaw. That compares with as little as one pound for less focused sites, he said.

The FT’s website has succeeded in striking a balance between mass-market appeal and winning money from subscribers, said Alexander Wisch, a media analyst at Standard & Poor’s Equity Research in London. “They are able to draw ads and get the eyeballs, and at the same time to monetize subscriptions.” Specialized publications “do draw audiences, and they draw audiences that pay.”

‘Prix-Fixe Menus’

The New York Times will see “some effect” on readership after it implements a paywall next year, Times Co. Chief Executive Officer Janet Robinson said in an interview. “We feel that we will protect as much of the audience as possible” with a “metering” approach, that allows free access to a limited number of stories, she added.

Existing paywalls usually follow one of three strategies: a flat-rate subscription for all content, a mix of paid and free articles determined by editors, or a metering system that allows readers a capped number of free stories of their choice.

Flat-rate subscription models have the advantage of “decoupling” the unpleasant experience of payment from that of reading articles, according to Ziv Carmon, who researches consumer behavior at INSEAD in Singapore.

Newspapers should “look at the prix-fixe menus in French restaurants,” he said. “If you’re eating a shrimp appetizer, you don’t think that every bite equals two bucks.”

Makes No Sense

The Financial Times in 2007 switched from a mix of free and paid content to its current metered model.

“One person’s goldmine of an article was behind the wall, but it could be irrelevant to another person,” Grimshaw said.

Still, any paywall strategy risks cutting newspapers off from an ecosystem of blogs and social media sites that was created partly by the availability of free content.

The New York Times in 2007 abandoned its two-year TimesSelect experiment, which charged for access to some columnists and articles.

Andrew Sullivan, a commentator at The Atlantic magazine whose site is among the top 15 blogs on the Web, dubbed the service “TimesDelete,” because of the difficulty of linking readers to stories behind the paywall.

Tim Kevan, a legal blogger, on May 28 left the London-based Times, arguing that he didn’t want his work to become “the preserve of a limited few.”

The Times’s Finkelstein argues that the newspaper needs to charge to invest in content output, even at the risk of smaller readership.

“It doesn’t make sense for any length of time to give away the product you’re selling,” he said.

18 June 2010

Vogue Publisher Florio Leaving Conde Nast

The Wall Street Journal

Tom Florio, the long-time publisher of Vogue, is leaving Conde Nast Publications Inc. at the end of the month, Mr. Florio said Thursday.

Mr. Florio said in an interview that he has been talking to Conde Nast Chief Executive Chuck Townsend for some time about leaving the company to explore opportunities to run a business.

"I want to be CEO of my own company," he said, adding, "we already have a really good CEO." He said he has not made a decision on his next move.

Mr. Florio, 54 years old, has been at Conde Nast since the mid 1980s and spent most of the last eight years as publisher of Vogue. During that time, he lifted Conde Nast's flagship to new advertising heights. Vogue topped 3,200 pages in 2007, when the creation of its September issue became the basis for a motion picture.

He is also credited with helping to push Vogue beyond its print roots in an effort to keep the magazine relevant to young readers and blunt the effects of the recent drop-off in luxury advertising. Vogue launched Vogue.TV, a Web TV and shopping network developed in collaboration with advertisers, and Model.Live, an online reality show about the modeling industry. Mr. Florio also set up an in-house creative team to compete with advertising agencies.

Late last year, Mr. Florio took on an expanded role as senior vice president and publishing director of a group of magazines that includes Bon Appetit and Conde Nast Traveler in addition to Vogue.

Mr. Florio said he wants to use his experience at Vogue to take a business or brand and create entertainment opportunities around it.

"I've been here a long time and I really love the place," Mr. Florio said. "So it's not like I'm unhappy. But if I don't do this now, then when?"

16 June 2010

Tales of Brave Ulysses: Apple Re-Thinks Book-Banning

NY Times

Score one for “Ulysses” – Apple has decided that it is not obscene after all.

After the makers of a Web comic version of the epic novel said last week that Apple had rejected several images that contained nudity, Apple reversed its decision on Monday morning and asked that the panels be re-submitted, said Chad Rutkowski, the business manager for Throwaway Horse, the publisher of “Ulysses Seen.”

“They basically apologized,” Mr. Rutkowski said. “They said they gave it a second look and realized that it wasn’t obscene or anything like that. They’re clearly drawing a distinction now and they understand what we’re doing.”

The initial installments of the heavily annotated version of the book are available in the App Store and on a Web site, ulyssesseen.com.

Mr. Rutkowski said he was rushing to re-submit the original panels to Apple. “The sense that he gave me was that they were going to try to get it approved and up there as quickly as we can,” he said.

Jenny McCarthy to Replace Oprah?

One India

American actress and former Playboy model Jenny McCarthy may replace Oprah Winfrey after her popular talk-show goes off air at the end of its 25th season in 2011. According to reports, Mc Carthy has made a development deal with Winfrey’s Harpo Productions.

“We do not have anyone taking over for Oprah,” the New York Post quoted a Harpo spokeswoman as saying. “We do have a development deal with Jenny McCarthy. We are exploring possibilities across a number of platforms,” she added.

Oprah is launching her own network and might want McCarthy's talk show on her schedule.

Mercedes-Benz Plans New Ad Push

The Wall Street Journal

STUTTGART, Germany—Daimler AG's core Mercedes-Benz division is launching a global marketing campaign Friday, including a new advertising slogan—"The best or nothing"—and a redesigned version of its three-pointed star brand symbol.

"Our claim has to reflect that we want to be the best in all disciplines," Mercedes-Benz sales chief Joachim Schmidt told reporters on Tuesday, referring to the brand's new advertising slogan. His remarks were embargoed until Thursday.

He said the campaign will be financed from Daimler's existing marketing budget, which accounts for about 2% of the German auto maker's annual revenue, but declined to provide a specific figure. TV advertising will account for around 40% of the campaign, print media for around 45% and online media for 15%.

Mr. Schmidt reiterated that the Stuttgart-based company targets a car sales rise of at least 7% year-on-year in 2010, compared with a rise of the overall market of between 3% and 4%. Growth is expected to be driven this year by rising demand, particularly in the U.S. and in China.

In April, Daimler Chief Executive Officer Dieter Zetsche said the Mercedes-Benz brand alone is to achieve annual sales of 1.5 million vehicles by 2015, compared with 974,700 in 2009, with the Smart minicar brand set to contribute additional sales volume after its future has been secured through the partnership with Renault SA and Nissan Motor Co.

The sales target was previously for the entire Mercedes-Benz Cars division, which comprises the Mercedes-Benz, Smart and Maybach nameplates.

The Mercedes-Benz Cars division on Monday posted a 14% global sales rise in May to 110,700 vehicles, with the core Mercedes-Benz brand posting an 18% rise year-on-year to 101,400 vehicles, and anticipates double-digit growth in the second quarter.

Sales at the troubled Smart minicar brand last month dropped 15% on year to 9,300 cars. Daimler expects the new generation of smart cars to boost sales when they are launched in the third quarter of 2010.

Last month, Daimler said second-quarter earnings before interest and taxes, or EBIT, for its Mercedes-Benz Cars unit is expected to be higher than the first quarter's €806 million ($972 million). The Stuttgart-based firm expects its core division to reach its 10% return-on-sales target in the second half of 2012 and to maintain it for the full-year 2013.

The recovery in the luxury car segment gained momentum in recent months.

Daimler anticipates the division's full-year EBIT to come in "at the upper end" of its forecast of between €2.5 billion and €3 billion. Many analysts, however, expect the unit to exceed this target range as the firm benefits from a strong model mix and soaring demand for its lucrative flagship S-Class and E-Class vehicles.

15 June 2010

Piers Morgan to Replace Larry King in CNN Deal

Telegraph UK

The Britain's Got Talent judge and former newspaper editor is on the verge of signing a four-year contract to take over King's primetime show in the autumn.

He has built a profile in the US as a judge on America's Got Talent, which is made by rival network NBC. CNN executives were also impressed by his British chat show, Piers Morgan's Life Stories, in which he interviewed Gordon Brown.

King, 76, has reigned over American television for decades, with the Larry King Show first airing in 1985. However, his ratings for the first three months of this year fell to an all-time low of just 771,000 viewers, down 43 per cent in the last year.

Morgan is expected to quit his role on Britain's Got Talent and base himself permanently in the US. Simon Cowell has also indicated that he will not take part in the early audition stages of the talent show, leaving its future in some doubt.

14 June 2010

BP Buying Search Ads to Improve Image

USA Today

Google, Bing and Yahoo are seeing a windfall stemming from the Gulf of Mexico oil spill. British Petroleum has begun posting sponsored advertisements that turn up in search queries related to the unfolding ecological disaster.

BP is paying to show up as the top sponsored ad when you type search queries such as "BP news," "oil spill" and "oil spill claims." The sponsored links take you to a special BP webpage brimming with images, news updates and videos of clean up efforts.

The embattled oil company "could be spending a million dollars a month depending on how broadly they've defined the keywords they're purchasing," says Kevin Lee, CEO of search consultancy DidIt.com.

Matthew Whiteway, Director of Campaign Management at search marketing agency Greenlight, calls BP's online reputation-management campaign "a PR masterstroke."

Vanessa Fox, author Marketing in the Age of Google, notes that it has long been common practice in times of crisis for companies to use PR outreach. "More and more, consumers are turning directly to search engines to get information so paid search ads can be a much more direct way for companies to connect with the audience they are trying to get their message out to," says Fox.

11 June 2010

Apple's Next Disruption: Advertising

The Wall Street Journal

If anything is clear from the punches being thrown by Google at Apple over mobile advertising, it is that the search giant understands what is at stake.

As mobile advertising comes into its own, Google should be well-positioned to grab a big piece of it. Prospects for other large media companies, online or traditional, are less sure.

It is easy to underestimate the importance of mobile Internet and advertising. ComScore estimates 48 million people had smartphones in the U.S. in the three months to April, of whom only 5.4 million searched the Web on the devices on a near-daily basis. In contrast, the firm counted 214 million people searching the Web generally in April.

Estimates from eMarketer put mobile advertising at $593 million this year, compared with about $25 billion for total online advertising.

But eMarketer's numbers were issued last September, before the release of the iPad. The Apple tablet's strong sales so far confirm consumer demand for tablet computers and suggest consumers' online behavior is likely to become a lot more mobile. That is likely already the case for owners of smartphones with robust Web browsers like iPhones or Android-powered devices.

Android and iPhone devices commanded 37% of the smartphone market in the first quarter between them, according to Nielsen, against 35% for Research in Motion's BlackBerry. Nielsen's data also show that close to 90% of iPhone and Android owners used the mobile Internet in the previous 30 days, compared with 73% for all smartphones. Browsing the Web on a BlackBerry can be a frustrating experience. So as RIM's market share declines and iPhone, iPad and Android devices become more common, mobile Web use will take off.

Data are scarce on how mobile browsing affects online behavior at a PC. But the ability to do Web searches anywhere likely reduces those done at a desk. Searching could become less important as people rely on apps for certain functions.

All this should spark an ad shift to mobile, particularly to apps. Admittedly, advertisers can take years to respond to changes in consumer behavior. But Apple's plunge into the ad market with iAds, which serves advertising inside apps, is likely to accelerate the change. That it drew $60 million in second-half 2010 commitments from such marketers as General Electric, Unilever and Nissan Motor indicates mobile-ad estimates are too low.

Who will suffer from the advance of mobile advertising? TV networks, potentially, if the caliber of big-brand advertisers snagged by Apple continues. As the mobile audience is likely to fragment among applications, big Internet portals also may be at risk. Regardless, mobile likely will cause a bigger, faster disruption to the ad world than is generally appreciated.

10 June 2010

Will the NY Football Giants and Jets Play for Ashley Madison?

New Jersey Star-Ledger

According to a report on the website LastAngryFan.com, the website AshleyMadison.com has made an offer to the people who run the New Meadowlands Stadium to pay $25 million over five years in exchange for naming rights to the new home of the Giants and Jets and Super Bowl XLVIII.

What is AshleyMadison.com? It's a dating site for married people who want to meet people with whom they can cheat on their spouses. And, according to LastAngryFan.com, the website is "surprisingly profitable.''

The report concedes the odds of AshleyMadison.com winning the naming rights to the new stadium is remote, but it says the website's owner has offered to match any other naming rights offers New Meadowlands Stadium gets.

Kellogg to Restrict Ads to Settle U.S. Inquiry Into Health Claims for Cereal

NY Times

Maybe it should have just stuck with Snap, Crackle and Pop.

The Kellogg Company has agreed to advertising restrictions to resolve an investigation into its claims about the health benefits of its Rice Krispies cereal, the Federal Trade Commission said on Thursday.

The agreement expands on a settlement order that Kellogg agreed to last July over similar claims that another cereal, Frosted Mini-Wheats, was “clinically shown to improve kids’ attentiveness by nearly 20 percent.”

The commission acted against Kellogg as public health researchers and obesity opponents have intensified their challenges to the marketing of sugary foods.

“We expect more from a great American company than making dubious claims — not once, but twice — that its cereals improve children’s health,” Jon Leibowitz, the chairman of the F.T.C., said in a statement.

Marion Nestle, a nutrition professor at New York University, said it was unusual for the commission to act in a case involving health claims made for food products, an area traditionally handled by the Food and Drug Administration.

Last summer, Kellogg unveiled product packaging claiming that Rice Krispies “now helps support your child’s immunity” and that the cereal “has been improved to include antioxidants and nutrients that your family needs to help them stay healthy.”

In the order covering Frosted Mini-Wheats, Kellogg had agreed to stop making claims about benefits to “cognitive health, process or function provided by any cereal or any morning food or snack food” unless the claims were true and substantiated.

The new expanded order bars the company from making “claims about any health benefit of any food unless the claims are backed by scientific evidence and not misleading.”

In a statement, Kellogg, based in Battle Creek, Mich., said it had “a long history of responsible advertising,” but did not specifically address the latest accusations.

“We stand behind the validity of our product claims and research, so we agreed to an order that covers those claims,” the company said. “We believe that the revisions to the existing consent agreement satisfied any remaining concerns.”

Jennifer L. Harris, a psychologist who studies food marketing at the Rudd Center for Food Policy and Obesity at Yale, said the agreement highlighted the need to tighten requirements so that all health-related claims on packaging are based on scientific evidence, which is not the case now.

“As parents become more health-conscious, these claims try to make high-sugar cereals healthier than they really are,” she said.

A study by the Rudd Center found that the least healthful cereals were the ones most heavily marketed to children, and that children were exposed to more advertising for highly sweetened cereals than for any other kind of packaged food.

08 June 2010

Google Buys Online Ad Startup Invite Media

Mercury News

Google has acquired Invite Media, an online advertising startup based in New York and Philadelphia.

The Mountain View Internet giant announced the deal Thursday in a post by Neal Mohan, vice president of product management, on Google's DoubleClick Advertiser Blog. Terms of the deal weren't disclosed. However, Peter Kafka of the AllThingsD blog estimated the value as "in the $70 million range."

According to Mohan's post, Invite Media's technology allows advertisers and ad agencies to use "real time bidding" to buy online display ads on exchanges including Google's DoubleClick Ad Exchange. "We're big believers in the benefits and future of this type of display ad buying," he wrote.

The technology "enables advertisers and agencies to tailor their bids on an impression-by-impression basis, based on their own data, when bidding on websites that choose to make their ad space available through an advertising exchange," Mohan wrote.

According to Invite Media's website, the company was founded in April 2007 out of The Wharton School at the University of Pennsylvania. It has been funded by Comcast Interactive Capital, First Round Capital, Genacast Ventures and angel investors. The co-founders are CEO Nathaniel Turner, President and Chief Operating Officer Zachary Weinberg, Scott Becker and Michael Provenzano.

As of November, according to the company's site, Invite Media had 28 employees with offices in New York, San Francisco, London and Philadelphia.

07 June 2010

Apologetic BP Ads get Criticism, Not Sympathy

Associated Press

MIAMI — An apologetic advertising campaign by BP PLC for the oil spill polluting the Gulf of Mexico is going over about as well as the tar balls and rust-colored froth washing ashore in the Florida Panhandle.

The new radio, TV, online and print ads feature BP CEO Tony Hayward pledging to fix the damage caused by an undersea gusher of crude oil unleashed by an April 20 drilling rig explosion that killed 11 people.

The company will honor financial claims and "do everything we can so this never happens again," he says in the spots.

The ads began appearing last week and have been criticized by President Barack Obama, who said the money should be spent on cleanup efforts and on compensating fishermen and small business owners who have lost their jobs because of the spill.

The ads also don't thrill residents and visitors of the Gulf Coast, where the oil has blackened some beaches and threatens others. And others say the sentiments come to soon and insincerely.

"Their best advertising is if they get this cap (in place) and they get everything cleaned up. All you've got to do is do your job, and that's going to be plenty of good advertising," said Grover Robinson IV, chairman of the Escambia County, Fla., Commission, referring to BP's efforts to place a cap over the gushing pipe and capture the oil.

BP spokesman Robert Wine said in an e-mail Saturday that "not a cent" has been diverted from the oil spill response to pay for the ad campaign. He didn't know its cost.

"All available resources are being deployed, and efforts continue at full strength," he wrote.

BP estimates that it will spend about $84 million through June to compensate for lost wages and profits caused by the spill. The company has promised to pay all legitimate claims, and no claim has yet been rejected, Wine said.

Shortly after the one-minute television and online version of the ad begins, Hayward speaks to the camera, saying "The Gulf spill is a tragedy that never should have happened."

Hayward then narrates over images of boom lying in clear water before uncontaminated marshes and healthy pelicans. Cleanup crews walk with trash bags on white sand beaches as he touts the oil giant's response efforts: more than 2 million feet of boom, 30 planes and more than 1,300 boats deployed, along with thousands of workers at no cost to taxpayers.

The ad's imagery clashes with disturbing news photographs published recently of pelicans coated in oil, gunk dripping from their beaks.

"To those affected and your families, I'm deeply sorry," Hayward says in the ad.

As the ad fades out to show BP's website and volunteer hot line, he says, "We will get this done. We will make this right."

Picking up tar Saturday with her parents at Pensacola Beach, Fla., 13-year-old Annie Landrum of Birmingham, Ala., called Hayward's apology a joke.

"It's a lame attempt a month and half after the disaster. It's too late," she said.

Public-relations experts said BP's ad blitz seems premature and a little shallow. BP missed an opportunity to shift focus away from criticism of the company and toward BP's strategy for cleaning up the spill, said Gene Grabowski, a senior vice president with Levick Strategic Communications.

"The one element they seem to be missing is laying out a plan for what they're going to do," he said. "Usually in ads like these you apologize; he's doing that in the ad. You talk about your resolve to fix the situation; that's also included. But what's missing is a concrete plan or vision for what they plan to do next."

04 June 2010

'Vanity' Press Shakes up Book Industry

The Wall Street Journal

Writer Karen McQuestion spent nearly a decade trying without success to persuade a New York publisher to print one of her books. In July, the 49-year-old mother of three decided to publish it herself, online.

Eleven months later, Ms. McQuestion has sold 36,000 e-books through Amazon.com Inc.'s Kindle e-bookstore and has a film option with a Hollywood producer. In August, Amazon will publish a paperback version of her first novel, "A Scattered Life," about a friendship triangle among three women in small-town Wisconsin.

Ms. McQuestion is at the leading edge of a technological disruption that's loosening traditional publishers' grip on the book market—and giving new power to technology companies like Amazon to shape which books and authors succeed.

Much as blogs have bitten into the news business and YouTube has challenged television, digital self-publishing is creating a powerful new niche in books that's threatening the traditional industry. Once derided as "vanity" titles by the publishing establishment, self-published books suddenly are able to thrive by circumventing the establishment.

"If you are an author and you want to reach a lot of readers, up until recently you were smart to sell your book to a traditional publisher, because they controlled the printing press and distribution. That is starting to change now," says Mark Coker, founder of Silicon Valley start-up Smashwords Inc., which offers an e-book publishing and distribution service.

Fueling the shift is the growing popularity of electronic books, which few people were willing to read even three years ago. Apple Inc.' s iPad and e-reading devices such as Amazon's Kindle have made buying and reading digital books easy. U.S. book sales fell 1.8% last year to $23.9 billion, but e-book sales tripled to $313 million, according to the Association of American Publishers. E-book sales could reach as high as 20% to 25% of the total book market by 2012, according to Mike Shatzkin, a publishing consultant, up from an estimated 5% to 10% today.

It's unclear how much of a danger digital self-publishing poses to the big publishers, who still own the industry's big hits, whether e-book or print. Many big publishers dismiss self-published titles, noting that most disappear, in part because they may be poorly edited and are almost never reviewed.

But some publishers say that online self-publishing and the entry of newcomers such as Amazon into the market could mark a sea change in publishing.

"It's a threat to publishers' control over authors," said Richard Nash, former publisher of Soft Skull Press who recently launched Cursor Inc., a new publishing company. "It shows best-selling authors that there are alternatives—they can hire their own publicist, their own online marketing specialist, a freelance editor, and a distribution service."

Amazon has taken an early lead, providing service tools for authors to self publish and creating an imprint last year to publish promising authors in print and online.

This month, Amazon is upping the ante, increasing the amount it pays authors to 70% of revenue, from 35%, for e-books priced from $2.99 to $9.99. A self-published author whose e-book lists for $9.99 on Amazon's Kindle e-bookstore will receive about $6.99 for each book sold. The author would net $1.75 on a similar new e-book sale by most major publishers.

The new formula makes digital self-publishing more lucrative for authors. "Some people will be tempted by the 70% royalty at Amazon," Mr. Nash says. "If they already have a loyal fan base, will they want 70% of $100,000 or 15% of $200,000 for a hardcover?"

Digital self-publishing, or "vanity" publishing, is creating a powerful new niche in books. WSJ's Geoffrey Fowler joins the Digits show to discuss how this is threatening the traditional book industry.

Traditional book-industry players and tech companies are jumping on the digital self-publishing bandwagon. Apple last week announced a digital self-publishing program for its iPad giving 70% of revenue to authors, similar to Amazon's formula. Last month, Barnes & Noble also announced a service called PubIt!, allowing authors to post and sell e-books online.

Last fall, Jane Friedman, former chief executive of News Corp.'s HarperCollins Publishers, started Open Road Integrated Media LLC, which focuses on e-books, including authors who are willing to be published digitally before going into print. Traditional publishers such as Nashville, Tenn.-based Thomas Nelson Inc., a religious publisher, have struck alliances with Author Solutions Inc. for print and online self-publishing.

And a flurry of tech-focused startups now offers self-publishing services, including Smashwords, FastPencil Inc. and Lulu Enterprises Inc. Website Scribd.com says it publishes 290,000 independent books annually on its site, which authors sell at a price they set themselves.

One of the largest repositories for digitally self-published works for sale is Amazon's Digital Text Platform. Steve Kessel, an Amazon senior vice president, says the company launched Digital Text along with its Kindle in 2007 to give writers and small publishers simple tools to add books to the Kindle store. Today, the Kindle store accounts for about 70% of the U.S. market for e-books.

Amazon has used its retail clout to make deals directly with brand-name authors. It has won exclusive e-publishing deals from authors such as Stephen King and Stephen Covey.

And in May 2009, Amazon launched its own publishing imprint, Amazon Encore. From a sea of self-published titles, Amazon plucks a few with promise, then edits and distributes them online and through print retailers. It began with the book "Legacy," written by then-14-year-old Cayla Kluver. Amazon Encore has announced 19 books so far.

CEO Jeff Bezos says Amazon wants to be a partner, not a threat, to publishers. "I think the real risk is that there are a multitude of publishers. Some of them are really forward leaning, and are really going after this new e-book area," he says. "If you are not one of those publishers, then I would be worried."

The industry says that most authors will stay with their print publishers. More than 90% of sales still come from physical books. In addition to the editing and marketing support for their manuscripts, many writers depend on the advances they get from their print publishers. For some, this means seven-figure payments long before their titles hit the bookshelves. Self-published authors only generate revenue when their books are sold to consumers.

Yet as tens of thousands of authors self-publish their work, publishers' control continues to weaken over how titles are distributed and which books are offered for sale. Some publishers fear that one of the big technology companies now distributing e-books will compete for the industry's best-known authors, by offering advances in a bid to gain market share. Some best-selling authors write several books a year, and may be tempted to test the market if they have a manuscript that isn't under contract.

The market is likely to shift into two tiers, "branded/high-quality" and "cheap/good enough," predicts author and lecturer Seth Godin. Mainstream publishing houses have long depended for much of their profit on selling backlist titles, books in print for more than a year. In coming years, there will be adequate substitutes for many of those works at a quarter of the price, he says.

"Not for the books of J.D. Salinger or George Orwell, but for a book on stretching, certainly," he says. "And books on stretching have long helped pay the bills at many publishing houses."

The proliferation of cheap digital books concerns even publishers who don't think readers will defect to self-published titles. "There is some truth to the idea that low prices will drag down our prices," says Dominique Raccah, owner of Sourcebooks Inc., an independent publisher in Naperville, Ill.

Pricing was at the heart of a public spat between Amazon and five of America's top six publishers this spring. Amazon had been retailing most top e-books for $9.99. Publishers argued that price devalued work they sold for more than twice as much in paper form.

Publishers worried that readers would get used to paying so little for e-books that it could devalue the industry's cash cow, hardcover books. The publishers won, and Amazon adopted an "agency" model, in which publishers set prices for books, and distributors such as Amazon take a cut of the proceeds.

Digital self-publishing is attracting even top-selling authors. F. Paul Wilson, who writes the popular "Repairman Jack" thriller series published by Tor, an imprint of Macmillan, says he posted on Amazon five science-fiction novels published earlier in his careerat $2.99 each.

"This stuff was just sitting around, out of print, doing nothing," says Mr. Wilson, who has written about 40 books. He thinks he'll eventually make as much as $5,000 to $10,000 a month when he lists all his older titles.

Mr. Wilson doesn't foresee abandoning print, but some authors do. Thriller writer Joe Konrath says that, as more consumers buy e-books, the economics will tip.

Under the pen name Jack Kilborn, he sold 50,000 copies of his last novel, "Afraid," published by Grand Central Publishing, an imprint of Hachette Book Group, in all formats. He earned about $30,000. But if he sold it as an e-book on his own, he could make that much in 18 months by selling 800 e-books a month, he estimates.

Mr. Konrath says he's already earning more from self-published Kindle books that New York publishers rejected than from his print books. In the past 14 months, he has sold nearly 50,000 Kindle e-books, and at the current royalty rate, he makes $58,000 per year from his self-published works. When Amazon royalties double this summer, he expects to bring in $170,000 annually.

"I'm outselling a bunch of famous, name-brand authors. I couldn't touch their sales in print," Mr. Konrath says.

Most self-published authors don't have popular followings and see modest sales. Caroline Weiss and Margaret Wallace self-published their novel "Stalking Bret Easton Ellis" last year. Ms. Weiss estimates sales of the book at fewer than 400 paper copies and 100 digital copies. "It's a lot of work to promote your book, definitely," says Ms. Weiss. "Social media helps, but you have to be very aggressive."

Still, the success of Ms. McQuestion's debut self-published novel, "A Scattered Life," illustrates perhaps the biggest long-term threat to traditional publishers: a replacement for their ability to curate and market books.

Ms. McQuestion, who lives in Hartland, Wis., says she wouldn't have entertained a self-funded print run of her books. But she uploaded her first e-books to Amazon's Digital Text because she read that it worked well for another author. "I thought, if nobody buys it, I can just take it down," she says. When people began buying her e-books, she says she wondered: "Who were these people, and how did they find my books?"

The answer: Amazon has proven adept at using its technology to merchandise the so-called "long tail" of niche goods. While traditional publishers rely on name-brand reviews, Amazon has millions of customers posting reviews. Amazon offers free, instant, sample chapters to hook readers. And it makes computer-generated recommendations based on other readers' purchases. So, the more people that bought Ms. McQuestion's books, the more often the site recommended her work.

For new writers, Ms. McQuestion says, Amazon levels the playing field, since it doesn't differentiate between self-published and big-publisher titles. Ms. McQuestion says low prices—the novel sold for less than $2 on Amazon's Kindle—play a role in her success.

Amazon executives say they signed Ms. McQuestion to the Encore imprint after noticing the positive user-generated reviews of her books. Thanks to its vast database, Amazon not only knows what people buy but also how they consume e-books—such as which passages readers most often highlight.

Ms. McQuestion and Amazon won't disclose the terms of their deal for "A Scattered Life." Seattle-based Amazon will issue a new version of her e-book and produce a paperback version targeting book clubs.

"All of this time I have been trying to get traditionally published, I was sending my manuscript to the wrong coast," says Ms. McQuestion.

Exxon $600 Million Algae Investment Makes Khosla See Pipe Dream‏

Bloomberg News

Inside an industrial warehouse in South San Francisco, California, Harrison Dillon, chief technology officer of startup Solazyme Inc., examines a beaker filled with a brown paste made of sugar cane waste. While the smell brings to mind molasses, this goo, called bagasse, won’t find its way into people-pleasing confections.

Instead, scientists will empty it into 5-gallon metal flasks of algae and water. The algae will gorge on the treat -- filling themselves with fatty oils as they double in size every six hours, Bloomberg Markets magazine reports in its July issue.

Down the hall, past a rainbow of algae strains arrayed in Petri dishes, Chief Executive Officer Jonathan Wolfson shows off a gallon-size bottle of slightly viscous liquid. After drying the algae, wringing out the oil and shipping it to a refinery, this is the prize: diesel fuel that Wolfson says is chemically indistinguishable from its petroleum-based equivalent and which has already powered a Jeep Liberty and a Mercedes Benz sedan.

“We’ve produced tens of thousands of gallons, and by the end of 2010, I hope I can say we’ve produced hundreds of thousands,” Wolfson, 39, says. “In the next two years, we should get the cost down to the $60 to $80-a-barrel range.”

At that price, Solazyme’s algae fuel would compete with $80-a-barrel oil.

In Japan, the U.K. and the U.S., green energy advocates and some well-heeled investors are obsessed with perfecting a way to turn the scum that coats ponds, lakes and fish tanks into a substitute for gasoline, jet fuel and diesel.

Huge Payoff?

Algae, mostly single-cell photosynthetic organisms that usually elicit a “yuck,” can yield 30 times more oil than crops such as soy. Algal oil doesn’t need much processing before it can power a car, truck or jet engine, says Matt Carr, a policy director at the Biotechnology Industry Organization, a Washington-based advocate for biotech companies.

Algae have advantages over producers of other so-called biofuels. They don’t compete for land with a crop that feeds people and animals. Corn-based ethanol, the first viable biofuel, produces just two-thirds as much energy as gasoline and corrodes pipelines and car engines, says Anthony Marchese, a mechanical engineering professor at Colorado State University, who is taking part in a $48 million Department of Energy research project.

Supporters say algae overcome these disadvantages while eating twice their weight in carbon dioxide, reducing what some scientists say is a leading cause of global warming.

“The potential payoff is huge,” Carr says.

Gates Jumps In

Microsoft Corp. co-founder Bill Gates and Venrock Associates, the Rockefeller family’s venture capital firm, along with the U.K.’s Wellcome Trust Ltd. and Chicago’s Arch Venture Partners, have poured $100 million into Sapphire Energy Inc., which is trying to produce gasoline from algae.

U.S. President Barack Obama talked up alternative fuels during his 2008 campaign, vowing to push for the country to use 60 billion gallons of advanced biofuels such as algae and cellulosic ethanol made from wood chips or grasses by 2030. The DOE has provided more than $185 million in grants for algal biofuels.

The U.K. government-funded Carbon Trust, which aims to trim carbon emissions, is providing 8 million pounds ($11.7 million) to nine universities for algae research. In Japan, Toyota Motor Corp., the world’s largest carmaker, and oil refiner Idemitsu Kosan Co. may join a research program with the University of Tsukuba, northeast of Tokyo, to turn algae into fuel.

Exxon’s Bet

Exxon Mobil Corp. threw its weight behind algae in July 2009. The oil giant, often a target of environmentalists for dismissing concerns about global warming, is investing $600 million.

Exxon is working with La Jolla, California-based Synthetic Genomics Inc., a company founded by J. Craig Venter, who in 2000 mapped the collection of human genes. Venter’s team is working on changing the genetic code of some algae to make it easier to extract the oil.

“We spent two years evaluating all kinds of biofuels, assessing their scalability, technical challenges, environmental impact and commercial viability,” says Emil Jacobs, Exxon Mobil’s vice president of research and development. “Algae had the best potential,” he says, noting that it doesn’t compete for land with food crops.

Operative Word

Potential is the operative word. No one has produced enough algae fuel commercially to run a family’s SUV, let alone make a dent in the more than 200 billion gallons (760 billion liters) of gasoline, diesel and jet fuel that the U.S. uses every year.

The Carbon Trust is funding research to make 70 billion liters by 2030, equivalent to 6 percent of current global diesel use. To do that, algae ponds would have to cover an area larger than Wales or New Jersey, says Ben Graziano, technology commercialization manager at Carbon Trust.

Algae proponents differ on growing methods. Open ponds, the choice of most researchers, rely on photosynthesis. Algae grow and fill with oil as they use sunlight to convert carbon dioxide into sugar and chemical energy. Ponds, though, can get infested by pesky, low-oil native organisms or become the targets of microscopic aquatic creatures.

Solazyme is trying fermentation, producing its algae without light in metal vats. This requires adding sugar or other feedstock before the algae are dried and the oil extracted.

While people may curse the algae that pop up unbidden in their swimming pools, the organisms are expensive to produce commercially because electricity, water and chemicals all cost money. Today’s estimates range from $400 to $600 to produce one barrel of algae oil.

‘Billions of Dollars’

“It may take billions of dollars to set up the infrastructure,” says John Benemann, a biofuels consultant who worked on a 17-year DOE algae study. Companies would need thousands of acres of ponds, pipes to feed in carbon dioxide and fresh water and a link to refineries.

“I don’t know of an oil company that is quaking in their boots worried about algae,” Benemann says.

Chevron Corp. fits that category. Although the second- largest U.S. oil company has a deal with Solazyme to produce algae fuels and funds university research programs, it doesn’t see algae taking over the world.

“Global energy demand is going to increase 40 percent by 2030,” says Jeffrey Jacobs, vice president of Chevron Technology Ventures. “It is not feasible for biofuels to replace conventional fuels.”

Investments Climb

Silicon Valley pioneer Vinod Khosla is among the biggest investors in green technologies. His Khosla Ventures has bets on cellulosic ethanol company Range Fuels Inc. and LS9 Inc., which designs microbes to produce nonpolluting biofuels.

Khosla says algae fuel is a pipe dream.

“We looked at two dozen algae business plans and have not found one that was a viable plan,” says Khosla, speaking from his Menlo Park, California, office.

Ever since the Organization of Petroleum Exporting Countries shocked the world with embargoes and price increases in the 1970s, companies and investors have searched for fossil- fuel alternatives.

In 1978, with drivers fuming over gasoline lines, the Aquatic Species Program, part of the DOE under President Jimmy Carter, studied making diesel-like fuel from the lipids that algae accumulate in their cells. After 17 years, the group concluded that algae couldn’t compete with oil that then averaged about $20 a barrel. President Bill Clinton closed the program in 1996.

Congressional Mandates

Now, green-energy advocates say climate change makes the quest for petroleum alternatives imperative. In the first quarter of 2010, venture investments in clean energy jumped 83 percent from a year earlier to $1.9 billion, San Francisco- based Cleantech Group LLC says.

“With a focus on global warming, we are seeing investors showing interest in a broad range of clean technologies,” Cleantech President Sheeraz Haji says.

The U.S. Congress wants to speed the switch from fossil fuels. The Energy Independence and Security Act of 2007 calls for refiners to use 36 billion gallons of biofuels in gasoline blends by 2022. That’s triple the current amount, which is mostly in the form of corn-based ethanol. Fifteen billion gallons would be starch-based ethanol, with the rest from sources such as algae and switch grass.

The U.S. military, which accounts for about 80 percent of the federal government’s energy demand, is exploring biofuels after spending more than $20 billion on jet, diesel and other fuels for its fleets in 2008.

Cutting Oil Imports

The Defense Advanced Research Projects Agency, the Pentagon’s venture arm and the outfit that’s credited with developing the Internet, is funding a $35 million research program to find a way to make jet fuel from algae that costs less than $3 a gallon by 2013.

“The attraction of algae is that it fills the need to develop renewable energies and cut foreign oil imports,” says George Santana, director of research at Greener Dawn Corp., a San Diego-based firm that promotes renewable energy. “To replace foreign oil, you need to fill up your tank with biofuels.”

Exxon Mobil says it may take as long as 10 years before any algae biofuel reaches motorists. That hasn’t stopped the company from covering itself in green colors.

Soon after signing the deal with Synthetic Genomics, Exxon ran ads featuring a scientist named Joe Weissman: “We are making a big commitment to finding out just how algae can help meet the fuel demands of the world,” Weissman tells the TV viewer.

‘Pays Off Politically

While Exxon’s $600 million investment is the largest of its kind in algae, it’s infinitesimal for a company that brought in $301.5 billion in revenue last year and plans to spend $28 billion on oil wells, floating platforms and refineries this year.

“For Exxon, the algae bet pays off politically; it helps their public relations and their image,” says Robert Bryce, author of “Gusher of Lies” (PublicAffairs, 2008), a book about the ethanol industry.

Philip New, who heads the alternative fuels unit at BP Plc, says investments in algae’s potential may never be recouped. BP is investing in ways to make ethanol from sugars, which he says offer greater promise.

“We looked at algae and the numbers do not make economic sense,” New says. “Ours is not a greenwash.”

Exxon spokeswoman Cynthia Bergman says the company’s investment and partnership with Synthetic Genomics show Exxon is serious about algae.

BP’s Oil Spill

BP, which is at the center of a massive oil spill in the Gulf of Mexico, has run ads touting its alternative energy investments. In 2000, the London-based company changed its logo to a green, yellow and white sunburst.

BP has poured $500 million into a joint venture called Tropical Bioenergia SA to produce Brazilian ethanol from sugar cane. It has also invested $112.5 million in Verenium Corp. of Cambridge, Massachusetts, to research producing ethanol from agricultural waste and saw grass.

Netherlands oil giant Royal Dutch Shell Plc has investments in ethanol made from sugar cane. In February, it entered a $12 billion joint venture with Brazil’s Cosan SA Industria & Comercio and plans to produce 5 billion liters a year. (For a story on working conditions in Brazil’s cane fields, see “Ethanol’s Deadly Brew,” November 2007.)

“Second-generation biofuels may take another decade,” says Luis Scoffone, Shell’s vice president of alternative energies. “Cost of production will be a factor in determining which technologies win.”

‘Expensive to Produce’

Even so, Shell hasn’t written off algae. It’s building a research plant with HR BioPetroleum Inc. on Hawaii’s Kona coast near commercial algae farms. Here, oblong ponds grow algae for nutritional supplements such as omega-3 fatty acids and protein powders.

Although advocates say that most algae need only sunlight, carbon dioxide and water -- including saltwater -- to grow, the reality is more complicated. Algae are less productive below 15 degrees Celsius (59 degrees Fahrenheit). In the heat, the organisms require constant refreshing. Most ponds have electric paddles to circulate the algae-filled water.

“Open ponds need a lot of water, a lot of electricity,” says Robert Rapier, chief technology officer at Kamuela, Hawaii- based Mercia International, a bioengineering holding company. “Algae are expensive to produce.”

Enormous Projects

Jason Pyle, CEO of Gates-backed Sapphire Energy in San Diego, says the challenges of algae are like those in farming: increasing yields and protecting crops from pests. Sapphire plans to build a 300-acre (120-hectare) plant in New Mexico, which will be completed in 2013. The company says it’s a first step toward producing 1 billion gallons of diesel and jet fuel by 2025.

“These are large projects and take enormous amounts of time and capital,” Pyle, 38, says.

Not far away, Exxon Mobil is building a research facility at Synthetic Genomics headquarters. By the end of next year, the oil company plans a 10-acre site filled with ponds and clear containers called bioreactors, intended to speed up growth. The key is getting different algae strains to work beyond the lab, Exxon’s Jacobs says. To commercially produce algae-based fuel will require billions of dollars.

“If we can pull it off, it will have a significant impact,” Jacobs says.

Freshman Dreams

About 500 miles to the north, Solazyme cofounders Wolfson and Dillon, 39, are sidestepping the challenges of algae ponds. The pair met in 1989 at Emory University in Atlanta and discovered mutual interests in the outdoors and the environment. During that freshman year, Dillon, who was studying biology, and Wolfson, a political science undergrad, agreed to form a biotech company one day.

That off-the-cuff promise began to take shape in 2003. The two raised money from friends, family, New York-based Harris & Harris Group Inc. and Berkeley, California-based Roda Group and started growing algae in open ponds. They wound up with little to show.

“We tried direct photosynthesis but couldn’t figure out how we were ever going to take it to a commercial scale,” Wolfson says. “There were too many problems.”

The two went back to investors. This time, they focused on algae that grow in the dark, as in swamps. Standing in front of a whiteboard, Wolfson explains the process in layman’s terms:

“We put algae in a tank and feed them sugar, such as sugar cane waste, and they make oil and we take the oil out. There’s a lot of science involved, but it’s a bit like making beer.”

‘Green Sludge’

Every few months, Wolfson’s team mails 10-milliliter vials containing millions of frozen algae cells to one of three plants for fermenting. At the Cherokee Pharmaceuticals LLC site in Riverside, Pennsylvania, which used to make antibiotics and food additives, scientists mix a teaspoonful of algae stock with water, cellulosic waste like the bagasse in Dillon’s beaker and such trace elements as potassium.

The tanks keep the brew at about 30 to 40 degrees Celsius. After a few days, there are enough cells to fill a 75,000-liter fermentation tank. By making modifications that Wolfson declines to discuss, the algae convert the sugar into fatty lipids.

“We end up with a green sludge that has a high percentage of oil content -- over 75 percent,” Wolfson says. He won’t divulge how Solazyme extracts the oil except to say that the sludge goes into standard plant-oil extraction equipment similar to that used for soy or canola oil.

‘Silver Buckshot’

Solazyme, which has raised $76 million from VCs such as New York-based Braemar Energy Ventures and Menlo Park-based Lightspeed Venture Partners, has a contract with the U.S. Navy to provide 1,500 gallons of jet fuel. It also received $8.5 million to deliver 20,000 gallons of fuel for Navy ships.

Wolfson says he needs $150 million to build a commercial plant to produce 100 million gallons a year. He predicts that algal oil will cost $60 to $80 a barrel within 12 to 24 months.

“We don’t have a business in fuel until we are at parity with fossil fuels,” he says. “There is no silver bullet for our problem of replacing fossil fuels; maybe a silver buckshot.”

Fans of algae are betting that the tiny organism can produce giant strides for going green.

03 June 2010

700-Hour Silent Opera Reaches Finale at MoMA

NY Times

At 5 p.m. Monday one of the longest pieces of performance art on record, and certainly the one with the largest audience, comes to an end. Since her retrospective opened at the Museum of Modern Art on March 14, the artist Marina Abramovic has been sitting, six days a week, seven hours a day in a plain chair, under bright klieg lights, in MoMA’s towering atrium. When she leaves that chair Monday for the last time, she will have clocked 700 hours of sitting.

During that time her routine seldom varied. Every day she took her place just before the museum doors opened and left it after they closed. Her wardrobe was consistent: a sort of concert gown with a long train, in one of three colors (red, blue and white).

Always her hair, in a braided plait, was pulled forward over her left shoulder. Always her skin was an odd pasty white, as if the blood had drained away. Her pose rarely changed: her body slightly bent forward, she stared silently and intently straight ahead.

There was one variable, a big one: her audience.

Visitors to the museum were invited, first come first served, to sit in a chair facing her and silently return her gaze. The chair has rarely, if ever, been empty. Close to 1,400 people have occupied it, some for only a minute or two, a few for an entire day.

Sitting with Ms. Abramovic has been the hot event of the spring art season. Celebrities — Bjork, Marisa Tomei, Isabella Rossellini, Lou Reed, Rufus Wainwright — did a stint. Young performance artists seized a moment in the limelight. One appeared in his own version of an Abramovic gown to propose marriage. Certain repeat sitters became mini-celebrities, though long-time waiters on line stared daggers at those who sat too long.

Thanks to the Internet many people saw all of this without being there. A daily live feed on MoMA’s Web site, moma.org, has had close to 800,000 hits. A Flickr site with head shots of every sitter has been accessed close to 600,000 times. Yet foot traffic has been heavy. By the museum’s estimate, half a million people have visited all or part of the Abramovic retrospective, “The Artist Is Present,” of which the atrium piece is a small part.

The rest of the show, installed on the museum’s sixth floor, is a problem. It is made up primarily of videos and photographs of the artist’s performances over nearly 40 years, beginning when she was a student in Belgrade, Yugoslavia, where she was born in 1946.

Her solo work from the early 1970s was hair-raisingly nervy. She stabbed herself, took knockout drugs, played with fire. For one piece she stood silent in a gallery for six hours, having announced that visitors could do anything they wanted to her physically. At one point a man held a gun to her neck. Her eyes filled with tears, but she didn’t flinch.

In 1976 she started collaborating with the German artist Uwe Laysiepen, known as Ulay. Some of their performances were punishing athletic events, as they slammed their bodies together or into walls. Others were almost aggressively passive. For a piece called “Imponderabilia” they stood facing each other, nude, in a narrow doorway in a museum. Anyone wanting to go from one gallery to another had no choice but to squeeze awkwardly and intimately between them.

Ms. Abramovic restaged “Imponderabilia,” along with some other works, for the MoMA show using actors. And although the nudity caused a buzz, the restaging fell flat. Two elements that originally defined performance art as a medium, unpredictability and ephemerality, were missing. Without them you get misrepresented history and bad theater.

Evidently Ms. Abramovic doesn’t agree. In 2005, at the Guggenheim Museum, she restaged vintage performance pieces by other artists (Vito Acconci, Joseph Beuys) with herself in the leading roles. She recently established the Marina Abramovic Institute for Preservation of Performance Art, to be housed in upstate New York.

In the near future she will be collaborating with the director Robert Wilson on a stage work based on her life. By the sound of it, this project will mark her furthest departure yet from old-school performance art and into the realm of closely scripted theater. What it will have, however, is her charismatic personal presence, and that means a lot. That presence is probably the most important ingredient missing from the restagings. It is what makes the atrium performance compelling. For better and worse, it has carried Ms. Abramovic’s career.

One of her lifelong heroes is the opera singer Maria Callas, to whom she can bear a striking physical resemblance. Callas was a disciplined, risk-oriented musician, made vulnerable by a voice that began to disintegrate early. Increasingly, as she aged, every performance became an ordeal, an invitation to failure. Her willingness to face failure became the prevailing drama of her life. It was a drama of survival, and her fans had a part in it: she needed them to need her, so they did.

That’s that classic diva dynamic. And what we’re seeing in the MoMA atrium is basically a 700-hour silent opera. Ms. Abramovic, with her extravagant costume, her bent shoulders and her mournful gaze, is the prima donna. Visitors are cast as rapt audience, commenting chorus, supporting soloists. Unpredictability is in the air: Will she make it through the day? Will she faint from pain? Will she cancel at the last minute?

When I dropped by last week, one sitter, a repeater, sat across from Ms. Abramovic with his hands clasped to his chest, like a tenor about to burst into song or a worshiper transported in prayer. Perfect. That Ms. Abramovic will be collaborating with Mr. Wilson, a once-radical creator of epic experimental works and now best known for his ritualistic productions of Puccini and Wagner, is also perfect.

Of restagings I remain an unbeliever. Of Ms. Abramovic’s recent overblown solo pieces, seen in video in the sixth-floor installation, I’m not a fan. But the atrium performance works because she is simply, persistently, uncomfortably there. As of 5 p.m., she won’t be, though. The klieg lights will dim. The audience will move on. Something big will be gone, and being gone will be part of the bigness.