Amazon

Just two months after starting a flame war of sorts over whether it would acquire or go into competition with companies that were just “filling holes” in its service, Twitter is finally moving to fill one of the biggest holes the social network has had since it launched: the lack of a built-in link shortener. A post on the Twitter blog explains how the company has been shortening links in direct messages since March, in part to provide more security against phishing attempts — and will soon roll out the use of the t.co link shortener as a “wrapper” for all links.

The term “wrapper” means that every link that passes through Twitter will be shortened via the t.co system — and not just long links, but even links that have already been shortened by some other method, such as a competing service like Bit.ly or a white-label version such as the New York Times custom shortener. These links will still appear to users in the same way, but they will be shortened via t.co as they make their way through the Twitter system. When it comes to long links, Twitter hasn’t decided yet what they will look like exactly, as staffer Sean Garrett explains in the blog post:

A really long link such as http://www.amazon.com/Delivering-Happiness-Profits-Passion-Purpose/dp/0446563048 might be wrapped as http://t.co/DRo0trj for display on SMS, but it could be displayed to web or application users as amazon.com/Delivering- or as the whole URL or page title. Ultimately, we want to display links in a way that removes the obscurity of shortened link and lets you know where a link will take you.

Garrett also explained that t.co links will be a maximum of 20 characters, so once the feature is rolled out to all users, links added to tweets will only use up 20 characters, regardless of their actual size.

The immediate response from many observers was to see the new feature as a Bit.ly killer, and it is clearly competition for that service, which was one of a number of link shorteners that sprang up to fill the void when Twitter first launched. But Bit.ly has moved on from its reliance on Twitter, as Betaworks founder John Borthwick described in a recent blog post. In any case, it’s clear that the real point of Twitter’s new feature isn’t to kill Bit.ly or any other service, but to accumulate data about the links that are shared on the network. As the Twitter blog post describes it:

Routing links through this service will eventually contribute to the metrics behind our Promoted Tweets platform and provide an important quality signal for our Resonance algorithm—the way we determine if a Tweet is relevant and interesting to users. We are also looking to provide services that make use of this data, an example would be analytics within our eventual commercial accounts service.

As Bit.ly understood long before Twitter did (or before Twitter did anything about it), the data underlying the links that are shared by users is far more important than the simple act of shortening a link. The analytical data that could emerge from seeing everything that is shared in tens of millions of tweets every day could produce an incredibly valuable storehouse of information about what stories or websites or content is getting the most activity, in real time. It’s about time the service started paying attention to it.

Related content from GigaOM Pro (sub req’d): Lessons From Twitter: How to Play Nice With Ecosystem Partners

Post and thumbnail photos courtesy of Flickr user Max Klingensmith

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Twitter Introduces Bit.ly-Baiting URL Shortener, T.co —

Say goodbye to the bit.lys that pervade your Twitter stream--along with all the other custom URL shortners from your favorite publications--Twitter is rolling out its own way to shorten those unruly post on the Twitter blog announces the change.

As early as this summer, any links shared via Twitter will be shortened and wrapped into Twitter's new t.co URL shortener, which will seem to have some smart capabilities when viewed on Twitter:

A really long link such as http://www.amazon.com/Delivering-Happiness-Profits-Passion-Purpose/dp/0446563048 might be wrapped as http://t.co/DRo0trj for display on SMS, but it could be displayed to web or application users as amazon.com/Delivering- or as the whole URL or page title. Ultimately, we want to display links in a way that removes the obscurity of shortened link and lets you know where a link will take you.

There are a couple elements of this update that push t.co into more than a bit.ly competitor that makes me subconsciously want a taco. First, Twitter will be keeping track of all these t.co links, and will use the data they've snagged to make algorithmic recommendations to users--basically, the data will be made available through API for targeted advertising.

The other element is not entirely clear right now, in what's becoming a refrain for new Twitter announcements. Twitter will be counting t.co-wrapped links differently in terms of character count. Because this URL-wrapping will be done automatically, you can actually submit updates of length longer than 140 characters--Twitter will shorten the links and then count characters afterwards. That's how many third-party apps work, but now it's built into Twitter.

This is yet another attempt for Twitter to make first-party what was formerly third-party, just like Promoted Tweets and the new mobile apps for BlackBerry, Android, and iPhone. Twitter is taking control of the ways people use their service. So what does this mean for other URL shorteners, most notably bit.ly? Will bit.ly still work? Will Twitter allow it? That remains to be seen.

Dan Nosowitz, the author of this post, can be followed on Twitter, corresponded with via email, and stalked in San Francisco (no link for that one--you'll have to do the legwork yourself).

Links and Twitter: Length Shouldn’t Matter — Since early March, we have been routing links within Direct Messages through our link service to detect, intercept, and prevent the spread of malware, phishing, and other dangers. Any link shared in a Direct Message has been wrapped with a twt.tl URL. Links reported to us as malicious are blacklisted, and we present users with a page that warns them of potentially malicious content if they click blacklisted links. We want users to have this benefit on all tweets.

Additionally, as we mentioned at our Chirp developer conference in April, if you want to share a link through Twitter, there currently isn't a way to automatically shorten it and we want to fix this. It should be easy for people to share shortened links from the Tweet box on Twitter.com.

To meet both of these goals, we're taking small steps to expand the link service currently available in Direct Messages to links shared through all Tweets. We're testing this link service now with a few Twitter employee accounts.

User Experience, Safety, and Value

When this is rolled out more broadly to users this summer, all links shared on Twitter.com or third-party apps will be wrapped with a t.co URL. A really long link such as http://www.amazon.com/Delivering-Happiness-Profits-Passion-Purpose/dp/0446563048 might be wrapped as http://t.co/DRo0trj for display on SMS, but it could be displayed to web or application users as amazon.com/Delivering- or as the whole URL or page title. Ultimately, we want to display links in a way that removes the obscurity of shortened link and lets you know where a link will take you.

In addition to a better user experience and increased safety, routing links through this service will eventually contribute to the metrics behind our Promoted Tweets platform and provide an important quality signal for our Resonance algorithm—the way we determine if a Tweet is relevant and interesting to users. We are also looking to provide services that make use of this data, an example would be analytics within our eventual commercial accounts service.

Early Developer Preview Comes First

As a first step, developers who create applications on the Twitter platform can now begin to prepare for this service. They will be able to choose how to display the wrapped links in a manner that is most useful, informative and appropriate for a given device or application. Our first step is a small one. We're rolling out wrapped links on a handful of accounts, including @TwitterAPI, @rsarver, and @raffi, to help developers test their code. Ultimately, every link on Twitter will be wrapped.

If you are already partial to a particular shortener when you tweet, you can continue to use it for link shortening and analytics as you normally would, and we'll wrap the shortened links you submit.

We’d like to thank our friends at .CO Internet SAS, the registry for the new .CO extension, for helping us secure t.co for use with this service. Links shared on Twitter will be safer, clearer, and more valuable.

Back when Amazon bought Zappos for a little over a billion dollars, it left a lot of people scratching their heads. Zappos had been growing like gangbusters, gettings tons of positive attention, in part due to its obsessive commitment to over delivering on customer service, as well as its unique and creative management practices. Given all of that, any acquisition was a bit of a surprise, let alone one at a price that wasn't much more than 1x revenue (even in a low margin business). At the time, the announcement from Zappos CEO Tony Hsieh definitely stunk of PR-spin, as well, which was unfortunate, coming from a guy who's usually such a straight shooter.

So it's very cool to see (via Liz Gannes that Tony has since written up a very honest explanation for why he sold Zappos. It really comes off as a lesson in how your investors can force you into moves you really don't want to make. First he details some of the realities of operating an e-commerce business: how they had a revolving line of credit for $100 million that could be pulled pretty easily, as well as some other inventory issues that could lead to cash flow problems, even as the business itself was thriving (if you've never run a business, it's important to understand the differences between revenue and cash flow). Those cash flow problems were apparently creating tension on the board of directors, made up of some venture capitalists that Zappos had brought on late in the game (it had been financed by Tony for a while):

These issues had nothing to do with the underlying performance of our business, but they increased tensions on our board of directors. Some board members had always viewed our company culture as a pet project -- "Tony's social experiments," they called it. I disagreed. I believe that getting the culture right is the most important thing a company can do. But the board took the conventional view -- namely, that a business should focus on profitability first and then use the profits to do nice things for its employees. The board's attitude was that my "social experiments" might make for good PR but that they didn't move the overall business forward. The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes.

On some level, I was sympathetic to the board's position. The truth was that if we pulled back on the culture stuff, the immediate effect on our financials would probably have been positive. It would have reduced our expenses in the short term, and I don't think our sales would have suffered much at first. But I was pretty sure that in the long term, it would have ruined everything we had created.

By early 2009, we were at a stalemate. Because of a complicated legal structure, I effectively controlled the majority of the common shares, so that the board couldn't force a sale of the company. But on the five-person board, only two of us -- Alfred Lin, our CFO and COO, and myself -- were completely committed to Zappos's culture. This made it likely that if the economy didn't improve, the board would fire me and hire a new CEO who was concerned only with maximizing profits. The threat was never made overtly, but I could tell that was the direction things were going.

From there, Tony and Alfred decided the best way to get out from under the threat of board revolt was to buy out the board, and that led them to go looking for a partner to help make that possible. That eventually resulted in knocking on Amazon's door, which turned into a discussion about a full acquisition -- which Tony agreed to once he felt clear that Bezos and Amazon understood the culture aspect that he felt was so important, and agreed to let Zappos operate independently and continue that tradition.

Now, times may change, and situations may change. Tony may end up leaving. Amazon may not like how things are going at Zappos at some point. Or Amazon may come under more financial pressure from its own shareholders (though, to be fair, for many years Bezos did an amazing job resisting calls from Wall Street to focus on short term profits over long term results -- if no one has done a case study on this, someone should...). However, to some extent, this really is a story that touches on our recent discussion on motivation and monetary rewards. Hsieh and Lin certainly made out very nicely in the Amazon acquisition. If I remember correctly they each ended up with hundreds of millions of dollars. But at the rate the company was growing, many thought they could have done much, much better by hanging on and waiting for an IPO. However, there are motivators other than "more money" -- especially when you already have plenty of it. And, in this case, that seemed to work out for Zappos.

Either way, the clear honesty of what was happening behind the scenes that resulted in the sale is nice to see. You usually don't hear that at all (other than random rumors). Lots of things happen behind the scenes in various business deals, much of which never gets talked about. It's always nice to get a peek into the details of some of those situations.

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Kehalim

In what could be their latest stroke of brilliance, Israeli start-up Wibiya has integrated Kehalim's cooperative affiliate marketing program into the popular blog and website tool bar.

Brief background.  I started using the Wibiya toolbar here when it first launched.  The response was instantaneous.  "Nice toolbar" ... even a tweet from Microsoft.

Microsoft later gave Wibiya a BizSpark award.

The company launched with a simple premise.  Help bloggers and webmasters reduce real estate while offering a variety of social and other options in a very non-invasive toolbar.

I loved the Twitter integration.  Since then Wibiya has added Google Buzz, Friendfeed and more.

It's time for the bucks?

Kehalim is a contextual and semantic affiliate marketing network partnered with many (if not most) of the major affiliate programs already in existence.  Google Affiliate, Commission Junction, LinkShare, Amazon, and many others are onboard.

Monetization - The new 'partnership' just makes it too easy and the Wibiya bar has already transcended many industries.  Factually, it's in use by some VERY high volume websites and growing in popularity.

This blog was never really intended to be monetized.  The Adsense ads at right have been turned on and off many times over the years simply as an experiment.  As part of this post, I have enabled the Kehalim / Wibiya feature as well so we can all see how it looks (and if it delivers?).

The 'magic' to Kehalim is that it makes it turnkey for bloggers to tap in to numerous affiliate programs simply and easily.  They've been at it for some time but the 'Express Ads' feature that launched in February was significant.  This parternership could literally take BOTH start-ups over the top .... (Just my humble opinion :)

So ... before Apple's WWDC no doubt takes over the tech headlines for a few days ... be sure and check this out!

Editor’s note: Book rental startup Chegg is making money hand over fist. Guest author Steven Carpenter does a teardown of its business model and estimates its revenues will reach $130 million this year.  Carpenter was the founder and CEO of Cake Financial, which was sold to E*Trade earlier this year.  Previously, he’s written TC Teardowns on Groupon and Zynga.

Chegg may very well be the fastest-growing, most successful, second-generation e-commerce startup that you hardly ever hear about,except maybe for the fact that it’s raised more than $140 million. Chegg is the “Netflix for textbooks.” It lets students across 6,400 college campuses rent from a virtual bookstore containing 4.2 million books. Based on my analysis (which I get into more detail below), the company is on track to generate $130 million in revenues in 2010, up from $25 million in 2009, and $10 million in 2008. During the January, 2010 semester, I estimate the company made close to $1 million in revenue a day, up fivefold from $200,000/day the previous January, and it should double that this coming September. My analysis suggests Chegg will do close to $50 million in revenue this September alone. It is underappreciated, to say the least.

Chegg is disintermediating the $5B+ college textbook market by providing a low-cost, short-term, nationwide rental alternative to the high-priced university bookstore. This disruptive model will likely shrink industry revenues by half in the coming years, with Chegg in a leadership position to command 80%+ market share. The key questions, of course, are: 1) Is this a winner-take-all market, 2) What can Chegg do to fend off the likes of the major bookstore owners, Barnes & Noble and Follet, as well as Amazon and Apple, and 3) Is Chegg a harbinger of a new age of startup rental services?

Old School
The Chegg story is different from those of other breakout startups, such as Groupon and Zynga, in five key ways. First, rather than creating an entirely new industry, Chegg introduced a proven service concept and relied on established customer behavior (mail-order rentals) in an old, highly dysfunctional category, whose customers felt captive and where costs were spiraling out of control. Second, founded in 2003, the company took four years to find its business, so it was not a rocketship from inception. Third, rather than targeting a broad audience, Chegg focused on solving the pain point of a specific customer set desperate for an alternative. Fourth, Chegg, like traditional e-tailers Amazon and Zappos, requires a complex infrastructure to handle warehousing, shipping, and returns for millions of physical items, as well as a customer service desk that is highly seasonal. And fifth, because Chegg is innovating in an existing industry, the company faces rampant competitive threats from both the old guard and new entrants alike.

Not Just Extra Beer Money
According to the Department of Education, the annual cost of tuition, room and board for a four-year public institution is now $13,500, while a private university will set you back $30,400.

While college tuition costs have far outstripped inflation, having grown at an average rate of 7.74% per year since 1978, guess what constitutes the second highest educational expense for college students? Textbooks.

And those costs have grown at an average annual rate of 6.9% over the same time period, more than the growth of medical care expenses, causing real hardship to students who can already barely afford to put themselves through school. The issue of textbook affordability is so acute that in 2005 Congress asked the Department of Education to conduct a study on the matter and then released a plan in May, 2007 to make textbooks more affordable.

BMOC: Big Monopolist on Campus

According to the National Association of College Stores, students have historically been paying nearly identical prices for both new and used textbooks. Last year, the average list price for a “new textbook” was $64 compared to $57 for a “used textbook.”

When you consider that bookstores are making significantly higher margins on used vs. new books (35.7% to 22.3%) as a result of taking advantage of students by buying back (for very little money) the very books they just sold them last semester, its is clear that bookstores have little incentive to change. Students, on the other hand, are more than ready for a more economical solution that treats them like customers.

“Hi, I’m Chegg”

Chegg launched its rental service in 2007 and it quickly gained traction with students. Highly dependent on the fall and spring semesters when the majority of textbook-buying occurs, Chegg saw a nearly 2X increase in traffic to its website  from Fall, 2009 to Winter, 2010.  In January, it drew 1.3 million unique visitors, according to Compete. This was 10 times more than its closest startup competitor, Bookrenter. Based on its current growth pattern, I expect to see another 2X – 2.5X increase in traffic to the website this fall.

How Fast is Chegg Growing?

Sometime in 2008, Chegg began publishing on its homepage a real-time tally of the total dollars the company was saving its customers. Thanks to screenshot captures and Google image search, I was able to put together the following chart, which shows the explosive growth the company has experienced since the beginning of 2010. The company passed the $100 million savings mark on January 11, 2010 after two years of operation and needed just an additional three months to cross $200 million in May.

Financial Report Card

Jim Safka, the former Chegg CEO, said in an interview that the company generated $10 million in revenues in 2008.  According to a company press release, Chegg saved students just over $16 million in 2008. That means the company is saving students 63% off the list price of books and making 37% in revenue. Using this ratio, I estimate the company did close to $1 million in revenue per day during the winter semester 2009-2010, an increase of four to five times its daily average of $200,000 a day during “off peak” business days.

Based on this ratio, I estimate Chegg generated $25 million in 2009 and will do $130 million in revenues in 2010, accounting for increased traffic and awareness, almost half of which ($50 million) will come in September alone.

Based on my analysis, Chegg is likely operating at breakeven or at a slight loss each month, making the bulk of its profits in September and January. The reason for this is the complex and expensive warehouse and customer service operations required for this business.

Chegg hires three different tiers of employees: full-time engineering and marketing, warehouse, and customer service. Chegg needs to preserve as much flexibility as possible with its customer service and warehouse teams, so that they can be ramped up or down depending on the time of the year. When things are slow, the company still needs to carry the costs of its warehouse.

With a strong affiliate program that costs the company 8% of revenues, and its textbook buyback program, Chegg’s profitability comes down to how effectively they manage three aspects of the business: 1) textbook wholesale cost, 2) warehouse efficiency, and 3) customer service operations. These are three competencies that are very difficult to learn and mimic, creating strong barriers to entry.

Chegg is clearly planning for continued future growth. In February, the company announced plans for a brand-new warehouse facility in Shepherdsville, Kentucky, which will cost the company $27 million and employ another 100 full-time and 1,200 seasonal employees.  Based on my analysis, Chegg will likely have to double its monthly revenue run rate to $10 million in order to cover these additional expenses. Chegg had previously raised $55 million in debt in November, 2009 to invest in this area.

Is This A Winner-Take-All Market?

The nascent textbook rental market is looking a lot like the early days of the online DVD rental business. Online-only startup, Netflix, managed to out-innovate, out-operationalize, and outlast its deeper pocketed rivals—mainly Blockbuster—that had the added advantages of a local physical storefront and customers who already rented movies!

The potential challenges for Chegg look a lot like those facing Netflix a few years ago (and a key one that does not):

• Lack of a physical footprint on campus
• Industry long dominated by a few, deep-pocketed players; in this case, Barnes & Noble and Follett, which operate more than 1,500 campus bookstores between them
• Impending threat of digital replacement of physical goods
• A seasonal product need that does not fully utilize operational capacity

But here is what Chegg does better than anybody else, which makes it difficult to compete against and win:

1. Test Quickly and Fast Rollout: The company can test concepts in discernable communities with limited risk and capital outlay. At the formation stage, the company could limit the number of books it needed. As it grows, it can roll out new services quickly after proving out the concept at say, Florida State.
2. Marketing: There is nothing as viral as a college campus. FTW!
3. Operational Excellence: Like Netflix, Chegg is excellent at pick, pack, ship, and return. This is incredibly difficult to do. And will become more so when the company begins experimenting with extending the model to other books. See #1.
4. Scalable: Chegg will always have better inventory than local bookstores and better pricing. There is nothing stopping Chegg from offering other kinds of books for rent.
5. Customer Service: 30-Day refunds, free return shipping, customer support, tree planting. As I mentioned above, managing for peak and off-peak times is difficult.

Based on my financial analysis above, operating a physical bookstore and running an online rental service require different core competencies. I believe this is a winner-take-all business and that Chegg should control 80%+ market share over time.

Strategic Plan

In order to further ensure its position as market leader, I believe Chegg should position itself as the “Amazon for College Students” and cater to their unique university needs. The company should also go deep into expanding its classroom offerings, such as class notes and digital goods.  Here are some other things it could do

1. Partner with bookstores for physical presence and kiosks a la Red Box
2. Expand its assortment of books to leverage its operational expertise and capacity
3. Expand classroom offerings and potentially acquire companies in this space, such as lecture capture company, Echo 360
4. Embrace digital a la Netflix and partner with publishers
5. Work with Apple and e-reader company Kno (started by Chegg founder Osman Rashid)

The big question for Chegg down the line is how do they counter the cyclicality of the textbook business with more steady streams of revenue.  I’d rent a novel for $5 if there was an easy way to return it.  Wouldn’t you?

Android Could Get Audible App Before iPhone —

Amazon's audio book provider Audible.com is testing an app for the Android platform. With a target date of "Summer 2010" the company will likely land its popular service on Android before it does on the iPhone. The app will allow subscribers to participate in the Audible ecosystem beyond simply listening to the audio files; a lightweight social network, accomplishment badges, analytics concerning your listening habits and text content all appear to be supported. It might seem unnecessary for the company to build a dedicated Audible app - but there's actually some very good reasons to.

Breon Nagy gained beta tester access to the app and posted screenshots today on his site DroidDog.

Sponsor

Amazon acquired Audible.com for $300 million in 2008. The service charges a monthly subscription fee, sells DRM-protected audio books and provides substantial financial support for the larger community of free podcasts on the web through advertising.

The Richness of the Files

Audible files are published using the RSuite Content Management System, which allows the company to append more than 100 different fields of metadata to each file. That much metadata offers opportunities for cross referencing various fields and other data sets, such as social activity, meaning that an Audible app could offer incredibly rich functionality. In other words, there is reason for a dedicated app to be built.

Unfortunately, Audible doesn't support in-app purchases of audiobooks in its Blackberry app or this forthcoming Android app. The Android app is also not particularly attractive. Audible has a complicated and unfulfilling relationship with the iPhone; there is no iPhone app for the service. Wireless syncing, file sizes, proprietary formats and audio book competition appear to be complicating factors.

Android screenshots below from DroidDog, where there are more posted as well.

Discuss

Amazon could release the next generation of the Kindle in August. The company is also hard at work on new touch-screen prototypes for the device, as well as color LCD screens.

Few will dispute Amazon’s role as current king of the e-commerce space, but this week’s TechCrunch Disrupt conference raised an interesting question: Did Amazon miss the boat on social commerce?

At the conference last week in New York, John Caplan, CEO, OpenSky; Rob Kalin, CEO, Etsy; Susan Lyne, CEO, Gilt Groupe and Dan Porter, CEO, OMGPOP sat down to discuss the idea of social commerce and where the marketplace is going in the future in terms of both monetization and socialization. All of the panelists seemed to agree that Amazon will continue to reign supreme in “commodity commerce” but will not be able to lead social commerce. Kalin stated, “I think Amazon is doing a good job monopolizing boring way of shopping.” Caplan agreed, saying that “Amazon will own commodity commerce. They won’t lead the way to relationship commerce and more and more people are craving relationships in shopping.”

These relationships have captured the attention of millions of paying customers, and in turn, the interest of marquee investors from around the globe. Groupon recently raised a massive round valuing the company at $1.35 billion. Meanwhile, Gilt Groupe is expected to triple revenues this year, and fellow flash sale site Vente-Privee itself is on target to €650m in turnover globally this year.

Other industry giants are thinking through ways to horizontally integrate into the social commerce space. eBay, for example, is aggressively targeting the flash sales market, having recently launched the Fashion Vault, a flash sales site that offers deep discounts on designer items.

Meanwhile Amazon’s interest in blending commerce with social dynamics seems flirtatious at best. It dipped its toes into the group- buying dynamics with a lightening deals feature, which allows a limited number of discounts in a given day for users. But the feature is hard to find, and Amazon doesn’t seem to be taking steps to make it more discoverable. Perhaps they are testing the viability of the product, but the industry is moving too fast to take an overly measured approach.

It was also rumored that Amazon was sniffing around Vente-Privee last Fall. Amazon, along with eBay and even Gilt, considered spending $1.5 billion to $4 billion in exchange for a rapid move into the space.

And while an acquisition may make perfect sense for a cash-rich company like Amazon (they have $5 billion in cash and securities), some will argue that they should continue to focus on scaling traditional online retail business. After all, revenue continues to rise as they continue to sell ridiculous numbers of Kindles, and other products. And the executive team hasn’t exactly been complacent, particularly with the recent $1.2 billion acquisition of Zappos.

And yet a dogged focus on “commodity commerce” may prove to be short-sighted. For over a decade, Amazon and eBay have enjoyed the fruits of a market that required a greater focus on scale than on innovation. But the rise of Groupon, Gilt, LivingSocial, Vente Privee and other social e-commerce sites have taught us an undeniable truth that customers are ready for something different. The question is whether Amazon will disrupt its own model in order to preserve its reign as the king.

Photo Credit/Flickr/Frialove

Disclosure: My husband is an employee of Groupon.

According to the NYPost today, the US Department of Justice is doing an "outreach" program to Apple to find out how it is handling its dealings with not just the music business but Hollywood in general.

"The [Justice Dept.] is doing outreach," said one Hollywood industry source. "You can't dictate terms to the industry. The Adobe thing is just inviting the wrath of everybody." Added a senior source at a media company: "If Apple thinks it's going to increase its monopoly with the iPad, it should look at the history of other walled gardens."

After having recently surpassed Microsoft in market capitalization to become the biggest Tech company in the world, Apple is no longer the underdog in the technology world.  Companies like Adobe, Amazon and Media Players in Hollywood certainly would like to see Apple carefully scrutinized.

Books As Social Objects —

Verlyn Klinkenborg makes some astute observations about his use of iPad and Kindle as a reader of books, in particular the role that books play in social intercourse and how this is diminished becuase of the restrictions that digital books tools place upon us:

The entire impulse behind Amazon’s Kindle and Apple’s iBooks assumes that you cannot read a book unless you own it first — and only you can read it unless you want to pass on your device. That goes against the social value of reading, the collective knowledge and collaborative discourse that comes from access to shared libraries. That is not a good thing for readers, authors, publishers or our culture.

Removing the social affordance of loaning someone a book is perhaps the worst crime perpetuated by the new world order of digital content. The communitarian aspect of shared books in libraries is similarly damaged.

Books should be social. Our personal property should be ours to loan to friends.

Imagine if Sears mde it impossible for me to loan my chain saw, or if fingerprint recognition on my VW made it impossible for a neighbor to borrow it?

But, in the name of countering 'piracy', we can't loan The Moon Is A Harsh Mistress to a friend. And our society is lessened because of that.

This one got to me instantly and powerfully: “not a book of pictures … (it) is a book of ideas.” As author Jim Krause calls it.

Measuring a pocket-book sized 23×15x2cm, it could fit into a mid-sized camera bag and would rapidly give you a jolt of fresh ideas when out and about with a camera.

In reality you have to take Krause’s “not a book of pictures” message with a pinch of salt: the book is actually chockers with pictures and very light on text. However the pictures — well over 300 of them — are of such a concise and powerful style that each does in fact give a creative jolt as you skim through them.

Delving deeper I discovered that each group of thirty images is backed up by 40-50 words of explanatory text describing how each was achieved at the camera and software stages.

Krause is a designer/illustrator/photographer by trade and his precise eye for a picture shows up brilliantly, not only in his choice of subject but also in the tight framing that avoids distracting elements in the frame.

I see a lot of books kin my reviewing tasks but this one impressed the hell out of me as a concentrated stimulant to get out there and get the shots! Great shots!

One of the best!

Author: J Krause.
Publisher: HOW Books.
Distributor: Capricorn Link.
Length: 354 pages.
ISBN 978 1 60061 044 8.
Price: Get a price on Photo Idea Index – Things at Amazon.

Post from: Digital Photography School - Photography Tips.

Photo Idea Index: Things [Book Review]

We’re adding broadband connections to our televisions, our phones, our reading devices and our game consoles these days, to the point that we expect such connections in almost everything we own. But while connectivity is awesome 90 percent of the time, it’s also scary because it can turn what were once private habits such as reading a book or answering email into something social — in some cases, without us knowing.

It also allows advertisers to better track our activities and to offer up personalized ads. Thanks to more gadgets with a web connection, we all live in glass houses where friends, neighbors, advertisers and potentially the government can see what we’re up to. What’s worse is that the records of our daily activities aren’t a transitory blip; they’re kept for months on end and can be searched, resold or shared.

Sure, your glass house has a great view of the world, and the ability to let your friends know what TV show you’re watching so they can share the experience is nice. But sometimes — perhaps for no other reason that a desire to be alone — you might want to close the drapes.

I place very high value on the notion of privacy. It disturbs me to find that Amazon might be sharing my anonymized highlighting of my Kindle books with the world — not because I’m learning how to make a bomb or reading Harlequin romance books — but because reading is a private activity for me. I’m similarly disturbed when a company that’s already pushing my comfort zone on privacy says one thing, but is apparently doing another.

If we’re going to live in glass houses, here’s what we need as connected consumers:

Transparency: Services shouldn’t say one thing but do another. Nor should they explain what they share in convoluted or complicated terms. And given how fast things change online, when privacy policies are amended, users need to be explicitly told (GigaOM Pro, sub req’d).

Standards: We need the companies that want to use and share our information to agree on terms, and market the heck out of them as a means to educate consumers. IP addresses, for example, are generally considered anonymous but they can be traced back to a household. Consumers need to know that. They also need to get a real sense of other potentially invasive ways tech can track them and understand which ones matter. Having a unified schema for entering and storing data would also help because it would enable users to move their information to other providers and perhaps shop around on the basis of privacy.

Control: I think we’re in many ways having the wrong debate over privacy. Most people don’t know what’s being shared, which means they don’t know what to do about it and instead, just freak out. If you give people information in a standardized format suddenly they can have control — they can decide what to share and with whom.

Having control may not mean that a consumer opts into sharing information through an arduous, click-filled process, but with enough transparency and standard language, can tell immediately what’s going to be shared upon signing up. In many ways the Internet is about the ability to access information or services easily and virally, and opt-ins create a barrier to entry that’s pretty high for businesses. Plus, the expectation that has developed around the Internet is that it’s easy to sign up and share information, but you need to clearly tell people what’s happening and offer them a way out before they share more than they intended.

A Line of Demarcation: How much someone is willing to share online is pretty personal. Already I share more online than I ever thought I would, while I’m sure my daughter, who is now three, will share even more. But as we connect financial and health information to the Internet through broadband-connected medical devices and online health records, we need to set limits as to who owns those records and how they can be accessed.

I think that data should belong explicitly to the user and methods to read it should be interoperable so that it can be shared at will with service providers when needed, while the user retains control. There is no sharing without an explicit opt-in.

Clearly this isn’t going to stop egregious violations of privacy, such as photos of a dead teen being posted online despite the family’s wishes, and it doesn’t mean one shouldn’t exercise common sense when, say, pondering whether or not you should post that pic of your friend drinking.

One way or another, instead of debating the nebulous issue of whether we share too much, we need to talk about how to set standards and educate consumers. Only then will we be able to have a healthy debate over what privacy practices we need in a connected age. We live in glass houses — let’s accept that and start shopping for blinds.

Image courtesy of Flickr user seier+seier

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Facing increasing pressure from Apple’s red-hot iPad, Amazon intends to fight back with a thinner, sharper and more responsive Kindle that will be introduced later this year.

According to Bloomberg, Amazon will introduce a new version of its popular e-reader in August. It will boast a thinner build, sharper contrast, and faster page-turning. However, it will not be a touchscreen device, nor will it boast color.

Apple is gunning directly for Amazon’s e-book business with its iBooks store, which publishers have embraced as an alternative to Amazon’s long-standing dominance in the e-book space.

The iPad’s multitude of uses and starting price point of $499 are a threat to the Kindle, although the iPad’s LED screen isn’t as well suited as the Kindle for extended reading. The Kindle utilizes black-and-white e-ink technology to make reading on the device less strenuous on the eyes.

While the upgrade should help Kindle stay relevant, we’re likely to see color and a touchscreen on Amazon’s e-reader device at some point. In February, the company acquired Touchco, a startup specializing in color touchscreen technology. It’s going to be some time though until Amazon is satisfied with a touchscreen interface that is also easy on the eyes.

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Tags: amazon, apple, ipad, Kindle

Engadget Gets Wind of K66, the iPhone OS-Based Next-Generation Apple TV —

The code name has been in the iPhone OS 4 beta SDK for months. Joshua Topolsky reports:

Not only will this be priced to sell (like hotcakes), it seems that Apple is moving away from the model of local storage, and will be focusing the new ATV on cloud-based storage (not unlike Amazon’s streaming scheme, though we’re talking instant-on 1080p, a la Microsoft).

The big question — which I do not know the answer to — is what the interface is going to look like. It certainly can’t be a direct touch interface. You can already use an iPhone/iPod Touch as a remote for the existing Apple TV; presumably that’ll still be an option, but I don’t think Apple can sell a $99 set-top box that requires a $199 remote. And will there be a TV app store? If so, when? (Maybe not right away.) A web browser?

Can a Computer Detect Sarcasm? —

Can a Computer Detect Sarcasm? is a post from Chris Pirillo

Sarcasm is a great way to take the edge off of criticism or to tell the world you aren’t exactly happy about something. When we are using verbal language, it’s usually fairly easy to detect sarcasm. It’s another matter completely when we attempt to get our point across in text. It’s easy for someone to take things the wrong way online because it’s impossible to read intended meaning. We have a few ways to combat this problem, including actually placing a disclaimer within our comment stating that we are being sarcastic.

Doing this isn’t always possible, though. How, then, are we supposed to know for sure? Why can’t our computer just tell us when sarcasm is detected? A slew of researchers are attempting to help. They have developed a computer program that can identify sarcasm in online environments with about an 80% accuracy. There’s obviously still a long way to go before computers can correctly understand all the subtleties of humor. This new research might just help companies sort through comments about products and services to find out what their customers really think.

The program uses a strategy called “machine learning,” and detects sarcasm by analyzing patterns of phrases and punctuation often used to indicate irony. Starting out, the researchers fed the computer 80 sarcastic sentences and a few thousand non-sarcastic sentences grabbed from Amazon user rewviews. Sarcastic comments included: “Trees died for this book?” and, for a smart phone: “All the features you want — too bad they don’t work!” The program analyzed all of the sentences and created several hundred patterns that it then used to evaluate a total of 66,000 reviews. Each review contained an average of fifteen sentences. One of the patterns it figured out, for example, was that sentences that start with “I guess” and end with an ellipsis are often, though not always sarcastic.

To test the program out, the team gave two hundred of the same product reviews to three independent reviewers. Results showed about an 80% agreement between computers and humans when trying to detect sarcasm in the written words. Research like this may well lead to very important advances in artificial intelligence. Who needs monkeys, anyway?

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Startup Strategy Roundtable: Don't Waste Precious Years Of Your Life —

Today quite a variety of entrepreneurs presented their business ideas at my Online Strategy Roundtables. Several times I brought up how precious our time is and we need to treat it as such. So many people become enamored with technology and the building of the product before they ever think to validate that this is a business service or product that a customer wants to pay for.

I've seen too many entrepreneurs wasting precious years of their lives, and I sincerely try to discourage anyone from wasting his or her time on an idea that does not have legs based on concrete customer feedback. One of the entrepreneurs said he thinks of me as the Simon Cowell for entrepreneurs after listening to some recordings of previous roundtables. I think my advice is only valuable if I'm being honest and direct. Plus, I don't want to waste my precious time either!

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Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy. She has a master's degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys, Bootstrapping: Weapon Of Mass Reconstruction, Positioning: How To Test, Validate, and Bring Your Idea To Market and her latest volume Innovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon. Mitra is also a columnist for Forbes and runs the 1M/1M initiative.

Dawson Fercho started off by introducing Temetic Research, an software services company that offers advanced tools based on digital sociology that can offer a deeper understanding of social media buzz (beyond just words) than social listening and monitoring products currently do. Launched in January, they already have half a dozen communications firms who deal in brand awareness and management on board as clients. They offer a base analysis report as a service, and they hope those who like the report will become clients of either the software products or of their ongoing service.

Dawson asked if he should position his business as being similar to social monitoring to help potential clients fit them into a category. He tells me there are several metrics that his technology is able to track because of the algorithmic sophistication that others cannot, so my advice is to lead with those metrics to differentiate. He needs to ask customers if they are interested in measuring X, Y, and Z to validate that these metrics are indeed of interest to them.

Dawson said all of their money is going into development, and my advice is to ramp up the base analysis service to help fund their development and continue to bootstrap. I also suggested he explore partnering with SaaS PR businesses like Vocus PR who I think will find this technology intriguing. I asked him to check out my case study on Vocus PR.

Next, Griffin Boyce presented PsycView, a software to help eliminate the distance between doctors and patients. Griffin discussed how this software can help doctors manage patients over great distances, and also how patients can use it to get treatment from rural and frontier areas. Griffin is trying to do too many things at once with his business and is going in too many directions. He spoke about having an iPhone application to serve people living in frontier areas, but the iPhone is not widely used in such places. He said he thinks addicts are a strong segment to target, but I don't think people in the depths of addiction will be checking their phones for solutions.

I think there could be something interesting in Griffin's pool of ideas, but he needs to do a lot more focused work to figure out what it is. I told him it's like an uncut diamond that still needs to be shaped and pared down to get to the gem. He needs to focus his software on doing one thing really well - zero in on one idea, a specific disease or whatever. Spraying and praying does not work. I suggest using the Clarify Your Story framework to focus.

Gustavo Hernando was up next to present daFoodie, a website that allows diners in Orlando to share photos of their plate of food at a restaurant to help others decide where to eat. He sees the sharing of such photos as a growing trend and does not plan to include ratings or reviews.

I'm very concerned that there is no reasonable way to make money doing this. I question how many people base their dining decision on photos alone rather than reviews. Perhaps he could partner with some other review sites, but what will keep them from doing this themselves? I hate to discourage any entrepreneur, but Gustavo may be better off using his considerable skills elsewhere. It is very expensive to go to market in this area; OpenTable has spent a ton of money. I hope Gustavo will find an opportunity that will monetize better for him.

Then we had Rudy Santamaria who has designed a line of kids clothing called Look Mommy! Clothing. These clothes convey positive images depicting what a child would like to be when he or she grows up. He has sold 750 of these shirts by hand in the past six months, validating that this is something parents are interested in buying for their child. If he would like this business to scale, the next step is to figure out how to sell these shirts without Rudy being physically involved in the process. Since baseball player and rock star shirts are his best selling, I suggest he start exploring what the best channels are for each category and remain very focused on each niche. Personally, I'm aware of a high level effort to interest young girls in science, so I suggested he do a Look Mommy, I'm A Scientist design for girls and target the organizations that are leading this movement.

Up last was Matt Walters for Sports Spray, a line of water resistant spray products to help amateur and professional athletes excel. His product line includes a stick spray (to enhance grip), slip spray (for under padding and blisters), no sweat spray (antiperspirant for hands or feet), more sweat spray (enhances workout and weight loss), and shoe spray (to keep from slipping). He is ready to go to market but is wondering if he should lead with a product whose competition retailers would already be familiar with or should he introduce the slip spray product, which is totally unique.

I suggest he start with the new, more differentiated product, the slip spray, and manufacture that first. He should focus all the branding around this new product and getting it reviewed by bloggers and social media influencers interested in sports. We discussed very targeted advertising to coaches since he believes it is a cost-effective and reasonably priced channel. I suggested he validates that the demand for this product exists by selling online before chasing retailers to get broader distribution.

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures.

In addition, we are offering entrepreneurs access to investors and customers through our substantial channels. Our newly launched 1M/1M Incubation Radar series this week profiles La Grande Dame, and you can also read about several other 1M/1M entrepreneurs on my Forbes column, These Companies Are Built To Enjoy.

You can find the recording of this roundtable session here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

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