News - Digital Media

The masses have spoken.

And Wal-Mart Stores, the nation's largest retailing chain, retreated from a misdirected and unfair policy. Last month, the company informed customers who bought its DRM-wrapped music that it would no longer issue keys to unlock the songs. That meant music buyers would no longer be able to move their libraries to new computers or players. On Thursday, the company reversed that decision and said it would continue to issue keys for "the present time," according to Ravi Jariwala, a Walmart.com spokesman.

OK, let's tally these up. By my count this makes the third behemoth company this year to bend its digital rights management strategies to your will. Yes, you the Internet user, consumer, music fan.

I'm not pandering. That's what happened. The pattern was the same in each case. MSN Music was the first to announce that it planned to stop supporting DRM. Then came Yahoo Music, followed by Wal-Mart. Each announced a plan to kill support. Each was criticized. Each caved in.

Customers pointed out the obvious: There was no expiration date on the music they bought. Customers deserved to keep what they paid for.

If nothing else, the lesson here to you--techies and digital music fans--should be that when you go to the barricades, you can make something happen. When you combine voices, the sound is loud enough to force conglomerates to bend their ears. To their credit, Microsoft, Yahoo, and Wal-Mart listened.

Of course, this isn't the end. Microsoft has committed to supporting the DRM keys for three years. What happens in 2011? And when I asked Jariwala how long does "for the present time" mean, he e-mailed this:

"(Walmart.com) will continue to evaluate options and no decisions have been made at this point. In the meantime, we'll continue to offer MP3 downloads through our online music store and will assist with DRM issues for protected Windows Media Audio (WMA) files purchased from Walmart.com."

It's generally recognized as a good thing that Walmart.com has opted to switch to MP3s, but as far as the DRM-wrapped music it once sold, it's plain to see the company could pull the plug whenever it wishes.

And what about the services which continue to sell DRM-laden downloads, such as iTunes? Who knows what the future brings, but if Apple ever considers turning off its DRM support, it should make preparations to take care of its customers.

If not, well, then the people will clear their throats once again and make themselves heard.

New reports say Wal-Mart may have reversed its policy on digital rights management, and will keep servers online for the near future.

Wal-Mart had sent an e-mail to consumers last month that, starting October 9, it would no longer assist with digital rights management issues for protected files purchased from Walmart.com.

That means that anyone who had those music files would still be able to access them on the devices or computers they reside on, but wouldn't be able to transfer them to new devices.

Yahoo and Microsoft had announced similar plans when shuttering their DRM programs, but both companies backtracked after sharp criticism.

Now, reports say Wal-Mart has told consumers that it, too, will continue to support the DRM-protected music.

Engadget has posted an e-mail that Wal-Mart reportedly sent to music customers informing them that "we have decided to maintain our digital rights management (DRM) servers for the present time," and that their customer service team "will continue to assist with DRM issues for protected windows media audio (WMA) files purchased from Walmart.com."

A spokesman for Wal-Mart could not immediately be reached for comment.

One after another, venture capitalists are stating the obvious to the companies they've invested in: Now would be a very good time to keep your money under lock and key.

From Sequoia Capital, which has had parts of its dire economic presentation to its portfolio companies aired out in the press, as reported in VentureBeat and GigaOm, to angel investor Ron Conway in his letter to his portfolio companies, the message is clear and persistent: prepare for the worst.

M&A and IPOs Worldwide and Tech

(Credit: Thomson Reuters)

And that preparation, as Conway noted in his letter to portfolio companies, includes cutting marketing costs, general and administrative expenses and, yes, even layoffs if need be. Sequoia was a bit more dramatic in its message, reportedly using a tombstone with the engraved words "R.I.P. Good Times."

Faced with a tightening credit market and the markets in a virtual meltdown, the VCs that fund these start-ups are busy dishing out sage advice--and companies are taking it to heart much earlier in the game compared with the Internet bubble of 2000.

And for later-stage companies, the M&A route is virtually the only game in town. The IPO scene, in this bearish market, has virtually shut down, with only 44 tech initial public offerings out the door so far this year, compared with 215 deals last year, according to Thomson Reuters.

Start-ups that are fortunate to land another financing round should expect smaller rounds and ones with lower valuations for their company.

And while most tech companies are capital efficient, meaning they need little money to fund their operations, the hot investment area of "green tech" is not as fortunate, noted one venture capitalist.

"One area that is very affected and needs large sums of capital to take off is the novel energy ideas like solar, biofuels, and large-scale energy projects," noted venture capitalist Geoff Yang of Redpoint Ventures.

He added that businesses that plan to rely on the credit markets and finance markets to make their business models work are the ones that are at greatest risk in this current economic climate.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

As Yahoo stock reaches new lows, it appears a private equity fund that owns a small percentage of Yahoo's stock has proposed a new deal for selling the company to Microsoft.

Mithras Capital Partners, which reportedly owns more than 1.9 million shares, or 0.14 percent of Yahoo, suggested a new deal Thursday to sell the company to Microsoft for $22 a share, a 74 percent premium on Yahoo's current stock price, Reuters reported. A Mithras Capital partner plans to send a letter proposing the deal to Microsoft and Yahoo on Thursday night, Reuters said.

Under the deal, the software giant "would unload Yahoo's Asian assets and nonsearch businesses, extract $3 billion worth of cost savings, and receive $2.8 billion of tax benefits," Reuters said. In other words, the software giant would pay $10.3 billion for Yahoo's search business.

In May, Microsoft walked away from its buyout offer of $47.5 billion to snap up all of Yahoo, only later to return with a partial buyout offer of $9 billion to acquire just the company's search assets.

The Internet company on Thursday dipped for the first time into the $12-a-share range, ending the day at $12.65. That followed Wednesday's crossing into the $13-a-share range. Analysts have noted that these crossings into new dollar ranges are psychological landmarks for investors.

Maybe it's advice he heard from a career counselor at Harvard and took to heart: Do what you love, and the money will follow. For now, what Mark Zuckerberg wants most for Facebook is to see it grow and grow and grow some more, without too much fretting over the bottom line.

In an interview with a blogger for the German newspaper Frankfurter Allgemeine Zeitung, Facebook's co-founder and CEO minced no words on the matter: "Growth is primary, revenue is secondary."

Mark Zuckerberg and Sheryl Sandberg at the D6 conference in May.

(Credit: Dan Farber/CNET News)

Of course, it could be less a philosophical matter than a practical one for a site that's still sketching out its plans for making money to match its popularity. And bless his heart, even in a tanking global economy, Zuckerberg suggests there's plenty of time for that. He elaborates:

But what every great Internet company has done is to figure out a way to make money that has to match to what they are doing on the site. I don't think social networks can be monetized in the same way that search did. But on both sites people find information valuable. I'm pretty sure that we will find an analogous business model. But we are experimenting already. One group is very focused on targeting; another part is focused on social recommendation from your friends. In three years from now we have to figure out what the optimum model is.

Sheryl Sandberg, Facebook's chief operating officer, said essentially the same thing over the summer--the social network's focus is on growth.

How do the two executives divvy up their responsibilities? Zuckerberg said of Sandberg, who joined Facebook about six months ago:

She is an excellent manager. She is very good in building our international organization. I'm focused on the direction of the company, especially of the product development, and the overall strategy. I spend a lot of time working with engineers and product developers. We work together hand in hand.

He also made it clear who's boss: "Me!"

On Friday, Zuckerberg will be taking part in a "fireside chat" at the Future of Web Apps conference in London.

For the full interview, including Zuckerberg's take on Facebook's Windows Live Search deal, its international growth, and the possibility of an IPO, see " Facebook CEO Mark Zuckerberg: Our focus is growth, not revenue."

Yahoo fell into the $12-a-share-range Thursday, marking the second consecutive day its stock tumbled to a new low.

The Internet company dipped as low as $12.47 a share during intraday trading, before ending the day at $12.65 a share--down just over 8 percent.

Each time Yahoo's stock drops into a new dollar range, analysts have noted that the border crossing serves as a psychological landmark for investors.

Yahoo falls into $12 range

(Credit: Yahoo Finance)

On Wednesday day, Yahoo crossed the $13-a-share threshold. Fear and loathing seem to have taken hold of its stock, with analysts panning the company's prospects in display advertising, given the shaky economy, in addition to a bleak performance on Wall Street.

In the last two hours of trading, Yahoo's shares crossed into the $12 range and quickly plummeted as the broader markets slumped.

The Dow Jones Industrial Average also hit a new psychological mark Thursday, falling below 9,000 for the first time in five years. The Dow ended the day at 8,579.19, down a whopping 678.91 points, or 7.3 percent.

The Nasdaq dropped nearly 5.5 percent, or 95.21 points, to close at 1,645.12, while the S&P 500 closed down 7.6 percent, or 75.02 points, to finish at 909.92.

And in the tech world, the CNET Tech Index, about 30 minutes before the close, was trading down 2.2 percent, or 26.41 points at 1,162.74.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

Google Maps now shows text ads across the bottom of the screen sometimes when people perform searches.

(Credit: CNET News)

Google has switched on another search-related ad revenue source, this time on Google Maps.

Some searches, such as those for taxi, restaurant, or hotel, show a blue-background text ad along the bottom of the Google Maps page. Given that anyone at the site is using a map, this is an opportunity for Google to employ a strong geographic influence in its ad targeting algorithm, and in general, the better targeted an ad is, the more effective and costly it is.

The results vary according to what the user sees on the map; for example, searching for "notary Kansas City" shows no ad, but centering the map on Kansas City then searching for "notary" does. Likewise, "shoe store San Francisco" shows results but "shoe store" while looking at San Francisco doesn't. Presumably this behavior will change according to what keywords advertisers bid on.

The company already showed some sponsored "pushpin" links that appear on Google map results.

Google makes the vast majority of its revenue from text ads that appear next to search results. Searches are a great way to discern exactly what people are interested in, which improves targeting.

In all likelihood the Google Maps ads also require payment only when users click on the ads, a more measurable method of paying than exists for most graphical "display" ads.

(Via TechCrunch.)

Some people Yahoo selected to test a revamp of its home page aren't happy with their involuntary guinea pig status.

On the blog post from Tapan Bhat announcing the new Yahoo front page, the commentary begins with a number of favorable comments and several requests by people who want to try it out, but soon, the complaints start bubbling up too.

A common complaint is that it's harder for a user to get to e-mail.

"I do not like this. I did not ask for it to be changed. It scares me that you have control over my computer to change only mine in the office and no one else's," wrote user Terri. "E-mail sucks. You have to go through four screens before you can read your e-mail. I want the old Yahoo back. You changed this; I did not. How do I change it back?"

Wrote user AG55: "Terrible! Takes too long to get to e-mail. Extra steps....yuck. I'm all for new, but make it more efficient."

User dlfarley thought he'd been hijacked to another site, but once he figured out it was a beta test, gave Yahoo a thumbs-up for an easy-to-use, fast site.

And alstrooper griped, "I have written to the support group to find out how to get the original Yahoo page back. The answer is, you cannot. I am now stuck with having to click and navigate multiple times to get to my normal e-mail screen instead of doing it in one click. I used to be able to hover over the weather icon to see current weather quickly; now I have to take the time to log in, navigate, and click. With all the negative feedback I have read on this board and zero response from Yahoo, I can only assume they do not care, and longtime users will move on out of sheer frustration."

Yahoo said it randomly picked users for "bucket testing," in which it compares how things work for users in different buckets. Because the company wants to get statistically significant results, not the biased ones that come from those who self-select, it won't let people in or out of the test. Future phases of the test will implement new features, and presumably, the company will notice if people overall reject the new site by using it less.

Update 2:02 p.m. PDT: Yahoo had this to say about the change: "Yahoo is committed to creating innovative, easy-to-use products. When making changes to Yahoo.com, one of the most trafficked pages on the Web, we understand that it is important to carefully test our innovations and listen to our users. Not every person will like every change, but we value all feedback and strive to keep consumers at the heart of our product development process. Testing and gathering user feedback have always been a significant part of our product development process, and we encourage people in the test groups to send us feedback via a link at the top of the new page."

Yahoo is testing a new home page. The new site is more personalized and customizable. This version is a 'baseline' for user testing; Yahoo will add more features later. (Click to enlarge.)

(Credit: Yahoo)

A number of Telstra's major broadband rivals have said they have no immediate plans to follow the telecommunications company's lead and use the Twitter microblogging service to monitor service outages and contact customers about support plans, though a closer look shows Optus to be one of the only large carriers not using the tool.

Telstra launched the offering over the past several weeks, garnering a mixed response from Australian users of the service, but rivals Optus, iiNet and Internode said they weren't as keen to offer an official Twitter-based service.

iiNet did admit that it had already dabbled in the tool and had an unofficial Twitter account. But the Internet service provider didn't intend on extending the channel to offer Twitter support in an official capacity, according to a company representative.

"For now, we're interested in informally participating in the commodity-free, open-conversation platform that Twitter encourages," iiNet said.

Despite its unofficial nature, answers to iiNet customer queries have been posted on the Twitter stream since the first post, on September 30. In reply to one tweet on whether responses would be coming 24-7, the company said, "Not at this stage, no. For now, it's proof of concept, hurtling towards a greater destiny! We hope."

The iiNet account's opening follows that of competitor Internode, which existed despite the ISP's managing director, Simon Hackett, saying the company was happy with its current use of broadband information site Whirlpool to communicate with customers.

"We're quite open to the idea (of using Twitter), but to date, we're finding that being open and accountable on Whirlpool has served us well for many years and continues to do so," Hackett said.

He said many senior staffers, including himself, were active on Twitter. Recently, when Internode had an outage, Hackett made multiple posts on threads discussing the problems.

Internode's Twitter stream has been in operation since midway through last year. Optus, however, seems to be the odd one out, with no Twitter account, official or otherwise.

"At this point in time, we're not using Twitter. However, we are always looking at emerging technologies and tools to improve the way in which we communicate with our customers," an Optus representative said.

Suzanne Tindal of ZDNet Australia reported from Sydney.