Is this man unbeatable in the digital-music sector?
(Credit: Ina Fried/CNET News.com)Update 6:04 p.m. PST: The New York Times is reporting that Apple and Lala have struck a deal.
Apple, which is in talks to acquire Lala, is unlikely offering much for the streaming-music service.
Sources with knowledge of the discussion told me that Apple is interested in bringing some of Lala's engineers on board. According to the sources, Apple is impressed by Lala's technology. The 4-year-old Lala scans users' hard drives and creates a duplicate music library that they can access from Web-enabled devices. The company also sells songs for a dime each.
I posted a story on Friday about the acquisition talks. Apple declined to comment on "rumor and speculation" and a Lala spokesman did not respond to an interview request.
Over at The New York Times, Brad Stone posted a report citing sources who also said Apple had a special interest in obtaining Lala's engineering talent. But the Times also added this:
"The talks (between Apple and Lala) originated when Lala executives concluded their prospects for turning a profit in the short term were dim," Stone wrote. "(Lala) initiated discussions about a potential investment with Eddy Cue, Apple's vice president in charge of iTunes."
That Lala was struggling to turn a profit is consistent with the kind of bleak news that has come out of digital music the past year. Many of the newer and experimental business models, such as ad-supported music, have flopped. The only reasonable question now is how much longer will this shakeout continue?
We saw Ruckus falter and close in January. We saw SpiralFrog flameout spectacularly in March. In August, MySpace picked up iLike, and sources said that MySpace acquired Imeem last month, but the news has not been announced.
What seemed to be different about Lala is that the company had received positive reviews from the music labels for a long time. Executives at some of the biggest recording companies have told me in the past that they respected Lala's management and its focus on the bottom line. This spring, label execs said they saw some encouraging signs after Lala had revamped the service for seemingly the umpteenth time. It initially made a name for itself by trying to enable users to swap CDs over the Internet. It never went anywhere.
Then came the announcement in October that Google would offer Lala's music to users searching for information on music acts. That could mean a boon said some of the pundits. Apparently, by that time, Lala's fate was sealed.
So, we're kind of right back where we started. The only proven winners in digital music are Apple and download sales.
Michael Robertson, the serial entrepreneur and MP3.com founder, told me earlier this year that it doesn't matter if Imeem, Lala, and their competitors went away because there is always a new crop of players longing to jump into the music industry.
"It's sexy," Robertson said.
In that case, who's up next? Let's see your ideas and technology. Better bring a lot of nerve.
Update 1:32 p.m. PST to include some of the reasons sources say Apple is interested in Lala.
Apple is close to acquiring digital-music service Lala, according to two sources with knowledge of the discussions.
Talks are very advanced, the sources said Friday. One said that the sides have already agreed on terms and have only to sign a final agreement. (Update 6:04 p.m. PST: The New York Times is reporting that Apple and Lala have struck a deal.)
Steve Dowling, Apple's spokesman, said the company doesn't comment on rumors and speculation. A representative from Lala was not immediately available for comment.
Lala is a streaming-music site that sells songs for 10 cents apiece and enables users to store their music libraries on the company's servers. But it has gone through multiple iterations and was once known as a CD-swapping service before it began streaming music to users' PCs.
Exactly what Apple intends to do with Lala remains unclear. Right now, Apple is the largest music store online or offline and has made more money than any other music service by selling downloads. CEO Steve Jobs could have plans to start a streaming service, but my sources told me Friday that Apple managers are very interested in working with Lala's engineers, who have come up with "a payment and fulfillment system that could save Apple millions of dollars a year."
In addition, Apple wants Lala's founder Bill Nguyen to come over as part of the acquisition, another source said.
Nguyen is a well-known and respected Silicon Valley entrepreneur who has tried for years to find a music service that is both popular with users (meaning cheap and easy to use) while also generating profits.
According to music sources, the affable Nguyen is also one of the more popular figures from the tech sector because he has typically focused on generating profits as much as whiz-bang technology. That is not always the case, the sources said.
That said, Lala is not believed to be profitable.
If the deal should go through, it would be the third acquisition of a digital-music site in recent months. MySpace acquired iLike in August and sources said last month that MySpace purchased Imeem.
If Apple is planning some kind of streaming service, the public has shown an appetite for the kind of streams that are free of charge and ad-supported.
Many music fans have also clamored for a better way to store music. Right now, most music libraries can be found on an owner's computer hard drive, which can malfunction. Lala enables users to store songs on the company's servers and access them from Web-enabled devices.
Google is making a new move to lower language barriers, offering the ability to translate search results from one language to another.
The search giant is in the process of adding the feature to the "show options" button that shows at the top of search results page. "We've offered this feature in Google Translate for a while, but now we're integrating it fully into Google search, making it easier for you to find and read results from pages across the web, even if they weren't written in a language you speak," said Maureen Heymans, the project's technical leader, and Jeff Chin, its product manager, in a blog post.
Clicking the option can dramatically change the results you see. For example, my ordinary search for "Taipei Museum of Fine Art" produced mostly English-language results. The translated results, though, featured Chinese Web sites with a different perspective (see the result below). Among other things, there was a Chinese Wikipedia entry--also conveniently translated by Google when I clicked the link--where there is none written in English.
... Read moreExecutives of online music video service Vevo are close to finalizing an agreement that will bring content to the site from EMI, the smallest of the four top recording companies and the label of Coldplay, Katie Perry, and Norah Jones.
EMI's New York headquarters.
(Credit: Greg Sandoval/CNET)The deal between Vevo and EMI could be announced at any time, sources familiar with talks told CNET.
"EMI is in discussions with Vevo," EMI spokeswoman Jeanne Meyer acknowledged, though she declined to disclose the current stage of the talks.
Scheduled to launch on Tuesday, Vevo will soon be able to offer music videos and other content from three of the four top labels: Universal Music Group, Sony Music Entertainment, and EMI.
The only major record company not partnering with the venture is Warner Music Group. Sources said talks between Warner and Vevo continue.
Universal Music founded the service earlier this year, aiming to cash in more on the popularity of music videos. At YouTube, which is powering back-end operations for Vevo, Universal's videos have accumulated the most views of any YouTube channel.
Universal has long wanted a standalone site to showcase video content, which includes traditional video but may also include other video content produced by artists.
Of YouTube's 25 all-time most watched videos, 14 are music videos. EMI recently signed a video-licensing deal with Hulu.
Immediately following the Friday night broadcast of MTVU's alternative-music awards show, the Woodie Awards, viewers will be able to watch a 360-degree video of it online.
The Immersive Media technology supporting the online video, scheduled for online availability at 8 p.m. PST, is designed to enable users to freely navigate around a video, 360 degrees, letting them explore angles and shots that they wouldn't normally have been able to see.
While I haven't seen the Woodie feed yet, I did have a chance to play around with the technology on some test videos. The video experience seems perfectly suited for a concert format. It's certainly something worth checking out, even if you don't particularly care for the music, which is scheduled to include performances by Death Cab for Cutie, The Dead Weather, Matt and Kim, and Passion Pit.
This is the first big event for the IM Live technology, so it should be interesting to see how the experience of the fully produced show on TV compares to the IM Live video experience, in which site visitors essentially become their own producers. If you end up making your own comparisons, let us know what you think.
I wouldn't for a moment think that anyone working late on something frightfully significant in Redmond would conceive of alcohol as a means to help them through their engineer's block.
But just in case there is one tortured soul who might be tempted to have a six-pack delivered to his cubicle, I have some difficult news.
i-Booze, the Seattle-based folks to whom you used to be able to turn online for a swift delivery of soothing liquids, seems to have fallen on difficult times.
For Techflash has delivered the information that not only has i-Booze failed to secure a license to sell liquor but that its enterprising founder, Karim Varela, uncorked a plea bargain on two misdemeanor charges of selling alcohol without a license and illegal possession of alcohol with intent to sell.
In truth, i-Booze isn't i-Booze any more. While the idea reportedly came to Varela when he was in jail for DUI, there were those who felt the name might be something of an incitement to excess. So the company recently changed its name to Dilky.com.
Which some might find a more neutral moniker, but I find my neural association membrane immediately goes to "alky."
In speaking to Techflash, Varela did not sound confident of Dilky's resurrection: "We are still working with the city and the liquor control board to regain a license, but it is a difficult battle."
Prohibition is not quite at hand, though. Anne Radford of the Washington State Liquor Control Board said the board will look into the matter over the next couple of weeks.
Meanwhile, Varela is hoping that former customers and those who would like to be current customers might lobby the board with a human rights appeal. Or perhaps offers of a free wine-tasting trip. (Some details exaggerated here.)
What hope he has, Varela is putting into the presence of a new Seattle City Attorney Pete Holmes, who replaced someone called Tom Carr.
"We feel our downfall was mostly due to ex City Attorney Tom Carr's battle against bars, clubs, and alcohol in Seattle and we just got caught up in the middle when really we're providing a beneficial service for the community," Varela told Techflash.
A beneficial service, indeed. I would happily use it were it to descend to the Bay Area. However, it might also have helped if the service had benefited from a name such as i-Pinot or i-(De)liver rather than the somewhat provocative i-Booze.
An e-mail was sent on Thursday to Facebook users who were members at the time that its controversial, now-defunct Beacon advertising program was operated: it's the official notice about the proposed settlement for the class-action lawsuit against Beacon. The terms of the settlement have been public since September, but the court-ordered summary notice is the last step in the process before final approval on February 26.
"This is not a settlement in which class members file claims to receive compensation," the notice explained (possibly crushing the hopes of any Facebook members who might have got excited that this would be an easy way to make some pizza money). "Under the proposed settlement, Facebook will terminate the Beacon program. In addition, Facebook will provide $9.5 million to establish an independent nonprofit foundation that will identify and fund projects and initiatives that promote the cause of online privacy, safety, and security."
A Web site has been set up to explain the terms of the settlement for the case Lane et al. vs. Facebook Inc. et al., which was originally filed last summer.
Beacon, an advertising program that shared members' activity on participating third-party sites on their Facebook profiles without much warning or notification, was a much-hyped part of the Facebook Ads initiative that debuted in the fall of 2007. But it was, unfortunately for Facebook, a complete public relations disaster.
Pressure from privacy and activist groups resulted in notable changes to the product and member controls thereof, but image repair proved to not be enough and Facebook let Beacon fade to black.
Alec Baldwin fans needn't worry that Comcast will soon pull "30 Rock" or other NBC Universal shows off the Web.
The entrance of NBC Universal's office building at 30 Rockefeller Center.
(Credit: Greg Sandoval/CNET Networks)Comcast managers said Thursday, following the company's announcement it had acquired a controlling stake in NBC Universal, that it will be business as usual at Hulu, the joint venture operated by NBC Universal, News Corp., and Disney.
Ever since rumors of the acquisition began to swirl in September, questions were raised about whether Comcast would try to kill Hulu to discourage cable customers from dropping their subscriptions. Some critics of the deal said Comcast could also limit access of NBC Universal's TV shows and films to other popular distributors, such as Netflix and iTunes. It appears that some of this may happen and some of it may not.
During a conference call, Comcast executives said they anticipate that some content will appear online at Hulu, and other shows will appear on TV Everywhere, the Hulu competitor that Comcast, Time Warner, and other cable companies rolled out last summer.
"Comcast is too deep into their Internet-related investments for me to believe that they are hoping to clamp down on consumer enjoyment of NBC content," said James McQuivey, a digital-entertainment analyst for Forrester Research. "They have spent far too much money buying companies and developing infrastructure to suggest they are going to make it a 'my-way-or-the-highway' distribution scheme. It would be absolutely foolish to buy an expensive property like NBC Universal and then cut the legs off of it."
Hulu's freedom
Okay, so Hulu won't disappear once the acquisition--which still needs government approval--is finalized, but Hulu fans are concerned about how the site will develop. Many had long hoped that the service might one day offer a better selection of full-length feature films and past episodes from hot TV shows. Now, Hulu offers only a smattering of films, and to watch episodes of a TV show from a prior season, a fan must plunk down for a DVD.
Most importantly, Hulu fans want to continue watching without paying subscription fees, which has been discussed publicly by some of Hulu's backers, including Jeff Zucker, NBC Universal CEO.
Free content was the promise that made consumers so giddy about Hulu and YouTube not that long ago. Cable subscribers were thrilled by the possibility that they could watch the best shows and films without having to pay fees. The NBC Universal acquisition is just the latest sign that this dream might be in jeopardy.
Paul Gallant, an analyst at Concept Capital's Washington Research Group told The Washington Post that Comcast could "harm consumer welfare by preventing Internet video from becoming a viable cut-the-chord threat."
"It's a little bit Pollyannish to say 'I can cut cable because everything I want is on the Internet,' because it isn't," McQuivey said.
The big knock on Hulu and other legal video sites is their selection of films and TV shows is still pretty poor. Under Comcast ownership, Hulu will unlikely be unable to change that. More probable is that Comcast will use NBC Universal's content to sweeten its offering to paying subscribers.
"The goal of Comcast is not to make it hard for people to get content," McQuivey said. "The goal of Comcast in the future is to make it really easy to get content and that's what people will pay for.
"In the future, Comcast isn't going to say 'Here's 500 channels delivered to one set-top box,'" he continued. "In the future, they'll say 'Hey, you know that subscription you're paying us every month, that buys you red-carpet access to the best content. No matter what you want to watch we have the license to it. We're going to deliver it to you online, to your game console, to your connected television or Blu-ray player.'"
But what about Netflix and iTunes? Doesn't the Comcast-NBC Universal deal put them in a position of competing with a major supplier?
Is Netflix friend or foe?
Netflix looks less like a DVD-rental business and more like the Web's version of a cable company with each passing day. For more than a year now, Netflix has streamed movies over the Web to anyone who pays the company's subscription fees. CEO Reed Hastings raised the stakes in the competition with cable companies by partnering with set-top box makers and TV manufacturers to create systems that enabled Netflix customers to watch streaming films on their flat screens.
Jumping to the TV set was huge for Netflix. No longer latched to the PC, the company was now threatening cable companies on their home turf. But if content is king, then Netflix was offering only a duke.
Just like Hulu, Netflix offered cable subscribers a cheaper alternative. Just like Hulu, Netflix's library lacks new and hot titles. Without the best content, the cable companies still hold an advantage over Netflix. Since Netflix is now a direct competitor to Comcast and other cable companies, it will be interesting to see what kind of terms the Web's No. 1 rental store gets from the new NBC Universal?
As for Apple, it's highly unlikely that Comcast will tinker with NBC Universal's arrangement for digital download sales at iTunes. The very public quarrel between the companies over pricing in 2008 is behind them.
In that case, Apple gave NBC Universal more flexibility over pricing. Apple CEO Steve Jobs has shown respect for Hollywood's lucrative practice of giving exclusive film access to certain distribution platforms over specified periods, called "windows." Jobs is also purveyor of the Web's most successful video-download store, so the relationship will likely remain unchanged.
But McQuivey sees a potential problem for Apple should the company decide to broaden its video business.
Apple could become an over-the-top pay TV provider," McQuivey speculated. "Apple should say 'You buy an Apple TV from us and pay $28 a month and we'll give you access to this number of downloads and all of this TV-network content for free. They are one of the few companies that could really create this amazing little business model of mixing Internet downloads with Internet streaming with over-the-air HD broadcast...Lets be honest, Apple users have fairly shared tastes and as a result it would be easier for Apple to serve its customer base this way than it is for, say, Comcast. Comcast has to offer the world, where as Apple only has to offer what's cool."
It should be noted that in every scenario McQuivey discussed, he mentioned price. In his vision of the digital future, Internet distribution looks a lot like cable.
According to McQuivey, "All of these Internet delivery solutions are going to face some kind of reckoning over the next couple of years. It shouldn't come as a surprise that Hulu is going to evolve to include some kind of pay model."
The 2009 holiday season thus far is revealing much stronger online sales figures than what was witnessed in 2008, market-research firm ComScore announced late Wednesday.
According to the company, which has monitored spending for the first 30 days of the November-December shopping season, sales are up 3 percent to $12.26 billion, compared to the same period in 2008. Cyber Monday sales hit $887 million in online spending, tallying a 5 percent gain over the same day last year. That amount also matched "the biggest spending day on record, December 9, 2008."
"We've seen an encouraging start to the online holiday shopping season and it would appear that retailers' aggressive and early marketing efforts have so far succeeded in persuading consumers to open their wallets online," ComScore chairman Gian Fulgoni said in a statement. "Thanksgiving Day and Black Friday were atypically strong online sales days this year, and Cyber Monday has continued that trend by outperforming the season-to-date average growth rate and matching last year's record day of $887 million in online spending."
The good news doesn't stop there. Cyber Monday also saw an increase in the number of buyers, ComScore found. The total number of online buyers grew 6 percent to 8.7 million people. That said, the average amount each person spent dropped 2 percent to $102.19.
True to the day's origins, the majority of sales originated from work computers. The company found that 52.7 percent of all purchases were completed in the office. Just 41.6 percent of shoppers picked up items from home, ComScore said.
ComScore wasn't the only company reporting strong numbers this week. eBay said that Cyber Monday transactions outpaced Black Friday's by a whopping 35 percent. More than 2.4 million transactions were completed on Black Friday and Cyber Monday, eBay said. The site even has a heat-map graphic that shows how the transactions pored in over the course of those days.
ComScore and eBay's data follows another strong report from marketing-optimization company Coremetrics, which said earlier this week that sales were up 13.7 percent at some online retailers that it received data from.
It's official. Comcast, the nation's largest cable company, announced Thursday that it is buying a controlling stake in the TV network and movie studio NBC Universal.
The total value of the blockbuster media industry deal, which had been rumored since September, is estimated at around $37 billion. The new joint venture will merge Comcast's cable channels, which are worth about $7.25 billion, with NBC Universal assets that have been valued at around $30 billion, the companies said Thursday.
Comcast also plans to contribute about $6.5 billion in cash. The cable heavyweight will own 51 percent of the venture, and General Electric will own 49 percent. Jeffrey Zucker, who has been president and CEO of NBC Universal, will lead the joint venture.
GE, which owned 80 percent of NBC Universal before the deal, is getting about $8 billion in net cash for its contribution. The joint venture is taking on about $9.1 billion in debt, which reduces the amount of cash that Comcast has to put up for the deal. And it also provides the cash to pay GE.
The deal will make Comcast a major media player with several very profitable cable channels, including USA, CNBC, MSNBC, and Bravo. It will also have control over NBC's broadcast networks and TV stations, its film studio, and its amusement parks.
The New York Times reports that Comcast and GE had been working on the deal since March. Rumors of a pending joint venture surfaced in the press in September. But the final deal was delayed as GE negotiated a buyout with French media company Vivendi, which owned 20 percent of NBC Universal. Earlier this week, GE and Vivendi reached an agreement whereby Vivendi will get $5.8 billion for its 20 percent share. If the deal does not close by September, GE is still responsible for paying Vivendi about $2 billion, or about 38 percent of the agreed price.
Brian Roberts, chief executive of Comcast, said in a statement that NBC Universal is a perfect fit for Comcast, and it "will allow us to become a leader in the development and distribution of multiplatform 'anytime, anywhere' media that American consumers are demanding."
Roberts tried and failed to buy another major media company, Disney, in 2004.
Will cable-bashing undo the deal?
The deal is likely to be scrutinized by government regulators, namely the U.S. Department of Justice and the Federal Communications Commission.
Craig Moffett, an equities analyst with Bernstein Research, said in a research note in late October, when rumors of the deal were heating up, that regulators may find plenty of reasons to reject the acquisition.
The biggest problem for the deal could be the fact that GE and Comcast will try to close it during a midterm election year. Politicians taking sides on Net neutrality issues and the national broadband plan may find it easy to bash Comcast. And a marriage between the nation's largest cable and Internet service provider and one of the nation's three broadcast TV stations may ignite old fights over media ownership, a la carte billing, retransmission consent, and cable prices.
"Cable-bashing in an election year is a no-lose bipartisan proposition," Moffett writes in his note. "The headline risk is quite material. Approval of a deal, should one be reached, cannot be assured."
Comcast argues that the deal will be good for consumers by getting some movies on cable TV and on-demand services more quickly, since Comcast will control NBC Universal's movie catalog. Comcast may also be able to put content more quickly on cell phones.
Still, some consumer advocates, such as Free Press, oppose the deal. They say Comcast would have too much power in the entertainment industry.
One issue of concern is that Comcast could use NBC's programming to undermine rival TV services from phone companies, such as AT&T or Verizon Communications, or from cable operator Dish Network. Comcast could charge these competitors more for cable channels, while giving its own cable TV business a better deal. Comcast officials say this is unlikely. And the company has already proven that it offers fair pricing with its existing cable channels, such as E! Entertainment, G4, and the Golf Channel.
The deal may also have an effect on online video services, such as Hulu, which is owned by NBC, News Corp., and Walt Disney Company. That said, Comcast has been experimenting with its own online video service for some premium channels for Comcast customers. The company also already has a Web-based video aggregator called Fancast, which streams full TV shows and movies for all Web users.
