Digital Media

On2 Technologies has filed an update with the SEC on its proposed merger with Google, hoping to put to rest some key questions.

On2, which makes video compression software, announced Monday that the update includes certain key highlights about the merger and some frequently asked questions.

On2 agreed on August 5 to be acquired by Google for $106.5 million, a deal already approved by its board of directors. The terms call for each share of On2 to be exchanged for 60 cents worth of Google common stock.

With its board anxious for investors to approve the deal, On2 outlined some of the risks to itself and to shareholders if the acquisition is prevented. On2's merger-related expenses have already exceeded $2 million, an amount it would be responsible for if the deal is stopped, it said. With cash reserves of only $2.2 million, such a debt could certainly hurt the company.

Without Google's acquisition, On2 said it might have to grab additional financing to run its business, which could include the sale of certain assets, the issuing of debt, or the release of even more shares.

On2 also admitted that it's had trouble hiring and retaining skilled, qualified employees, a challenge that might be resolved if employees knew they'd be working for a Google instead. Otherwise, if the merger does not move forward, On2 believes its revenues would be impacted by its failure to attract or keep good employees.

To address any conflicts of interest, On2 said none of the members of its board would serve as directors, officers, or employees of Google or receive any money from Google in connection with the merger.

On2 also released an FAQ, hoping to address any concerns on the part of shareholders. Since the Google offer, the board has received no other offers or inquiries from other firms about an acquisition, the company said. The FAQ also goes into great detail about On2's board and key executives and their involvement in the merger.

On2's board has set a special meeting for December 18 for shareholders to vote on the deal, and is urging them to approve it. Proxy cards have also been sent out. If the majority of stockholders okay the merger and all other conditions are met, then it should become effective within two days after the meeting, said On2. Google has said it plans to make On2's technology part of its own Web platform.

The merger initially triggered some On2 shareholders to file lawsuits against the company in August, alleging that the deal undervalued On2 and that certain provisions prevented On2's board from considering other offers. But those suits were settled on October 26, though are currently awaiting final approval by the court.

Under terms of a memorandum of understanding in the settlement, On2 agreed to provide additional disclosures in its final proxy statement and prospectus. However, On2 said the settlement implied no wrongdoing on its part, there was no monetary damage, and the company would have released the same information in its proxy statement regardless of the lawsuits.

Facebook users are too willing to give out their personal information, security firm Sophos has found.

According to Sophos' Australian team, which conducted a study to see how likely Facebook users were to offer up personal information, 41 to 46 percent of the 100 people Sophos contacted "blindly accepted" friend requests from two fake Facebook users created by the security firm.

After becoming friends with Sophos, the security firm was able to access up to 89 percent of the users' full dates of birth, all of their e-mail addresses, where they went to school, and more. Half of all the users Sophos befriended displayed the town or suburb where they live. They even offered up information on family and friends.

Younger users were "more liberal" with their workplace or school information than older users. "Both groups were very liberal with their e-mail addresses and with their birthdays," the security firm wrote in a blog post Sunday announcing the results. "This is worrying because these details make an excellent starting point for scammers and social engineers."

The security firm added that "10 years ago, getting access to this sort of detail would probably have taken a con-artist or an identify thief several weeks, and have required the on-the-spot services of a private investigator. Sadly, these days, many social networkers are handing over their life story on a plate."

Sophos' concerns over the way Facebook users are keeping information private comes on the heels of a statement released last week by Facebook founder Mark Zuckerberg discussing why Facebook users need to use the privacy tools his company has created. On Sunday, Facebook also announced the formation of a safety advisory board, comprised of five Internet safety groups.

Yahoo announced on Monday a new consumer tool called "Ad Interest Manager."

BoomTown is going to ignore the could-it-be-duller name for the feature, which--Yahoo said in a press release you can see below--gives users a "central place where Yahoo visitors can see a concise summary of their online activity and make easy, constructive choices about their exposure to interest-based advertising served from the Yahoo Ad Network."

What fortuitous timing, since the first of three of the Federal Trade Commission's "Exploring Privacy: A Roundtable Series" begins Monday in Washington, D.C.

And, of course, the bigger backdrop is the pending regulatory approval of the massive search and advertising partnership between Yahoo and Microsoft. The two companies announced Friday that they had completed the definitive agreement for the deal.

(Credit: FTC)

One of the key issues for regulators, of course, is the privacy implications of combining the search and online ad technologies of the No. 2 and No. 3 players.

The FTC's day-long agenda (PDF) is chock-full of academics and privacy group folks, but there is an Microsoft lawyer on a panel. (The next roundtable takes place at the University of California, Berkeley, School of Law on January 28.)

Said the FTC on its site:

The Federal Trade Commission will host a series of day-long public roundtable discussions to explore the privacy challenges posed by the vast array of 21st century technology and business practices that collect and use consumer data. Such practices include social networking, cloud computing, online behavioral advertising, mobile marketing, and the collection and use of information by retailers, data brokers, third-party applications, and other diverse businesses. The goal of the roundtables is to determine how best to protect consumer privacy while supporting beneficial uses of the information and technological innovation.

There will surely be lots to discuss, since privacy groups are wary of self-regulation by the very companies that link consumer data to advertising.

And, they have a point.

Visiting my Ad Interest Manager page is kind of freaky, to be honest. It shows I am interested in entertainment, technology and travel, checking in most on the finance and television pages. Correctomundo!

Also, it has detailed data about my computer, including its color depth, as well as my age and gender.

If I want, it is pretty easy to opt-out of the whole "interest-based" ad completely or by category, with on-off switches, which is a good thing.

If you want to know more, here is the Yahoo press release:

YAHOO! INTRODUCES AD INTEREST MANAGER

PROVIDES CONSUMERS WITH GREATER TRANSPARENCY AND CONTROL OVER THEIR ONLINE ADVERTISING EXPERIENCE

Today Yahoo! Inc. (NASDAQ: YHOO) released a beta version of a new consumer tool called Ad Interest Manager, which takes transparency in online advertising to a new level for building user trust. Ad Interest Manager http://privacy.yahoo.com/aim is a central place where Yahoo! visitors can see a concise summary of their online activity and make easy, constructive choices about their exposure to interest-based advertising served from the Yahoo! Ad Network.

"Ads tailored to users' interests make online experiences more compelling and user-focused, and the new tool Yahoo! is launching today will provide transparency into how Yahoo!'s interest-based advertising works," said Yahoo! Vice President of Policy and Head of Privacy, Anne Toth. "Yahoo! is committed to providing consumers with increased transparency and control when they are online. Ad Interest Manager will show users what interests we think they have, and also let them edit and change those interests to reflect the most up-to-date information." Anne Toth also pointed out: "Importantly, users who don't want interest-based ads can turn them off completely."

Yahoo!'s new Ad Interest Manager tool:

• Provides a central point where Yahoo! visitors can assert even greater control over their online experience.

• Gives visitors an unparalleled view into the information used to deliver interest-based advertising.

• Shows the visitor both Yahoo!'s educated guesses about their interests and a summary of observations, along with other information they have provided.

• Provides a list of specific interest categories that Yahoo! has placed a user into and lets people turn those categories off.

• Allows people who don't want to see interest-based ads to turn them off entirely.

"Yahoo! has long provided its users with products and services for free, thanks to a business model based almost entirely on advertising, and we've found that consumers are more likely to click on advertising that speaks directly to them and their interests," said Yahoo!Vice President and General Manager of Display Advertising, David Zinman. "With the introduction of Ad Interest Manager, users can not only get a better understanding of how the process works, but they can also communicate better with Yahoo! and our advertisers about what most interests them."

Yahoo!'s Ad Interest Manager is currently available in beta in the U.S. and will soon be made available to UK and European users. Planned future enhancements to the Ad Interest Manager will also let users add categories of interest that Yahoo! may have missed.

To see what the new Ad Interest Manager looks like and how it works, please visithttp://privacy.yahoo.com/aim.

Yahoo! was one of the first companies to implement a layered privacy center http://info.yahoo.com/privacy/us/yahoo/details.htmlmodel more than eight years ago, which provides people with a central place to understand and control their privacy online, as well as their options when it comes to the use of personal data. This information is coupled with our industry-leading data-retention policy http://ycorpblog.com/2008/12/17/your-data-goes-incognito/, which anonymizes most Web log data within 90 days. The policy also strives to ensure that Yahoo! retains data only long enough to serve the business and create the highest-quality user experiences, while simultaneously maintaining the ability to fight fraud, secure systems, and meet legal obligations.

And here is the consumer privacy groups' press release on the FTC hearings:

Consumer and Privacy Groups at FTC Roundtable to Call for Decisive Agency Action

Washington, DC, December 6, 2009-On Monday December 7, 2009, consumer representatives and privacy experts speaking at the first of three Federal Trade Commission (FTC) Exploring Privacy Roundtable Series will call on the agency to adopt new policies to protect consumer privacy in today's digitized world. Consumer and privacy groups, as well as academics and policymakers, have increasingly looked to the FTC to ensure that Americans have control over how their information is collected and used.

The groups have asked the Commission to issue a comprehensive set of Fair Information Principles for the digital era, and to abandon its previous notice and choice model, which is not effective for consumer privacy protection.

Specifically, at the Roundtable on Monday, consumer panelists and privacy experts will call on the FTC to stop relying on industry privacy self-regulation, because of its long history of failure. Last September, a number of consumer groups provided Congressional leaders and the FTC a detailed blueprint of pro-active measures designed to protect privacy, available at: http://www.democraticmedia.org/release/privacy-release-20090901.

These measures include giving individuals the right to see, have a copy of, and delete any information about them; ensuring that the use of consumer data for any credit, employment, insurance, or governmental purpose or for redlining is prohibited; and ensuring that websites should only initially collect and use data from consumers for a 24-hour period, with the exception of information categorized as sensitive, which should not be collected at all. The groups have also requested that the FTC establish a Do Not Track registry.

Quotes from Monday's panelists:

Marc Rotenberg, EPIC: "There is an urgent need for the Federal Trade Commission to address the growing threat to consumer privacy. The Commission must hold accountable those companies that collect and use personal information. Self-regulation has clearly failed."

Jeff Chester, Center for Digital Democracy: "Consumers increasingly confront a sophisticated and pervasive data collection apparatus that can profile, track and target them online. The Obama FTC must quickly act to protect the privacy of Americans,including information related to their finances, health, and ethnicity."

Susan Grant, Consumer Federation of America: "It's time to recognize privacy as a fundamental human right and create a public policy framework that requires that right to be respected. Rather than stifling innovation, this will spur innovative ways to make the marketplace work better for consumers and businesses."

Pam Dixon, World Privacy Forum: "Self-regulation of commercial data brokers has been utterly ineffective to protect consumers. It's not just bad actors who sell personal information ranging from mental health information, medical status, income, religious and ethnic status, and the like. The sale of personal information is a routine business model for many in corporate America, and neither consumers nor policymakers are aware of the amount of trafficking in personal information. It's time to tame the wild west with laws that incorporate the principles of the Fair Credit Reporting Act to ensure transparency, accountability, and consumer control."

Story Copyright (c) 2009 AllThingsD. All rights reserved.

On August 1, 1981, a cultural and entertainment juggernaut flickered onto TV screens and rocketed out of obscurity with these six words: "Ladies and gentlemen, rock and roll."

With that, the iconic cable network, MTV, was launched and a popular entertainment category--music videos--was born. Now, 28 years later, MTV has largely abandoned the genre and the record industry is preparing for the debut of a possible successor.

On Tuesday, video start-up Vevo is scheduled to launch. Supported by three of the top four largest record companies (sources say EMI has agreed to provide content to the site) and backed by the technological muscle of YouTube, Vevo is a Web site that will feature videos from many of the world's biggest recording stars, including U2, Cold Play, the Black Eyed Peas, Lady Gaga, Avril Lavigne, Bruce Springsteen, and Pearl Jam, according to the site's backers.

The move comes three years after Google's YouTube began proving that the masses still love music videos. Professionally made music clips are by far the most popular fare on the Web's No. 1 video site, accounting for 14 of the 25 most viewed clips ever. The labels involved with Vevo boast a combined total of about 15 billion views on YouTube.

Much of the music industry, including a score of independent labels that have recently signed on to the project, think it's time for music videos to take the next step in their evolution. They want a standalone site packed with high-definition clips from marquee acts.

Don't look for any user-generated content on Vevo, according to Doug Morris, chairman and CEO of Universal Music Group, the man who came up with the idea for the service. He said he wants to offer music fans as well as advertisers a more polished digital stage. That's one of the main reasons the venture was built, to charge advertisers premium rates in exchange for premium content.

Another motivation for building the site was to give the music industry a greater say in what happened to its content.

In an interview with CNET last week, Morris made no bones about the fact that by launching Vevo, the music industry is serving notice: no longer will middlemen or third parties profit from the labels' video content without giving up a fair share.

"What we're really doing is taking back control of everything," said Morris, who operates the largest of the top four recording companies. "This is us taking control of our future...Vevo enables us to provide consumers with about 80 percent of all the music videos in the world. So, this is really like MTV on steroids. We're starting with that kind of audience. But now we're in control of it. We don't have to go through a middleman anymore."

The problem as defined by the music sector started with MTV and extends all the way to YouTube.

When MTV was created, everyone told the labels not to worry about getting paid because the cable channel helped promote artists. "It was good exposure," they were told. The experts said the same thing in 2006 when YouTube started to emerge as one of the Web's favorite music sources. For a long time, the record companies seemed happy to go along, even as MTV built a financial empire from the videos.

But this time around, the music industry can't afford not to be the one who cashes in. The rest of the business is in decline, as CD sales shrink and profit margins on downloads are sliver thin. Record execs have been criticized for not finding new revenue models, so that's what they are trying to do. They believe there's new money to be had from the videos, even as they readily acknowledge that getting to it hasn't always been easy.

Morris remembers seeing a video from a Universal artist posted to Yahoo a couple of years ago and asking one of his employees what the portal paid for it. The exec told Morris the video was considered promotional and Yahoo paid nothing.

Promoting what? The video was five years old and Yahoo was pocketing the ad money without sharing it with the creators, Morris recalled telling the employee.

"I then called up (former Yahoo CEO) Terry Semel," Morris said. "And I said, 'Terry, we want to be paid.' Semel replied 'Absolutely not.' Then, we took our videos down from Yahoo and AOL and their viewership declined, at which point they came back and they paid us. They paid us a percentage of a cent for each view."

Morris isn't implying that Vevo's music clips will no longer be used to promote music or that Vevo plans to charge to watch videos. No, they will still be offered to viewers free of charge.

What is changing is that music videos, which often cost tens of thousands of dollars to produce, won't be treated as loss leaders anymore--not in this economic environment.

Nonetheless, Vevo faces plenty of challenges.

Nobody has proven whether advertisers are willing to pay top dollar for online videos, even professionally made music videos. There's also the question about whether interest in the genre will wane just as did with previous generations of music fans. After all, MTV switched to reality shows for a reason, no?

Rio Caraeff, Vevo's CEO, says the music video is only one of the site's features. The obligatory playlists will be available but music lyrics will also be offered. Visitors will have more access to their favorite performers than ever and Vevo's video quality will be as much as three times as what is typically available online.

All these upgrades were absolutely necessary to draw the kind of top advertising dollar that label honchos seek, according to Caraeff. He said typical ad rates for Web video run somewhere between $3 and $8 for every thousand views. Vevo's mission is to attract rates of $25 to $40.

"Successful was how we felt about YouTube, in terms of the shear popularity of our programming," Caraeff said. "But what we felt was that there could be a better way to drive a business around it. Advertisers had some reticence and some reluctance to fully embrace music videos on YouTube. We felt that there was work to be done to restore the premium luster and really create a better experience for advertisers."

In the short run, look for Vevo to be an online music store where downloads are sold as well as the merchandise created by artists, such as clothes and perfumes. In the long run, a music-video subscription service could be rolled out, one that offers full-length concerts.

"I do believe we will have a subscription service where we will stream live concerts from all over the country to viewers for a monthly fee," Morris said. "This is futuristic. We have not built this yet, but we're working on it."

Facebook has formed a safety advisory board comprised of five Internet safety organizations that will consult with the social-networking site, the company said Sunday.

Facebook said it plans to meet regularly with the advisory board to review the existing safety resources it provides its users, develop new materials, and seek advice on best practices for safety in general.

"We believe that the only way to keep kids safe online is for everyone who wants to protect them to work together," Elliot Schrage, Facebook's vice president of global communications and public policy, said in a statement. "The formation of a board to advise specifically on safety issues is a positive, innovative and collaborative step towards creating a more robust safety environment, and we are thrilled that such a well-respected, trusted group of organizations has joined us in this endeavor."

Facebook said the board is part of an effort that includes cooperating with state attorneys general to rid the social-networking site of registered sex offenders. The board's formation comes on the heels of New York Attorney General Andrew Cuomo announcing last week that more than 3,500 sex offenders from his state had been purged from Facebook and MySpace.

The five organizations on the advisory board are Common Sense Media, ConnectSafely, WiredSafety, Childnet International, and The Family Online Safety Institute.

Apple has acquired struggling streaming music service Lala, an Apple spokesman told CNET News on Sunday.

Apple spokesman Steve Dowling confirmed the acquisition but did not disclose the terms of the deal or what the company intends to do with the 4-year-old Lala. The company scans users' hard drives and creates a duplicate music library that owners can access from Web-enabled devices. The company also sells songs for a dime each.

CNET News reported Friday that Apple was close to finalizing the sale and that one of the reasons Apple was interested in acquiring Lala is to obtain some of the company's payment and fulfillment systems, which a source with knowledge of the talks said could save Apple money.

However, it's unclear whether Apple may also be planning to launch some kind of streaming-music or so-called cloud storage feature.

The New York Times reported that Apple was approached by Lala after the company concluded that reaching profitability was unlikely. All Things Digital reported that Lala was acquired for a sum that meant a loss for its investors.

If things keep going this way, pretty soon there won't be any digital music space to cover. Many of the players around a year ago are gone: Ruckus and SpiralFrog closed. MySpace is gobbling up iLike and soon Imeem. Apple got Lala.

The frontrunners now appear to be Pandora, Amazon, Spotify, MySpace Music, Last.fm (owned by CBS, parent company of CNET) and Zune's Marketplace.

To this point, not one of them has generated the kind of market share to challenge iTunes.

(Updated 11.35AM PST Monday, with comment from Amazon)

There's a wonderful Borders bookstore in the middle of London's Oxford Street. Or at least there was. I went there in September and suddenly it was no more. Indeed, the U.K. arm of Borders recently reached for a form of bankruptcy protection.

So how interesting that one of the greatest successes in online book retail, Amazon, is rumored to be troubling real estate agents in its search for retail premises in the U.K. According to London's impeccable Times, Amazon is looking for very fine locations in order to, well, fulfill orders.

Amazon's arrows always aim to satisfy.

(Credit: Cc Akira Ohgaki/Flickr)

Perhaps some might find it a touch amusing that such a dot-com icon has decided to trouble the physical world. However, it appears that the British are suffering from frightful attacks of impatience while waiting for their erudite tomes, wickedly catchy tunes and other more substantial purchases to arrive by ponies that may be less than express.

The Times says that Argos, a U.K. catalog retailer of, oh, useful and useless stuff, has 18 percent of its online orders picked up in store. Indeed, the company believes that 50 percent of its holiday television sales will be transacted in this manner.

Amazon's customer service has become so progressive that its presence in American, as well as British, malls might serve as something of an inspiration to the more complacent establishments.

And now that Amazon seems to be able to sell you everything from woodworking equipment to vacuum cleaners, it surely puts extra pressure on postal services and that nice man in brown who comes to my house and always looks tired.

What a revolutionary concept it would be to go to a store and know that the thing you want is actually there. It just might catch on.

UPDATE: According to Reuters, Amazon denied Monday that it would open physical stores. However, the company would not comment on whether it might instead create partnerships with existing retailers, many of whom, Lord knows, could do with the business.

Some industry insiders told me that any potential steps towards physical retail by Amazon might be a reaction to the EU tinkering with distribution regulations.

You may need a little Xanax after observing this. Equally, you may never want to take any drugs ever again.

For Quentin Tarantino, he who makes movies that contain blood, gore, and many homages to Asia, recently shot a TV spot for the Japanese cell phone company Softbank.

As well as an astute grasp of Japanese, you need to have a very firm grasp of existential philosophy to fully appreciate this spot. Without an astute grasp of Japanese, I can tell you that this is the latest in a series of spots that features the White family.

Just to give you a sense of how this ad follows in the rambunctiously absurd tradition of much Japanese advertising, the regular members of the White Family are Me, a Softbank saleswoman, Older Brother, played by American actor Dante Carter, Mom, and Otousan, the talking dog who is, in fact, Dad. (Yes, I am entirely sober.)

I will leave you to create your own version of what is going on here. Though, to my untrained, pained eyes, the story seems to concern Tarantino, whose character is Uncle Tara-chan, and his parading a live dog as some kind of competition to Otousan, the plastic pooch who is, in fact, Dad.

The blond lady near the end of the spot appears to be playing Tara-chan's wife and, as so many wives of famous Americans these days, she doesn't appear happy with her husband. Though she is screaming down the phone rather than wielding a three-iron.

I have embedded the short and long versions of the ad, just because the long version doesn't seem to make the short version any more understandable. Several people made similar comments about Tarantino's "Kill Bill" series.

However, Brad Pitt has already appeared in Softbank spots, so one must suppose that the most understandable part of Tarantino's performance is the fee.

(Credit: Screenshot by Leslie Katz/CNET)

If orangutans can post photos to Facebook, then toddlers can certainly Twitter.

And now they have a prototype gadget for doing that--the Twoddler, a tricked-out Fisher Price Activity Center with pictures of family members and friends attached and an Arduino board inside.

When a child presses a certain picture for a select amount of time, software captures sensor data from the activity center and selects and sends a predefined text related to that data.

For example, when Bobby plays with Mom's picture for more than three minutes, a Twitter message will post to Bobby's personal Twitter account saying, "@mommy_bobby Bobby misses mommy and looks forward playing with her this evening" (or as the messages get more refined and personalized: "@mommy_bobby Bobby is having a temper tantrum and wants mommy home now."

Twittering toddlers can also communicate with their social-networking peers by pushing buttons that generate effects, such as colored, blinking lights, on their friends' Twoddlers (a scenario that could easily turn day-care into a disco). Twoddler is connected to the Internet and to other activity centers using the home area networking standard ZigBee.

Twoddler emerged from a course on mobile and pervasive computing at Belgium's Hasselt University. Earlier this year, Twoddler beat out around 40 submissions for the top prize at the 09 Innovative and Creative Applications competition, where judges called it a "good, well-implemented idea, with a lot of potential that allows people/children that are not capable of verbal communication to communicate through an inventive combination of hardware and software."

As we mentioned, Twoddler is just a prototype for now, so don't expect to get an endless stream of tweets from your overexcited 3-year-old just yet.

INCA Award 2009 WINNER: Twoddler from IBBT on Vimeo.

(Via Engadget)