The Social

NEW YORK--You had two options if you wanted to hang out with Digg founder Kevin Rose at the Web 2.0 Expo conference this week: head over to the lobby bar of the trendy Standard Hotel on Monday night, where Digg was picking up the tab for several dozen of the city's blogger elite; or pack into Manhattan Center Studios on Tuesday night along with about a thousand other young, predominantly male New Yorkers for a live taping of Rose and co-host Alex Albrecht's "Diggnation" video show.

Geek heroes: Jay Adelson (left) and Kevin Rose in a screenshot from one of their regular 'Digg Dialogg' videocasts with Digg users.

Those are, after all, the two Diggs. There's Digg the company, the name that first put "social news" into the mouths of New York media both old and new, the BusinessWeek cover story that established the shaggy-haired Rose as digital media's poster boy, the start-up that was once talked about as a huge acquisition target for the likes of Current Media, News Corp., and even Google amid CEO Jay Adelson's coy insistence that it wasn't for sale. But then there's Digg the brand: haven for the wackiest of the Web, with a front page dominated by anything Apple, oddball science, insidery tech and politics news, and the latest YouTube sensations. It's a dual identity that seems to be tough for the industry, or the five-year-old company itself, to reconcile.

At the Web 2.0 Expo, both Diggs--and the tension between them--was on full display in a dual keynote by Adelson and Rose on Tuesday afternoon. And the executives were both vocal about the fact that Digg has got to change.

"We're about 40 million users today, (with) about 20,000 submissions a day going into the Digg system," Adelson said onstage. "It's certainly achieved huge things for us. It's what we've set out to do, but we have a ways to go."

Rose added, "We've pretty much stayed the same over the last couple years."

There's a revamped Digg coming, a complete overhaul using the Cassandra database management system, which was developed and then released as open source by Facebook. In the new version will be "instant Digging" that doesn't require registration or a login, better filtration of topics to fit any number of niche interests, and a "smarter" way to gauge story popularity so that both the number of "diggs" and the number of times a link was submitted in the first place are taken into account.

Adelson told CNET later on Tuesday, just outside the auditorium where hundreds of rowdy young Diggers were awaiting Rose and Albrecht to walk onstage for the live Diggnation taping (a co-production of Revision3, the video outlet that Rose and Adelson also co-founded), that this will arrive in the first half of next year. "I can't say with certainty when, because there are so many infrastructure components that have to come first," he said.

This talk of change and versatility is exactly the message that the San Francisco-based Adelson and Rose want to convey while they're visiting New York, the center of the global publishing industry. This is Digg the media company on parade, the Digg that picked up the tab for the cocktail-swilling media insiders at the Standard on Monday night; and this is the Digg that's taken a bit of a beating recently. True, its traffic isn't plummeting, and by most measures continues to grow at a decent pace, but as a news-sharing destination it's been eclipsed by both Facebook and Twitter.

Digg's once-gossiped-about valuation may have taken a hit simply because the market for social news has grown so saturated, and as a result the company is no longer a novelty. Take third-party Twitter app TweetMeme, for example, which takes the links shared all over Twitter in "retweets," and compiles them into something that looks an awful lot like Digg. Or the likes of Yahoo Buzz, which haven't proven to be as popular or ubiquitous as Digg but which proved that it's not particularly difficult to build your own social news service.

"It makes me very proud," Jay Adelson said of the Digg influence evident in TweetMeme buttons and, now, Facebook sharing buttons. He added, "I think that the sophisticated publisher understands the difference between sharing within a social network, sharing on Twitter, and sharing on Digg."

Influential, sure. But when it comes to making a lasting footprint in the media world, Digg hasn't yet been able to get past the common wisdom that the footprint in question will be from a beer-soaked Converse All-Star. And that's the Digg that was showcased on Tuesday night as Rose and Albrecht, both in trendy fitted plaid shirts, received a rock-star welcome for Diggnation.

More than a thousand people had showed up at the Manhattan Center Studios venue, a smaller crowd than the show's last taping in New York, but a company rep pointed out that the previous taping had been in the summer, and this one was on a school night. Someone in the audience excitedly waved a sign that said "WINDOWS 7 FTW!" (That's "for the win," in case you stepped in late.) Another sign read "I SKIPPED CLASS FOR THIS!" and still another, which Rose and Albrecht seemed especially proud of, was a green sign that read "GO HIPPIE!" with a massive, hand-drawn marijuana leaf.

Adelson says that the company's merry band of fanboys--yes, most of them are male--doesn't get in the way, strategy- or image-wise.

"Our core Digg enthusiasts frankly provide a tremendous amount of our feature ideas and feedback, and are the ones that we can count on to be there even when we screw up," Adelson told CNET on Tuesday night. "I don't think they hold us back. I think that's the power of the product."

Kevin Rose's essential Diggnation props: Mac laptop, open bottle of beer

(Credit: Revision3)

There have been some good signs. Adelson says that Digg's experimental advertising system, in which unpopular ads are penalized with higher costs ("We charge the advertisers more money when their ads start sucking," Rose explained in the Web 2.0 Expo keynote) have been a runaway success. The company also absorbed a Rose side project, Twitter directory WeFollow, which could have interesting implications.

Their mission is still precarious. The hordes of Digg loyalists propelled the company to fame, but they're known to be volatile: if they hate something, they'll make it obvious. In 2007, when Digg pulled down a number of news links in response to a cease-and-desist complaint (the links directed to instructions for cracking a digital rights management code in the now-defunct HD DVD format), avid users flooded its system with even more links to the code. Digg admitted defeat, and restored the censored links. Earlier this year, when a new URL-shortening feature called the DiggBar garnered a negative reaction, the company made some significant modifications. If they don't like the yet-to-be-unveiled Digg revamp, it could get really ugly.

But perhaps the most difficult part of Digg's dual-identity wrangling is the fact that the company's executives and figureheads really do seem to have an affinity for its mischievous roots. Take Tuesday night, when a few excited audience members at the Diggnation taping started waving around the pink tickets they'd received from local cops for downing booze while waiting in line outside to see the show.

"Open container in line? That is awesome!" Rose exclaimed, reaching for one of the tickets and displaying it in front of the crowd.

Co-host Alex Albrecht chimed in. "You should get that framed!"

NEW YORK--Web pioneer and conference honcho Tim O'Reilly warned the audience at the Web 2.0 Expo here on Tuesday afternoon that he thinks "we're headed into another ugly time." Namely, everybody is just being really nasty to each other. And it makes his hippie soul hurt.

For example, Rupert "Dr. Evil" Murdoch keeps threatening to pull News Corp.'s pay wall-guarded content from Google, perhaps offering an exclusive deal to another search engine for one hundred billion dollars (give or take a few bucks).

Those ubiquitous URL-shortening toolbars are throwing Web addresses behind a cloak of invisibility, O'Reilly said, and they "don't let you navigate freely like the Web used to work." With Google's Chrome hurling itself into the mix, the browser and operating-system wars are starting to look less "Mean Girls" and more "Aliens vs. Predator."

But O'Reilly's attitude isn't "bring it on, and get me a large popcorn with extra butter, while you're at it." Rather, he hinted that at least in some cases, he's willing to embrace Google as a big, cuddly, benevolent dictator in the midst of it all. It's "a monopoly that's a service of value to users," he said, adding that generally, when Google makes a product with the primary goal of one-upping the competition--Knol vs. Wikipedia, Checkout vs. PayPal--it's not a success.

That's probably because, at least right now, among all the giant robots stomping about the series of tubes, Google is the one that most resembles O'Reilly's vision of the "open Web." In a blog post prior to his speech, he predicted that Microsoft could take over this role. Or not. Either way, he insisted that "it's time for developers to take a stand."

Setting off this kind of electric shock in the Web's punditocracy is a great way to drum up attention and newsworthiness that doesn't have anything to do with philosophizing about the recession, extolling the possibilities of the real-time streaming Web, or predicting which dot-com figurehead is going to be the most plastered at South by Southwest this year. Thank goodness! That stuff was getting so boring!

And O'Reilly's rallying cry has already gathered reactions. Barbarian Group executive Rick Webb, for one, posted a colorful retaliatory blog post, in which he said that "setting aside the 'boo hoo, the Internet is becoming a bunch of walled gardens' arguments, when rational people have conversations about how to make the Web actually usable and not 95 percent piracy, spam, and fraud, almost every discussion starts with the proposition that there is no other realistic option but to chuck the whole thing and start over."

Of course, the Web should be in a state of "war." When have things been any different? It's a hub of innovation, competition, and constant change, and I think we all knew that already. The barrier to entry is low enough so that if there's a glaring problem with something, users will flock to whoever can create a better alternative. In fact, O'Reilly brought that up on Tuesday, when he talked about expensive in-car GPS navigation systems.

"The turn-by-turn directions from TeleAtlas cost $99 [on the iPhone], but Google is giving it away for free. This is a natural kind of extension for Google. I don't think Google is being evil here by being disruptive," O'Reilly said. "That's a massive user win, even though it is incredibly damaging to some existing companies and some existing business models. When Google offers free speech recognition, [that would be] an amazing win."

Is that legitimate innovation? Yes. But let's hope the "win" doesn't stop there. If Google manages to throw a sucker punch to Apple, Microsoft, or whoever else by offering something once-pricey for free, I should hope that the rest of the industry makes sure that it doesn't grow too complacent.

So let's get this straight: monopolies are bad, unless they're "nice" ones on behalf of companies that extol the virtues of Razor scooters, wheatgrass smoothies, and lava lamps. Competition is great, as long as everybody's nice to each other.

Doesn't quite make sense to me. But, hey, it's his show.

Unsurprisingly, at least one research company agrees that valuing a company at $1.1 billion before it's unveiled a long-term revenue strategy is a little bit premature.

A firm called Next Up Research released a study this week that estimates Twitter's actual value as somewhere between $526 million and $674 million--or somewhere between 47 and 61 percent of what its valuation was in September when Insight Venture Partners, T. Rowe Price, and other investors pumped nearly $100 million into the company..

The positives for Twitter? It's been able to scale to approximately 70 million users while maintaining a single office in San Francisco and about 80 employees--well, sure, but the fail whale does tend to rear its head--and the fact that you can use it almost exclusively as a low-end mobile application means a whole lot of potential for global reach.

Next Up's concerns are pretty predictable: It's not sure how Twitter will keep up its momentum as it prepares to roll out a revenue model. It spelled out a few options that have been tossed around over the past few years--ads on Twitter.com, ads in tweets, charging for access to its application program interface (API), premium accounts, selling data and analytics--but noted that "most revenue generation options available to the company have the potential to alienate at least some of cult-like Twitter's user base."

Regardless, the research firm is guessing that revenues will come. It's projecting $134 million in revenues in 2013, "in an optimistic scenario." Now let's sit back and see how Twitter does it.

The tractors, fuzzy pets, and mobster ambushes might be virtual, but the past few weeks have shown that the battle for social-gaming market share is very, very real.

Monday saw the long-rumored announcement of gamemaker Playfish's big-ticket sale to Electronic Arts, a big win for a product niche some had dismissed early on as faddish and silly. But it comes at a time when there's ongoing press blitz over how much social-gaming companies rely on lucrative but potentially misleading means of advertising in the form of lead-generating offers.

Both of these developments have changed the course of an industry moving at hyperspeed--but was anybody really sure where it was going in the first place? Playfish, arguably, was the safest buy in the space. Headquartered in the U.K., its revenues were solid--one analyst estimates it'll pull in $100 million this year--and it was less reliant on controversial third-party offer companies than many of its competitors.

Social-game manufacturer Playfish announced its acquisition by Electronic Arts on Monday.

(Credit: Playfish)

"I'd say hats off to EA," said Jeremy Liew of Lightspeed Venture Partners, which has invested in social-gaming firms like Serious Business and RockYou. "It's a much lower-fidelity product (meaning cheaper to produce) that appeals to a much simpler consumer (than the traditional gamer), but they recognized the risk that it poses to their business and they were willing to take a decisive action."

Playfish had a great exit, as they say in the venture capital world. Things might not go quite as smoothly for other social-gaming companies.

Here's some background. The social gaming craze grew out of an array of new time-wasters that involved neither a significant commitment nor a complicated set of rules. Companies like Zynga, Playdom, and SGN attracted millions of investor dollars, and word has it that former MySpace CEO Chris DeWolfe wants to roll up a bunch of smaller companies into another powerhouse. And now that EA has a big social-gaming company in its arsenal, other older video game manufacturers might push fast-forward on investments or acquisitions in the space.

Playfish, manufacturer of games like Pet Society and Restaurant City, was at the time of its buy either the second or third biggest company in the space--behind Zynga, but neck-and-neck with Playdom. Like most of its competitors, it makes money through a combination of advertising and the sale of virtual goods, which players can either purchase with real-world cash or can earn by completing offers and surveys from third-party companies like Offerpal Media or Super Rewards.

The industry common wisdom is that Playfish's revenue is less reliant on those offer companies than some other social-network gamemakers. That's a good thing, considering the bad press the likes of Offerpal have been pulling in recently. In a highly-publicized confrontation with Offerpal CEO Anu Shukla (who resigned from her post in a matter of days), TechCrunch blogger Michael Arrington launched a full-on assault against the business of social-game offers. They're no more than scams, he alleged, since many offers actually have hidden costs attached for consumers: entering your cell phone number to receive the results of a quiz you took, for example, may actually tack a charge onto your phone bill.

"The industry hasn't done, in general, as good a job as it could have of maintaining the offers' integrity to users," Jason Oberfest, a former MySpace executive who recently joined the executive team of iPhone and social-network gaming company Ngmoco. "(Playfish was) way more conservative in how they've used offers, and I'm sure, frankly, that their revenue per user has probably suffered a little as a result, but it's clearly played out well for them."

Even without the offers controversy, social gaming is a volatile industry: few if any of the companies in the space are older than five years. It's a hit-driven business, with companies needing to work around the clock to keep audiences playing and push out new games lest the current sensations grow stale. There's already a history of lawsuits and legal threats, often over rival gamemakers' extremely similar products. When bloggers started their keyboard assault on the likes of Offerpal, it was only adding to the sector's reputation for fast money, cutthroat competition, and occasionally shady business practices.

Playfish may have exited just in time. Some of the small to medium-size social-gaming companies are undoubtedly hunting for buyers, and Zynga has gotten so big that rumors suggest it may be looking to file for an IPO. With all the controversy over offers and whether social-gaming companies' revenues were inflated by misleading ads, there's a chance that their profits--and hence, their valuations to prospective investors or buyers--may take a significant hit.

Still, venture capitalist Liew doesn't think that will make a huge difference. "Zynga said 30 percent of their revenue comes from offers, and I think that's pretty representative of the industry," he estimated. "Let's say 20 percent of the offers are scammy, so that's 6 percent of the revenue of these companies that's at risk. It doesn't change the answer as to whether this is a valuable company."

Maybe so, but there are other complications. Facebook, the biggest destination for social games, continues to make alterations to its developer platform. Most recently, the massive social network announced some changes that limit games' and other applications' appearance in members' news feeds, a move that may make it more difficult for start-ups to enter the space as well as drive already-big companies to purchase more advertising space in order to get the word out about their latest games and keep acquiring new customers.

Social-gaming companies are already some of the biggest advertisers on Facebook, with the biggest one, Zynga, spending as much as $50 million this year on Facebook ads alone, according to estimates from industry insiders. If revenues are potentially going to decline (and no one can quite agree on how much) as a result of a crackdown on offers, but advertising costs may go up as companies attempt to increase their reach on Facebook, that makes their balance sheets look less sunny.

For all the ugliness of the Offerpal mess, it could have been much less pleasant if the scrutiny was coming from lawmakers rather than industry bloggers--like the several state attorneys general who were particularly vocal about stamping out misleading offers in display ads, but haven't yet targeted social networks. And changes appear to be imminent. Zynga CEO Mark Pincus announced Sunday that the company has blocked all cost-per-action offers until the situation calms down and it's easier to weed out scams. Playdom, too, says it is continuing to make its business less reliant on offers.

"Offers are an important industry issue, and particularly important for our players," CEO John Pleasants, a former high-ranking EA exec who left for the fast-growing company this summer, said of Playdom in an e-mail to CNET News. "When I joined as CEO, Playdom began a company-wide effort to deliver a quality user experience on our offer walls...We've dropped more than 1,500 offers that don't meet our standards. In tandem with these efforts, we have actively grown the direct payment portion of our business; offers, otherwise known as CPA advertising, currently account for less than 20 percent of our revenue and continue to shrink."

Social-gaming companies don't want to look like criminal operations, nor do they want to look like they're turning a blind eye to questionable third-party activity. While Zynga and Playdom are big enough to sacrifice that revenue, some other companies that are likely hunting for buyers might not fare so well. As a result, future acquisitions in the space could easily be much smaller. Price tags could be lower if revenues deflate, and now that EA's made its buy, the list of potential buyers who could actually pay $300 million is now one company shorter. There's a legitimate question as to who would actually be buying; even optimistic insiders say that this could get in the way of another Playfish-like exit.

"I think the more important question is who can pay. Because if you want to buy Zynga, it's way more than Playfish. If you want to buy Playdom, I think it's going to be equivalent, if not a little bit more than Playfish," Liew said. "There are a lot of people who want to get into social gaming that don't have the ability to write a check of that size, and so they are going to be looking at the next tier of companies. That's where I think we're going to see some action."

In other words, we still don't know who the next real winner will be.

Corporate tools take note: You can tell Twitter exactly what you're doing, and it'll tell LinkedIn too.

Chalk one up for the cringe-worthy marketing term "personal branding": there is a new partnership between Twitter, hub for informing the world exactly what you're doing and thinking at all moments of the day, and LinkedIn, the business-networking tool on steroids. In an announcement Monday, the two companies explained that LinkedIn status messages can sync with Twitter.

"The business use case of Twitter is turning out to be very important, and more and more people are finding that the persona they create for themselves on the Web is part of their resume in many ways," Twitter co-founder Biz Stone said in a joint video with LinkedIn founder Reid Hoffman that was posted to the LinkedIn blog.

So, in short, LinkedIn's "status" feature now syncs with Twitter with an optional check box--a feature that the two companies say should be rolling out over the next few days. Likewise, can set your Twitter status as your LinkedIn status by using the hash tag #li or #in, so that you can rest assured that your tweet about "watching Gossip Girl and eating cold pizza" won't immediately show up to potential clients or employers trawling your LinkedIn profile. (Full disclosure: This was my Twitter status tonight. If you believe that it renders me professionally unsound, please feel free to let me know.)

All snark aside, this is probably a very good bet for LinkedIn, which continues to grow fast and make money but which hasn't yet really jumped into the latest social-networking trend of real-time, streaming information. Inking a partnership with Twitter is much easier than launching some other kind of initiative to get members to update their statuses more often. Tweets sent to LinkedIn, presumably, could also be grouped in with LinkedIn status messages to form some kind of business-intelligence live stream. The sort of information that people want to share specifically with colleagues and professional associates could be of interest to high-end advertisers or the market research community.

Twitter, meanwhile, is going to want to stay in the limelight of the business community as it considers a long-term business model--one of the microblogging service's potential moneymakers has been launching a "dashboard" of analytics for people and companies who use it primarily for professional purposes rather than, you know, filling the world in on which beer was just discovered in the back of the fridge.

Also for Twitter, this is yet another potential source of tweets as it attempts to become the world's foremost repository of real-time information. Earlier this year, MySpace announced an official way to sync Twitter and MySpace status, and in a matter of weeks its link-shortening service had become the second most popular on Twitter (trailing Twitter's preferred Bit.ly).

Facebook, meanwhile, appears to have been more reluctant: a Twitter app on its platform has pulled tweets into status messages for some time, and an unofficial app lets members tag selective tweets with the hashtag "#fb" to cross-post them to Facebook, but the only time that Facebook has put out a big, official announcement about syncing with Twitter was when it added an easy-sync feature for "fan pages," profiles for brands and marketers.

Not surprising. Twitter is a hot name in marketing these days, and in order for Facebook to establish fan pages as an ideal spot for brands to build a presence, an easy Twitter sync is a selling point. But in the long run, it's an advantage for Facebook, which once tried to buy Twitter and was snubbed, to keep its treasure trove of what-the-world-is-thinking somewhat to itself. After all, it can get away with it: with well over 300 million active users, Facebook is significantly bigger than Twitter, and could be diluting its own product by openly sourcing status messages out to Twitter. LinkedIn, better known for its networking features than any kind of status updating, isn't running that kind of risk.

Until then: "At SFO airport at bookstore. Deciding between @gladwell and @tferriss. Need real, serious insights. Thoughts? #li."

I have a love song to write. I don't know yet whether it will be a tragic ballad or an exuberant ode to the triumph of happiness. But it's a love song for sure: I have fallen for Spotify, the latest buzzworthy "free music" service. After months of trying to find a great way to find and listen to music online, I believe I have met my match.

No, Spotify technically isn't available in the U.S. just yet, though the U.K.-based company hopes to bring the software stateside by the end of the year. My acceptance of an invite code sent by a generous friend therefore may or may not have been in gross violation of some international laws or statutes or regulations. But that's OK. Spotify, we can have an illicit romance for now.

You see, I needed this in my life. I had been thinking about "music discovery" of late. Last week, at the tail end of a trip in which I had been covering Google's splashy Los Angeles debut of its music search service in partnership with MySpace and Lala, I was sitting in the lobby of the Standard Hotel in West Hollywood, a shameless hipster magnet designed in the manner of tacky Southwest-desert motels and which features a constant soundtrack of semi-edgy music picks from '90s-era Britpop to lo-fi and LCD Soundsystem remixes. As a parade of attractive, Sunset Strip rocker types drifted to the check-in desk, I was sitting next to a cactus, intermittently holding up my iPhone to a speaker, using audio-recognition app Shazam to find out exactly what was playing.

Considering the cooler-than-thou crowd, I probably looked awfully silly. But Shazam has been my preferred method of music discovery because I just haven't found anything else I really like. Queuing up a Pandora station makes for great party music, but I've never been enthralled by its recommendations for me. Music blog aggregator Hype Machine has very well-done charts to track the songs that are getting blogged and tweeted about the most, but they can be a little bit predictable once you've already listened to the latest mashup of Kanye West and MGMT. I use Last.fm, owned by CNET News parent company CBS, to tabulate listening-history charts, but have never found myself hooked by its recommendations or radio stations. (Sorry, bosses.)

Social music and discovery services are a mess, frankly. Some of them have terrible user interfaces, and others are slowly becoming the victim of poorly conceived business models (many of which relied too heavily on advertising strategies that have yet to bear fruit) and ill-fated licensing agreements with the major labels. Still others, in striving to get a leg up on competitors, veered into editorial curation--exclusive album-listening debuts, promotions and tie-ins, and the like. That can make for a whole lot of clutter.

Then along came my Spotify invite, and everything changed. The service makes no attempts on the surface to be an "influencer" in and of itself, instead just offering access to full-length streams of just about any song. That's daunting at first. When you first load up Spotify, you're greeted with basic top-music charts that are notably uninspiring (Black Eyed Peas? Kings of Leon?) and searches don't bring you anything other than, well, what you searched for. Social-networking features like Facebook and Twitter sharing are sparse and well-hidden. If you don't know where to look, it can be a little bit dull.

Instead, the "discovery" process is left up to third parties. Create a playlist on Spotify, and you can assign it an HTML address so that when people click on it (assuming they have Spotify accounts) the playlist will open right up. A popular U.K. music blog called Drowned in Sound has a feature called "Spotifridays," where a selection of popular music from that week is packaged into a Spotify playlist, eliminating the need to click around through various Web browsers and streaming-music embeds. A friend sent me a link to Drowned in Sound's playlist of top songs of the first half of 2009. I was set for the next 7.6 hours.

Then, this happened: My Amazon MP3 bill started escalating as my "shopping cart" filled up with songs from bands I'd never heard of before, like the Veils, Let's Wrestle, and the Big Pink. The no-brainer Spotify platform, and how easy it is for anyone to use it to create playlists and share them in a way that doesn't involve a single wacky embeddable widget, was making me buy music.

But Spotify's long-term prospects are still hazy. Its dual business models, monthly subscriptions (for ad-free accounts and access to its iPhone app) and advertising for free accounts, have historically failed to hold up in the face of the micropayments-based iTunes. CEO Daniel Ek has even acknowledged that profits aren't flooding in yet and accused the labels of inflating licensing fees. The specter of SpiralFrog, another hyped free-music service that went down in flames earlier this year, is still in recent memory.

It's also unclear as to how the Spotify service, currently available in Sweden, Norway, the U.K., Finland, France, and Spain, will fare in the U.S. when it arrives here. Google's new music search feature, which is right now restricted to the States, may give a big advantage to competitors MySpace Music and Lala as search traffic is directed there. There's also the potential money drain: Government regulations over licensing fees last year. Digital music, you could say, is an industry with a lot of emotional baggage.

Generally, when there are glaring roadblocks in a new relationship, it's a red flag that you shouldn't get too attached. But this is one where I'm willing to fight to keep it alive. I hear there's a chance I'll be shut out of Spotify entirely in a few weeks unless I tweak my IP address somehow to fool the service into thinking I'm in one of its approved countries. Or unless I cough up the money for a premium subscription.

And I'd consider that. Money can't buy me love, but it could buy me Spotify. And right now they're sort of one and the same.

LOS ANGELES--There are a lot of reasons why the entertainment industry is still trying to figure out how to wrangle Twitter: real-time tabloid drama, on-set spoilers, and the fact that 140 characters offers a lot of ways to say a movie really sucks.

The 140Conf LA event, which took place on Tuesday and Wednesday at the Kodak Theatre on Hollywood Boulevard, had a great opportunity to be the definitive discussion hub for tackling those tricky issues and complications that arise when the much-talked-about "real-time Web" collides with the old-school entertainment industry. That didn't happen. Instead, the event was a general showcase of the possibilities of Twitter, much like at the previous 140Conf event in New York this summer.

Conference organizer Jeff Pulver said that despite the Hollywood setting, he didn't want to take a purely entertainment-focused angle. "This really is not a Twitter conference, it's a gathering of people who use it as a platform and speak it as a language," he explained at a post-conference cocktail event on Tuesday. Pulver said he intended 140Conf LA to be "a celebration" of the possibilities of Twitter and the people who are passionate about using it, a disparate crowd that includes marketers, public servants, and yes, entertainment industry professionals. Indeed, 140Conf featured panels about police chiefs who use Twitter, teachers implementing it in the classroom, and how it's affecting the photography profession.

True, there were a lot of entertainment types there, mostly those talking about how Twitter has positively affected their business. Industry bloggers talked about how the blast-it-out nature of Twitter makes it easier to harness and report fast-breaking news. "Access Hollywood" personality Billy Bush talked about what he's learned from Twitter, like "no TUIs. Twittering under the influence is not a good idea." And "Tonight Show" blogger Aaron Bleyaert talked about the program's popular "Celebrity Twitter Tracker" feature, in which it makes fun of banal celebrity tweets. "Making fun of how celebrities think that everything they do (matters)," Bleyaert said, "Twitter's been great for us."

More interestingly, Sarah Ross, head of digital at the Ashton Kutcher-founded Katalyst Media, said paparazzi interest in the Twitter-happy Kutcher has actually declined since he started documenting his life on the microblogging service. That's fascinating, and it would've been cool to see whether the case is the same or different for other celebrities who tweet. It would've been great to hear from an industry personality who doesn't tweet, or one who's quit the service, or some perspectives from the production or public relations side of things, or perhaps someone who manages celebrity Twitter accounts. There's a lot out there.

But, Jeff Pulver said, he didn't think a Twitter-and-Hollywood conference would have much draw.

"I don't think anyone in L.A. would give a damn if we had a conference about the entertainment industry and Twitter," Pulver said. "It's not as interesting to people here as it is elsewhere."

Another conference attendee at the same cocktail party voiced a similar opinion. "This is not a studio crowd," he said of the people who'd showed up for 140Conf. Studio executives are "not innovators, not movers. They're very reactive."

Fair enough. Folks like Pulver, who have been using Twitter since its early days, are probably pretty sick of hearing about the latest gossip-blog diatribes getting plastered all over their conversation tool of choice. But headlines in the likes of Variety, The Los Angeles Times, and the Hollywood Reporter beg to differ. "Bones" creator Hart Hanson inadvertently created a mini-firestorm when a tweeted joke about swine flu on-set was taken seriously. Some studios have reportedly started inserting "no tweeting" clauses into contracts. As the likes of Perez Hilton and TMZ continually remind us, it's also given train-wreck pop stars a whole new outlet to hate on one another.

The entertainment industry has historically been reliant on the deft spin of public relations to keep a gaggle of wild personalities under wraps. Social media, not surprisingly, is a real problem. That goes double for Twitter, which can be updated on-the-fly from any mobile phone on the set of the latest hyped-up teen vampire flick or on the sidelines of a velvet-rope tiff at the Roosevelt Hotel. 140conf, rather than focusing on the glittering possibilities, could have given these very real issues some more face time.

Take the no-tweeting rules that are getting imposed by studios, production companies, publicists, and even sports leagues. "The majority of celebrity tweets are inane and not of concern to studios, but they still need the stronger contractual protections to cover themselves against the minority," entertainment attorney Jonathan Fuhrman, who previously served as vice president of business and legal affairs at The Weinstein Company, explained to CNET News.

"Every talent agreement--with writers, directors, producers, cast, and crew--has a standard confidentiality provision," Fuhrman continued. "That's what really is at issue here. In a world where anyone can tweet, the new, buffed-up confidentiality language is an important protection for the studio to prevent any of the talent from releasing this. And this is before you take into account the whole other issue about publicists and marketing campaigns: we are talking huge, million-dollar organized campaigns that can be compromised by an ill-advised tweet."

But on the flip side, that potential benefit of Twitter was paraded onstage at 140Conf. "Heroes" creator Tim Kring, for example, gave a well-attended talk on Tuesday about how Twitter has allowed the NBC sci-fi show's team to interact with fans in an unprecedented way. "You can follow the escapades of the show by following the people involved in it," he said.

Still, Kring also hinted at the complications of using Twitter as a vehicle for connecting with TV audiences: "We're now making Episode 13 and we are airing Episode 8, so at the beginning of the season we're up to two or three months ahead of where the audience is," Kring said. "The making of the show is so far ahead of where the audience experience is that it's hard to have a real-time relationship." Unfortunately, he didn't elaborate on how the show keeps tabs on its Twittering team. Have they ever had any accidental leaks or near-missteps? Kring didn't talk about that.

"Twitter has become hugely important in marketing movies," Fuhrman said. "The perfect example is 'Paranormal Activity.' What Twitter did for that movie, every studio would love to bottle that formula, and believe me, they'll try." In other words, it's a delicate balance. Twitter, for all its 140-character simplicity, has the potential to make or break a big Hollywood success.

Even though he didn't think it merited its own two-day event on the Kodak Theatre stage, 140Conf creator Jeff Pulver did acknowledge that he thinks the Hollywood-Twitter relationship is only going to get more complicated, especially when it comes to the big movie studios.

"They're scared because they want to be the gatekeeper," Pulver said. "It's a big conflict and it's going to get worse."

This post was updated at 11:33 a.m. PT on October 30 to correct the spelling of Jonathan Fuhrman's name.

Sound the alarms! The U.K.'s Telegraph news outlet has a story that seems to prove the unthinkable: that onetime social-networking rivals Facebook and MySpace could actually be working on some kind of partnership.

Two years ago this would've been a huge deal. Now? I'm really not surprised.

"The move could potentially see MySpace music and video footage being shared on Facebook via its Connect platform, which allows people to log into third-party sites using their Facebook ID," the article by Emma Barnett explains.

It then quotes Facebook Chief Operating Officer Sheryl Sandberg as saying that "we would like to have (MySpace's) content, as we already do with many other sites, shared across our network because it is good for our users" and that "we are open to working with MySpace and are in talks with them at the moment."

MySpaces CEO Owen Van Natta, who used to have a similar role at Facebook to the one that Sandberg does now, is likewise quoted as saying "we are in talks with Facebook, and other sites, about how we could partner with them."

See, here's the deal. Sandberg and Van Natta are quoted in pretty ambiguous terms. But any third-party company on the Web is at liberty to implement Facebook's log-in standard with the Facebook Connect API: over 15,000 sites had, at last count. The catch with MySpace is that both sites are so large, they'd naturally be in some kind of talks about it simply to handle infrastructure issues (and likely more). The Huffington Post, for example, struck a deal with Facebook to power its "Social News" feature with Facebook Connect rather than just to chuck in some Facebook Connect code.

Partnering with Facebook is actually excellent positioning for MySpace, because the News Corp.-owned social site has been attempting to differentiate itself from pure social networking: a game that Facebook has clearly won. By hinting that it could strike a deal with Facebook, MySpace is putting out a major "we're different" message as it tries to establish itself as a pop culture hub. Facebook's the one providing the platform for the content; MySpace is the one providing the content itself.

For Facebook, meanwhile, you could take this as a "look, we've won" move. After all, it's a validation of the power of the social network's content platform that a company like MySpace--which used to dwarf Facebook in size--would want to use it for distribution.

Facebook chief operating officer Sheryl Sandberg has something to smile about at the Web 2.0 Summit (onstage with conference organizer John Battelle).

(Credit: James Martin/CNET)

SAN FRANCISCO--That was quick.

The hardcore optimism was back, and so were the open-bar parties, at the annual Web 2.0 Summit event this week--where a ticket price of over $4,000 for the three-day O'Reilly Media and TechWeb event hadn't fazed the sold-out crowd. Just about every big player on the Web had a high-profile executive speaking (well, except for Yahoo, because CEO Carol Bartz cancelled her Wednesday keynote, citing the flu), and the mood was clear: Economic recovery is on its way, and we're going to be ready.

Are we really past last year's financial crisis, or are we just sick of hearing about it? Or perhaps, with the Web 2.0 Summit's focus on the biggest of the big, did the industry come across as healthier than it actually is?

Sure, in a talk on Thursday morning, economist Austan Goolsbee cautioned conference attendees that the country is "still in a fairly deep recession." But gone were the do-gooderism and dreamy futurist thinking of last year's Web 2.0 Summit, where speakers like former Vice President Al Gore and cyclist-activist Lance Armstrong addressed an audience shell-shocked both by the economy's downward spiral and the once-unthinkable election of Barack Obama, something that left the liberal-leaning Valley set simultaneously thrilled and overwhelmed. The Web 2.0 Summit this year was not about vague possibilities of the future, or solemn acceptance of difficult times, but about everything good happening right now.

Dramatic unveilings ruled the show. On Wednesday a parade of announcements took over the conference stage--Facebook and Twitter partner with Microsoft's Bing! MySpace launches a music video portal! Google has a social search project!--and on Thursday, Google co-founder Sergey Brin strolled into the conference venue for an unexpected talk. AOL CEO Tim Armstrong seemed to want to hop on the big-surprise bandwagon, too, assuring that the company has been readying "a fairly substantial shift in our technology" but declined to say much more.

It didn't stop there. Morgan Stanley analyst Mary Meeker, a Web 2.0 Summit regular--not to mention someone who took a lot of heat for overhyping tech stocks during the dot-com boom--gave a presentation about the health of the industry where she painted the tech industry as a bright spot in the still-faltering economy and talked up the huge potential for growth in the mobile space. Tom Hale, chief product officer at "Second Life" manufacturer Linden Lab, essentially laughed in the face of critics by pulling out the numbers: the virtual world, which many in the mainstream press have long since written off as a haven for bizarro-world subcultures, expects to chalk up $500 million in user-to-user transactions this year and its membership recently reached 1 billion hours collectively spent "in-world."

"The Linden dollar has been very stable compared to the U.S. dollar, which is very unstable," Hale joked.

The good-times-are-coming-back attitude extended to the after hours, too. A Microsoft party celebrated two of Redmond's latest hatchlings: the Bing search engine and the Windows 7 operating system. A MySpace-hosted concert hailed the social site's music-centric revamp with a performance by Weezer; the downtown Regency Ballroom flooded with young hipsters who quite likely didn't know how to tie their shoes when the band released its debut album in 1994. And an official Web 2.0 after-party on behalf of venture firm Canaan Partners, which has backed the likes of DoubleClick and Match.com, appeared to be celebrating the fact that in the tech industry it's OK for adults to throw back glasses of champagne and play with orange Silly Putty and glow sticks. (Both of those, as well as copious amounts of alcohol, were distributed at the soiree.)

But it's not over yet. Two of the big companies with executives in the Summit lineup, MySpace and AOL, have yet to prove that their much-talked-about reinventions will actually be successful. Audience members whispered to one another that Twitter's "fail whale" error message was rearing its head on occasion during the conference, a sign that the mega-hyped poster child of the real-time Web still has a few kinks to iron out.

The Web 2.0 Summit is by nature a tableau of bigwigs: CEOs, politicians, big-think inventor types. And the whiz-bang announcements emerging from it came from the likes of Microsoft, News Corp., and Google--and they were, for the most part, deals rather than legitimate technological innovations. With a few exceptions--red-hot geo start-up Foursquare, well-connected dictionary project Wordnik--there was very little at the Web 2.0 Summit that came from legitimately new companies and ideas. There wasn't much of a presence at the conference, whether in the audience or on stage, for the small- and medium-sized businesses that are responsible for so much of Silicon Valley's spirit, the ones who keep the tech industry a whole lot more interesting than boardroom suits.

It's worth noting that small companies aren't sitting on $22 billion in cash or have Steve Ballmer's phone number on speed-dial. And some of them might have a very different song to sing with regard to the health of the industry. Venture dollars are still closely guarded, and ad-supported business models don't look anywhere near as sunny as they did in 2006.

Where were the start-up guys? Playing poker, apparently.

(Credit: Julie Blaustein)

Where were the small players? Probably at their offices conducting business as usual. A handful chose to indulge in a $150-a-head event on Monday night that featured a dinner, networking mixer, and poker tournament at one Valley investment banker's Tudor mansion in nearby Los Altos Hills, organized by the SF New Tech Meetup group. The crowd, a mix of small-time start-up guys, a few perennial scenesters, and a handful of legitimate dot-com era veterans, largely wasn't planning to attend Web 2.0 Summit later in the week. It's not all that relevant to start-ups anymore, some commented over the pre-poker dinner.

Others expressed outright scorn at the idea of ponying up four grand for a conference. "Never underestimate how much money is squandered simply because there was someone borderline sociopathic managing it," remarked one who asked not to be identified.

Vocal opposition to the big-ticket conference circuit isn't anywhere near universal, of course. This year, with the impressive speaker roster and barrage of announcements, it seemed like an especially productive affair, and talk of economic recovery kept things buoyant. But after everything the industry's been through in the past year, sometimes talk can just seem like, well, talk. You fork over a few G's, you watch a bunch of billionaires chatter about innovation, you exchange some business cards or LinkedIn contact requests over lunch, and sometimes you get so caught up in it all that you aren't even really sure what you paid for.

"I'm completely exhausted," said a consultant who'd flown in from the U.K. for the whirlwind event, a few yards away from the open bar at the Web 2.0 Summit closing cocktail reception on Thursday afternoon. Gesturing to the glass of wine in his hand, he added, "I'm just trying to get the last of my money's worth."