Webware

HALF MOON BAY, Calif.--Facebook's business playbook takes a page from those of the early dot-coms: build it and then figure out how to make money.

Sheryl Sandberg, the chief operating officer of Facebook, said here in a panel interview Tuesday that Facebook's primary goal is to grow its social network. Second is monetization.

"Our focus is on growth--we believe this is the moment people are joining social networks," Sandberg said here at the Fortune Brainstorm Tech conference, a three-day gathering on technology and media. "Then it's monetization to support that growth."

Her comments were in answer to a question about Facebook's reported $15 billion valuation after Microsoft invested and struck a strategic partnership with the company last year. David Kirkpatrick, a Fortune writer who's working on a book about Facebook, asked about whether the company is feeling pressure from investors to produce revenue and take the company public. Her answer was no.

"We're not public (and we're not feeling that pressure)."

Sandberg joined Facebook in March after six years with Google, where she was vice president of global online sales and operations. At the time, it was a big loss for Google because she oversaw the search giant's advertising engine AdWords. At Facebook, she's founder Mark Zuckerberg's right arm in charge of business operations and developing an economic engine for the company.

She said that after six years in advertising at Google, she believes that there's an "unusual and extraordinary opportunity" for advertising at Facebook. That opportunity is somewhere between major brand advertising like Super Bowl commercials and the direct-response search ads that Google sells.

"This isn't search and it's not monetization of search--that's direct response. We're not trying to compete with direct response," she said. "We do see a huge opportunity in performance and brand marketing. More than 90 percent (of marketing dollars) spent in the world are not in direct, but in brand, and that's (about) generating awareness."

The unusual situation Sandberg spoke of is that Facebook members create and share content with each other. The opportunity is for marketers to insert themselves into that swap of information. For example, she said Facebook helped Mazda run a design contest on the site recently that let members rate new designs from the car company, or create their own. Three hundred people submitted designs to Mazda, and Facebook members voted on the best one.

Fitzpatrick asked if that kind of relationship with marketers can scale enough to justify the company's valuation.

"All of the tools are publicly available--Mazda used groups and pages, and we worked with them to put that together," she said. "We need to do a better job to work with advertisers so that they can use the tools."

Sandberg said her biggest challenge at Facebook is growth, rather than figuring out how to make money. More than half of the site's users are based overseas, and as a result, the company recently launched versions of the site in 18 different foreign languages. She said that overseas usage is accelerating because of it.

Facebook's already in the cat bird's seat when it comes to social network traffic in the United States. According to ComScore, Facebook pulled in 123.9 million unique visitors in May, beating MySpace's 114.6 million visitors that month.

The company is also working on projects to develop Facebook for the enterprise, data portability technology, and settings to help people differentiate types of friends on the site.

And the company is enjoying a fast rate of growth on mobile applications, including the iPhone, she said. She would not say how many people are using Facebook on the iPhone, but she said the company is not yet focused on monetizing mobile traffic. "We're not very far in this. We're focused on that for the site."

Sandberg sloughed off the bubbly notion that Facebook is focusing on "if you build it, they will come."

"We're growing users and we're growing revenue along with it," she said.

ZURICH, Switzerland--Chances are that if you've solved one of those distorted-word tests to secure an account with Facebook, Craigslist, or Ticketmaster, you've helped The New York Times inch a little closer to digitizing its entire print newspaper archive from 1851 to 1980.

How have you unwittingly helped the Gray Lady by wasting 10 seconds on a computer-generated word challenge? It's thanks to a year-old initiative called ReCaptcha, a play on the antispam tests known as Captchas (Completely Automated Public Turing Test To Tell Computers and Humans Apart), a test that people can pass, but machines cannot.

People typically fill out Captchas so Web sites can verify that a human, rather than a spam bot, is behind the request for a new e-mail address, log-in, or membership. But with ReCaptchas, which are double-word tests, humans are also helping machines better recognize faded-ink or blurry words that have been digitally scanned from old newspapers or books--text that's difficult for a computer to recognize optically. That way, people will eventually be able to sift through print archives with a more intelligent search engine.

Luis von Ahn, assistant professor in the computer science department at Carnegie Mellon University, created ReCaptcha.

(Credit: Stefanie Olsen/CNET News)

In the last year, as many as 600 million people have completed at least one ReCaptcha on sites such as Twitter, LastFM, and Ticketmaster, which use the technology for free, according to ReCaptcha creator and Carnegie Mellon University assistant professor Luis von Ahn.

With all those helping hands, von Ahn expects that The New York Times digitization project will be finished by the end of 2009, at the latest. (About five months ago, The New York Times paid an undisclosed sum to von Ahn's CMU team to complete its project.)

"We're reusing wasted human cycles," von Ahn, 28, said while speaking at a robotics conference here recently.

The venture involves putting millions of eyes on words printed in roughly 47,000 newspapers, with various counts of pages. For example, before the turn of the century, The New York Times was about one-fourth the breadth it is today. It's doubled in size about every 50 years or so since its beginning in the 1850s, when it was published every day except Sunday. (The New York Times did not immediately respond to a request for comment for this story.)

Von Ahn's team is also helping the Internet Archive with the digitization of books through ReCaptcha, but it's doing that project gratis.

... Read more

In true Internet-foolery fashion, someone is having a little fun at Yahoo's expense following its latest executive exodus.

By visiting the newly created site Yahoorezinr.com, current Yahoo employees can expedite their resignation to Yahoo Chief Jerry Yang with a host of Mad Libs-style pull-down menus.

For example, the site reads: "It is with great 'sadness/glee/self-interest' that I ask you to accept this letter as my official resignation from Yahoo!

"As you know, for some time now I have been desiring 'more time with my family/a more challenging position/you guys quit destroying all my net worth' and thus I feel the time has finally arrived for me to 'move on/take a new direction/tell you to go f*** yourself.'"

Though it seems like the site could have easily been created by a disgruntled Yahoo employee, Network Solutions Whois registration data points to a Mathew Honan, who could be a contributing editor at Wired. An e-mail to Honan was not immediately returned, so it's unclear if it's his creation.

Still, some points in the letter are obvious hyperbole. In one of the menu options, the letter suggests that Yahoo doesn't understand how to run a taco truck, much less a $30 billion business. The company's not worth quite that much.

The rants may reach Yang himself, but that's unclear, too. The form letter is addressed to Jerry Yang @ Yahoo (without the typical "inc" at the end of the address) with the subject line "Get bent."

Flixwagon, a tool for live video broadcasting to the Web via smartphones, is working on a version for the Apple iPhone and Windows Mobile devices.

Tel Aviv, Israel-based Flixwagon is still relatively new. In January, the company launched a free downloadable application for video broadcasting for the Symbian mobile operating system, used largely by Nokia smartphones such as the N95. In February, MTV became its biggest customer, by deploying 23 street reporters with Flixwagon-enabled phones to report on Super Tuesday.

Now, the company is developing support for additional mobile platforms so that it can appeal to an even wider set of customers and media partners. Sarig Reichert, the company's co-founder and vice president of marketing, said that it's working on applications for Java, Windows Mobile, and the iPhone. (Demo here.) That will give Flixwagon entree to tens of millions of phones. In the coming weeks, it also plans to update its technology to include greater controls over the quality of video people can capture and post to the Web.

The company's better-known rival Qik has started offering support of the Windows Mobile operating system by invitation only.

With Flixwagon, people can record a video with the click of a button and have it broadcast to the Web within seconds, depending on the mobile phone connection. On the back-end, Flixwagon trans-codes the video file from the phone to a Flash widget, which at its best output, delivers 320x240 video at 15 frames per second. With a bad connection, it might broadcast video at half the number of frames.

On the downside, the rawness of mobile broadcasting can come off like a Blair Witch Project-style documentary. On the upside, it's incredibly fast and efficient for telling a story, updating friends on your life, or archiving video-worthy moments.

People can choose to upload their clips to a public or private page on Flixwagon, cross post the clip to YouTube, or send an announcement to a Twitter account. Flixwagon followers can also chat with people who are posting videos.

Apart from MTV, Web surfers might stumble on more and more Flixwagon or Qik video installments. Reichert said the company is talking to major media companies about using its technology for citizen journalism, news reporting, or even video streaming for reality TV shows.

"MTV opened up the minds of people in the industry about what you can do about live video broadcasting," Reichert said during an interview Wednesday at the On Hollywood Conference.

The company has raised an angel round of funds from investors in Israel, and it will soon close a round of venture capital investment, according to Reichart. The company makes money through partnership like the one with MTV. It charges service fees for hosting and distributing videos. The company also hopes to sign deals with mobile phone carriers, with which it would share revenue.

Here's a rough cut of a home Flixwagon video, a Flash widget cut and pasted into this blog.

Update at 1:45 p.m.: Qik said that it is has a demo version for the iPhone, too.

News.com's Greg Sandoval contributed to this report.

MOUNTAIN VIEW, Calif.--Reality check: half of the social media start-ups at Tuesday's Under the Radar Conference won't exist next year.

That was the dour prediction of an advertising executive after a day of start-up presentations from a tongue-twisting list of tech companies--including Verismo, Mytopia, Loud3R, Jacked, Sometrics and PutPlace.

Not that the start-up pitches were boring or hard to swallow. It's just that similar to the dot-com heyday (and eventual bust), the success of many social media companies is tied to online advertising spending. And guess what, after nearly 10 years of hand-wringing over Internet advertising models, traditional brands are still not spending the many millions of dollars online that they regularly do on TV commercials.

Even more relevant to social media is that traditional advertisers are especially cautious when it comes to the idea that their brand logo might appear next to an image of a marijuana leaf posted by a 16-year-old. Never mind that Facebook's audience rivals that of some television networks.

"Take a look at history, and the way Web 1.0 worked...publishers didn't make it until the ad dollars started to scale. The same mistakes are being made in the social media space today," said Jeff Stiers, senior vice president of business growth for JWT, a major traditional advertising agency that was founded in 1864.

His skepticism--and hope for Internet advertising--was matched by other ad executives on the panel, which included Tom Bedecarre, CEO of digital advertising agency AKQA, and Chris Colborn, executive vice president of its rival R/GA. Internet companies must take the hand of traditional advertisers to get them to spend online, the executives said. But they agreed that there's continued uncertainty in interactive advertising and reluctance on the part of big advertisers.

Like with Web 1.0 companies, one of the biggest problems social media companies have in the market is that they're technology driven, the executives said. Tech companies often fail to hire media-savvy executives at the top who can sell brand advertising.

Another Web 1.0-like problem: many social media start-ups are marketing the idea that they have tons of data on people's demographics and preferences. The start-ups believe that that data will lure brand managers seeking to reach new customers. Not true, executives said.

"I can't imagine a large agency giving a rat about a small firm's data. Advertisers are looking for aggregation of data...and someone at a very high level to give an overview (of what it means)," said Bedecarre.

One member of the audience, an executive from news site Topix, asked the panelists when a major advertiser would announce plans to spend $20 million sponsoring AOL or Facebook. Bedecarre answered that that kind of deal doesn't translate on Facebook because brands are too used to ads that broadcast to, instead of engage, audiences. They're still not willing to spend many millions of dollars on major Web sites, he said.

"It hasn't happened yet because big advertisers and agencies haven't let go of advertisements. They like to buy lots of ads," he said, referring to commercials.

MOUNTAIN VIEW, Calif.--News aggregation, licensing rights, and user-generated content. Every publisher has grappled with one or all of these issues as they've built online operations in the age of social media.

They're also potentially ripe markets for innovation. Or at least that's the hope of four Web publishing start-ups that presented business models here Tuesday at the Under the Radar Conference, a one-day confab on social media.

Four companies--AudioMicro, GumGum, Keibi, and Loud3r--delivered a six-minute elevator pitch to an audience of executives and three judges. Judges included Charlene Li, vice president at Forrester Research; Rob Hayes, partner at First Round Capital; and Jason Oberfest, vice president of business development at MySpace.

Here are the online publishing hopefuls:

AudioMicro
What it does: licenses music or soundtracks for $1. Launched last week, the company hosts a marketplace for independent artists to upload and license their music for $1. People who've produced a YouTube video, for example, could license an audio track from AudioMicro's collection of artists to sync the music with their video. Or movie studios could use the site to find music and offset production costs, according to founder Ryan Born. "We crowd-source content from unknown artists around the world and sell it for a dollar," Born said during his elevator pitch.

But First Round Capital's Rob Hayes pointed out that the company has a chicken-and-egg problem. It needs artists to attract major licensors, and it needs major licensors to attract artists.

AudioMicro, based in Los Angeles, is looking to raise a series A round of funding to grow fast and market itself.

(Credit: GumGum)

GumGum
What it does: Flexible licensing of photos, text, and video over the Internet. GumGum, which was founded in February, has created a marketplace for content--audio, pictures, articles, and video--that publishers can license per use, or for a share of advertising revenue. (Independent content creators post their material on GumGum, which is based in Santa Monica, Calif.) "We aggregate, post, and distribute content via widgets," according to the founders.

Gawker, for example, can pick up a cut of code for a photo on GumGum and paste it to its site, then pay a set price each time that photo is viewed from its site. Or it could allow GumGum to wrap an ad around the photo and collect 20 percent of the revenue. Gawker is an early public customer.

The challenge? Adoption.

Keibi
What it does: Technology for moderating user-generated content on sites like MySpace and Facebook. The two-year-old company is trying to solve one of the biggest problems that social networks face--how to make major brands comfortable with advertising near potentially questionable content posted by members of these networks. Keibi's answer is to sell an enterprise software platform that helps social networks moderate photos, text, images, or video before they're posted to a site.

Jason Oberfest (of MySpace) and one of the judges asked how well it integrates with social networks' existing software infrastructure. Paul Remer, CEO of Keibi, said that it has a plug-in and is working with companies like Salesforce.com on integrating its technology.

Keibi charges customers between $2,000 and $20,000 a month to use its software-as-a-service platform. So far, the company has raised $6 million; and it's in the process of raising a series B round of financing, Remer said.

(Credit: Loud3R)

Loud3r
What it does: news sites for sneaker heads, dog lovers, and martial arts geeks. And that's just a drop in the bucket. Loud3r develops technology to scour the Web for specialized news and social content, and then aggregates that material into a branded Web site. It owns 25 different sites--New3R (for gadgets and technology), Glaci3r (environment), and Putt3r (for golf)--but it plans to have at least 250 by the end of 2009. The company plans to make money by selling brand advertising around its targeted topics, and license its technology to third parties for five figures monthly.

"The Internet is a noisy place. Loud3r is the solution for the noise," said Lowell Goss, founder and CEO.

Still, the judges were skeptical about whether the Web needs another news aggregator. One judge asked specifically if Loud3r is late to the party. Lowell's answer: "Google wasn't the first search engine."

MOUNTAIN VIEW, Calif.--YouTube--that's the first name in Internet video. Apple's iTunes might turn up second.

For start-ups in Internet video, it can be a tough sell to prove a new market. But a handful of upstarts tried their hand at an elevator pitch here Tuesday at the Under the Radar Conference, a one-day confab for Web start-ups. Four video-related companies presented their business models in six minutes to judges including Lewis Henderson, head of digital at the William Morris Agency, and Joshua Newman from Twentieth Century Fox.

Here are the aspiring newcomers:

Jacked
An interactive Web companion for TV broadcasts. If you want to spice up the broadcast of the Lakers game, for example, visit Jacked.com and click on the game ticket. Without downloads or connection to the TV, the site will deliver news, products, photos, sports stats, or related information to the game via an array of widgets. Launched last September, Santa Monica, Calif.-based Jacked, which has raised $6.5 million, uses a search engine to crawl the Web for content related to the live broadcast, such as Amazon.com, Associated Press, and Flickr. It has deals with the National Hockey League and Major League Baseball, among others. It supports the site with advertisements and distribution partnerships with sports leagues or, potentially, broadcast networks.

One of the first questions judges asked of the company: Why should people care? "Consumers want control over their experience. They want the convenience of everything on one page," said company executive Bryan Biniak.

MovieSet
An online social network for movie production. Independent film producers can use MovieSet's technology to publish their production schedule online and upload behind-the-scenes videos during the making of a movie. The goal is to attract fans before the film's release. The Vancouver, B.C.-based company, which recently raised $2 million, already has drawn as many as 150 feature films, including the Charlize Theron film Battle in Seattle, to the technology. MovieSet is still in beta.

One question from the judges: Why aren't you involved with the major studios? Mark Rutledge, chief operation officer of MovieSet and a former entertainment lawyer, said that the company has had several meetings with Creative Artists Agency and the studios are showing some interest. But they're not quite ready to sign up yet.

"We're taking advantage of the long tail for independent films," Rutledge said.

Verismo
AppleTV for the rest of the world. The Mountain View, Calif.-based company makes a Wi-Fi-enabled device called the Pod that plugs into the television and streams content from the Internet (no PC required, according to company CEO Prakash Bhalerao). With the Pod, people can download movies from BitTorrent, CinemaNow, or Blockbuster; watch videos from YouTube; or simply surf the Web with a Qwerty remote that controls the box. The device costs $99.

One of the judges asked, what's the difference between the Pod and Apple TV? "Apple TV goes only to the Apple site. Other than Youtube, you cannot go anywhere. I can take you to 10,000 sites," Bhalerao said.

Vusion
Encoding technology for high-definition video over the Internet. The Milpitas, Calif.-based company, which launched this month, develops a software infrastructure that will help movie studios or sports companies deliver commercial-grade video online. Grover Righter, vice president of marketing, said that the technology can serve high-definition video superior to MPED 4 or Flash players (which is encoded and encrypted) to at least 85 percent of the Internet audience. Those people need a browser plug-in, however.

How does it make money? It charges studios or sports agencies by the stream on the order of 15 cents per hour. (Righter said the company is in talks with all the major content companies.) It has raised just under $10 million.

The winner: the judges choose Vusion and the audience, Verisimo. They won a copy of Microsoft Zune or Microsoft Ultimate Software suite.

With banks scrutinizing loan applicants with renewed fervor, students who need money to cover college tuition could start looking to friends, family, and social networking for cash.

Two start-ups are banking on the premise, with Web sites that help college students secure small loans for school from relatives, close friends, and their extended social networks. Their timing couldn't be better, given that banks and other private lenders are pulling up stakes on risky loans (e.g., those granted without a proven credit history) and students need to bridge the gap between a $40,000 tuition bill and a $20,000 government loan.

One such start-up, Redwood City, Calif.-based GreenNote, will officially launch its service Tuesday to help students solicit as little as $100 from friends and family at an interest rate that's on par with subsidized government loans. For a percentage fee, the site legally formalizes what would otherwise be a transaction sealed with a handshake or nod. Its rival, Fynanz, launched in March.

"They're essentially playing the role that banks had in the past," said Forrester Principal Analyst Brad Strothkamp. "Banks have tightened up lending standards, so if you're looking for a small loan, and you don't have a credit history, this may be the only option."

This post was updated at 12:30 p.m. PDT with more detailed information and quotes.

PALO ALTO, Calif.--Facebook plans to unveil a redesign of profile pages in coming weeks to help members cut down on the clutter, executives said here at a press event Wednesday.

Executives also said they'll introduce a beta version this week that will allow developers to test the new pages before it rolls them out to members in June.

The redesign, a preview of which was released Tuesday night, slots member information under five new tabs: personal news feeds; profile information; photos; applications; and a customizable page.

As part of the redesign, Facebook is dramatically playing up the role of its News Feed, which will be the anchor, or first tab, of the new member home page. This shift is meant to make it easier for people to see dynamically changing information from friends and applications first, according to Chamath Palihapitiya, Facebook's vice president of product marketing.

"We see this big trend," Palihapitiya said. "People are publishing feeds all the time, and the point is, people are increasingly telling a narrative, and we want to make that easier for our users to do. And we want people to consume that narrative more easily."

The company will unveil design changes at the risk of angering application developers that rely on Facebook for distribution and member usage. Designers of less popular widgets, for example, could feel somewhat marginalized by Facebook's placement of external applications on a dedicated profile tab.

Company executives, however, said the design overhaul will ultimately give developers more reason to engage with members. "We think there's more opportunity for distribution, but (also) for more meaningful application," Facebook product manager Mark Slee said.

Palihapitiya added that some developers could suffer in the more dynamic environment of News Feeds on member home pages. "Applications that are much more static in nature will not be as successful as they used to be."

Here is an overview of the changes:

The news feed will take the role of the member home page, with one stream of information that people can reformat into three different sizes. From the main page, people can also update information on new Facebook applications, post a wall message, or upload photos from one point next to the news feed.

The reason for that change, Palihapitiya said, is the company's desire to make the home page cleaner and simpler, and allow people to see dynamically changing information first.

Developers can also get front-page play through the news feeds. "Developers can integrate into the feed through the publisher box, so I could draw some graffiti or send a SuperPoke," said Facebook product manager Ruchi Sanghvi.

Facebook moves the static information on members to its second tab, or the information tab. That page will contain detailed data about the person's address, personal history, and preferences. Executives said developers can get creative with new applications that help members tell a story about who they are.

Next is a tab for photos, which are commanding a lot of attention from Facebook users, according to Palihapitiya. So far, he said, members have uploaded 6 billion photos to the site, or 14 million on a cumulative daily basis. "Photos are just one example of an application that could blow up for us," Palihapitiya said.

The profile box tab, or where applications will reside, lets people see a record of the widget they downloaded.

The last tab gives people a choice to customize a page, much like a new feature on the iPhone. People can add a new tab to highlight an application like Scrabulous that they play often. Executives said this is "a huge new opportunity for developers" that could increase advertising revenue.

That said, developers will need to try it out of themselves.

"We are going to give developers a beta period in which they will be able to step into the sandbox and tweak their application," product manager Slee said, "so that they're ready for when this thing gets rolled out in coming weeks."