Archive for the ‘Technology’ Category

To you, those are ways to enjoy, expand and improve your experience on Facebook. To Facebook, they’re the building blocks of a multibillion-dollar company.

In business, there’s a well-worn line that could apply to the social-networking behemoth: If you’re not paying for it, you’re not the customer. You’re the product.

In this case, you’re a product worth, to Facebook, an average $4.84 a year.

As Facebook hits Wall Street this week with a public stock offering that could value the company at more than $100 billion, investors appear dazzled by the company’s uncanny ability to put the right advertisements in front of its roughly 900 million users.

“The unique thing about these guys is the accuracy with which they can help advertisers and marketers understand who they’re getting,” said Arvind Bhatia, an analyst with Sterne Agee Financial Services. “On Facebook, your information is authentic; they are able to basically make the ads, and your experience, more relevant. I think that is unique. It’s unprecedented and the reach is unparalleled.”

In documents filed in relation to its stock offering, Facebook says that about 85% of its revenue comes from advertising. The other 15% comes from payments made within apps that run on the site (a head-turning 12% is from a single source — Zynga, makers of social games such as “FarmVille.”)

As Bhatia suggests, Facebook’s unprecedented advertising advantage is built upon the service it provides. As users interact with the site, they gradually build a fuller and fuller picture of themselves. That, in turn, lets Facebook sell advertisers on its ability to put their product in front of the people most likely to be interested.

CNNMoney: You’re only worth $1.21 (per quarter) to Facebook

How targeted ads work

For example, say a woman who has listed her hometown as New Orleans changes her relationship status from “single” to “engaged.” Facebook suddenly has a hot prospect to offer up to a bridal retailer or caterer in the Big Easy. To dig deeper, if she lists her MBA from Loyola and has “liked” pages for, say, Saks Fifth Avenue and Mercedes Benz, you get a fuller picture of how much she might be willing to spend.

“With a reported 901 million members, Facebook is a great test bed for understanding consumers and their purchasing interests,” said Jan Rezab, CEO of Socialbakers, a social-media analytics firm. “Before Facebook, marketers relied on online surveys or focus groups to determine customer interest. Now, they can reach the customer directly on their Facebook page.”

Facebook doesn’t publicly give away the details of how its system works. But as it has begun wooing potential investors, the company has been more willing to talk about its advertising approach.

Dan Rose, Facebook vice president of partnerships and platform marketing, discussed the appeal of its social ads at an event recently in Austin, Texas.

According to research from Pew, the average Facebook user has 229 friends. When that user likes a product or company’s ad, it serves as an endorsement to those friends from someone they know and, presumably, trust.

“When I raise my hand and say, I like Einstein (Bros.) bagels, and then one of my friends sees that ad, they’re going to see my name in that ad,” Rose said. Through Facebook’s partnership with the media-research firm Nielsen, “We found that when my friend’s name is in an ad, I’m over 60% more likely to remember the ad, and I’m over four times more likely to purchase the product,” he said.

“This is word of mouth. This is word of mouth at scale. This is what, as marketers, we’ve always been trying to bottle up and find a way to take advantage of. And the social Web is finally allowing us to do that.”

In his 2010 book, “The Facebook Effect,” David Kirkpatrick recounts chief operating officer Sheryl Sandberg’s arrival in 2008, when she sharpened the company’s focus on what would become the current advertising model. CEO Mark Zuckerberg, meanwhile, remained focused on growing the site and improving user experience — a focus he reportedly maintains to this day.

Kirkpatrick writes of the level of detail a Facebook ad can reach:

“Anybody can pick through endless combinations on Facebook’s self-service ad page,” he wrote, referring to the tool advertisers use to target their ads. “You can show your ad only to married women aged 35 and up who live in northern Ohio. Or display an ad only to employees of one company in a certain city on a certain day. (Employers aiming to cherry-pick people from a competitor do this all the time).

“Customers for Facebook’s more expensive engagement ads can select from even more detailed choices — women who are parents, talk about diapers, listen to Coldplay and live in cities, for example.”

In its Wall Street filing, Facebook listed its Average Revenue Per User at $1.21 per quarter, or $4.84 a year. That’s less than rivals like Google and Yahoo and miniscule compared to companies with more traditional business models, like wireless providers and cable companies.

But, as Rose says, it’s all about scale for a company that will likely reach 1 billion user accounts by the end of the year.

Are you living without Facebook?

User data and privacy

Not that the model hasn’t made some folks antsy. Time and again, tweaks to Facebook’s privacy settings have prompted user backlash, occasionally to the point that the site has reversed or modified those changes.

According to a recent Associated Press/CNBC poll, three out of five users say they have little or no faith that the company will protect their personal information. Half of those who use the site daily say they wouldn’t make a purchase through it and 57% of all users claimed they never click on ads or other sponsored content.

On a page about its advertising approach, Facebook makes it clear that it never sells user data, saying that “if you don’t feel like you’re in control of who sees what you share, you probably won’t use Facebook as much, and you’ll share less with your friends.”

Facebook officials also emphasize that while advertisers can market to specific users, they don’t receive the data that was used to make the selection and never know the actual names of the people they’ve reached. Facebook’s policy is to not actually look at user data except to check whether someone is violating the site’s terms of service.

Doubling down on user satisfaction is the most important thing Facebook can do, Bhatia said, even if it occasionally means passing up chances to max out the amount it could earn on the data users provide.

“For them, the user experience does come first and I think that’s the right strategy for the long term,” he said. “Along the way, putting the user experience first makes a lot of longer-term business sense.”

As an analyst, Bhatia is bullish on Facebook, leading the pack with an early “buy” rating at the beginning of this month. With Facebook reportedly looking at expanding into China and at monetizing its mobile app (an untapped resource even though the majority of time on the site is now spent on mobile devices) he expects its data-driven model to keep making money well into the future.

“Facebook is going to become just like search, [which] disrupted online advertising,” he said. “What Google did eight years ago — that is what Facebook is doing now. The reach is unparalleled and they’re just scratching the surface.”

TORONTO (Reuters) – Planning a wedding? A new web app lets the bride and groom-to-be create a social website that connects guests with each other before the big day.

Called Weduary, the web app provides a simple way of creating a modern-looking wedding website, and allows the couple to invite guests using Facebook.

The site tells guests which of their Facebook friends will also be attending and points out people at the event who may have common interests and mutual friends.

If a guest is attending alone, the Flirt section of the site shows other singles who will be there.

“We’re giving people a cheat sheet on who to meet at these big wedding events,” said Brit Morin, CEO of Brit & Co., the digital lifestyle brand behind Weduary.

In addition to connecting guests, the site provides details about the date and time of the wedding, hotel information, and a link to the couple’s registry.

Each guest also gets their own profile.

“It says which hotel they’re staying at, when they are arriving to the event, their favorite story of the bride and groom and what their cell phone is,” she explained.

Information on the site can be useful to help guests to co-ordinate travel plans, pitch in on registry gifts, or split accommodations.

Morin said that she came up with the idea while planning her own wedding last year.

“Not only were a lot of the templates, themes and web designs a little bit dated, but we also didn’t find anything that was social in nature,” she said, adding that couples are increasing opting for non-traditional wedding registries.

“We’ve seen a lot of websites catering towards inventive registries like donation registries, or registries to fund the purchase of the first house, or their honeymoon,” she explained.

Morin believes the wedding industry is ripe for innovation. Her company is also working on an iPhone app that will harness real-time communication between other guests at weddings.

Other popular wedding websites include TheKnot.com, and WeddingWire, which provide free wedding website building tools, but without the social component.

An app called SocialTables connects with Facebook to let guests see other guests attending the event and allows hosts to create seating arrangements, but it is not exclusively targeted to weddings.

About 70 percent of brides create a personal wedding website, according to a survey conducted last year by websites TheKnot.com and WeddingChannel.com.

(Editing by Patricia Reaney)

Irrational Games and Take Two announced Wednesday that “BioShock Infinite” will be delayed four months to allow developers more time to make tweaks to the game. The third installment in a popular horror series, set in a dystopian undersea universe, will now be released on February 23, 2013, instead of this coming October as previously scheduled.

Creative director Ken Levine made the announcement on Irrational’s website:

“When we announced the release date of BioShock Infinite in March, we felt pretty good about the timing,” he wrote.

“Since then, we’ve come to realize that some specific tweaks and improvements will make Infinite into something even more extraordinary. Therefore, to give our talented team the time they need, we’ve decided to move the game’s release to February 26, 2013. We wanted to let our loyal (and very patient!) fans know this as soon as possible.

“I won’t kid you: BioShock Infinite is a very big game, and we’re doing things that no one has ever done in a first-person shooter,” he added. “What does this mean for you? It means a bit more waiting, but more importantly, it means an even better BioShock Infinite.”

Levine said developers will hold off on showing “BioShock Infinite” this summer at such gaming events as E3 and Gamescom.

“That way, the next time you see our game, it will be essentially the product we intend to put in the box,” he said. “Preparing for these events takes time away from development, time we’re going to use instead to get the best version of Infinite into your hands in February.”

Fans have been waiting for the next creation in the “BioShock” universe since “BioShock 2″ was released in 2010. The new title will take players beyond the underwater realm of the first two games and put them in Columbia, a futuristic city in the sky, during a time of anarchy and strife.

In an interview with CNN last December, Levine described how excited he was to work on this new setting.

“In all these stories, you have these incredible themes. One of great optimism and excitement for the future and one of this ominous feeling at the same time,” he said. “This yin and this yang that was present in all of this research really made me excited to work on this game.”

Response from fans on Internet message boards Wednesday was generally positive, with many saying they are willing to wait longer for the game if it lives up to expectations.

BOSTON (Reuters) – Harvard and the Massachusetts Institute of Technology, both academic heavyweights and often neighborly rivals, are joining hands in a new partnership to offer courses online and for free.

The two schools, located near each other in Cambridge, Massachusetts, are teaming up on an initiative called edX only five months after MIT rolled out MITx, its online learning system which allows students to earn certificates for completing course work from a distance.

Harvard and MIT each committed $30 million to the project, which will be overseen by a not-for-profit group based in Cambridge. Anant Agarwal, who led the development of MITx and directed MIT’s Computer Science and Artificial Intelligence Laboratory, will be edX’s first president.

The group plans to offer its first courses in the fall and eventually expects other universities may join.

With a wink to the schools’ long-running rivalries in racing to academic breakthroughs and wooing professors and students, MIT President Susan Hockfield said they also work together. “One of the best-kept secrets is the profound richness of collaboration between Harvard and MIT,” she said at a news conference, standing next to Harvard President Drew Faust.

Online learning has become a hot topic in education with many schools, including MIT, offering hundreds of courses online where students work through the material at their own pace but are not tested. Now the trend is to offer classes online where students can earn certificates if they show they can master the subject.

MIT said 120,000 people signed up for the first such course – Introduction to Circuits and Electronics – that MITx rolled out earlier this year. Halfway through the course, some 20,000 were still actively keeping up with it.

The new program is expected to make Harvard and MIT’s course work available around the world to students who cannot sit in classrooms on campus, and officials also expect it to aid researchers in figuring out new ways for people to learn.

“EdX gives Harvard and MIT an unprecedented opportunity to dramatically extend our collective reach by conducting groundbreaking research into effective education and by extending online access to quality higher education,” Harvard’s Faust said.

The students who sign up, free of charge, will be able to watch video lesson segments, take embedded quizzes and participate in online laboratories.

And they will be able to earn certificates for completing the work. But university officials have long underscored that these online learning platforms are not a less strenuous path to a top-tier diploma. Indeed diplomas can still be earned only by being admitted by the schools and attending classes in person.

Harvard and MIT are extremely selective with Harvard accepting only 5.9 percent of the applicants for an undergraduate degree this year. MIT accepted 8.9 percent.

(Reporting By Svea Herbst-Bayliss; Editing by Jackie Frank)

<span class="articleLocation”>(Reuters) – Amazon.com Inc’s stellar quarterly results are helping convince skeptics on Wall Street that a bout of intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company.

Shares in Amazon leapt 15 percent on Friday after it reported first-quarter earnings and margins well above investors’ most bullish expectations, tacking on some $10 billion in market value and marking its biggest single-day gain since October of 2009.

CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent quarters. He is trying to transform Amazon from an online version of a big-box retailer like Wal-Mart into a provider of technology services.

Some investors argue that its valuation of over 70 times forward earnings — dwarfing companies like Apple Inc and Google Inc that produce record profits — is justified because Amazon is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers and sellers.

“These services will become an increasingly important part of Amazon’s overall business and will be a driving force of profitability going forward,” Bernstein Research analyst Carlos Kirjner wrote.

Amazon is trying to be “not a bookseller or a retailer, but a company that uses technology and (now) its scale to transform whole value chains” from retail to publishing and video distribution.

Heavy spending has pressured profit margins in recent quarters, hitting the company’s shares. But in the first quarter, gross margins rose by about 120 basis points to roughly 24 percent, Macquarie analyst Ben Schachter estimated.

Amazon shares rose to $225.75 on the Nasdaq.

A FLURRY

That surprise increase in gross margins prompted a flurry of price target increases by analysts.

Faster growth at its online marketplace business and cloud unit Amazon Web Services, along with sales of digital goods, drove the improvement in margins, analysts said.

Amazon’s 34 percent revenue increase to $13.18 billion also impressed Wall Street which had expected revenue of $12.9 billion, according to Thomson Reuters I/B/E/S.

“The biggest surprise in the quarter was Amazon’s gross margin increase of 120 basis points year-over-year, the largest uptick in 10 years,” RBC Capital Markets analyst Ross Sandler said.

During the first quarter, nine of the 10 top-selling products on Amazon.com were digital products, including Kindle e-books, movies, music and apps.

“Bulls have been waiting a long time for this gross margin upside and it finally came in the first quarter,” Macquarie Equities Research analyst Ben Schachter said.

The company’s shares had been hit by margin pressure over the past few quarters.

Schachter expects gross margins to continue to ramp up in the long term as the company benefits from the increasing use of the Internet.

Analysts at Macquarie, RBC, Citigroup and at least nine other brokerages raised their price target on the stock. Nomura upgraded it to “buy” from “neutral.

According to Thomson Reuters StarMine, 12 analysts rate the stock “strong buy,” 11 a “buy,” 15 a “hold” and one a “sell.” Only one rates the stock “strong sell.” Analysts have a mean price target of $218.69.

The company released its quarterly results after the market’s close on Thursday.

(Editing by Phil Berlowitz)

NEW YORK (Reuters) – Apple Inc wants to go to trial to defend itself against U.S. government allegations that it conspired with publishers to raise prices of electronic books, a lawyer for the Silicon Valley giant said in court on Wednesday.

Two publishers took a similar stance in the first hearing in Manhattan federal court since the anti-trust division of the Department of Justice last week accused Apple and five publishers of colluding to break up Amazon.com’s low-cost dominance of the digital book market.

The publishers are Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, and Pearson Plc’s Penguin Group.

“Our basic view is that we would like the case to be decided on the merits,” Apple lawyer, Daniel Floyd, told U.S. District Judge Denise Cote. “We believe that this is not an appropriate case against us and we would like to validate that.”

The judge scheduled the next hearing for June 22.

The court also heard that 15 U.S. states and the Commonwealth of Puerto Rico were in settlement talks with the three publishers. If all 50 states were ultimately to settle, it would have an impact on a separate class action brought by consumers, a HarperCollins lawyer, Shepard Goldfein, told the judge.

“There could be something left of the class, or nothing left of the class,” Goldfein said.

The government said the price-fixing took place in early 2010 as Apple was introducing its iPad.

E-book prices went up an average of $2 to $3 in a three-day period in early 2010, according to the complaint.

The settlement with three publishers will allow Amazon to resume discounting books, and will terminate the “most favored nation” contracts with Apple.

News Corp owns HarperCollins Publishers Inc, CBS Corp owns Simon & Schuster Inc and Hachette Book Group is a subsidiary of Lagardere SCA.

Hachette and HarperCollins also settled with a group of U.S. states, agreeing to pay $51 million in restitution to consumers who bought e-books. Simon & Schuster is in negotiations with the states to join that settlement, a lawyer for the company said in court on Wednesday.

The European Commission is also probing Apple and publishers in a similar antitrust probe. It said on Wednesday that it had received settlement proposals from Apple and four publishers – Simon & Schuster, Harper Collins, Hachette Livre and Macmillan’s parent.

The case is USA v Apple Inc et al in U.S. District Court for the Southern District of New York, No. 12-2826 and No. 11-md-02293.

(Additional reporting By Diane Bartz; Editing by David Gregorio)

Online retailer and auction site eBay has reported an increase in first-quarter sales and profit.

EBay said first-quarter profit was $725m (£453m), up from $619m a year earlier. Revenue was $3.3bn, up 29% on 12 months ago.

Results were again boosted by strong performance from its online payments unit Paypal, which accounted for about 40% of total revenues.

EBay's shares, down by 0.58% at close, rose by 3.2% in after-hours trading.

The company's chief executive, John Donahoe, said it had been a "strong start to the year".

"We believe that innovation in retail today is technology driven, and consumers are embracing smarter, easier, better ways to shop," he added.

"We are enabling commerce in this new retail environment, supporting and partnering with sellers of all sizes and giving consumers worldwide the ability to shop anytime, anywhere, for whatever they want."

Story By: Talk of the Nation

John Villasenor, senior fellow at the Center for Technology Innovation, Brookings Institution

Catherine Crump, staff attorney with the American Civil Liberties Union’s Speech, Privacy and Technology Project

Related Reading

Read John Villasenor’s blog post “What Is A Drone, Anyway?” for Scientific American.

Congress recently passed the FAA Modernization and Reform Act of 2012, which — along with funding the Federal Aviation Administration’s budget through 2015 — encourages the acceleration of unmanned aircraft programs in U.S. airspace. Drones have taken on a large role in military operations in Afghanistan, Pakistan, Yemen and Somalia. The new legislation could make the technology more prevalent in several arenas, from local police departments to farmers monitoring crops. What exactly are drones, how are they used — now and potentially — and do they threaten people’s rights to free speech and privacy?

Editor’s note: Pete Cashmore is founder and CEO of Mashable, a popular blog about tech news and digital culture. He writes regular columns about social media and tech for CNN.com.

The TV show is co-produced by Randi Zuckerberg, former marketing director of Facebook and sister of its founder, Mark Zuckerberg. Its brief preview showcases the glamorous life of a tech startup founder: Lots of parties, alcohol, attractive women and a social scene that is like “high school, but it’s only the smart kids.”

The problem: The tech industry isn’t like that at all.

Here’s how tech-company founders usually succeed in Silicon Valley: They spend endless hours in front of a computer building products people want to use. Alas, this doesn’t make for interesting TV.

Hence all the Hollywood cliches. Computers on TV shows and in movies beep when a button is pressed. Characters seem able to type at a frenetic pace. Passwords can always be guessed within three attempts — and always just in time to prevent a disaster.

These cliches once existed only in fictional shows and movies. Alas, as Silicon Valley continues to power a digital revolution that’s changing the world at a rapid pace, camera crews are increasingly trying to capture startup reality and bottle it as entertainment. And they’re finding it converts to film about as well as paint drying.

Mark Zuckerberg built Facebook through thousands of hours spent in front of a dimly glowing screen. His motive? He “likes to build things.” And yet in 2010′s “The Social Network,” the Zuckerberg onscreen is more concerned with girls, parties and getting into Harvard’s most exclusive social circles.

Therein lies the second issue with bringing startups to the big or small screen: Startup founders rarely have interesting social lives. Building a company takes almost every minute of the day, leaving little time for a personal life.

TV viewers demand drama: If it can’t be found, it’s manufactured. The small screen loves a performer, too. A celebrity. An exhibitionist. Can you dance? Sing? Act? Even once the show is over, these outgoing stars convert well to a world of tabloids and celebrity magazines.

Startup founders, however, do not.

So now comes the time to pick a side. Is representing Silicon Valley as a party haven doing a disservice to those who work countless hours to build products we’ll all love? Or is there nobility in Randi Zuckerberg’s mission to “make accessible and to humanize the increasingly important tech community for the average consumer”?

Perhaps it’s both. Translating tech for those not living in its epicenter is a noble effort that will surely bring more new people — and more diversity — to Silicon Valley. And yet this can’t be done in a literal way: Bringing technologists’ stories to TV and movies requires a little creativity to make the subject matter fit the medium.

My science teacher didn’t get our class interested in a science career by telling us that most chemists work long hours on repetitive tasks. No, he showed us explosions. And crazy, color-changing reactions. And non-Newtonian fluids dancing on speaker cones.

It’s unfortunate that the story of tech revolution doesn’t convert well to the dominant medium of the day. And it’s regrettable that some viewers will wildly misinterpret what entrepreneurship is all about. But after grabbing the attention of viewers with dramatic exothermic reactions — or scenes of wild parties — perhaps we’ll be able to teach them what it really takes to build a company.

The opinions expressed in this commentary are solely those of Pete Cashmore.

Spotify, the London-based music streaming service, is to launch in Germany on Tuesday.

The subscription business already operates in the UK, US, France and nine other countries, but this marks its first entry into Europe's biggest economy.

Earlier this year Spotify's rival, Grooveshark, pulled out of Germany, blaming high licensing costs.

Spotify said it did not comment on its commercial relationships.

Chris Cooke, business editor of the music industry newspaper CMU Daily, said that the German royalty collection agency Gema was probably responsible for the fact that it had taken Spotify until now to make the move.

"Representing Germany's songwriters and publishers, Gema is renowned for being the toughest of the royalty collecting agencies," he said.

"Spotify was discussed at the Reeperbahn music conference in Hamburg in 2010, and Gema's representative in that debate, Alexander Wolf, was pretty blunt when talking about the streaming service, saying he couldn't see it ever being licensed in Germany without a change in its business model.

"Since then Spotify has altered its priorities somewhat to put more emphasis on paid subscriptions, and we've heard that some of the major music companies – which have equity in Spotify via their labels, and through their music publishing companies are also stakeholders in Gema – have been putting pressure on the royalty body to change its stance."

A spokeswoman for Gema said she could not provide a response at this time.

Spotify said it now has more than 10 million active users, three million of whom pay for its service to override time limit restrictions and remove adverts.

"It's the third largest music market in the world and is a very important market," Jeff Levick, the firm's chief sales officer told the BBC.

"We took it very seriously and had wanted to make sure that when we did launch in Germany it was the right time with the right product as well."

Mr Levick said the firm had added new German language albums to its library ahead of the move, bolstering its size to 16 million tracks. Users in other markets will also have access to the new songs.

The launch is the company's first since unveiling its app store in November. Local partners include the German edition of Interview magazine and the festival guide Eventim.

Users will face the same 9.99 euro ($13.10; £8.40) monthly fee for the business's premium service that is charged elsewhere in the EU.

Despite Grooveshark's exit Spotify will face local competition.

Cologne-based Simfy says it already has more than a total of two million users in Germany, Austria, Belgium and Switzerland. Its chief executive said he welcomed the extra competition.

"Spotify's upcoming launch in Germany has been a topic for a long time now and we are happy to have one more contender here spreading the word," said Gerrit Schumann.

"More and more people will consider music streaming and look at the available options, and that's how the market will really take off."

International rivals Rdio and Deezer also launched in Germany over the 12 months.