People login to AOL and follow links to AOL sites which generates the traffic that underpins the advertising revenue… facts are stubborn things.

CEO Armstrong says that the content portal traffic is not dependent on the ISP business but the data simply doesn’t support that contention, and the content sites that do stand up well on their own have a relatively small unique visitor and pageview count; while we could argue that these are increasingly outdated measures the fact remains that an advertising driven site is dependent on showing strength on exactly these 2 measures.

Today it was announced that AOL is going to shed 2,500 employees ahead of the planned spinoff from TimeWarner, reducing their operating expenses by approximately $300 million annually once the restructuring costs are accounted for. This move suggests that AOL understands that the move away from the ISP business will stunt their publishing aspirations.

Armstrong is giving up his generous bonus for 2009 but far from being the magnanimous gesture from Armstrong it is rooted in the reality that a full blown employee mutiny would have been certain were Armstrong to take his bonus while pink slipping 1/3 of the employees.

Armstrong’s (expensive) goodwill gesture: He is giving up his 2009 bonus, which was to be at least $1.5 million. His explanation to employees: “As a member of our team and the person who takes accountability for the results of the company, I am making the decision to forego my 2009 bonus. That decision is a personal one and is not a sign for the future payout of the overall bonus plan for employees.”

[From AOL: We Need to Fire 2,500 “Volunteers” | Peter Kafka | MediaMemo | AllThingsD]

AOL is the tech industry’s General Motors, it’s legacy for many will always be this and spinning it off and buffing up a new media strategy simply won’t be enough…

Here’s my edited version of the full piece:

BEIJING, Nov 18 (Reuters) - President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession. His crack team of economic advisors made the previously undiscovered link between deficit spending and negative economic consequences on Tuesday night and defended the $3 trillion in debt accumulated in 2009 as necessary spending to expand the role of government , denying that any link between massive public debt and economic conditions was evident before Tuesday.

With the U.S. unemployment rate at 10.2 percent, Obama told Fox News his administration faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction, saying “because let me be clear, we have to get ourselves re-elected next year!”

His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with Fox conducted in Beijing during his nine-day trip to Asia. With his team of economic advisors behind him, shuffling their feet and looking downward, Obama admitted that “basically we have no idea how to create jobs because outside of government payrolls we’ve never done that, we’re pretty much guessing at this point and anyone with a good idea should send me a tweet.”

“It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” he said. With consumer confidence at record low levels, many argue that it’s hard to imagine that confidence in the economy could be any lower but the President needs Americans to keep buying Made in China to ensure the flow of recycled dollars into U.S. debt purchases.

Fox News, which released a transcript of the interview, showed that comment by Obama on Wednesday morning and said the full discussion would be broadcast later in the day. (Reporting by Caren Bohan; Editing by John O’Callaghan)

[From Obama: Too much debt could fuel double-dip recession | Markets | Markets News | Reuters]

Blazing Saddles Scene Nick | MySpace Video

General Motors, encouraged by its improving financial situation, could repay all of its $6.7 billion in loans from U.S. taxpayers by the end of next June, the company’s top executive said Monday.

[From With $42B, GM moves ahead | freep.com | Detroit Free Press]

Let’s recap what is going on at GM. The Federal government - aka “us taxpayers” - gave GM $57.6 billion in exchange for equity in the company and a debt instrument for $6.7 billion, which is referenced in the above pull quote.

One of the favorable consequences of reorganizing GM in the bankruptcy court is that the company was relieved of servicing the $50+ billion in corporate debt that they had accumulated and suspended payments to their employee pension fund. What all this means is that $GM’s fixed burn rate went way down… way way down.

So fast forward to today and we learn that GM posted a loss but increased it’s operating cash by $3.3 billion. The increase in operating cash is what is really important, not the accounting loss… but it’s no surprise that they increased their cash considering that they didn’t have all that debt to pay interest on and then there is that $25 billion owed to the VEBA trust (another employee benefit expense) that payments were suspended on until December.

GM has the chutzpah to hold up high their plan to pay back taxpayers with the same money that the taxpayers originally gave them and claims that their increasing cash position as a consequence of not having to pay the VEBA Trust and the now extinguished bondholders is a win… really.

Let’s talk in January after they pay $10 billion to the VEBA Trust, $8.1 billion to the US Treasury and Canada, $2.8 billion for the fiasco at Delphi, and another $900 million for Canadian worker benefits.

This is really nice.

Having had the opportunity to play around with the device I think I’m going to hold on to my iPhone for the time being. The Droid is really nice but it’s simply not appreciably better than the iPhone therefore it’s hard to justify switching.

My first concern, having seen the Droid only in press photos, was that the build quality was suspect but I’m happy to report that those fears are unfounded. The Droid is solid and conveys a sense of quality when held in your hands. The slider is smooth and the touch screen is crisp.

The camera is one area where the Droid excels compared to the iPhone. While it does have some latency that could disrupt your ability to get a shot “in the moment”, the quality of the images more than makes up for this negative. The flash and picture controls, white balance and color effect, are nowhere to be found on the iPhone.

I am not so enthusiastic about the keyboard, for several reasons. First of all, I’m not a big fan of the iPhone virtual keyboard but I do appreciate how it can be reconfigured for the app, such as offering a different layout when in the email address field as opposed to the body text, and when spun in landscape mode the virtual keys are plenty big enough even for folks with big fingers like me. You really do get used to it.

The Droid keyboard will no doubt please many and also be subject to the “you’ll get used to it” clause, but there are several design elements I just don’t like. The keys are flat, reminiscent of the laser etched keys on the old Razr handset, and while they do offer some tactile feedback (and in all fairness the iPhone keyboard offers no tactile feedback) it still isn’t enough to comfortably type without looking at where your fingers are going. The spacebar key is too small, which makes no sense because there are two unused key positions on the lower right and lower left of the keyboard; certainly they could have made that space bar larger by moving the ALT key left and right (there are 2 ALT keys, one on each side).

I found the keyboard keys to be really small for my fingers, and ironically I discovered that my typing speed and accuracy were greatly improved using the Droid virtual keyboard. This may be a simple transition issue for me, coming off an iPhone, that my wife who uses a Blackberry and never got used to the iPhone keyboard doesn’t experience.

The Google App Market needs some work, and this is probably the single dominant reason why I would not switch off the iPhone just yet. My favorite apps (e.g. Evernote and Tweetie) were not available and while promised I have long ago learned to judge application offerings on what is available rather than what is promised to be delivered.

I also found it interesting that many of the featured apps in the Market were priced in € and UK£. This is probably not a big deal from the standpoint on handling the transaction but is it really too much to ask that the storefront merchandizes every app in USD$ for customers who are clearly entering it through a U.S. carrier?

Aside from a couple of annoying usability issues (I still can’t figure out how to wake the device without opening the slider) the Droid is nicely designed and well appointed. The build quality is impressive and it feels substantial, and perhaps most importantly my first impression of it as an actual phone are pretty good although I would have to use it for a couple of weeks to really get the gist of integration of phone features in the apps (e.g. click on a phone number in an email to make a call).

In the final equation, the Droid is impressive for a v1 handset but it’s not enough to make me switch… yet. The openness of the Android platform is a big strategic advantage for Google and handset partners, providing they don’t allow the carriers to dictate what the handset can and can’t do from an app standpoint, but if allowed to develop momentum I could see this putting real pressure on Apple even among the hardcore user base.

On Sunday, 92 percent of workers at Ford’s Kansas City Assembly Plant voted against proposed contract changes. The vote there came after a stormy meeting at nearby Winnetonka High School where UAW Vice President Bob King, head of the union’s national Ford section, made an appeal to workers to support the agreement, which was negotiated by the UAW and Ford earlier this month.

[From Ford workers in Sterling Heights reject concessions | detnews.com | The Detroit News]

The main issue that workers are objecting to is the no strike clause in the proposed agreement. This same clause was instrumental in securing the Chrysler takeover by Fiat, which the UAW now owns 55% of, and ensures that Fiat will not face union work stoppages until at least 2015.

This brings about an interesting question, can the UAW be both an owner of car companies and a representative of the employees at the same time? The entire UAW strategy to date has been to establish a common labor agreement across all U.S. car companies (no foreign company has a UAW plant except for the joint venture between GM and Toyota in Fremont, Nummi, and that is going to shut down, according to Toyota).

With the UAW ownership stakes in GM and Chrysler, the pattern agreement strategy appears to be thrown under the bus and if so would the labor agreements with GM and Chrysler put Ford, with no UAW ownership, at a competitive disadvantage? It’s not like this administration is going to do anything under the guise of antitrust given their complicity in the current state of affairs, but one has to wonder if this is ultimately an anticompetitive scheme set up by the UAW and government that will be applied against Ford in the name of leveling the field.

According to a new study, if HDDs continue to progress at their current pace, then in 2020 a two-disk, 2.5-inch disk drive will be capable of storing more than 14 TB and will cost about $40 (today, a typical 500 GB hard drive costs about $100). Although flash memories have also become popular - with advantages such as lower power consumption, faster read access time, and better mechanical reliability than HDDs - the cost per GB for flash memories is nearly 10 times that of HDDs. In addition, flash memory technology will reach technical limits that will prevent its continued scaling before 2020, keeping them from replacing HDDs.

[From What Comes After Hard Drives?]

As we look to a future with smart grids/cities, digital medical records, lifestreaming, and things we haven’t even thought of yet, the one constant is that we are overrunning our capability to store all the data that is being generated. I am not talking about the physical requirements for storage because we can simply keep building bigger storage arrays that constantly catchup to what our requirements are, but the problem that remains is overcoming the mechanical limitations of a hard drive in order to serve up the piece of data that is required when it’s required.

So there is a physical performance issue and most likely a schematic issue as we come to terms with the limitations of data storage models for accommodating 10, 50, 100x the amount of data that we deal with today. Just building cheaper bigger hard drives is not the solution, it helps but it’s not the primary problem that requires solving… data storage models, the digital detritus problem, and data performance are the problems I foresee.

With Thursday’s vote, the five-member panel began the process to move forward with the regulations announced last month by the agency’s chairman, Juilus Genachowski. His proposal would formally codify the FCC’s four existing principles, intended to prevent Internet service providers from giving preferential treatment to certain content and services. He also proposed two additional principles: one to ensure providers do not discriminate between applications; and another to require Internet companies to disclose their network management practices to consumers.

[From On 5-0 vote, agency moves ahead in push to regulate Internet - TheHill.com]

If I am incorrect I would appreciate hearing about it, but to my knowledge all regulatory action to date involving the internet has been specifically targeted at commerce activities that are potentially fraudulent, data privacy (or lack thereof it would seem at times), technical aspects, and specific speech, such as SEC regulations on company disclosure. VoIP has been another focus of regulation but that would appear to be an extension of their traditional focus on telecommunications more so than Internet regulation.

I am a proponent of net neutrality but in the pit of my stomach I have a strong fear that now that the FCC has determined they can broadly regulate the relationship between internet technical service providers and content providers that they will have a reflexive desire to overreach much like the FTC did with their much maligned “guidelines” for bloggers and advertisers. There is one absolute truth about Washington D.C. and that is the desire for turf knows no bounds and once authority has been established it is fully exercised and rarely relinquished.

I simply hope that now that we have achieved what has long been desired with net neutrality that we won’t ultimately regret it.

Those who are not customers of Optimum Online or the newspaper - both owned by Bethpage-based Cablevision Systems Corp. - will have to pay a $5 weekly fee. However, nonpaying customers will have access to some of newsday.com’s information, including the home page, school closings, weather, obituaries, classified and entertainment listings. There also will be some limited access to Newsday stories.

[From Newsday.com moves to subscriber model]

In reality this is a lot of talk about something that will actually have very little impact on revenue because if you are a Newsday subscribers or a Cablevision cable customer you will have access to the Newsday.com site for no extra charge. Given that Newsday is concentrated on Long Island and Cablevision has a virtual lock on that region, what the online pricing plan is doing is not increasing revenue but defending revenue that is under assault by adding the online service as something extra subscribers get.

In the final analysis, this is exactly why it will fail. By creating a pricing plan that defends rather than attacks a market the company is conceding defeat in print and this strategy will have the effect of slowing audience growth online in the one segment that the paper requires, young people. I am willing to give Newsday and Cablevision some credit for being creative with a multichannel strategy that covers TV, print and online, but this pricing plan is a throwback to a subscription model that simply doesn’t work anymore.