ReadWriteWeb

Provider Fail: Vodafone Sells HTC Smartphone Loaded With Malware

Alex Williams — Wed, 17 Mar 2010 17:42:00 -0800

Panda Security is reporting a second incident of malware on Vodafone's HTC Magic, a Google Android smart phone. it provide a clear example for how smartphones are prime targets to become botnets once connected to a user's personal computer.

The incidents provide real-world examples of how companies can inadvertently spread malware. It also raises questions about the quality assurance testing done by manufacturers and the carriers.

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After the first discovery earlier this month, Vodafone said it was an isolated incident. But two days later the company announced the HTC Magic would be discontinued. Vodafone also deleted questions about the issue from its forums.

A Panda employee discovered the "Mariposa," virus after connecting it via USB her PC. Her Panda Cloud Anti-Virus software detected the malicious code, revealing that the smart phone was infected and spreading the virus to the PC.

Mariposa is a program that turns infected machines into botnets. it has infected more than 13 million computers, stealing credit card and bank log-in information.

In the second incident, an IT security expert who had bought the phone learned about the virus discovery. He decided to test his phone, using AVG anti-virus protection. Sure enough, his device also showed it had malware on it.

According to Panda Security:

This guy had also purchased an HTC Magic direct from Vodafone's official website the same week as my co-worker. He hadn't connected the phone to his PC yet, but as soon as he saw the news hurried back home, plugged it in via USB and scanned its memory card with both MalwareBytes and AVG Free. Lo and behold, Mariposa emerged again, exactly in the same way as in our original finding.

The HTC Magic has historically been sold in Europe.

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New Mozilla Labs Project Wants to Give You Total Control Over Your Address Book

Frederic Lardinois — Wed, 17 Mar 2010 16:25:14 -0800

Currently, your contacts live in address books that are distributed all over the Internet and your desktop. Because of this, chances are that you have numerous address books on the web that are often "inconsistent and disjointed." Contacts, a new Mozilla Labs project, wants to put an end to this. The Contacts addon creates a local database for all your email and Twitter contacts that can then be used by your browser and any website that supports Contacts' API.

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Thanks to this, you can now import all your Gmail contacts to the local database and use this contact info to autocomplete forms anywhere on the web. You can also import data about your Twitter friends and if you are on a Mac, you can import your local address book as well. Contacts will also import avatars from Gravatar whenever they are available.

Lots of Ambition Beyond Autocompletion

This email autocompletion feature is really just a first step for Mozilla, though. The real mission of this tool is to give users more control over their own data - a mission that is also very much in sync with what Mozilla considers its own mission to be these days. When you import your contacts database on most websites today to check if your friends are already online or to invite them to the service, you have to trust this service that it will keep this data private. Once more sites implement Contacts directly into their services, however, you will be able to control exactly what data a third-party site can access and retain control over this data.

The current version of Contacts consists of four pieces:

a browser-based database that syncs with your address books. Contacts uses the Portable Contacts format to represent this data in the database.
a generic importer system that allows developers to create importers for desktop and web-based address books
an email autocompletion feature
a Javascript API that third-party sites can use to access all of your data (with explicit permission and the ability to filter the data)

Give it a Try

After installing the addon, you can test both the autocomplete and the tool's export features here.

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The Death of the Pageview

Guest Author — Wed, 17 Mar 2010 16:00:00 -0800

The Web has hit a point where tracking pageviews is useless for startups.

There was a time when all you needed to succeed on the Internet were lots and lots of eyeballs, and the best way of measuring those eyeballs was by tracking pageviews (measuring exactly which pages on a website are viewed by individual visitors). The dot-com crash showed us that the eyeball-based business model was a failure.

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Since then, startups have moved toward direct monetization strategies such as subscriptions and virtual goods - and these businesses using these strategies require very different metrics than an advertising-based business would. Make no mistake, pageviews were valuable metric once, but their time has passed.

Guest author Tim Trefren is one of the founders of Mixpanel, a real-time Web analytics service that helps companies understand how users interact with Web applications. He writes about analytics at the company blog.

For startups that sell something, metrics like average revenue per user (ARPU) and customer lifetime value (CLV) are vastly more valuable than detailed pageview tracking. It doesn't make any sense to focus on pageviews (an approximation for value) when you can measure the real thing directly.

There's also a clear pattern in the direction the Web is heading - toward interaction and responsiveness, and away from separate pages. If you're going for incredible user experience, on-page interactions are your bread and butter. Can you imagine what a drag it would be if the page reloaded every time you commented or 'Liked' something on Facebook? It would be awful.

This trend further devalues the pageview as a valid metric. If you have a highly interactive Web application that spans only a few pages, there's not a whole lot of value in seeing how many times those pages were loaded. Much more valuable information can be found by tracking the parts of your application that your users are interacting with the most. The benefits here are twofold: You can directly measure the things that are important to you, and you gain unparalleled insight into how people actually use your application.

If Not Pageviews, Then What?

When you're deciding how to incorporate analytics into your strategy, the most important thing is that you are gathering actionable data. By this I mean that you have to be able to use the information you gather to make a decision and take action. If you're not going to use it to make a decision, it's a waste of time to even look at it.

With this in mind, there are a few areas we should focus on: split testing, interaction tracking, conversion funnel analysis, and click tracking. These methods will give you the information you need to both improve your conversion rates and your understanding of user behavior.

Just a few years back, your only options were to roll your own analytics or to pay tons of money to a giant company like Omniture. This left startups in a tough spot, one many startup founders still encounter today: it's difficult to justify putting a lot of development time into analytics when it's not your main product, and it's hard for a small company to work with a large sales organization.

Luckily, the analytics landscape is changing. Many new companies are sprouting up to handle every aspect of your analytics, freeing you from the need to develop your own internal tools.

Split testing

Split testing involves creating different versions of your site and measuring how the changes affect user behavior. Your changes can be as small as a different call to action or as large as a complete redesign. With this data in hand, you can make changes to your website to massively improve your conversion rates.

What companies do it?

Google Website Optimizer is a free multivariate testing solution. It makes it possible to change a number of different things and determine the optimal combination of changes.

Conversion funnel analysis

Funnel analysis is a way of measuring conversion rates across multiple steps of user acquisition. For example, you can measure the rate at which visitors from the front page go to the pricing page, and then how many continue on to actually create an account. This is an incredibly important concept to understand, and can be applied to many aspects of your application.

What companies do it?

Mixpanel (my company) is a freemium service that provides funnel analysis and segmentation.
Google Analytics has a feature called Funnel Visualization that provides basic pageview-based funnel tracking.
KISSmetrics is a new company with a funnel analysis product in closed beta.

Click tracking

Click tracking is a great way to measure how effective your website is. Every click a visitor makes is recorded, so you know which links and buttons are receiving attention. There are a number of ways to report this data, but the most popular is to overlay an image of your website with a heatmap of all of the clicks. If your users aren't performing as you expect, you can try changing the page and continuing the test.

What products do it?

ClickTale is a freemium service that can generate click heatmaps and movies of single visitor sessions.
CrazyEgg is a paid service that can generate a few different reports for your visitor click activity, including heatmaps.

Event tracking

Event tracking is a way of measuring exactly what users are doing on your site. Things like invites sent, videos played, and user signups all count as events. This functionality will grow more and more important as the Web grows more interactive.

What companies do it?

Kontagent is a freemium service that is focused on Facebook applications. It can track Facebook-specific events like invites and notifications, among other things.
Google Analytics recently added basic event tracking to complement its pageview based service.

Measure Relevancy, Not Your Ego

Ultimately, analytics are crucial to online success. If you want to improve your startup, you've got to be measuring it. It's critical to measure the right things, though - the things that are actually important to your business, not things merely appeal to your ego. It can be mesmerizing to watch the unique visitor count go up day-over-day, but this is a dangerous diversion. The era of eyeballs equaling success is long past, so you should instead be measuring the things that are truly relevant to your business.

If you're not measuring your visitors yet, I urge you to get your toes wet - track something small. The conversion rates for the buttons on your front page would be a great place to start.

Is the pageview really dead? What other companies and services are available to help companies move beyond a pageview-centric mindset? Let us know in the comments

Photo by Iva Villi.

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Proposed Financial Regulations Could Cripple Angel Investing

Chris Cameron — Wed, 17 Mar 2010 15:00:00 -0800

In the wake of the financial meltdown, a new set of financial regulations proposed by Senator Christopher Dodd aimed at plugging the "too big to fail" loopholes could have some negative side effects for the angel investment community. According to a report from the Seattle-based site TechFlash, Dodd's bill would require that angel investments be approved by the SEC, a process that could take as many as 120 days to complete.

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But that's just the tip of the iceberg. The enormous reform bill (some 1300+ pages) also gives the SEC the ability to delegate regulatory authority to state governments on investments it deems too small in size or scope. Angel investors themselves could be place under the regulatory microscope as well; the bill wants to raise the income level it takes to become an accredited investor, perhaps even doubling the requirement.

Not only would this bill make the process of attaining seed-stage funding more difficult, more expensive, and more time consuming, it goes against the government's goal to create jobs in America. If these regulations become law, fewer startups will get funding because they won't want to deal with the lengthy SEC filing process.

Instead, more innovative ideas will go by the wayside, startups will not get funding, and jobs will not be created. Furthermore, by raising the requirements to provide angel funding, the pool of investors will shrink, which will only exacerbate the problems facing the nation's already floundering venture capital industry that is only recently seeing signs of recovery. In a letter sent to Senator Dodd earlier this month, Mark Heesen, President of the National Venture Capital Association, and Marianne Hudson, Executive Director of the Angel Capital Association, together outlined their grievances with the bill and its danger towards the VC industry.

"Venture capitalists often invest in companies that were supported by angels, so ensuring that regulations for accredited investors do not harm this capital source is important," said Heesen and Hudson. "In addition, as more and more venture capital firms co-invest with angel investors and angel organizations, the state preemption of securities regulations could extend to a large number of businesses, from start-ups to others that need capital for growth."

What do you think of this bill? It seems to me the sections mentioned above will be in direct conflict with the Startup Visa movement which most of the startup community seems to be on board with. The distinction seems obviously clear: encouraging foreign entrepreneurs to start their companies in America will create jobs, and this new bill from Senator Dodd will prevent the creation of jobs by thinning out angel investments. Let us know your thoughts below in the comments.

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Future: Amazon's 'Think Clouds' are Data Aware

Mike Kirkwood — Wed, 17 Mar 2010 15:00:00 -0800

At the RSA Keynote a few weeks back, Amazon's Security Lead, Steve Riley participated on a panel with other security leaders of the industry. We were impressed with the openness of all of the participants, and particularly excited with the new concepts coming from at Amazon. Riley used a term that is being used within his part of Amazon, the "Think Cloud".

As we understand it from the discussion on stage, a Think Cloud is a "body of knowledge" that is a real-time information base of Amazon cloud that can be pivoted all the way down to the threads and individual data concurrency. It would be an index that acts like a control point that helps define movement of data through a servers and compute tasks. Looking at the journey from the data point of view, including data about the environment itself and how to repair itself when damaged and keep data concurrency in tact.

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Here's the RSA cloud security keynote to get a bit of inspiration to benefits of portable (cloud) computing.

In this 30 minute discussion, there are several notable considerations from the contributors on how cloud security challenge can be thought of as a big opportunity and that perhaps now is time to debunk the myth that security is not a part of the cloud.

We picked out a few of Riley's comments that we believe are leading towards the idea of the Think Cloud and why Amazon may be there first.

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Amazon knows it is critical to be able to have good inputs and outputs. And emphasizes ease of use even more than data portability standards themselves.

Riley described a great use case where an un-named customer used Amazon for compute, another cloud provider for data processing, SalesForce for crunching, and then pushed the results to Facebook. Interconnection is happening and applications are already "using all the clouds out there". In this case, all the way down to the consumer.

When we look at this pattern, it we see parts that mimic the history of web in the enterprise. Back-end systems moving data around, optimizing, and passing it to the a web portal. And, the portal demanding "real time" updates for key pieces of data, while relying on batch for others.

We can see that idea of a Think Cloud may come into this pattern to help set boundaries and checks so that when a piece of data passes through an Amazon, it is returned reliably, ever time. Perhaps a Think Cloud is a registry that does part of what a smart Enterprise Services Bus does when registered new applications for master data, that is keeps track of activity.

In a way, we need to solve the cloud-equivalent "floating point" problem in the CPU of generations past in the computer itself.

On the CPU math co-processor, the question was, "Does it know how to do math correctly every-time under all conditions?".

Perhaps the question in the cloud may be "Are all my customers still in the database even though that thread died?", or "Do we have encryption set on every cpu that this user's information is stored in memory or on disk". Solving that problem of interchange the role the concept of Think Cloud might lead.

Many legacy applications won't make it to the cloud.

At least, not as-is. Riley comments that "servers are disposable horsepower, they come, they go".

In other words, Since applications sit on top of servers, and servers are sinking into the cloud, applications will sink or swim based on how they migrate to this model. So, the first movers are "the rats" that have jump ship as it started to sink. Follow the rats, or drown.

The tear-down of the server into the n-resource cloud breaks-or-suboptimizes server based applications in a fundamental way.

Thinking back, this is very similar to web services revolution in the enterprise, where just because an application can export its data model, doesn't mean it is optimized for web services, or API level interaction.

We find this almost a reverse-trend to server virtualization, which has expanded the physical compute space. Perhaps we are finding that there is some new turf to be claimed on where the cloud reaches and virtualization ends.

We like to think of it as "smart service bus" meets "smart application" on infinite resources. Infinite, or course, equaling the credit in your PayPal (or other) form of payment collection required by either, or both parties.

As reported by The Register's Cade Metz, Microsoft's Steve Ballmer recently pointed out that this is a potential opportunity with Microsoft and Azure. Where, instead of "only" focusing on infrastructure clouds, the company is working towards a new programming model, Steve said on March 4, 2010.

"I think Azure is very different than anything else on the market. I don't think that anyone else is trying to redefine the programming model"

When we look at the services recently in our post, Is Amazon's Computing Fabric a New Economy, we noted a series of services outside of core computing that start evolving Amazon quickly down the path of a new development paradigm. Abstracting storage, network, monitoring, and perhaps in future security, in raw terms gives rise to new opportunities to bind them back together.

Security is the topic for RSA. Compliance is the reason to get it right. If the computing model wants to be secure, it needs to know the assets and their relationships. As reported by Search Cloud Computing, Amazon's Riley also tipped the audience at RSA that Amazon is weighing in on encryption as a service offerings. This is another example, where that now Amazon is supporting a new services such as Virtual Private Cloud, it moves one step closer the knowledge point for all the key assets, including their peers within the corporate network.

We find this area, as well as certificate management, to be an area ripe for the type of thinking we see at Amazon. The problem to be solved isn't a better routine, but is how to apply it tandem with the moving assets and data that is ever changing in demand.

Perhaps We Needed to Get to Random, to Get to Secure

We wonder if Amazon's Think Cloud is something new, and if so, is a path towards solving the collision of the major parties in the network. If it joins network, storage, person, and server resources together, perhaps it is the brains of the next generation Internet.

The winner will be the one that makes it simple, because as Devo on Chatroulette is proving, demand is asymmetric, and access control is from the eighties.

Photo credit: RSA, Devo, Inc.

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How Do You Handle Data Integration in the Cloud?

Alex Williams — Wed, 17 Mar 2010 12:34:32 -0800

At times it feels like the concept of cloud computing is as ephemeral as a towering cumulus cloud on a summer day. It passes by, changes shape and looks different to every person who views it. But like those clouds in the sky, there's a lot of complexity out there, especially as it concerns how data is managed in a multi-tenant environment.

The issue keeps coming up. First off, there are no existing standards for moving data in the cloud. Third party vendors like CloudSwitch are providing ways to "drag and drop," data from on-premise to a cloud environments. But there is just no standardized way to move information between cloud networks.

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But there are some ways to manage the complexity. Informatica's David Linthicum wrote a blog post yesterday on the topic. We agree with Linthicum to some extent but his declarations don't entirely reflect the current reality.

Linthicum outlines some of the inherent issues that come with data integration in the cloud. The biggest issue comes down to the cloud computing providers. They do not provide syncing back to the customer's on-premise environment. Linthicum points out that Salesforce.com is the exception to the rule in this regard.

So, according to Linthicum, what should the customer consider?

Backup: This is the first and foremost issue for Linthicum. You need to have an on-premise backup in case of cloud computing outages,cloud service providers going out of business or to prevent the headaches that can happen when the new owner of your cloud computing provider decides that it's really not interested in that business at all.
Data Movement: It's the data integration that drives processes between systems that may be in the cloud or on-premise. How do you manage all this information that may be dispersed over geographically distant platforms? It's a different world than dealing with systems that exist in one data center.

We agree to a point but there are lots of various options to these issues. First off, it's often a matter of what cloud computing platform you choose. The large service providers offer the safest bet. They are vested in the future of cloud computing and are developing ecosystems that consist of third-party partners. A number of these partners specialize in cloud-based application deployments.

And cloud-based security is making advances that make data loss as rare as if the data is on-premise.

Linthicum does offer some sound advice that may seem more like common sense but it is worth noting:

"First, consider the overall requirements of the business. Sounds obvious, but many who deploy cloud computing systems do not have a complete understanding of the overall business requirements.
Second, focus on the holistic architecture, on-premise and cloud-delivered, including how they will and should exchange data to support the core business.

Finally, select the right data integration technology for the job, and do so only after taking everything into account. You'll find that there are both on-premise and on-demand options, and in many instances you may have to mix and match solutions."

There are a lot of options out there. We do not necessarily agree that the hybrid approach is the best way to go. There is no one formula. Standardizing on the cloud has its advantages.

But, still, the over riding issue is really how data passes between systems. Without standards for managing data transfer, the issues Linthicum points out will never go away.

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Want to Read Good Journalism? Try NewsTrust's New Personalized Filtering Tool

Marshall Kirkpatrick — Wed, 17 Mar 2010 11:49:27 -0800

Fair, thorough, enterprising and in context - that's what we're looking for in the journalism we read, isn't it? At a time when shallow ranting takes up so much space in public discourse, a new media evaluation technology offers hope, inspiration and is a lot of fun to use.

NewsTrust is a media technology organization funded by the Omidyar Network and MacAurthur Foundation. Yesterday it launched a personalized news filtering tool called MyNews. The tool helps users review the quality of journalism from all over the web and discover high-quality content they and their friends might enjoy. A light-weight, crowd-sourced, personalized recommendation engine that adds value on top of existing content? Sounds like our kind of app!

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When reading content from around the web through NewsTrust, the user is presented with a well-designed interface through which to review the quality of journalism in question. Users are prompted to evaluate stories based on things like how well they were sourced, whether both sides of a controversy were explained and how enterprising the story was. Short and long reviews are supported and it's easy to review a story in less than 30 seconds if you feel so inclined.

The ability to post links to Twitter and Facebook with a single click means that users who already share articles around social networks have an opportunity to pause briefly and add another layer of value by using NewsTrust.

The new MyNews product released yesterday leverages that network of reviewers to draw in a stream of high-quality links from around the web, on particular topics. In addition to NewsTrust reviewers, the service also delivers stories discovered and vetted algorithmically and it pulls links shared by your friends on Facebook and Twitter into the NewsTrust ecosystem. It's one thing to get a vote of apparent approval from friends sharing links on social networks, it's another to peruse those links through a lens of community grading for journalistic quality.

The end result is a personalized news reader populated with generally high-quality topical stories that have been reviewed by other readers. It's a useful product and one that would work well as a mobile app, where browsing through lots of content of variable quality is less appealing.

NewsTrust and MyNews aren't for everyone, though. Only so many people will be interested in a news consumption interface so closely wedded to review activities. Many people will, no doubt, bristle at the prospect (or reality) of amateurs reviewing the quality of professional journalistic product. Some will find the site too left-leaning for their tastes. (Though it tries hard not to be.)

Many people will enjoy MyNews, though, and we suspect everyone who follows social software in general will find this project particularly interesting. Projects like this may or may not be able to change the way news producers operate, but the news consumers who use it will likely find MyNews a helpful way to enrich their time on an otherwise all-too often low-quality web of news content.

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Latest Version of Google Chrome Adds Auto-Translation and New Privacy Features

Frederic Lardinois — Wed, 17 Mar 2010 10:47:30 -0800

Google just launched a new stable version of Google Chrome, the company's increasingly popular browser, which introduces a number of new features and more advanced privacy controls. Chrome will now automatically detect the language of any site you surf to and offer you to translate the text for you. In addition, Google also added granular privacy controls to Chrome that allow you to turn off cookies and JavaScript on a site-by-site basis. For now, these new features are only available in the Windows version of Chrome.

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Read 52 Languages

Starting today, anybody who uses the stable release of Chrome on Windows will see a little bar appear at the top of the window whenever the browser loads a page that features a language that is not the default language of your browser install. Google Chrome uses the technology behind Google Translate to automatically detect and translate 52 languages. Chrome also gives you the ability to selectively turn this feature off for those languages you don't need it for.

One interesting aspect of this technology is that the language detection happens in the browser, while the translation itself happens on Google's servers. As with all automatic translation algorithms, Google Translate is prone to errors, but it more than good enough to easily get the basic gist of a new article or blog post.

Better Privacy Controls

In addition to the new translation feature, the new stable release of Chrome also includes a number of new privacy controls. Through the new "Content Settings" option, Chrome users on Windows can manage how they want Google to handle pop-ups, plug-ins, cookies, images and JavaScript code. These new settings, for example, allow you to easily block cookies from some sites. It remains to be seen, however, if mainstream users will be able to understand these relatively complicated controls.

What About the Mac and Linux?

With multiple release channels and different schedules for every platform, keeping track of Chrome isn't easy. While these new features aren't available for Mac and Linux users yet, it's likely only a matter of time before we will see them on non-Windows platforms. For the time being, Mac users on the dev channel should make sure that they have updated to the latest version of Chrome, which finally brings a usable bookmarks manager to the OSX version of Google Chrome.

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Google Apps Offers Migration for Microsoft Exchange

Alex Williams — Wed, 17 Mar 2010 10:18:27 -0800

Google Apps is offering migration for Microsoft Exchange. The service is free with Google Apps Premiere or Google Apps Education.

Last July, Google Apps began offering migration from IBM's Lotus Notes. Most enterprises are standardized on either Microsoft Exchange or Lotus Notes, which means that Google now pretty much can migrate any organization to the cloud. Google also offers connection to Blackberry Enterprise Server.Google Apps is providing migration for Microsoft Exchange 2003 and 2007.

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Microsoft has very limited capability to offer a cloud-based email environment. Most of the offerings it provides are locally installed, single-hosting services. Concerns will wane about cloud security. The ability to offer a cloud-based email environment for easy access will be the norm, not the exception. But even though Google has a jump, Microsoft will have its own offering. In the meantime, Google has an opportunity to make another leap into the enterprise.

This does represent a tipping point for many companies shedding IT assets. The question about email often comes up when companies consider moving to the cloud. It's an important part of the migration. In recent weeks, we have seen how email is becoming a foundation for the evolution of a web oriented, social enterprise. Google Apps Marketplace offers the capability to offer third party applications that integrate with Google Apps. Email is a critical part of the equation in this Google ecosystem. It provides a backbone for companies to connect its employees with Google Apps and the associated third-parties.

The process to migrate looks relatively simple. Through Google Apps, a customer enters their Microsoft Exchange user name and what it calls "two-legged OAuth," consisting of a consumer user key and a consumer "secret". They then upload a .CSV file consisting of the email adresses, calendar and contact information. It is optional what to migrate. For example, an IT administrator may upload email addresses and contact data but not the calendar. Email service does not get interrupted during the migration.

This is a compelling offering for companies moving to the cloud. But it's only part of the equation. Google still needs to prove it is robust enough for the enterprise to migrate to Google Apps. In the meantime, Microsoft needs to act fast and provide a cloud offering that at least gives its own community the option to move Microsoft Exchange to the cloud.

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Micropayments and Subscriptions: How Business Models for Startups are Shifting

Chris Cameron — Wed, 17 Mar 2010 10:00:00 -0800

Back in early February, while aboard a red-eye to New York, Dave McClure wrote a long, humorous, rambling, profanity-laden rant of a blog post that focused on startup business models. While it makes for an entertaining read, McClure's post is also very insightful and makes a solid case for why startups should shift from advertising models and instead build their new businesses on subscriptions and micropayments. Earlier this month I had the chance to visit the headquarters of ZooLoo, a startup that witnessed this very shift first-hand with their own business model.

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During my visit I spoke with Aaron Baer, Director of Communications at the Scottsdale-based ZooLoo, a site that provides individuals with the ability to share and manage content on their own domain. Like many startups in the past decade, ZooLoo opened for business under an advertising business model, but eventually caught on to the changing trend McClure evangelized on his blog.

"[ZooLoo's original model] was an advertising platform, we had a shopping page, we would do affiliate marketing, you could buy and order prints off of our website - we had a very broad business model," says Baer. "We discovered that didn't work."

They also realized that it wasn't the model their customers wanted. Under the old model, users were presented with two options: a free basic service, and a premium service with more features in an "all or nothing," fashion. Customers complained that they wanted to upgrade and purchase premium services, but that they weren't willing to pony up the full price for a bunch of other features they didn't want.

In January, ZooLoo fundamentally changed their business model by creating a storefront through which customers could pick and choose features on a micropayment level. Now if a user wants to purchase their own domain name, but doesn't want to pay for ZooLoo's SEO services, they can do that instead of being forced into picking from a tiered package.

While customer feedback was a substantial motivator for the change, Baer says that potential investors also played a role in the addition of the storefront. "The investors said, 'You have a solid product, but I want to see you find a better way to package it, and a better way to sell it'," he says.

And the change worked. Since adding their micropayment storefront, ZooLoo has seen an increase in purchases of their premium services. The company is making more money marketing virtual goods in a micropayment system than they were when they bundled everything together at a higher price and relied on advertising and affiliate marketing. This is the exact paradigm shift in online marketing that Dave McClure preaches in his post mentioned earlier.

"Gradually we are discovering that the default revenue model on the internet should probably be the simplest one," writes McClure. "That is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage."

Without repeat usage, McClure says that the biggest obstacle in the way of getting users on board with micropayments is that they forget their password. Honestly, if I was asked to login to my Amazon or PayPal accounts right now, I would be playing a guessing game with a handful of passwords because I don't use those services too often. But for iTunes, Google and Facebook - the services McClure says will be the leaders in eCommerce login in five years - I use those every day, and surely remember my password.

ZooLoo realizes this too, which is why they foster repeat usage by connecting their services with Twitter, Facebook, and other popular online social networks. Users can also log into ZooLoo using Facebook Connect, which eliminates the problem of remembering a less frequently used password. ZooLoo and Baer are fully on board with this emerging model, and suggest others hop on as well.

"There is this social media bubble forming where all these services are saying, 'We're free, come use us!', but eventually those services need to make money," says Baer. "We think micropayments are the next big thing."

Photo by Flickr user r-z.

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Blockbuster Brings New Releases to Android, Windows Mobile Phones

Sarah Perez — Wed, 17 Mar 2010 08:48:32 -0800

Blockbuster is bringing its OnDemand service to both Windows Mobile and Google Android phones, starting March 24th with the launch of the T-Mobile HTC HD2 smartphone. On that device, Blockbuster customers will be able to download and watch new releases directly on their mobile phones while also gaining access to queue management and movie locator tools similar to those found in Blockbuster's iPhone application.

The company has also confirmed that they're working on an Android app, which is likely to launch on the "select Motorola phones" Blockbuster previously hinted at when they partnered with the handset manufacturer last summer. Motorola is the maker of several popular Android-powered handsets including the Droid, Backflip, Devour, Cliq and Cliq XT, but Blockbuster won't yet confirm which of these will be able to utilize the new mobile service.

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Focused on Mobile

Although Blockbuster's annual report to the SEC hints at the company's financial troubles - troubles exacerbated by competitors like Netflix and the pop-up video rental kiosks from Redbox - the company has clearly not given up its will to compete. With offerings already available for PCs, Samsung Blu-ray players, Samsung TV sets and Tivos, Blockbuster's strategy going forward is attacking the mobile front with full force. In the works is an updated iPhone application, an Android application (apparently for the Motorola phones, although the company won't directly confirm this), the Windows Mobile application for the HD2 and the expectation that more carriers and manufacturers will want to partner with them once they see what the company's mobile apps can do.

Blockbuster vs Netflix: New Releases vs. Back Catalog

Where Blockbuster differs from Netflix is in its desire to forgo "streaming" in favor of downloads when it comes to their on demand options. Unlike Netflix's desktop streaming service and newly announced Silverlight-powered app for Windows Phone 7 Series devices, Blockbuster's OnDemand service for both desktop and mobile actually downloads content to whatever hardware it runs on. According to Scott Levine, Blockbuster's VP of Digital, it's not that the company is against streaming per se - it's just that streaming over 3G is more of a challenge.

Instead of dealing with the network connectivity issues brought on by overloaded wireless carriers or relegating themselves to putting out a limited "Wi-Fi only" type of application, the company's free mobile apps will actually download the movie a customer rents or purchases to the handset and protect it using DRM (digital rights management) technology.

This solution allows Blockbuster to serve new releases to their mobile customers as opposed to the "back catalog" content which is what, for the most part, Netflix's streaming service currently provides, says Levine.

No Downloads on Apple Devices, but Working On Other Solutions

However, the technology Blockbuster uses now to serve its movies to mobile devices limits what the company can offer to iPhone, iPod Touch and soon, iPad users. This is due to the fact that Apple restricts apps from saving movies to the device's hard drive, Levine explains. When asked if they had plans to work around these restrictions in order to launch an iPhone/iPad app, he would only say that the company was "exploring different options" and that they would "love to be there."

For now though, iPhone owners who use Blockbuster's mail service can manage their account with the mobile application which will soon be updated with more features. In the new release, there will be improved remote control options for queue management plus tools that help you determine Blu-ray store inventory, games store availability and the availability status for movies in your Blockbuster queue.

More Details on Devices

T-Mobile has just launched the site for the new HTC HD2 smartphone which lists the Blockbuster service among its many features. The status of which Motorola phones will include the new mobile app is still unknown but Motorola's Android lineup includes several devices running different versions of the Android OS. Both the Backflip, Cliq and Cliq XT come with Android 1.5, but only the Blackflip is upgradeable to 2.1, according to Motorola's website. The Devour runs Android 1.6 and the Droid runs 2.0. However, Verizon is pushing out the 2.1 update to the Motorola Droid starting this Thursday.

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Why Aren't There More Venture Services Firms? POLL RESULTS

Jolie O'Dell — Wed, 17 Mar 2010 08:42:03 -0800

Last night, we asked folks if they'd rather have cash or services (like marketing, development and HR services) to help their early stage startup grow.

While our readers' responses were pretty evenly split, the split between startups that seek capital first far outweigh those that seek to make equity-for-services deals. Also, the number of VC firms (well in excess of 700 in the U.S. alone) is far greater than firms offering services or a mix of cash and services.

Are we just too used to capital? Are "venture services" firms still too new? Why don't we have more services-for-equity programs?

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The readers we polled last night were about evenly divided when asked if they'd take services (54%) over cash (46%). However, our commenters last night were overwhelmingly in support of taking services over cash alone.

"You need money to buy services, and most of the time, since you do not know where exactly to shop, you overpay or pay for something you do not need," wrote commenter Marfi.

Commener Jorge made a good case for mentor-driven accelerators when he said, "Just getting the cash won't get me some good mentors[...] The main reason why startups need cash is because the model is either not clear or not set to work in the short term[...] Just cash ins't enough unless you're an experienced entrepreneur."

Power commenter Warren Bendetto spoke to the sometimes arbitrary nature of valuation, saying, "When you're starting out, you really have no idea what you'll need. You base your anticipated amount of capital you need to raise based on assumptions and guesstimates that are 99% bullshit.

If you're lucky, you'll raise too much money[...] So you buy servers you don't need, you hire too many people, everyone gets 36" double LCD monitors, and your kitchen has a vending machine that spits out free MacBooks.

That's all fun, until you realize that you gave away 80% of your company in exchange for the funding. By the time you realize that you could have raised less and kept more equity, it's too late."

Salient points, all.

So, what is it about the magic and allure of VC that keeps startups pitching for more funding when they might be better served to take services instead?

Chris Wanstrath, founder of the bootstrapped and profitable GitHub, was in the to-VC-or-not-to-VC panel I moderated at SXSW yesterday. When I asked him if he'd ever considered taking capital to get his business up and running, he said that he absolutely hadn't. He had instead chosed to make business deals, strategic partnerships that would allow him to get the goods and services he needed without being financially dependent on others or having to give up equity.

In that panel, I asked audience members in the packed room how many were currently considering seeking or were actively trying to secure capital for their startups. Between 80 and 90 percent of folks indicated that they'd be making the rounds on Sand Hill Road.

I wish I'd had the chance to ask them if VC was still their preferred option after the panel was over. It seems now that there are more options and alternatives for smart, lean startups to get further with less reliance on the complicated and sometimes predatory business of venture capital.

As for why there aren't more venture services firms in existence, some have said it's because getting the capital to run a VC firm is a heck of a lot easier than building the infrastructure to offer startups mentorship, office space, and other business-building services.

Do you think there's enough justification - both in terms of demand from startups and in terms of return on investment for firms - to warrant more of this new breed of startup support? We'd appreciate your thoughts in the comments, particularly if you're involved in the VC/startup ecosystem.

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Mobile App Marketplace: $17.5 Billion by 2012

Sarah Perez — Wed, 17 Mar 2010 06:59:00 -0800

According to a study commissioned by mobile application store operator GetJar, the mobile application market will reach $17.5 billion by 2012. By then, the number of mobile application downloads will have also grown to nearly 50 billion from just over 7 billion in 2009. Although those numbers may seem high, they line up with other estimates, such as those previously reported by analysts at both Gartner and research2guidance.

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The GetJar study, run by independent consulting firm by Chetan Sharma Consulting, noted that over the past year, the number of app stores grew from 8 to 38 and that there are even more in the works. Apple's iTunes store leads the way with a reported 150,000 mobile apps and 3 billion downloads to date. Google's Android marketplace is growing fast as well, and now has more than 30,000 mobile applications that run on devices like the Droid, the myTouch 3G and the Nexus One, among others.

However, as Getjar founder and chief executive officer Ilja Laurs told the BBC, feature phones should not ignored either. "It is almost as if these phones don't exist. We know smartphones are an extremely important phenomenon, but in terms of consumer mindshare and revenue share, feature phones represent 90% of the global market compared to 10% for smartphones and data cards."

He also made the bold prediction that "mobile apps will eclipse the traditional desktop Internet," even going so far as to say that "mobile devices will kill the desktop."

Just the Stats:

Here are a few other highlights from the report (via Paid Content and TechCrunch):

The annual growth rate for mobile app downloads is 92%
By 2012, off-deck, paid apps will be the biggest source of revenue
In 2009, mobile operators accounted for more than 60% of apps' revenue
By 2012, mobile operators will account for less than 23% of apps' revenue
The app store growth (8 to 38 by 2012) is an increase of 375%
Average app selling price is $1.09 in North America, $0.20 in South America and $0.10 in Asia
Revenue opportunities in Europe will grow from $1.5 billion in 2009 to $8.5 billion in 2012
Revenue opportunities in North America will grow from $2.1 billion to around $6.7 billion in 2012
Apps are most popular in Asia where they account for 37% of global downloads this past year
Users spent the most for apps in North America where they account for over 50% of revenue

Analysts Agree: Apps are Big Business

A report earlier this year from research firm Gartner predicted that application stores are expected to generate revenues of nearly $7 billion over the course of 2010. That figure is a combination of the $6.2 billion spent purchasing the mobile applications themselves combined with an additional $.6 billion generated through advertising revenues from in-app ads. The Gartner analysts also predicted that mobile application stores' revenue will grow to $29.5 billion by the end of 2013.

Another forecast from research2guidance estimated the smartphone application market will grow from $1.94 billion in 2009 to $15.65 billion by 2013.

Although these aren't exactly apples to apples comparisons, the overall trend is apparent: app stores are growing rapidly and generating massive revenue streams.

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How US Government Spies Use Facebook (Updated)

Marshall Kirkpatrick — Tue, 16 Mar 2010 20:57:32 -0800

The US Department of Justice this week released slides from a presentation deck titled Obtaining and Using Evidence from Social Networking Sites. The document was released in response to a Freedom of Information Act request by the Electronic Frontier Foundation (EFF).

The DoJ presentation describes Facebook as much more co-operative with law enforcement requests for user information than Twitter and MySpace are. Update: Facebook's Barry Schnitt contests this interpretation of the document, says the company is resistant to illegitimate government requests for user information and offers one example of that resistance in a comment posted below. The document also explains to officers what the advantages of going undercover on social networking sites are. The EFF posted IRS training documents for using various internet tools as well, including Google Street View, but those were much tamer than the Justice file.

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Highlights from the deck include:

On "getting info from Facebook" - options include photos, contact info, group contact info and IP logs. "HOWEVER, Facebook has other data available." The deck notes that Facebook is "often cooperative with emergency requests."

MySpace and Twitter, on the other hand, are described differently. MySpace "requires a search warrant for private messages/bulletins less than 181 days old." Twitter "will not preserve data without legal process," has a "stated policy of producing data only in response to legal process" and has no Law Enforcement Guide (or spying manual, as some parties call such documents). Wouldn't you like your social network to say no before it says yes and require a warrant before handing over information to law enforcement? We reached out to Facebook this evening about the government claim that it was unusually co-operative but have not yet received a response. Update: Facebook has responded in comments below and says that the company is in fact resistant to any requests for user information that it does not believe are an emergency and even then hands over a minimal amount of user data.

Funny: As social networks go, LinkedIn's "use for criminal communications appears limited" the document says. You don't say. LinkedIn can be useful in finding expert witnesses, however.

"Why go undercover on Facebook, MySpace, etc?" the document asks. Three reasons are offered: 1. Communicate with suspects/targets. 2. Gain access to non-public info. 3. Map social relationships/networks.

"If agents violate terms of service," the document asks, "is that 'otherwise illegal activity'?" No answer is offered in the text.

"Many witnesses have social-networking pages," the presentation notes. Those pages can be a "valuable source of info on defense witnesses" and "potential pitfalls for government witnesses."

Also funny: DoJ prosectors are urged to "use caution in 'friending' judges, defense counsel."

We expect the Electronic Frontier Foundation to offer further analysis in coming days. You can download a PDF of the document yourself here. For further discussion of these documents, see blog posts clustered on Techmeme.

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Oops: Google Denied Trademark on Android Nexus One

Marshall Kirkpatrick — Tue, 16 Mar 2010 19:40:02 -0800

It's been a rough day for Google's Android phone, the Nexus One. First we learned this morning that initial sales have been far weaker than the iPhone saw when it first came out of the gate. Now it's being reported that the U.S. Patent and Trademark Office has rejected its application for a trademark on the name Nexus One.

The name "Nexus One" was ruled too close to Portland, Oregon based Integra Telecom's own registered trademark for its Nexus fixed bandwidth integrated voice and internet T1 product.

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Mike Rogoway, of Portland's The Oregonian newspaper, got the following statement from Integra:

"We appreciate that the PTO is protecting our trademark rights. Integra has over $60 Million in annual revenue associated with our Nexus brand and it represents millions of new revenue for the company each year. Google hasn't contacted us since the PTO issued its objection but we hope we can work together to achieve our respective business goals."

Does that mean Google will rename the Nexus One, or that it will end up paying the trademark holder for the privilege of using the name? Google just expanded the Nexus One onto the AT&T network today.

Either way, we wouldn't be surprised if the hunt for a new name is already on. What would you suggest, readers?

It's tempting to say this is another example of the Patent and Trademark Office moving too slow, but note that Integra was granted its trademark in December 2008. The Nexus One was just release January 5, 2010.

Meanwhile, the open Android operating system marches on. XML co-creator Tim Bray announced this weekend that he has joined Google to work on Android. He called the iPhone in a blog post "a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord's pleasure and fear his anger."

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