The number of funds which raised capital also dropped in half from last quarter to 25 funds, a 13-year low. And the average amount of new capital going to each fund was $68 million, down from $94 million in the previous quarter.

Capital is fleeing the sector, partly because there is less capital to go around, and partly because venture capital exits appear to be blocked. Although there was cause for hope during the quarter—which saw five venture-backed IPOs poke their heads above the water—the NCVA doesn’t expect venture funds to bring in major new infusions of capital until 2010.

For startups with proven traction there is still money out there. For instance, Pandora just raised a massive $35 million round last week and we tracked $6.4 billion in venture money going into companies last quarter, a 25 percent drop from the year before but still a healthy rate of investment. VCs are getting more selective about where they put their cash, but when they do they are more likely to bet big.

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He is starting a discussion on the need for government regulation of the organic and paid search policies of Google, which maintains a commanding lead in search market share today. Or at least transparency in how search results are determined. There is clearly growing frustration on the constantly changing “border policies” that are created and enforced by Google and other search engines. It is a fascinating read.

Imagine, if you will, that the entire Internet is contained within a single continent. That continent is filled with countries, states and cities. Each jurisdiction is autonomous, relying on visitors to cross on to their turf to engage in commerce. Now, imagine if the only way to get into this continent involved just two methods: SEO and SEM. Let’s further imagine that the borders to this continent were controlled by a single company. Let’s also hold that the rules for search engine optimization listings and search engine marketing were not only defined but were completely controlled at the whim of this single company. Of course, we all realize that word-of-mouth marketing and viral marketing also contribute to traffic to individual websites. That said, the primary methodology for all users to reach any individual website destination is still search, of either paid or organic listings.

Or suppose the paradigm is the streets of Los Angeles. Let’s imagine that in order to enter the city you had to pass through a single gate. And once you entered that gate, the streets you were or were not allowed to go down — and thus the businesses you were or were not allowed to visit — could be randomly blocked from your access. Blocked to a point where you might not even know they exist; whatever streets were available for you to traverse were in essence the only streets you knew where business could be transacted.

Whatever the scenario, it’s unsettlingly close to the situation that prevails today in search. It’s now conventional wisdom that search engine optimization, representing the organic result sets on any search query, is more voodoo than science. Through an uncontrolled set of factors search engines determine which listings appear at the top and bottom of any individual query. In addition, consumer behavior dictates the top three results on any search page are all that matter. If you happen to own an online business, unless you exist within those top three, the amount of individual traffic you will obtain from organic listings is very, very low. As the proprietor of that business you may hire search engine optimization companies to assist in increasing your rankings on organic results, with or without success. And at any one time, the controller of these borders (that is, the search engine itself) can change and manipulate those rules – and that can substantially decrease or destroy all organic traffic coming to your website, without notice and without your knowledge.

Search engine marketing now faces a similar challenge. Although anyone can open an account to buy paid search listings, the rules on each account are arbitrary. Accounts can be shut down at any time, without notice to the website owner. In other words, if you haven’t successfully obtained enough traffic to your site from organic listings and you decide to rely on paid search, you still face a situation where regardless of how much you bid per click you may or may not show up at the top of the paid results. That’s because paid results that are displayed on any query are not only determined based on the price the buyer is willing to pay. Unlike other auctions that are completely priced-based, these results are determined and sequenced not only on price but also on quality of advertising and click-through volume. For example, if company A was willing to pay $1 per click on a certain term and company B was willing to pay 10 cents but company B’s ad generated ten times as many clicks as company A’s, the yield to the search engine would be identical between the two.

The second factor is that the search engine can, at any time, determine that either company A or company B may or may not buy traffic within its index. And without notifying the company and with no path toward recourse and statement, the search engine can disable the paid search account from either business. Returning to the continent metaphor, this ends up looking quite a bit like free trade. Various businesses (call them sellers), operating within this continent, wish to conduct business with the rest of the world (that is, the population of buyers). The border — which in this case is the search engine — thus has complete control of who can transact and how often. And at its discretion, the search engine can decide to increase, decrease or completely disable access between buyers and sellers. Because search is the dominant methodology for consumers to find what they are looking for, whether a product or a service, the unilateral control that search engines wield enables them to control billions upon billions of dollars of consumer spend every year. It also gives them the ability to completely determine which companies become more successful — or less so.

The situation we face today is unique. Due to Google’s dominance — and the fact that it controls such an enormous amount of consumer behavior through paid and organic search listings – the company in essence governs commerce on the web. And any company that falls out of favor with Google, whether for reasons of bad practice or simple disagreement, can find itself at risk of going out of business.

This system also benefits the few in a host of other ways. Because the rules of organic and paid search change frequently – and remain undefined — agencies and other traffic brokers can win big; through their experience, they’re capable of reverse-engineering these rules. This means that, as this market matures, individual businesses have a diminishing chance to actually compete and gain search market share. That, in turn, puts them in a position of not only needing to hire an agency in order to find any traffic, but also making it more expensive overall to build businesses on the web.

I’ve worked with many businesses who feel they are playing in Google’s world — behaviors from product decisions to marketing strategies rely completely on appeasing these undocumented and often mystical Google desires. I’ve seen companies choose to not work with Google’s competitors for fear that by building those relationships, they’re damaging the ability to be indexed properly on Google and are anxious that result sets will be compromised. Many likewise believe that by having a monetization relationship through Google, they will somehow achieve higher quality listings through organic search. I’ve also witnessed companies who, in addition to using Google for monetization, have preferred relationships with purchasing traffic through Google Adwords. By supporting this dual relationship, they appear to want to live by two sets of rules – those that exist within the Adwords marketplace and those that apply to the Adsense product. And because they’re walking on both sides of the (Google) street, they feel they have a strategic advantage — as though the Adwords product will enable them to acquire traffic at both a lower cost and with a looser rule set than their competitors.

Here’s where the parallel to free trade breaks down. There are no perfect paradigms looking at free trade and import/export laws that exactly define or address this challenge. Neither would a secret relationship between the government and the search engines solve the problem. The only real solution is disclosure. Transparency. Those traffic generators that use rule-based algorithms to determine result sets must publicly disclose their methodologies. That is the means by which all businesses can compete freely in the organic and paid search marketplaces. If we lived in a world where Google didn’t hold sway over such a significant portion of consumer behavior, this kind of regulation wouldn’t be necessary. The market would be self-correcting, and we could trust the individual decisions of a healthy and competitive search industry. Regrettably, due to search dominance, the industry can’t be left to its own devices.

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According to new MySpace CEO Owen Van Natta, this is the first result of its international operational review, which comes a few weeks after the company gutted much of its operations abroad. Van Natta asserts that the new partnership will allow MySpace to further slash operational costs and effectively leverage FIC’s local knowledge and relationships.

Fox International Channels, obviously also owned by News Corp, operates 170 linear and non-linear television services, their websites and an international online advertising business in a number of Latin-American, Asian and European countries. Starting today, FIC will start managing marketing and advertising sales for MySpace in Argentina, Brazil, Spain, Italy, Poland, Mexico, and Turkey, effectively keeping the troubled social networking company’s local operations and advertising efforts in these countries from shutting down altogether.

In my opinion, this is a necessary and logical move by Van Natta. We’ve earlier noted that MySpace laid off most of its staff in countries where it isn’t competing well against Facebook, and to me it makes sense to cut your losses when you’re in apparent trouble.

By effectively outsourcing the management of local advertising and marketing to another unit within MySpace’s parent company, the synergy can be mutually beneficial plus it allows the company to refocus most of its attention to the countries where it is still holding strong without suddenly losing whatever revenue came out of the countries cited above.

If it’ll be enough to keep the ship from sinking remains to be seen.

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That’s the title of a press release distributed late last week by the European Publishers Councel (EPC), which you can find here. Pretty heavy stuff, right? They don’t ask, they demand. They’re not looking for more effective application of the current IP rights protection, they want an entirely new one. And once they’ve secured that, the future of journalism will be safeguarded (hold the applause).

The rest of the news release contains more gems, like this quote from Gavin O’Reilly, Group Chief Executive Officer, Independent News & Media, President of the World Association of Newspapers and News Publishers (WAN-IFRA) and Chairman of ACAP (Automated Content Access Protocol):

“We continue to attract ever greater audiences for our content but, unlike in the print or TV business models, we are not the ones making the money out of our content. This is unsustainable. Publishers failing will benefit no-one, least of all consumers, or indeed the search engines and other aggregators who currently make huge profits on the back of our intellectual property”.

Whether you agree with the man or not, read Danny Sullivan’s many excellent blog posts on this topic to get some perspective. My personal favorite is this one: “Google’s Love For Newspapers & How Little They Appreciate It”. There’s no better response to O’Reilly’s assertions.

So what exactly prompted the EPC to push out the press release, once again underscoring their desperation in finding a viable business model now that media usage and content generation has fragmented to a point where the world of information consumption is simply not what it used to be anymore, whether publishers like it or not? Turns out the Council has started petitioning Europe’s media commissioner Viviane Reding against unpaid use of their members’ content by aggregators and search engines.

Their intentions are neatly outlined in this Hamburg Declaration (PDF), which is rapidly garnering loads of signatures from publishers around the world, including Mathias Döpfner (Axel Springer AG, Germany), James Murdoch (News Corp, Europe and Asia), The Rt. Hon. The Viscount Rothermere, (Daily Mail and General Trust, UK), Ian Smith (Reed Elsevier, UK), Hannu Syrjanen (Sanoma, Finland), Robert Thomson (Dow Jones, Wall Street Journal, US) and many more. An excerpt from the declaration:

Universal access to websites does not necessarily mean access at no cost. We disagree with those who maintain that freedom of information is only established when everything is available at no cost. Universal access to our services should be available, but going forward we no longer wish to be forced to give away property without having granted permission.

Translation: we still want all the traffic Google is sending our way for free so we can generate enough page views to keep our advertisers happy and revenues up (barely), but we also want to be able to charge people for reading our content and punish those who spread this information to even more people. Surely, that will safeguard journalism.

Miss Reding, you can safely ignore this declaration, no matter how many dinosaurs link their name to it. And feel free to quote me on that anywhere on the Web.

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The web has been abuzz the past few weeks with chatter about Microsoft’s announcement today at its Worldwide Partner Conference in New Orleans about the new version of Microsoft Office 2010. There’s even a mini-movie about its debut. Facing potential challenges from Google’s browser-based Apps products and its new Chrome OS, Microsoft has been touting its three screens strategy, which is the ability for products to synchronize across the phone, browser, and desktop, for some time now.

With the release of Office 2010, SharePoint Server 2010 and Visio 2010, we finally see the implementation of Microsoft Chief Software Architect Ray Ozzie’s mantra. We had the opportunity to see an in-depth demo of the new suite of products from Microsoft’s Group Product Manager for Office 2010, Chris Bryant. Here’s a complete breakdown of all the functionality that has been added, including screenshots:

The Move To The Browser

Most certainly a direct response to Google Apps, Microsoft is rolling out lightweight, FREE, Web browser versions of Word, PowerPoint, Excel and OneNote. All based in the cloud, the web-based versions of these products have fewer features than their desktop cousins but still give users basic tools to edit and change documents.

PowerPoint 2010

PowerPoint has been upgraded not only with a new browser version, but also a slew of bells and whistles have been added to the desktop version. Users now have the capability of editing video and images within PowerPoint with a basic video editing tool (not so different from the capabilities of iMovie) and an image editing tool, which is like a basic, simple version of Adobe Photoshop. Microsoft has also added the ability for users to launch a WebEx-like live sharing feature with other users. So if you create a slideshow in PowerPoint, you can share it with other people in real-time (which can be run on top of Sharepoint).

Here’s what the video editing tools look like in PowerPoint:

To share a deck with other users, you send an email to individuals with a link. Once they click the link, they will see the slideshow within the browser. This feature can also be used on a mobile phone’s browser. You can also create a slideshow in the desktop version and then publish it to the web version to access it via the browser. The browser version of PowerPoint doesn’t include the video editing features, but most of the functionality of 2008 is included in the browser version.

Excel 2010

Excel spreadsheets can now run in the browser, and similar to PowerPoint, spreadsheets can be published to the browser via the desktop version. The browser version of Excel has limited features, but offers more in-depth functionality than Google Spreadsheets. Microsoft has added a particularly innovative feature called Sparklines, which gives a visual snapshot image of a data trend over time within a cell. You can also share Excel via the browser with other users and set special permissions on who can access the document.

Here’s what the web version of Excel looks like:

Word 2010

Bryant says that the number one piece of feedback from users producing documents on Microsoft Word is that they want to preserve the look and feel of a document created in the desktop version in the browser. Microsoft calls this “document fidelity” and created the browser version of MS Word accordingly. In the browser, documents retain the same look and feel as in the desktop. The browser version still has the “ribbon user interface,” where you can change fonts, size, formatting, styles etc.

An image of the web version of Word:

Microsoft has also updated the desktop version to have collaborative features so that multiple users can be editing a document at once. This collaboration is not available in the web version, unfortunately. Microsoft says that users don’t want this feature but this might be a move to protect the Office revenue model.

When two people are editing the same document (in the desktop version) at the same time, Word will notify each user when there are changes that need to be synced with their document. The copy/paste function of the desktop version has also received an upgrade, where you can see see a live preview for the paste function. The paste function also has an advanced option to create and insert screenshots. To make moving around a long document easier, Word now has a visual navigation pane and section header breakdown which makes it easy to jump around different sections of a document.

Outlook 2010

Outlook 2010 now has a ribbon user interface, like Word, PowerPoint and Excel. The UI of email conversations has been upgraded to look almost like a message tree, allowing users a more visual view of sent and incoming emails. Search functionality has been improved as well, making it much easier to find content. Also, you can preview calendars in emails and choose to ignore selective email conversations.

Sharepoint 2010

Like Outlook, Sharepoint now gets a ribbon UI, making the document-hosting product more similar to Microsoft’s flagship products, like Word. You can tag authors of documents now and can share documents and files more easily.

Microsoft says that its browser versions have been tested on all major browsers aside from internet Explorer, including Firefox and Safari. Office 2010 is still being tested and reworked to function on Chrome. Microsoft also announced that it is streamlining the number of Office editions from eight to five. Office Web applications will be available in three ways: through Windows Live, where consumers will have access to Office Web applications at no cost; via on-premises versions; and via Microsoft Online Services, where customers will be able to purchase a subscription of MS Office. Microsoft says Office 2010 will be available in the first half of next year.

The key part of all of this news is the free, browser-based versions of Microsoft’s most popular Office products. Bryant says that Microsoft expects the browser products to be especially popular amongst student, but I think that the web-based applications will be hugely popular in the enterprise space as well, as long as there are security precautions taken to put documents in a secure part of the cloud.

But as more and more businesses are becoming comfortable with trusting cloud environments, Microsoft’s move to the browser could pay off in a big way, especially because it’s so easy to use both the desktop and browser versions of products interchangeably. The more successful Microsoft is in its browser strategy, the more they validate Google’s approach in the space, which will eventually put price pressure on Office.

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Once you have, you can download the photo or share it on your social network of choice or by e-mail.

Here’s a picture I took last week at The Europas event in London, featuring TechCrunch’s Sarah Lacy and Paul Carr.

Polaroid version, courtesy of Rollip

Original picture

(Thank you, MoMB)

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The event is aimed at showcasing ten promising Israeli startups and to serve as a networking platform for the individuals and companies leading Israel’s startup scene. All ten companies were chosen by a world-class panel of judges, ranging from über-Angel investor Ron Conway, to legendary ICQ founder and current founder and CTO of Dotomi, Yair Goldfinger.

Below are the official company descriptions for the ten startups chosen by the judges to present their products on stage in front of over 700 private and institutional investors, executives and entrepreneurs:

Shidonni is a web based virtual world for young kids, based on the simple joy of drawing. In Shidonni, kids draw their virtual pets and play with them as they magically ‘come alive’. After creating their pets, children enjoy over 30 different activities and games featuring their own creations and can even share their creation with their friends.

Confidela provides businesses and individuals with hassle-free document control, tracking and protection services to facilitate the sharing of sensitive documents with customers, partners or suppliers. Confidela’s flagship SaaS product, WatchDox, is the easiest way for organizations to send documents securely, and control and track who views, edits, prints or forwards them.

Cmycasa is a first of its kind “Handshake service” between home owners and furniture retailers. With Cmycasa, users of real estate web sites and “do-it-yourself portals” will be able to visualize in stunning photo-realistic 3D how their new home will look once furnished to their taste.

Cellerium is the maker of MobileCanvas, a mobile application platform that delivers rich, mobile tailored web experiences across leading mobile platforms. Cellerium AppOnce approach resolves device and operating system fragmentation and combines a rich UI experience that rivals client centered applications with the flexibility of web deployment.

ContextIn is a semantic media-buying platform for display-advertising. Using semantic algorithms for automatic extraction of the discussed topics in web pages, ContextIn addresses the display advertising market problems of absence of visibility and control over the media-buying and poor performance, especially over user-generated-content sites. ContextIn offers a new and innovative solution, which proved to show significant increase in the online campaigns returns, using automatic ads targeting, real-time bidding, unique BI data and dynamic ad-creative creation according to the web-site content.

Tweegee is a pioneering destination site designed exclusively for kids. The site empowers children and pre-teens, ages 7 to 12, to express themselves creatively and safely in an innovative and customized online environment. Tweegee integrates social networking, digital content, and interactive tools to offer a complete web platform for kids. Tweegee’s platform has been released with great success in Russia and soon in Turkey and many other countries. (Tweegee debuted at TechCrunch50 2008).

KIDO’Z is a web operating environment intended for children between the ages of 3-8yrs. KIDO’Z creates a personal protected Internet space with a collection of special tools that enable the children, for the first time, to carry out everything that adults do on the Internet; but simply and intuitively, and without needing to know how to read or write.

CamSpace is a ground breaking computer vision platform that connects the virtual and the real world through motion games, experiences, activities and navigation of application and websites through your browser and using any standard webcam. The platform can detect human gestures and turns everyday products (like cans, bottles, boxes, etc) or objects into exciting computer controllers that can operate new or existing games and applications. The company is active in the advertising space (creating games and experiences based on products), in the educational space and in the social/fun gaming space. (Disclosure: I advised the company in the past).

Virtual Web provides innovative social network marketing solutions. Its SociaLAVA™ platform enables online publishers of any scale to instantly deploy a fully-functional social network as a transparent layer over their existing websites, powered by a unique social network interaction analysis engine™. Publishers can offer users personalized content to keep them on the site for longer visits, enhance conversion rates, monetize their sites through segmented ads, increase site ‘stickiness’ and link a consistently growing number of online communities to their domains using a unique community-clustering mechanism.

Reimage is a fast growing company that offers a web-based service that automates all PC repairs (due to software problems), and makes PC’s run better than new using unique boosting technologies. To date, Reimage has repaired tens of thousands of Windows based computers.

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TeachStreet, a Yelp-like service for real world classes (cooking, dog obedience, music lessons, ballroom dance, foreign language, golf, yoga, etc.), is launching a marketplace feature for teachers to be able to coordinate payments from students. TeachStreet, which serves seven metropolitan areas in the U.S. including New York City, Silicon Valley/San Francisco and Seattle, allows instructors to upload information about classes. Users can look for available classes, and read and write reviews on the course and the instructor. Currently, the site includes a selection of more than 135,000 classes and teachers, across more than 700 subjects and categories.

TeachStreet payments enables credit card payments for a portion of teachers/classes, letting teachers who are unfamiliar with e-commerce be able to elicit sales leads from the web. TeachStreet’s founder, Amazon and JibJab Alum Dave Schappell, tells us that the site is powered by PayPal Website Payments Pro to make it easy for both students and teachers to use the system. TeachStreet charges students a 5% for booking and charges teachers a 4.9% processing fee. Teachers pay an additional 2.5% first-time-student payment fee to TeachStreet. While adding a listing and profile on TeachStreet is free, teachers only pay out to the site when a sale takes place. TeachStreet plans to also let teachers also opt out of the fee-model and pay monthly fee but the pricing has not been determined.

TeachStreet doesn’t just simplify e-commerce for teachers. The site is also letting teachers use a call-tracking service (powered by Twilio), which gives teachers an 1-800 (or local) number that allows any messages to be forwarded to email and lets teachers keep their numbers private. TeachStreet also provides teachers with data and analytics, including number of visits and views, number of sales leads from e-mail messages, phone calls and site-visits, and competitive information on other teachers and classes in their categories and geographical areas.

There’s no doubt that TeachStreet’s new features are going to be particularly useful to teachers who want to implement e-commerce to get sales leads, but don’t want to pay to power the site themselves or simply don’t know how to navigate the process. It’s seems like a win-win for teachers, especially considering that TeachStreet’s fees are fairly low. TeachStreet has had a bittersweet year so far. The startup had a small round of layoffs in the spring, but rebounded with a $1.2 million extended Series A funding round in May from Madrona Venture Group and Bezos Expeditions. Competitors include School Of Everything and Libersy.

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Thanks again to all of you who came out to our Real Time Stream CrunchUp and August Capital Summer Party. We broke 600 attendees to the Real Time Stream CrunchUp, double our initial expectations, and we hosted lots more of you at the August Capital outing. We had an amazing group of CrunchUp speakers to talk about new trends, boundaries and your passions. And we fit in 22 new product highlights from start-ups and big internet companies alike. It was a blast, and we’ve got the photos to prove it.

Photos by Marc Salsberry

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The issue I’m noticing now is that if you have too many apps with Push Notifications turned on, the whole system becomes a lot less useful. You see, Push Notifications are basically Apple’s way to get around allowing third-party apps to run in the background of the iPhone. So apps can now send these push messages to your phone to let you know if there’s some kind of message or update that you should open an app for. But if you have a lot of push messages coming in, I’m finding that you either have to pull out your phone every couple minutes, or risk still missing notifications that you probably want to see.

The problem is that the Push Notification message indicators are not built for heavy use. If you have multiple push messages coming in to you phone, only the latest one will be shown on the screen. And even when you unlock your phone, it’s hard to tell which push messages have come in. Though you can set a badge on app icons to let you know there is a message, if it was overridden by another message, you are forced to open the app to figure out what it was.

And let’s be clear: It’s not like I’m using Push on a ton of applications. I’m basically only using it (regularly) on three right now: Foursquare (a location-based social network [iTunes Link]), GPush (which does push for Gmail, which sadly isn’t approved in the App Store, yet), and Boxcar (which does Twitter @replies and DMs [iTunes Link]). At one point, I had it on for AIM too, but that got to be too much to handle in and of itself.

Between just those three, I’m getting pinged every few minutes during the regular hours of the day (if not more often during peak hours). And while that’s fine, because I can change things like the audio notifications, I want to be able to see a full list of what has come in since I last looked at my phone. Google’s Android platform handles this in a much nicer way, with a top drop-down menu that breaks up your notifications (which are also a bit different since applications can run in the background on Android). Of course, that is only after you unlock your phone, but still, that would be much more ideal than the current iPhone method.

But better would be some sort of way to break up these messages when you still have the phone locked. I’m thinking first of all maybe breaking up Push Notifications, text messages and calls by colors, and displaying them in a list on the screen. Then then having some way to further break down Push Notifications on that screen, maybe placing the app icon next to each and saying something like (4) new Foursquare messages, like Apple currently does for text messages.

This guy did a nice mock-up last year, but that was before Push Notifications were even available. And Apple has been thinking about this too, according to its patents. A system that is something like this (right) is needed even more now.

Naturally, this should all be user-adjustable in the settings, but it seems like an easy enough thing to do. Because as many people are shortly going to find out, the current way of handling Push Notifications just isn’t cutting it unless you’re only using one app that gets messages once every few hours. And with more Push-capable apps coming everyday, the problem is only going to get worse.

[mockup: robertsdonovan.com]

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OurStage says it intends to double the amount of financing for the Series B round, which would bring the total investment put into the company to $23 million by the end of 2009.

Since launching publicly back in April 2007 the company has been steadily attracting users to join its service, which enables people to discover new independent artists, rank and share music with others and communicate directly with upcoming singer/songwriters and bands. Thanks to viral growth in combination with dozens of partnerships with music festivals, radio networks and media companies like AOL/WinAmp, OurStage is currently nearing 1 million registered users. The company has also managed to sway 95,000 artists into joining the platform, and in combination with the strong user base they currently receive about 3 million unique visitors on the site every month.

So how do they monetize the service? By focusing on three good old revenue streams that seem to work well for them: sponsoring, advertising and data services. The latter I think is interesting: OurStage is beta testing a service called TRAViS (shorts for Track Validation Services) that is currently being trialled by divisions of four major record labels and will be publicly launched in Q4 2009, and expects to add some more services targeted at industry professionals soon.

Somehow OurStage has also found a way to get close to running a cash-flow positive business with classic advertising (powered by ad platforms like MTV Tribe, AOL’s Platform A and IndieClick) and sponsorships from major corporations like MTV2, JetBlue, Radio One as well as notable artists like Bow Wow, Busta Rhymes and John Legend. According to the company, ad revenues alone have grown tenfold year-over-year compared to the same period in 2008.

Not enough to impress you? Maybe the startup’s board of directors will convince you the company is onto something great here: it includes a former CMO of Yahoo!, David Moore (founder and Chairman of 24/7 RealMedia), the founder and CTO of Maven Networks, the former Chairman and CEO of Interpublic and since last month, former Chairman and CEO of Sony Music Don Ienner.

Refreshing to hear this type of update from an Internet startup these days.

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There’s now a lot of buzz debating the business model of “Free” with the release of Chris Anderson’s new book. Most of the conversation has focused on free media and free consumer services, but ultimately the effects and expectations of free in our consumer lives will begin to emerge within our business lives. Today, there’s no shortage of examples of free or “freemium” business software, from commercial services (37Signals, PBworks, Google Apps) to open source (Mysql, SugarCRM), yet, there’s still a great divide of SaaS solutions selling their software with an “older” format (Salesforce.com) and even some with a really old model (SharePoint). Simply judging by the relative market caps of companies pursuing each model, no one in SaaS has built up a substantial enterprise business yet with the model of free or freemium alone. Mysql only got to $50M in revenue before it was acquired, and the majority of freemium enterprise service providers are still in the tens-of-millions range, with few exceptions.

Mark Cuban brings an interesting point to the debate: when you live by your free service, you die by your free service. There’s certainly merit in this argument if your business model is an advertising model based on pageview volume alone or if you’re holding up solely because of venture capital. When your uniqueness and flavor dries up, so may your users, and thus your revenue and funding. This was generally Mark’s concern when we introduced the free version early in 2006 (he was an early investor in Box, with no current stake): Why would people ever pay? How do you avoid just eating up a ton of costs with no revenue to supplement? What about when someone else comes out with a version of your service that’s also free with more bells and whistles? How will you remain competitive?

To put one main argument to rest, we’ve learned that there is no business model in Free alone (duh), while there may just be a large business model in Freemium in time. There are a few reasons why the freemium model has enabled new software products to grab significant market share while also build a strong enterprise business in the face of dozens of startup competitors and giants like (both free and pay). This model allows you to surface your service to a much wider customer base (cross vertical, geography, function) and learn from and efficiently attract all types of users onto the service. And - more significantly - maintaining a free version of your service for a single user or small group is a very efficient way to get users to eventually actually pay for your product: customers can quickly try out your service without a lengthy sales pitch and users with limited requirements can get by for free, but recommend the business version to their company when the time is right.

Take a look at Google Apps for a great example of this model done right. You can use as much Gmail and Calendar as you want as a single user or small group, but if you want the real business version on your domain, it’s time to pay up (see their 15,000 seat Genentech deal). Instead of spending large amounts of money on marketing that tells people about a product, create a community of free users and create evangelists in the process. It also helps avoid the risk of competitors coming in and undercutting your costs - fun fact: when in a sales “bake off,” Box.net loses the largest amount of deals to ourselves, not to another service.

Let me emphasize that in case you missed it: Not everyone will find the same value in your product or service. For those that don’t, why not keep them as users and turn them into evangelists?

Freemium allows the actual consumer of the technology to make decisions in an unprecedented way: if the product doesn’t solve their problem, they move on to something else. This forces you to create better, more usable products, and not simply build your business on aggressive and costly marketing and sales. Instead of focusing primarily on the purchasing party (often an IT or department manager), the model is inverted, with more power being put in the hands of the end-user of the technology. Onerous contracts and deep sales relationships don’t keep them there. This means your product has to rock, and it has to constantly be asking and answering the same fundamental question: are we providing the best valuable possible? If you’re not, Free users will leave and the rest certainly will never pay.

Freemium is also great strategy for products that have high switching costs - why not allow me to start using a free version, get hooked, and begin charging me when I hit a threshold of activity? Every day, in our own business, we have to make budget decisions on new software which can ultimately hold up the purchase by months; whereas if we were able to start using the product immediately we’d quickly hit a usage threshold, and we’d be more convinced about the solution at the point of purchase (no more buyers remorse). Instead, we end up doing a price bake off between multiple solutions, and whoever has the better sales rep and “story” essentially wins. What if Salesforce.com gave you the first 100 contacts for free, then you start paying once you need more? Once my first 100 leads are added into SalesForce, I’m not going anywhere else. If your service offers true ROI once implemented, why not let me implement it for free and charge me once I achieve some success? These strategies will reduce the sales friction of any service, allow businesses to be more competitive, and expand the potential market dramatically.

The great news is that because software distribution and sales models are adapting with the times, the number of people that can now access and afford your product has gone up exponentially in the past decade. Given the fact that we can now develop and deliver software much more easily and cheaply (distribution over the web vs. hardware and software sales), and thus reflect these cost improvements onto customers, we can now go after much larger or harder to reach markets more efficiently (small businesses, for instance). With the right product, reaching 10 million potential business users and customers is now trivial. Imagine doing that 10 or 20 years ago. And with an addressable market in the millions of users, it becomes a lot more practical than ever before to make a meaningful business just selling to a subset of that base.

So what to take from all this? Here are some quick lessons we’ve learned from “Free” in the enterprise:

• Free is not a business model, it’s a marketing and distribution tactic. Don’t forget this, and don’t get distracted into thinking otherwise.
• Free is not an excuse to make a lesser product, in fact it forces you to make a better product or no one will ever pay.
• Free will expand your market size and scope instantly; make sure you’re prepared, and make sure you can survive and thrive if only a subset ultimately pay you.
• Freemium works when you know who will want to pay for the service and what extra bells they will pay for. This can be based on usage thresholds, ROI achieved, more features, better support, etc.
• Freemium also works because larger businesses have specialized requirements that they’ll pay for: more security, more users, better management, etc.
• Treat free as an advantage - learn from all those new potential customers of your product, pay attention and allow niches to emerge that you can sell to.
• Lose customers to yourself, not your competitors

This discussion certainly isn’t over. We’re going through a major sea change. It happened to music, it happened to consumer services, it’s happening to newspapers and publishing, and it will happen to business software. The business models are changing. It means software businesses will need to be innovative and adaptable, but ultimately you’ll survive if people want what you have to offer, regardless of the price tag. Of course there will always be room for premium software to be pay-only, just like we still expect to pay a premium for a variety of content in the “real” world (movies, research reports, education, etc); but, for mass penetration the reality is Free and Freemium will you get there quicker, faster, and with less friction along the way. If that’s what you’re looking for, then it’s just up to you to figure out the actual business model if you want it to last.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Last week I wrote about a snappy new bookmarking tool called Pinboard. The best way to describe it is Delicious before Yahoo mangled that product into an over-featured sluggish shadow of its formerly zippy self.

Founder Maciej Ceglowski, a former Yahoo and Twitter engineer, noted a surge of new account request in a blog post, noting that he was putting new resources in place to take on the new users.

Today, though, he sent out an email to people requesting accounts telling them they’ll need to pay a “small signup fee” to create a new account:

Hello,

You’re receiving this letter because you recently signed up to help beta
test Pinboard.

While we have enough testers for the time being, the site is now also open to
regular users. If you’d like to create an account, please visit the following
URL:

http://pinboard.in/signup/

You’ll need to pay a small signup fee (around three dollars) through Amazon to
create the account. This money goes towards the costs of running the site,
and the fee helps to discourage spammers.

As I make more features available, I’ll announce them on the Google group
(http://groups.google.com/group/pinboard-dev) and the site blog (http://pinboard.in/blog/).

You can also find me on IRC: irc.freenode.net #pinboard

If you find bugs while using the site, please send me an email and I’ll try
to fix them as quickly as I can.

For things that are not bugs (feature requests, critique, suggestions,
questions) please post to the Google group so that everyone can pile on.

Thanks again for joining me on this project, and happy bookmarking!

Maciej Ceglowski

This is a side project for Ceglowski, so charging a fee for new users certainly isn’t a dumb business move. And if enough people pay to use the service, maybe it will signal to him to move this front and center on his priority list. I would have done things a little differently, though - let people in for free and charge them after a week or so or shut down their account. That lets people try it out before they open their wallet.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

One would assume you’re supposed to use it to start your favorite tweets, but I don’t use it like that, because what’s the point? Instead, I mostly use it to bookmark tweets that I want to find later. But a new service Favstar.fm hopes to take the Favorite functionality back to its roots, and make it useful.

While the fairly popular Favrd service has revolved around favorites for a while, it is basically only useful to show the most favorited tweets across the whole network on any given day. You can find individual user pages, but it’s not very obvious how to do that, and results only go back for a few weeks. Favstar.fm wants to be the all encompassing Twitter favorites destination.

The main page shows a recent leaderboard that can be set to show tweets of only a certain level (10 favorites, for example). If you sign in via Twitter OAuth, you get a whole range of functionality, including the ability to follow people from Favstar.fm and see what tweets your friends are favoriting.

Also, by signing in it is easy to see who is favoriting your tweets. As we all know, a big part of Twitter is vanity, so many of us likely want to know who is favoriting which tweets of ours. With Favstar.fm, it’s easy to see that.

Because it’s aiming to track favorites across the whole network for all time periods, Favstar works a little slower than Favrd does, developer Tim Haines tells us. But it seems like a fair trade-off to get all this data. And if you want your data quicker, Favstar.fm prioritizes those users who sign in via Twitter OAuth.

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Granted, we hear that a lot, but I’ve been invited to take an early peek at what they’ve been cooking and came away fairly impressed.

Dazzboard is currently invitation-only but is shooting for a Wednesday release of the public beta version. TechCrunch readers with limited patience (yes, you there) can already sign up to take it for a spin before that: 500 of you can register for an account right here. Note that the web application currently requires Windows - a Mac-compatible version is in the works - and works best when you’re using the latest Internet Explorer or Firefox browser.

With dazzboard, you can plug a wide range of mobile devices into your computer and easily transfer multimedia content like photos, videos and music to the web-based management interface, after which you can organize all your files and seamlessly share them through a variety of social networking services. It goes both ways: with the use of the ‘Dazz me’ bookmarklet you can download content from the Web to the media manager and distribute it to your favorite social network or your mobile device once it’s transferred to your account.

Dazzboard supports any portable device that can be used in mass storage or media transfer mode. The company divides the range of portable media players and mobile phones it supports into two groups: full supported devices (supported and maintained by the Dazzboard database, meaning no specific user action is required) and so-called generic devices (not fully supported by Dazzboard so handled as a generic media hub). In the latter case, it’s possible not all functionality of the media manager will work without any glitches.

All in all, dazzboard worked as advertised with the few portable devices I used to test it, and it does a great job syncing media content from and to social networks like YouTube, Flickr, etc. Of course, supporting ‘thousands of devices’ means that the company risks getting flooded with just as many device-specific support questions on a daily basis if it takes off. There’s a reason why closed platforms sometimes win.

Give it a whirl yourself and tell us what you think.

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Thank you to all of you who came out to support the 2009 Summer CrunchUp! We broke 600 attendees to the Real Time Stream CrunchUp, double our initial expectations, and we hosted lots more of you at the August Capital outing.

In typical TechCrunch style, it was a work-hard, play-hard day. Thank you to all our CrunchUp speakers for investing your time with us to talk about new trends, boundaries and your passions. Plus we fit in 22 new product highlights from start-ups and big internet companies alike.

If you missed the CrunchUp, the video is on the CrunchUp site, courtesy of Ustream. Both they and FutureWorks did an amazing job to help us stream and record Real Time for future use. We live blogged as much of the conference as possible. In case you missed yesterday:

The Real-Time Opportunity, including Ron Conway’s Top Ten List of Monetization Opportunities
The Real-Time Moment
Real-Time Search
Real-Time Mobs (and Syphilis)
Real-Time Business
Real-Time Roundtable
Demos and announcements. including:
Tweetdeck Funding
Microsoft Silverlight
PeopleBrowsr
Brizzly, from Thing Labs
Seesmic Browser Client
Bantam Live
Camtweet, from Justin.tv
Qik Push API
ECHO, from JK-Kit
12seconds.tv
Mag.ma

Additional archives are on the CrunchUp site. We incorporated real-time widgets and services, from CrunchUp sponsors Tinker, cc:Betty and Tokbox. Thanks again to Charles River Ventures and Microsoft BizSpark for helping to underwrite the CrunchUp.

August Capital was unbridled start-up networking and fun. As usual, we are indebted to David Hornik and the partners at August Capital for allowing we hooligans onto their beautiful back deck under the premise of business socializing.

We did manage to get a bit classy this year. Grey Goose Vodka hosted an amazing martini bar for us, complete with ice sculpture. (We were told the last time Grey Goose did an ice-sculpture, it was for Tiger Woods, so we’re super proud of our TechCrunch in ice.) cc:Betty’s founder Michael Cerda shared his latin jazz band, El Desayuno with us. Between sets, Pandora rocked the house with music. Silver Moon Desserts shared mini, gourmet ice-cream cones. Stormhoek provided wine and Groovy provided the beer and other refreshments. Friendster hosted an amazing caricature mural of attendees with artists who recorded hundreds of attendees. Gaping Void’s Hugh Macleod shared his Dream Big lithographs with attendees (a large-format serigraph a Dream Big was auctioned off during the CrunchUp, and picked up by Bantam Live founder John Rourke in honor of his company’s launch. Benefits to the EFF.) Lots of other start-up demos ran the length of the deck.

Eye.fi took pictures on behalf of Microsoft BizSpark’s photo wall. Catch them on flickr. Please tag your photos of the conference and social with crunchup (also techcrunch, august capital, 2009.)

Share your photos and posts about your CrunchUp experience, and we’ll add links to them here.

Thanks again for sharing your own ideas and energy at the CrunchUp. Events like this keep our adrenaline up at TechCrunch. We’ll do another one soon.

Lots more photos below.

Thank You To Our CrunchUp Sponsors Who Made It All Possible

Product Sponsors: Glam Media Lab’s Tinker live conversation moderation, Tokbox live video chat, Ustream live video streaming, Bantam Live, Charles River Ventures, Microsoft BizSpark and mailspace cc:Betty.

Demonstration Sponsors: Seesmic, OneRiot, PeopleBrowsr, Mashery, IDrive, Sun Start-Up Essentials, Meraki, SocialFeet, Tapulous, Loopt, Grey Goose Vodka, Future Works, Gaping Void, Stormhoek Wines, Silver Moon Desserts, Friendster, LifeIO, Groovy and ODesk.

Event Sponsors: Eventbrite for ticketing and MediaTemple for hosting, Topix, Orange, AIM/AOL, ReTargeter, NewTek, Coveroo, Pandora.

More photos:

Michael Arrington sweeps Randi Zuckerberg off her feet:

Michael Arrington (left), Ron Conway, John Borthwick:

Twitter creator Jack Dorsey on stage:

CrunchUp Crowd:

Grey Goose ice sculpture:

No idea, but I love it:

More photos from:
Brian Solis: Great shots from each the Real-Time Stream CrunchUp, http://is.gd/1vZJN, and August Capital Outing, http://is.gd/1vZLM

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

We’ve been sitting on the story all day and were trying to talk with Macgillivray because our understanding is that he may not have told Google that he was going to Twitter and we didn’t want to be the one’s to break the news. But the story broke on the NY Times, so I’m guessing they know all about it now.

We’ve also confirmed that Twitter is aggressively hiring across the board, including top executive spots. A number of candidates have been interviewed for the CFO job in particular.

Macgillivray, a former Wilson Sonsini Goodrich & Rosati attorney, has been a key figure in Google’s legal battles over their book scanning efforts. The U.S. Department of Justice has opened an investigation into the matter.

Macgillivray is leaving Google at a crucial time. The books settlement is a key antitrust issue that needs to be handled delicately, and he was leading the charge (or, perhaps, retreat). Google will be scrambling to fill his role.

One problem Twitter has had in attracting key executives, multiple sources have told us, is the impression that they may sell the company sooner rather than later. They have told candidates that they intend to stay in it for the long haul, and don’t plan to sell any time soon.

We’ll see.

Update: his blog post:

Working in Google Legal has been a dream job. The people at Google are phenomenal. In every part and at every level of the company there are great people with multiple useful talents in addition to those that got them the job. For a lawyer, the issues we dealt with every day were fascinating, the real-world impact of our work was humbling, and the ethical compass of the place remained true

Among many other things, I am proud to have been part of the legal department that helped:

Increase transparency for removals: Google remains the only search engine that sends legal notices to ChillingEffects.org to document search results suppressed for legal reasons.

Stand up to the Department of Justice: Google was the only search engine provider that stood up to the Department of Justice’s overbroad request for search query information.

Launch Google Book Search: Google is making books easier to find by using fair use for a great purpose and is working to expand access to books through the Book Search settlement.

Stand up for users: In my experience, Google does “focus on the user.” Google Legal is no exception in its decisions about everything from global product functionality to individual removals. As a result, we’ve been threatened or sued many times for user-focused functionality and what our users have said through our services.

There are many other examples, and many more that are confidential or privileged, but these give you a flavour of the types of things the Google legal department gets to do. I still can’t recommend it highly enough (really, go check out the jobs page).

Thank you Googlers, it was an honour.

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Animoto is turning into a cult favorite web app - upload a few pictures to the service, pick some music, add some text and get a really cool video slide show back. They made my annual “can’t live without” list last year based on their obsessive desire to perfect a single product. Many, many users agree.

Last month they announced a new round of financing and turned cash flow positive. Users are flocking to their iPhone application that lets you create slide shows from events even before you get back to your computer. And soon, CEO Brad Jefferson tells me, they will let users upload video clips as well as photos to make their slide shows.

They actually showed the feature last month in a promotional video for the Webbies, which shows photos as well as short video clips.

The feature is near-ready to launch to users, Jefferson told me last week. I was on a Southwest flight with him and Wired editor Fred Vogelstein (see his recent Facebook article and a 2007 article on TechCrunch) on the way back from an event in Seattle. Jefferson showed me some of the Animoto clips with video, and even showed off a 3D product they are working on. I took the video above when we landed at Oakland airport, much to the amusement of a few late night passengers hanging out near us. Make sure you watch to the end - Vogelstein is hilarious with the 3D glasses on.

Here’s what’s great about Animoto - these clips take just a few seconds to create. Animoto does all the hard work for you. And the demo videos show clips with mixed images and short video clips put together into a seamless product. You will actually be able to create these right from an iPhone using the app, the camera and the new video functionality, and then share them with your friends and family.

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Social Media has evolved beyond a series of platforms that enable content publishing, sharing, and discovery into a genuine, peer-to-peer looking glass into the real world conversations that affect the perception, engagement, and overall direction of the brands we represent.

Socialized media didn’t invent “conversations,” it simply organized and amplified them and established an opportunity for learning and collaboration.

Twitter and Twitter Search have ushered in a new genre of not only communications and associated search technology, but also dedicated ecosystems that transform and support how we as consumers share and discover relevant information in real-time.

Online discussions, rants, and observations are either alarming (and motivating) brand managers or fooling them into unforeseen enthrallment. But the reality is that real-time dialogue is fueling connections and perceptions in the statusphere, blogopsphere, online communities, and the social web in general. It’s this swelling tsunami of chatter that will only intensify and heighten as it forces a new genre of Social Customer Relationship Management (sCRM). Social CRM is no longer an option. It necessitates brand involvement to proactively share answers, solve problems, establish authority, and build relationships and loyalty, one tweet, blog post, update, and “like,” at a time.

In the world of business, social media, led by Twitter, is forcing companies to augment the offshoring of reactive customer service with the nearshoring of proactive customer engagement. The conversations that power social media are sparking a sense of urgency to identify influential voices and talk to customers in a place and time of their choosing (generally, in public and online).

For example, on Friday at during a panel at the CrunchUp on Real Time Business, Porter Gale, vice president of marketing for Virgin America, made it clear that Virgin America understands the promise, prospect, and value of listening and responding to the social stream.

Erick Schonfeld, who was moderating, asked Porter how her team mines Twitter for the perception of the brand and also for determining how they contact customers.

Porter revealed that the Virgin America team is small and applies roughly the equivalent of 1.5 people to monitoring and engaging on Twitter and other social networks. To her and the team, social media is representative of not only a listening system, but also a complete engagement channel. The word “marketing” doesn’t even enter the mix.

With more than 20,000 followers on Twitter, Virgin America is galvanizing a vibrant and active community of people who will respond in “Twitter time,” thus alleviating the modest team from having to engage in every discussion, whether it’s positive or negative.

The most common example Porter shared was a response to the question, “Should I fly Virgin?”

“The community closes the sale,” exclaimed Porter.

She also shared a story of how Virgin America invests in the good will of customers, simply by publicly acknowledging and supporting them in the same channels where they’re communicating.

During one flight, a woman who just graduated medical school to become a doctor, had tweeted her excitement about graduating and also flying @virginamerica. Instead of simply responding with a congratulatory Tweet, Porter and her team retweeted and asked someone on the flight to buy her a drink (the benefits of offering inflight wifi).

To her surprise, Porter triggered an immediate response, “Row 11 is going to buy her a drink.” And, to her further astonishment, the person who sent that Tweet was live in the audience at the Real-Time stream event.

Alexia Tsotsis, tech writer at the LA Weekly, shouted from the first row, “That was me!”

Everyone in the audience was a witness to a vivid demonstration of how interaction online extends into real world experiences.

More impressive is Virgin America’s use of the social Web for real-time customer service. They’re actively monitoring issues, frustrations, and recommendations to solve challenges as they arise. In several such instances, Virgin America has used Twitter as a real-time guest service recovery system in flight to address concerns and problems by contacting service staff in the air to alert them to issues – again, the perils and associated benefits of offering inflight WiFi.

Earlier in the day, Peoplebrowsr (disclosure: I am an advisor) showed a demo in which airlines were ranked by the sentiment expressed about each brand on Twitter, and Virgin America was on top. Peoplebrowsr highlighted the ability to analyze conversational sentiment by industry through the alignment of positive, neutral, and negative conversations and perception by brand.

Ross Mayfield, CEO and founder of Socialtext, discussed the nature of the social dialogue enterprises are being pulled into and how conversations require more than one person or department to engage. SocialText offers a dashboard for enterprises that wish to collaborate internally with coworkers and externally with customers and stakeholders.

Ross referenced the engagement iceberg, where he observes only a small portion of customer conversations and engagement as truly visible, with most occurring beneath the water line and thus, out of view.

He’ s right. In my research and experience, we’ve identified that every online conversation worthy of response directly matched specific divisions within an organization and usually rank in this order:

1. Support
2. PR
3. Marketing
4. Sales

It highlights the reality that every department eventually needs to socialize.

Ross then asked his fellow panel members as well as the audience, “Who’s going to own Social Media and the process of responding?”

My answer: No one.

Social Media is, for the time being, tuning-in new channels of influence to incorporate into the brand and marketing mix.  While it takes a station manager time to receive the signals and in turn, coordinate outward broadcasts, it is the divisions within each organization that will need to shift from an introspective support mode to an extrospective group of proactive collaborators.

But as Ross cautioned businesses and eager social media teams, “Before they collaborate with the community, they have to collaborate with themselves.”

If responsibilities and workflow isn’t established and most importantly, if guidelines aren’t drafted and disseminated company-wide, the intention of helping influential customers and advocates can quickly transcend into social, and very public, chaos.

We need rules of engagement.

As Erick pointed out in the discussion, “It used to be unhappy customers who would call into customer service lines to express frustration. Now if businesses don’t immediately respond with a resolution and nip these issues in the bud, they have the potential of spreading and getting out of control. At the same time, companies need to identify and amplify praise as it happens.”

Virgin America’s Porter Gale is trying to rally her team as well as the other departments that are affected by real-time conversations and the issues they raise. She hosts brownbag lunches, where PR, customer service, and other teammates discuss what’s happening with Twitter and other social networks. They also share and review strategies and tactics to teach and learn from each other based on their experiences.

There are social networks, and there are tools with which to identify conversations and facilitate interaction, but everyone agreed, that in the world of new service and marketing, we need to improve the literacy and education among the teams who occupy the front lines.

The “now” web is powerful. It’s building new bridges, networks, and channels. It’s absolutely changing the way people communicate, research, and ultimately make decisions.

Yes, the real-time Web is powered by conversations. But, what’s important to remember, is that conversations are personal and therefore sacred.
Broadcasting messages, or even worse, sponsored messages as a form of resolution or participation is foolhardy.

Companies such as Pizza Hut that relegate Twitter interaction to a summer “Twintern” will indubitably get what they pay for. We’ve already witnessed the public backlash when a twintern abuses Twitter on behalf of an unsuspecting brand. #habitat

The point is that it’s not whether or not an intern or junior staffer on the marketing and communications team is competent or incompetent. The reality is that businesses should view the role of engaging with customers, prospects and influencers as a strategic competitive advantage as well as an earned privilege.

As panelist Maynard Webb of LiveOps pointed out, “A brand can get damaged faster than ever nowadays.”

The true shift represented by the social and real-time Web is not simply the ability to surface relevant conversations as they happen, it represents the opportunity to learn from public sentiment and create a more aware and adaptive organization that leads communities through action.

Monitoring the conversation is not enough.  Brands need to jump in, but in a professional way.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

For the time being RentHop is only available in New York City, largely because of the way apartment hunting is set up there. For those who aren’t familiar with the situation, most of the time when you’re looking to find an apartment in New York City, you’re forced to work through a broker who will charge a fee of 15% of your first year of rent (which works out to around $3,000 based on NYC’s average rent).

So why not just skip the brokers and go straight through Craigslist, which offers a broker-free ‘no fee’ section? RentHop co-founder Lee Lin says that oftentimes brokers will spam this section with fake listings, hoping to seduce viewers into calling them at which point they can say “Oh, that one is taken, but we’ve still got this one available…” and so on. Because NYC apartment listings rarely include an actual address, these are very easy to fake.

RentHop solves this problem by going to major landlords, some of which own many buildings in New York City, and getting the listings straight from them. Each listing on RentHop has a valid address, which means that they’re harder to fake, and the site can also plot them on a map to give you an idea of where the apartment actually is. Lin says that landlords have an incentive to offer apartments through the site, because their inventory will move more quickly when potential tenants don’t have to pay a large broker fee.

While the site originally launched back in Febraury, Lin says that most of the features have been added since then, and the site has changed its business model. RentHop now looks to generate revenue by offering a set of ‘Pro’ features to large major landlords, who can have hundreds (or more) of apartments to manage at once.

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But this blimp (or rather a zeppelin) they’re flying around Silicon Valley is a menace. First of all, I go outside to get away from work, not to look up in the sky and see a big startup logo hovering over my house. And our attempts to take a video of it almost resulted in a car crash (video below) (Yeah, probably more my fault than theirs, but still, it’s there, I need to video it. From a moving car). Go away, Blimp. Or Zeppelin.

Apparently this thing has been around for a while. An excruciatingly detailed overview of the zeppelin and why it is flying around with a 23andMe logo on it is here.

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That’s 44 accounts by my count. Where are all those Jaiku accounts?

Still think they have no interest in the micro-messaging service? Of course they do. It just may cost them more than a billion dollars to satisfy their fixation. And Microsoft is starting to get a fixation too. Remember when the two had a bidding war over a stake in Facebook?

Update: Interesting. As Habib points out in the comments, it looks like Google may have missed one of its own accounts in the region list: Google Arabia. That makes 45.

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And then I read the story, which turned out to be a strange hit job on Google for no apparent reason, trying to imply that Google has somehow bypassed Apple’s “renowned secrecy” and used its ideas to foster the development of its new Chrome OS. And somehow, Google CEO Eric Schmidt is behind it.

Caulfield claims that Apple may have “missed a spot” by letting Schmidt stay on Apple’s board. First off, why does everyone seem to assume that Apple isn’t well aware of the fact that Eric Schmidt is the CEO of Google?  To paraphrase John Gruber, does anyone actually think Steve Jobs is too shy to confront Schmidt? Of course, Caulfield immediately goes on to say that Schmidt isn’t actually a spy, but rather that somewhere along the line Apple and Google have become “accidental competitiors” who have simply yet to realize it. Right.

But the Schmidt point can be forgiven. It’s possible, however improbable, that Eric Schmidt has somehow been accidentally abusing his position at Apple to gain insider knowledge that he then leveraged to empower Google, all under Jobs’ nose, and without realizing that he was competing with Apple. After all, he is a very smart man.

So on to the points where Google has apparently copied Apple, which range from the silly to utterly ridiculous.

Caulfield points out that Chrome OS runs on x86 and ARM processors and is based on Unix. But look: Apple’s OS X also runs on both x86 and ARM processors, is based on a Unix variant, and NeXT Step (which laid the ground work for OS X) was used to build the web. Frankly I have no idea what that last point is even relevant to (maybe that Chrome is optimized for browsing the web?). Moving on, OS X is built to run on a wide range of devices, including the iPhone, servers, and Mac PCs. Clearly, Chrome’s planned support for both netbooks and eventually desktops is entirely derivative of Apple’s idea to allow an operating system to perform on multiple products.

Caulfield fails to point out the major obvious differences between the two operating systems. For one, Chrome OS will probably be entirely browser driven — many of the details are still speculative, but it’s likely that Chrome PCs will boot directly into the browser, with a boot time ranging in the single digit seconds. Applications will all be reliant on ‘the cloud’, rather than storing data locally. In contrast, Apple’s OS X is totally different. It’s not cloud based. It’s a full fledged OS that doesn’t boot into the browser. It seems that Caulfield honed in on just about every other obvious similarity while ignoring the mountains of differences.

Caulfield then gets into the similarities between the iPhone and Android. This is well-trodden territory, and Apple and Google are definitely competitors here. But trying to say Google stole the idea of a smartphone OS from Apple is strange — Apple and Google are taking very different approaches to their software (Google is free and used on devices from multiple vendors, Apple’s isn’t). And Apple wasn’t exactly the first company on the mobile block, though they did revolutionize the touchscreen. So, okay, we can see where Caulfield is going with this.

Then :

Apple launched a Web browser for the Windows operating system Safari in June of 2007. Google launched the Chrome Web browser for Windows in September 2008. Apple offers a full suite of office productivity software for the Mac. Google offers its own Web-based alternative, Google Docs. Apple has an e-mail service. So does Google.

Let’s just go through these one by one. Eric Schmidt was just quoted by the Financial Times as saying “[Google co-founders Larry Page and Sergey Brin] wanted to do this project since founding the company”. In other words, Google has been thinking about doing this for over a decade. But Google didn’t actually wind up releasing Chrome until well over a year after Safari hit Windows. Point Caulfield, I guess. Of course, by this logic, Apple was “stealing” that whole Windows browser thing from Microsoft to begin with.

Next up, Apple’s office productivity suite iWork vs. Google Docs. I don’t think anyone who has ever actually tried using both iWork and Google Docs would put them anywhere near the same ballpark. Google Docs is a cloud-based service that allows for easy collaboration. But it isn’t where you’re going to be doing any heavy document lifting — I can’t imagine writing anything longer than a few pages in it, not to mention create a media-heavy presentation. Yes, you can edit documents in both of them, but calling this a “stolen” idea is pretty ridiculous.

Finally, Apple’s Email service vs Gmail. This one is just laughable. When Gmail was released back in 2004, it revolutionized webmail, offering a full gigabyte of storage space to users (not to mention a great interface). Mail services at the time that had previously been restricted to a tiny fraction of that — in fact, Apple’s premium .Mac, which cost $100 a year, was only giving out a measly 15 megabytes of storage.

Even if all these points held water, Caulfield could have used nearly exactly the same argument trying to accuse Google of “stealing” from Microsoft. Microsoft has a browser too, as well as a tiny productivity suite called Office, and an Email service called Hotmail. You may have heard of them. Google isn’t stealing, it’s competing. It’s releasing new products in an effort to beat out its rival. Likewise, Apple is out to beat Microsoft as well, so the two sometimes wind up releasing similar products. If anything, this is a case of convergent evolution, not cloak and dagger espionage.

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The folks at the Hype Machine, the popular music tracking site, think that all of the Twitter music charts out there are “lame,” so they decided to make their own Twitter Music Chart. It encourages people to Tweet out links to their favorite songs on the Hype Machine, where you can listen to the full audio stream. They came up with a formula which gives people with more followers on Twitter more points for every song they Tweet. The songs with the most points, move up the chart.

It seems straight-forward enough, but it is way too easy for people with a large number of Twitter followers to game. I just RickRolled the chart by Tweeting a link to Rick Astley’s “Never Gonna Give You Up” from the TechCrunch Twitter account. The TechCrunch account has 916,735 followers, which gives each Hype Machine Tweet 2,997 points. A single Tweet was enough to put the song at the top of the chart, above Michael Jackson’s and Telepopmusik’s “Remember The Time” (1,972 points). Okay, so maybe it wasn’t fair to use the TechCrunch account, but what else am I gonna do on a Saturday morning plane ride back to New York (gotta love Virgin America’s WiFi in the sky).

Even before I Tweeted the link with the TechCrunch account, I Tweeted it first through my personal @erickschonfeld account, which only has 7,224 followers, and was able to get the song to debut on the list at No. 24. Every time I Tweet out a song link, it counts for 266 points, noyt enough to get a song to the top spot with one Tweet, but enough to move “Superteen” by The Care Bears On Fire from the No. 12 spot to the No. 5 spot.

The Hype Machine’s formula is flawed. No single person should be able to affect the rankings so easily. To be fair, it just launched, and as more people start voting, the system should self-correct. But the bigger problem with ranking songs based on someone’s popularity on Twitter is that just because someone has a lot of followers doesn’t man they have good taste in music (TechCrunch and myself excluded, of course). Ranking music based on roughly on how many Twitter followers someone has is just as lame as any of the other methods the Hype Machinists are trying to replace. (I like WeAreHunted). If there was a way to figure out who are the music experts or influencers on Twitter and give their Tweets more weight, that would create a more interesting list.

Otherwise, the Hype Machine’s chart is just going to keep on getting RickRolled.

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The good thing about Setlist.fm is that the goal is to collect the real setlists, meaning which tracks artists and bands actually play at live gigs rather than what the setlist says they will. If you have any basic knowledge about the live music industry, you know that those are two completely separate things.

To submit and edit setlists, you don’t necessarily need to register, although the startup behind the site recommends that you do. Once you add tracks for a certain gig, say Metallica’s performance at the Sonisphere Festival in Hockenheim, Germany from last week, the back-end of the system will automatically check the web for a playable stream of the tune, YouTube videos and the lyrics. The site will also auto-generate statistics for artists and bands (example for Metallica) which gives you a good overview of their performance history and what their most played songs at live gigs are.

Setlist.fm comes with a decent internal search engine and enables visitors to easily share the setlist in their Last.fm event review or embed it on their own website or blog. For example, here is the setlist of U2’s concert at Camp Nou in Barcelona, Spain from the beginning of this month:

As an aside, this is most probably the first project that we cover that hails all the way from the tiny nation of Liechtenstein. Which goes to show good ideas can come out of countries with less than 40,000 inhabitants too.

Nice one!

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