Will he be able to guide society into a welcoming, bright digital future in the same way Steve Jobs was able to educate and show how things could become?

Mr. Bezos is a much more humanitarian version of Steve Jobs, who was an uptight hippie despite his ashram and alternate lifestyle experiences. Mr. Bezos' style is much gentler and better suited to our times.

He's a very impressive chief executive, a serial innovator with a a strong sense of the future and the discipline to do what's needed to get there. And he can inspire and lead a large organization.

I once asked him, "Shouldn't you focus on succeeding in one business instead of so many different businesses?" He answered, "Why? Why can't we succeed in all of them?" 

Amazon is a tech company but it's not a product company, it's a collection of many businesses. Here's his challenge:

Predicting the future of technology is easy, it's much harder to figure out how to be a business in that future. 

So far, so good for Mr. Bezos. His successes haven't come easily and he deserves the recognition for a hard job done well.

Reinventing the newspaper business might be a stride too far but it's worth a try and I'm glad it's not my money experimenting with business models. Who knows, he might come up with a winning formula that everyone can use. If not, then not much harm done - the $250m is only 1% of his fortune.

Steve Jobs didn't win all the time.

I remind people that, "Special interest groups will gladly pay for the media they want you to read, but you don't want to pay for the independent media you should be reading."

Take a look at some of this data put together by Amy Mitchell, Mark Jurkowitz, and Emily Guskin from the Pew Research Center: What's Behind The Washington Post Sale | Project for Excellence in Journalism (PEJ)

There's not much help from digital revenues — precisely the area where Mr. Bezos is expected to help — the situation is getting worse:

In 2012 for every one digital dollar earned - $15 in print revenues was lost. Things are getting worse: In 2011 the ratio was $1 digital gained for each $10 lost.

 - - -

Here is why things are getting worse:

Overall mobile ad revenue is growing rapidly – 80% in 2012 – but as with digital ad revenue overall, it may be a bust for the news industry as technology giants like Google and Facebook move in to harvest that money.

Fully 72% of mobile display ad revenue now goes to six companies—none of which are news producing organizations. 

There is a bright spot in local advertising, which grew 22 per cent in 2012:

But two major trends may be pushing that revenue out of the hands of local news organizations.  One is the more sophisticated geo-targeting by major national ad networks, which appeals to national brands like WalMart. In addition, Google, Facebook and other large players are improving their ability to sell ad space to truly local advertisers. 

Google and Facebook are competitors that newspapers cannot hope to compete against.

- - -

Here are some Washington Post specific numbers:

The Washington Post: By the Numbers | Project for Excellence in Journalism (PEJ)

At least Mr. Bezos is picking up the Washington Post at a bargain price:

Historic Deals of Major U.S. Newspaper Companies | Project for Excellence in Journalism (PEJ)

It is not a viable business, it loses $50m a year and has large pension liabilities.  Its purchase only makes sense as a vehicle of influence, and not as a rescue of the newspaper industry. 

Let me state some facts:

- Amazon has been dramatically increasing its spending on lobbying and is set to reach record levels this year. Lobbying Spending Database - Amazon.com, 2013 | OpenSecrets

- The Washington Post will find it hard to be seen as objective about a wide number of important stories, ranging from corporate taxes, Internet sales tax, to the business of e-books, and a whole range of gizmos and gadgets as Amazon moves to compete in new markets, including smartphones. There will be few beats where the the newspaper can claim a truly independent voice with no conflicts of interest.

- The association with Bezos will remove the newspaper's credibility on a huge number of topics — even if he stays away as promised. The name association will cause readers to constantly scan for possible conflicts of interest and a perceived bias in reporting. This potentially harms the  newspaper's voice on important social issues. 

- It only took a quick call to Bezos from the US administration to kick Wikileaks off of the Amazon cloud platform. What will happen if Bezos gets a call about the Washington Post's coverage or planned coverage?

- Amazon recently landed a $600m contract to build a data center for the CIA and is hiring 500 people in Virginia, just outside Washington. There is more government work ahead if Amazon plays its cards right.

- Bezos is not interested in the Washington Post as a business. He outbid all others, he clearly wanted it at any cost. That's not what a business owner does, they try to get the best possible price because they have to make the business profitable as soon as possible.

- It was secretly purchased. It's strange to sell it this way. I understand the owners weren't keen to publicize the sale but it could have brought attention from other suitors and maybe resulted in a better deal for shareholders.

- The Graham family asked Warren Buffett about Bezos. He said he is the best CEO in the US. Warren Buffett owns 28% of the Washington Post. The news of the purchase boosted the value of his stake to more than $1 billion.

- Bezos rushed to get it. He admitted he has no special plan for the newspaper and that he does't know the business. He also told Washington Post employees that he will be working in Washington state and not D.C. Strangely, he doesn't plan to spend time getting to know his new business, or the newspaper business. How will he make it a viable business? Again, another sign that he doesn't seem to be interested in the Washington Post as a business.

- It is not a philanthropic gesture. If he wanted to do that he would have structured the deal differently, say through establishing a non-profit foundation to show his hands will truly be off the news desk. 

- Politicians will treat Mr. Bezos with far more attention than before. They are older, and they understand the power of the press very well. They understand that the metric of influence is measured by the ink barrel — both digitally and literally. 

- Bezos didn't manage to do a "Gordon Gekko" with Post's 604m pension plan surplus. The Washington Post has a pension plan that's overfunded by $604m. Financial Times media editor Andrew Edgecliffe-Johnson reports that it is "unheard of in an industry where declining head counts in newsrooms and printing plants have strained retirement plans." However, the Graham family will give Mr. Bezos $50m to meet the first year pension obligation — a nice gesture for their staff.  

-Bezos had to use his own money. The newspaper group, with its $50m in annual losses, and large pension liabilities, would have dragged down $AMZN's finely balanced, barely-profitable financials. His stoic shareholders have supported his long term strategy to an extraordinary degree of loyalty unmatched anywhere, including Apple [$AAPL] But that long term strategy is understandable and scalable.

There's no strategy at the moment for the Washington Post — which is why it couldn't be an $AMZN acquisition. There's no need to startle the shareholders.However, the venture will be a huge benefit to $AMZN,  there's a tremendous value from the association with the Washington Post.

The genius of Mr. Bezos' strategy is that Amazon gets all the benefit and carries none of the costs on its books. That protects the company's share price, and also, Mr. Bezos' $25 billion share of the business.

For just 1% of his fortune, Mr. Bezos bought some very cheap and effective insurance for himself, and for his fellow $AMZN shareholders. 

- Owners of newspapers always use their businesses for influence. That's been true for more than a century, from Hearst to Murdoch. Australian mining billionaire Gina Rinehart, has been trying to acquire some of Australia's largest newspapers, and holds more than 18% share in Fairfax Media. She wants to fight anti-mining sentiment in Australia.

When people won't pay for the independent media they should be reading —  special interest groups will gladly  pay for the media they want them to read.

- Bezos is the new Steve Jobs, a more humanitarian version, with a style imuch better suited to our times. He's a very impressive chief executive, a serial innovator with a strong sense of the future and the discipline to do what's needed to get there.

Predicting the future of technology is easy, it's much harder to figure out how to be a business in that future. 

So far so good for Mr. Bezos, his successes didn't come easily and he deserves the recognition for a hard job done well. Reinventing the newspaper business might be a stride too far but it's worth a try and I hope he'll give it a try and use his money experimenting with business models.

Hopefully, he'll come up with a business model that other newspapers can also use, and maybe even thrive.  

I've spent the last ten years plunged deep into the new media and reporting on the extraordinary innovation from the two-way media technologies coming out of Silicon Valley. It's provided me with a rich source of insights into the media business and its continued destruction.

One of these insights is that it's not possible to make money simply from selling media, a media business needs many forms of revenue. 

Media is a loss leader — you have to have something else to sell.  The Washington Post could do well because $AMZN has a lot to sell.

Maybe the new media business model is that every newspaper becomes an Amazon affiliate. And maybe an affiliate for local businesses, too. 

- - -

Newspapers: 25 things to try before turning out the lights | ZDNet 

Media Under Seige: Billionaire Gina Rinehart Changes Strategy On Fairfax Media -SVW

- Internet sales tax can be delayed, or at least, it can be made to be into a single rate rather than a hodgepodge of state and county taxes.

- Corporate tax rates and repatriating overseas money without incurring a big tax bill.

- Reforming immigration laws to make it easier to hire foreign engineers.

- Bezos will also be able to represent future tech policy issues because politicians will give him more attention. They are older and they understand the power of the press, and that influence is best distributed by barrels of ink — digital and literal. 

- The Bezos/Amazon connection effectively removes the Washington Post's voice from key issues because of the perceived conflict of interest. Bezos doesn't need to directly command the news desk, it happens automatically.

Silicon Valley benefits tremendously from the Bezos Washington Post. However, as $AMZN moves into ever more digital markets it could cause problems as Bezos could try to influence government policy against competitors, or block anything that benefits a competitor.

The paper’s duty will remain to its readers and not to the private interests of its owners….Journalism plays a critical role in a free society, and The Washington Post -- as the hometown paper of the capital city of the United States -- is especially important.

Owning the Washington Post will most certainly help Amazon's lobbying of the government, which has increased substantially over the past five years and is set to hit a new high this year (below), according to open secrets.com.

Corporate and sales taxes have been $AMZN's biggest issues. Lobbying Spending Database - Amazon.com, 2013 | OpenSecrets

To the extent that Amazon's lobbying issues overlap with that of other tech companies such as Google, Facebook, and others — the tech sector's lobbying efforts will also be helped by Mr. Bezos ownership of The Washington Post.

However, with big issues coming up for the tech sector, The Washington Post will find it hard to be seen as impartial on key subjects such as immigration and corporate taxes.

The Hill reports:

Amazon and other technology companies have urged Congress to cut the tax rate for income that they bring back to the United States. The company is also lobbying in favor of online sales tax legislation, arguing a single national framework is preferable to a patchwork of state laws.

There's no need for Mr. Bezos to direct the newsroom to do what he wants. Just the association of his name with the masthead will do the job.

This will essentially take The Washington Post's  authoritative voice out of the public debate because of its owner and the perceived conflict of interest by its readers and others.

Great for access…

Politicians will go out of their way to meet with AMZN representatives because they are old enough to understand the power of the newspaper.

Although Mr. Bezos told employees to continue doing the same great job as before -- it's not true that they can pursue key stories in a range of contentious issues, with the same zeal and with the same influence as before because their work will be tainted by the newspaper's association with Amazon.

Amazon is increasingly competing in computer device markets, and there are reports it is planning a smartphone. There's a lot of stories that will have an Amazon component and that will hurt the independent reputation of the newspaper.

This is most certainly not a philanthropic gesture by Mr. Bezos, as some have suggested. If it were, then the purchase could have been made through a separate foundation set up by Mr. Bezos to demonstrate no intention to influence the newspaper. It's way too much money and there's way too much to be gained by Amazon and Mr. Bezos in this venture.

Rupert Murdoch and many other newspaper owners have used their newspapers for political influence for themselves and their allies.

And Gina Rinehart, one the world's richest women, has tried to take over Australian newspapers and influence media coverage of mining.

Special interest groups will gladly pay for the media they want you to read.

Mr. Bezos just bought the newspaper of the capitol of the world's most powerful nation. That's priceless. Yet most commentators assume he bought it as a business.

There's no reason to assume any other motive than influence in the purchase of The Washington Post because it certainly does not fit into any of Mr. Bezos' current business interests or Amazon's markets.

He out-bid all others for the newspaper, which indicates he wanted it at any price.

He clearly wasn't buying it for its business prospects as were the other bidders.

[He made a $5m investment in Business Insider in April, which is founded by Henry Blodget, the former discredited Wall Street analyst who made his name, and that of Mr. Bezos' when he predicted a sky-high stock price for Amazon — setting off an e-commerce stock market frenzy in the late 1990s that ended badly.]

He is buying influence by the metaphoric and literal ink barrel.

Friends in low places…

Mr. Bezos just earned himself a lot of new friends in Silicon Valley. And some companies might think twice about competing with Amazon in certain sectors, or go against Amazon on tech policy issues because of his perceived media clout.

Media is a loss leader, you need something else to sell.  Amazon has a lot to sell.

It's a fabulous coup for Mr. Bezos, he's by far the most astute of the tech billionaires.

The price of $250m for The Washington Post is cheap compared with the future benefits to Mr. Bezos' personal brand and his business interests. He is inside the world's most powerful city. 

- - -

Other coverage:

Jeff Bezos and the Washington Post: a marriage of old media and new money |theguardian.com

Washington Post to be sold to Jeff Bezos, the founder of Amazon - The Washington Post

Why The Washington Post isn’t a charity case for Jeff Bezos

Amazon CEO Jeff Bezos Pays $250 Million for Washington Post - Peter Kafka - News - AllThingsD

Google co-founder Sergey Brin has funded a project that grew strips of meat from stem cells, which were then collected to form a burger, cooked and eaten at a live event in London.

Bloomberg reporter Makiko Kitamura: Brin’s $332,000 Lab-Grown Burger Has Cake-Like Texture - Bloomberg

The 5-ounce burger, which cost more than 250,000 euros ($332,000) to produce, was developed by Mark Post of Maastricht University with funding from Google co-founder Sergey Brin…Cultured meat production uses as much as 60 percent less energy, resulting in up to 95 percent lower greenhouse gas emissions and 98 percent lower land use compared with conventional production in Europe.

A new meaning to "beefcake"  and with no fat in the meat, there isn't much flavor. It's color came largely from beet juice and saffron.

Growing meat is a lot less damaging to the environment than farming it. However, it could be another "decade or two" before it is commercially viable. Scientists have to figure out how to grow fat.

The lab process requires fetal bovine serum, which is expensive and it competes with its use to make vaccines.

There's no word yet if "Brin's Burger" will be offered in Google's free food staff cafeterias, or if it will come with cheese and bacon.

The Guardian has a video of Sergey Brin and scientists explaining the impact of meat consumption.

In this TED Education video, media maven Johanna Blakeley looks at the effects of intellectual protection on various industries and shows how less protection encourages creativity, innovation, and dollars.

The chart (above) clipped from her TED talk (below) shows the relative size of low-IP industries on the left (food, automobiles, fashion) versus high-IP industries on the right (films, books, music.)

It's a fascinating talk. Let's see what the lessons are for the high-IP industries going forward because their IP has been seriously breached without consequence, thanks to the Internet and web services such as Google's Youtube, which hosts millions of copyrighted films and TV programmes.

To be fair, Ms. Blakeley should provide a chart from 2000 rather than 2007. Maybe we could then compare it with 2007, or better yet 2012, to see if less IP has helped those industries. Maybe Google is an agent of change and dollars for those industries and companies, such as Viacom that claim to have been harmed.

Codefellas EP1: When Topple met Winters 

It's well written. 

"Takes you inside the secretive world of a slightly askew NSA, with the eccentric Agent Topple, played by John Hodgman, and his young hacker protégé, Nicole Winters."

Visit the Wired channel for more video: http://www.youtube.com/wired

The full results are here: www.nytco.com/pdf/2Q_2013_Earnings.pdf

Despite rising numbers of readers and paid subscriptions, the company continues to struggle as advertising revenues continued to fall again— 6% in this quarter. This is the eighth sequential quarter of declining print and digital advertising revenues.

"Print and digital advertising revenues decreased…largely due to ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace."

Jeff Bercovici, media reporter at Forbes, noted that the good news on digital was not enough.

Digital subscriptions still represent a smallish part of the company’s overall revenue picture — just 15% of circulation revenue and 7.8% of total revenues, which fell 1% in the quarter, to $485 million.

Foremski's Take: More readers, more subscriptions is usually great news for a newspaper however, print and digital advertising continues to fall in value due to what Mark Thompson, president and chief executive officer, calls "ongoing secular trends." 

Q1 2013 print and digital advertising fell 13% and 4% respectively, due to "ongoing secular trends."

Q4 2012 print and digital advertising fell 10% and 2% due to "ongoing secular trends."

Q3 2012 print and digital advertising fell 11% and 2% due to "ongoing secular trends."

Q2 2012 print and digital advertising fell 8% and 4%.

Q1 2012 print and digital advertising fell 7% and 10%.

Q4 20011 print and digital advertising fell 8% and 5%.

Q3 2011 print and digital advertising fell 10% and 5%.

There was a time when digital advertising was rising!

Q2 2011 print advertising fell 6% and digital rose 16%!

Q1 2011 print advertising fell 8% and digital rose 5%%!

Q4 2010 print advertising fell 7% and digital rose 11%!

[More results here: New York Times Company : Press : Press Releases]

The "ongoing secular trend" is the media disruption carving its way through the entire industry. 

The publisher has to grow faster just to stay in place. Yet it has been praised for its embrace of media technologies and novel forms of reporting.

It's not a good place to be and it's largely because Google has sucked so much value out of the advertising business so that only Google can make money from it.

Even Google is facing a decline in the money it makes from each ad click but it remains hugely profitable because of its scale and because it harvests its content from the Internet and doesn't need to pay editors, reporters, photographers, news bureau rents, etc. 

The New York Times still has hopes of turning advertising revenues around. It recently hired Meredith Kopit Levien, chief revenue officer at Forbes, as its new executive vice president of advertising. Does this mean it will adopt the Forbes' Huntington Post-like business model in which it gets free content from "bloggers?"

The National Venture Capital Association (NVCA) and Cambridge Associates recently released a study showing that VC funds returned an average of 7.4% annually over a ten year period. For early stage funding it was just 6.4%. This compares to 8.5% for the S&P 500.

Foremski's Take: The VCs of  Sand Hill Road have an unshakeable belief in their investment skills, despite the study's Big Data showing they can't outperform a grandmother investing in an S&P Index fund.

It's easy to see how "smart money" VCs  end up with dumb money returns, when they herd into the same types of me-too startups and ruin the market for each other; or force their portfolio companies to pivot their business plans based on the trend du jour in their Twitter streams. 

Add to that, imposing toxic term sheets onto a startup's founders — and it's no wonder they are increasingly despised in startup communities on both coasts.

Random investments…

The VCs are extraordinarily bad at picking winners. It might be better to assign investments to a wide variety of startups on a lottery basis.

I can guarantee there would be far fewer me-too startups funded; and the next big thing is always the ugly duckling no one wanted so you might just get lucky and get that black swan event — an extraordinary return on investment. It certainly won't happen by following the groupthink of the gulag.

A funding lottery for pre qualified startups could work. Random acts of funding will hit gold some of the time and probably about the same number of times as "smart" funding.

A long line…

There's always been plenty of people that would love to prick VC egos but lately, their numbers seem to be rising. Others see it too.

R. Scott Raynovich at The Rayno Report writes that, "a quiet attack is building on the VC industry."

"Entrepreneurs and tech-company executives I have been speaking to lately have turned up their griping about VC investing, pointing out that it's dysfunctional and overrated."

 Mr Raynovich points out that a small number of VC firms have done well:

"Accel Partners, Sequoia Capital, Andreessen Horowitz, and Greylock Partners, which was recently profiled in this interesting Bloomberg BusinessWeek article… Greylock was invested in Facebook (FB), LinkedIn (LNKD), Pandora Media (P), Workday (WDAY), and Palo Alto Networks (PANW). That seems like more than luck."

However, the lack of data on individual VC funds makes it hard to judge performance; how much luck or brains, separates the cream from the whey.

Every VC company is a media company…

Keeping up the VC myth of "smart money" is tough when the Big Data shows it's clearly not. But there are tried and true methods to keep the hot air pumping up the hype using traditional means: PR and media.

Andreessen Horowitz, with more than $2.7bn under management in three funds, is leading the way. The firm recruited Margit Wennmachers, the co-founder of PR firm OutCast Communications as a partner; and more recently, it hired Michael Copeland, a senior editor at Wired magazine.

Some its partners have made private investments in PandoDaily, the tech news site, and in local media stars such as Michael Arrington and his CrunchFund.

It's paid off well. The firm's founders have been regularly featured in the New York Times and other leading media outlets such as CNN. It's making other VC firms jealous and I hear that other VC firms are scrambling to do the same and boost their time in the spotlight — rather than their startups.

Because it is all about the dealflow. Yes, you might turn down the next Google or Facebook — every VC firm has it's stories — but at least you had the dealflow to turn down. Being constantly in the media is key to getting to see the best of the startups and that means more chances at beating the S&P500.

Hiring good journalists could be a good strategy for VC firms to differentiate themselves from the herd but I doubt it will work. The journalists will be simple employees at the beck and call of masters that always know better.

Inside the mirrored bubble their reflection looks so very good — which is why we need an independent media — to point out any distorted fantasies.  It's good for all.

And there's no point in hiring journalists to produce puff pieces about the Princes of Sand Hill Road when there's plenty of PR people expert in kissing frogs.

- - -

Silicon Valley's dirty little secret: The 'Startup Boom' is a disguised jobs fair for big corporations | ZDNet

Superfund sites, Silicon Valley on Dotspotting

Alexis Madrigal, senior editor at The Atlantic, tried to find the center of Silicon Valley and compare it to what was there before. It starts off as a whimsical tour of Silicon Valley's strip malls, and strip clubs, but then turns up a nastier side of Silicon Valley.

Not Even Silicon Valley Escapes History - Alexis C. Madrigal - The Atlantic

The precise center of Silicon Valley when it was the most important manufacturing region on Earth is now home to Super Space Self Storage…

Like most self-storage locations, the building is blocky and windowless. It's nestled in-between a massive Lowe's and Cheetah's, "a small neighborhood strip club," according to a Google Plus review. As I snapped away, a single pedestrian walked by, an Asian man in khakis and a tucked-in, short-sleeved collared shirt. Traffic came and went: a Camry, a Jeep, a Subaru, big white van. Just another part of the great California carscape, it would seem.

After many paragraphs he rediscovers Silicon Valley's toxic legacy – a huge number of Superfund sites.

Planet Granite is located on a site contaminated by Philips Semiconductor. So is Lowe's. The empty octagonal glass building is a TRW Microwave Superfund site. I'd been walking on a paved-over environmental disaster zone, colonized by whoever wanted to benefit from lower leasing prices and a lack of NIMBY opponents.

Superfund is not a VC fund -- it's a designation for the worst polluted sites where a company has created massive amounts of contamination by highly toxic chemicals -- many proven carcinogenics – and requiring immediate cleanup under EPA laws. Santa Clara has more Superfund sites than any county in the US.

The cleanup continues, and it includes pumping molasses into the ground, so that bacteria will eat the pollutants along with the sweet stuff. 

I watched Charlie Rose interviewing Bill Gates, on "60 Minutes" on Sunday, about his charity work, his war on diseases, his nuclear reactor, and his low cost toilet.

It seemed that Charlie Rose forgot to ask Bill Gates an important question:

"Would you consider going back to Microsoft? You are doing a brilliant job giving away billions of dollars and saving the children of the world, do you think you could do a 'Steve Jobs' and save Microsoft too?" 

Could Bill Gates save $MSFT? It's fallen on hard times and needs help getting revenues back up. More importantly, it needs a new vision, badly. 

He has more than 1,000 people plus his wife now running the foundation. He showed Charlie Rose his giant bag of books and says he spends a lot of time reading, so he clearly has delegated a lot of work and cleared space in his life. Maybe he's planning a comeback?

It would be a feather in his cap, for sure. It would boost the stock price of Microsoft and his personal legacy.

Giving away billions of dollars is easy -- making billions of dollars is hard. Bill Gates knows it and he loves a challenge.

UPDATE: 

From Spark Capital VC Bijan Sabet - The trouble with Microsoft

I am uncomfortable to kick a company when it’s down but I gotta take a moment and talk about Microsoft. It’s because I like the company and I’m friends with many folks that work there.

Bill Gates needs to come back…

He can’t be happy watching his company fade away to irrelevance over the years…Microsoft needs to start building amazing products. The current leadership isn’t getting it done. 

Google, Facebook, Twitter, and others, will have to work with a smaller number of very large agencies who are increasingly united on what works for them. The shift in the scale of the advertising agencies is a huge shift in the balance of power.

Suzanne Vranica and Ruth Bender at the Wall Street Journal reported:

David Bank, an analyst with RBC Capital Markets, said, "The bigger an ad agency is, the more likely they are to have more access to consumer data and data around the pricing of online ad impressions," which helps them get the best price when buying from "digital behemoths like Google and Facebook."

It also helps them from bidding against each other in the auction process for buying advertising — which is increasingly the same as those used by Wall Street firms and hedge funds.

Jonathan Nelson, head of Omnicom's digital business group, told the Wall Street Journal:

"We are borrowing black-box trading techniques out of Wall Street; we are looking at genetic algorithms; we are looking at artificial intelligence; we are looking at predictive models; we are looking for anything that might give marketers an edge."

Google also has a lot of Big Data on individuals and advertising. But it doesn't know how effective its ads are compared with their cost to advertisers, and how much revenue those ads drive. But the large ad agencies know far better than Google, what works and what doesn't, and at what price.

They can provide their clients with far better metrics, far better account of dollars spent in converting sales, and far better ad buying strategies that improve conversions. 

WPP, currently the world's largest ad firm, will be able to pick up some new accounts because of the conflicts between clients who don't want to be represented by agencies with the same holding company as used by competitors.

And WPP will also benefit from the combined pressure two large agencies can bring to bear on Google and other large Silicon Valley media firms, because both giant firms share common interests.

As the forces of digital disruption tear into the big agencies they are fighting back. Scale counts, that's how Google succeeds, Facebook, Twitter, etc.

Leverage is even more effective than scale.

Analysts estimate that the merger of Omnicom and Publicis will control 20% of global ad spending, valued at about $100 billion a year.

In their relationship with their digital disruptors, the big agencies have woken up, they realize they hold the purse strings -- but they don't want to be stuck holding the handbag. 

Bloomberg reporters Kristen Schweizer and Marie Mawa: Publicis to Merge With Omnicom to Create Advertising Leader

Publicis Groupe SA (PUB) and Omnicom Group Inc. (OMC) agreed to merge in an all-stock transaction to create the world’s largest advertising company with $23 billion in revenue, toppling market leader WPP Plc. (WPP)

Shareholders of Paris-based Publicis and New York-based Omnicom will each hold about 50 percent of the new entity, Publicis Omnicom Group. Publicis Chief Executive Officer Maurice Levy and John Wren, his counterpart at Omnicom, will be co-CEOs as they unveiled the agreement at a press conference in Paris today. 

The deal is expected to close in the first quarter of 2014. The new company will topple leader WPP, which has a current market valuation of about $23.84 billion.

Hat tip Don Bulmer.

Update: Here is a report from Tanzina Veda and Liz Alderman at the New York Times:

The marriage, if it passes muster with antitrust regulators in the United States and Europe, and is given the blessing of the French government, would bring under one roof separate networks of ad agencies — including BBDO, TBWA and DDB under Omnicom, and Leo Burnett and Saatchi & Saatchi under Publicis.

Collectively, the conglomerates represent some of the world’s largest brands, including AT&T, Visa and Pepsi at Omnicom and McDonald’s, Coca-Cola and Walmart at Publicis.

Foremski's Take: Larger scale means more control over advertising pricing and media buys. Google is increasingly seen as a media company and therefore as a competitor to WPP, PUB, and OMC. They spend billions of dollars with Google. 

The shift in the scale of the advertising agencies is a huge shift in buying power. It will spell future problems for $GOOG and $FB. It will be interesting to see if they lobby against the merger's approval. They should but WPP shouldn't, and likely won't.

I've been thinking about a recent conversation with Matthew Greeley, CEO of BrightIdea. He had a great take on 3D printers. He pointed out that when the time between thinking something up, and then physically having it – shrinks towards nothing – as with future 3D printers, our reality becomes less distinguishable from living in a digital reality, the Singularity. 

He's right and it's an interesting idea to explore further. In a similar vein, products such as Google Glass offer a similar merging of the worlds. Former magazine publisher Fred Davis showed me his Google Glass and I appreciated the fact that he could near instantaneously looking something up online, or take a photo. The lag between thought and action is shrinking.

When Google Glass figures out what I need, and when I need it – because it knows my physical context there will be no lag time, I'll get exactly what I need when I need it. I won't even need to go through a process of "wanting" something, say my supermarket shopping list, because it'll know I'm in the supermarket and it won't let me pass by the tomatoes.

With no need to "want" I'll always get the digital things I need in the physical world. This experience of a "blended realty" won't be far off from a true experience of a digital Singularity. "Doe's it blend?" will have a whole new meaning when applied to digital gadgets and technologies.

I found an interview (above) of Reduce the Time Between Intention and Action. 

Here's a description:

We cover a variety of interesting topics such as: how he coined the term augmented reality (AR) and the definition thereof; what is wearable computing and how it is different from AR; Google Glass -- its major breakthroughs, popular apps, misconceptions and implications; Starner's other cutting-edge projects such as the passive haptic learning mobile music touch glove; his personal advice for young augmented reality designers and developers; Vernor Vinge's Rainbows End and the technological singularity…

"#SoMe" is video maker Loren Feldman's long, funny, witty, insightful, and beautifully melancholic movie, recalling a time when social media was in its infancy, barely out of diapers but growing fast with the promise of becoming a force of nature, transforming us and our institutions into a future meritocracy, a democracy of transparency and rainbows.

We're still waiting for the rainbows and the rest. And the melancholy ending of #SoMe is a metaphor for what we lost, and maybe never had.

When I left the Financial Times in 2004 to become a "journalist blogger," there was tremendous hope that the rise of blogging was nothing less than an uprising of an army of citizen journalists, sweeping away the media gatekeepers in newspapers and TV, who were more interested in protecting corporate interests and profits than looking out for the people.

Sadly, social media became a less interesting place, where people shared artificially blemished photos, and shared links to articles in mainstream publications. Instead of challenging the establishment, social media became a way of promoting and extending its reach.

Social media became Social Distribution of Mass Media (SODOMM).

Oh well. 

We lost the promise and excitement of those times in Silicon Valley and we lost Loren Feldman, too.

For a while, Loren and his sock puppet creations that mimicked local personalities, such as Mike Arrington, Robert Scoble, Loic LeMeur, Shel Israel, and others, charmed and entertained – until they didn't. Suddenly, he was seen as "anti-startup," far too critical, and not funny — his former friends turned on him. 

How bad can a sock puppet be? You would think that the skin of the above personalities would have been hardened into that of a rhino's after all the time they'd spent in full exposure to the UV glares of the trolls on the interwebs.

Yet who knew that those skins were delicate membranes, requiring constant soothing mists of baby lotion and "like" buttons? The rough texture of the sock puppet, with its always-on, built-in-New-York-City bullshit meter, was too much… and soon, Loren was gone.

I miss Loren, he was the jester in the court of Web 2.0.

- - -

#SoMe has some wonderful scenes. The last reel is extraordinary. The Shel puppets's attempts to find meaning in life following the death of his best friend are wonderful. The last call to his mother, (59 minute 40 mark) is incredibly touching and hilarious, the Jewish escort service, the swimming pool scene, the descent into drugs, and the final loss.

Great writing, great acting, and no stuffing –it's all hand-made.

(I had a small part in the movie, I guess you could say I had a hand in its making :)

More info here: 

#SoMe - The Movie

A movie about friendship in the age of Social Media.

http://lorenfeldman.com/some

Forbes obtained the blueprints (above) for the NSA's one million square foot data storage facility being build in Utah, and due to open in September.

Kashmir Hill reports that experts have said it's likely not as formidable as some prior estimates: Blueprints Of NSA's Ridiculously Expensive Data Center In Utah Suggest It Holds Less Info Than Thought - Forbes

Brewster Kahle is the engineering genius behind the Internet Archive, which is kind of like the NSA for the public Web… Kahle estimates that a space of that size could hold 10,000 racks of servers (assuming each rack takes up 10 square feet). “One of these racks cost about $100,000,” says Kahle. “So we are talking $1 billion in machines.”

… If Kahle’s estimations and assumptions are correct, the facility could hold up to 12,000 petabytes, or 12 exabytes – which is a lot of information(!) – but is not of the scale previously reported.

The data center’s capacity as calculated by Kahle would only allow the NSA to create Beyonce-style archives for the 13 million people living in the Los Angeles metro area.

Foremski's Take: Those numbers about LA are too close to be a coincidence. It's clear that NSA is targeting Hollywood and surrounding areas, which host large Gay and Iranian populations.

As a byproduct of its investigation, the NSA will be able to boast having the best library of high def digital movies.

Eric Schmidt, chairman of Google, recently made a flip comment in the UK in response to news that the tech giant paid just $16m in taxes on $18.5 billion in UK revenues.

Google's Eric Schmidt: change British law and we'd pay more tax.

He said he had a fiduciary duty to his shareholders to pay as little overseas tax as legally possible.

The British hate paying taxes but consider it a social duty for the upkeep of their communities – and everyone is expected to pitch in and pay their fair share. Not understanding the culture, Mr. Schmidt's Ayn Rand-ish comments seemed better suited for Silicon Valley, and did not sit well with the British public. Which now makes him fair game for British newspapers.

Some of the attention has been tame: Ed Hammond, at the Financial Times, wryly noted that Mr. Schmidt, "Is searching for a London mansion – a prospective 30m purchase that would land him a higher tax bill than the internet group has paid on average in the UK in recent years."

The tabloid newspaper, the Daily Mail, which runs the world's largest news site, went much further. It published a lengthy, raunchy, unflattering account of Mr. Schmidt's sex life, complete with photos of "his string of exotic lovers." 

Caroline Graham reported:

The unlikely sex symbol with thinning hair and pockmarked skin has embarked on a string of affairs with younger women, including a vivacious TV presenter who dubbed him ‘Dr Strangelove’, a leggy blonde public relations executive and a sexy Vietnamese concert pianist.

The headline pulled no punches:

The 5.4billion Google love rat: How boss, 58, of internet giant resisting online porn crackdown has a string of exotic lovers in his 'open marriage'... but DOESN'T want you to know about it

He is the billionaire Google boss under fire for encouraging the company to ‘avoid’ paying massive corporation tax in the UK and for not doing enough to protect children from internet porn.

The reporter Googled much of the information in the story from other newspapers and US web sites such as Gawker. But she did try to take the story further by contacting his wife about their open marriage, and others close to Mr. Schmidt.

It's clear that Google's use of controversial methods in minimizing corporate taxes is starting to backfire. The tax savings will have to be weighed against the costly damage to its brand, and not just in the UK. Not to mention the costs of the salacious attention to Mr. Schmidt's personal brand. 

UK tabloids might decide to focus on founders Larry Page and Sergey Brin, next. Maybe even send their paparazzi to their annual executive retreat at Burning Man, which would be a massive buzzkill.  

Google has to turn around public opinion quickly or the ongoing brand damage will become ever more costly. It has a fiduciary duty to its shareholders.

- - -

It's understandable why he wants a delete button... Google's Schmidt: The Internet needs a delete button | Internet & Media - CNET News

Eric Schmidt's animated personal life from Taiwan's NMA.TV.

Google clearly is not a proponent of work at home. With all the thousands of current and future Googlers local businesses should be happy -- but they aren't. 

Local restaurants are hurting badly reports Daniel Debolt at the Mountain View Voice: Can't compete with free eats: Facing closure, Shoreline restaurant owners try to negotiate with Google.

…thousands of employees who once ate lunch at their businesses -- employees of Siemens, Visa and Omnicell, among others, leave the area to make way for Google.

Local restaurants asked Google for help, suggested a voucher system to encourage Googlers to eat out. Google's response? A letter offering:

"… personalized training to get your restaurant set up with free Google products. These tools and tips can help make it easier for customers (including Googlers) to find your business online and make sure your business information is correct in search results."

Googlers don't drive so how will they get to the restaurants? They are dropped off each morning by massive busses. 

Todd Carlisle, Director of Staffing at Google recently said that perks such as free food are not necessary to recruit top talent. He said no one accepted a job offer at Google because of the work perks. So why not scrap the free food and other perks?

Economic decline

It's not only food, Google provides a host of other services for its staff, including on-site dental work. That's not going to help local business services. Googlers don't leave the mothership. 

Google's chief economist Hal Varian should look into this issue.

Twitter is similar. It moved into a very poor neighborhood in San Francisco and it provides free food to hundreds of its staff. "We're proud to be gentrifying the area," said Melissa Daimler, Head of Organizational Effectiveness and Learning at Twitter, at a Commonwealth Club event last week. 

Keeping Twitter workers inside the building doesn't do anything to help local businesses. (Maybe they are scared of all the street people?) Gentrifying a neighborhood usually means working to improve it. How is Twitter "gentrifying" anything? It demanded tax exceptions before agreeing to move in. It would rather be a burden on its neighbors than ease the burden of others. 

Tech bubble and babble

What are the benefits communities get from having tech companies in their midst? They are supposed to be a good thing and other countries want them but what would they get?

They literally live in their own bubble. They don't pay much in taxes and they are oblivious to the health of their neighborhoods. The public schools here are basket cases and our cities face the same problems as cities anywhere in the US. 

Silicon Valley says it is inventing the future -- yet its neighbors are suffering. You can't change the world if you can't change your local communities. Make change local then scale global. 

Amazon Web Services (AWS) recently cut prices for its dedicated instances, the basis for its Virtual Private Cloud offering. If you've been keeping track, this is its 37th price reduction.

The day AWS announced the news, the price of Rackspace's stock dropped as well. The smaller providers competing with AWS got one more tough call to make to their investors: when to drop their prices. (Rackspace did so on Wednesday.) Finally, Hewlett-Packard, IBM, Microsoft, and the other big guys also have to lower their quotes to be competitive with AWS.

He argues that lower prices are great for moving companies to cloud adoption but is AWS building a position of market dominance reminiscent of Microsoft?

The bad: That already-a-winner controls the market, and it can get lazy or stupid, hurting everyone. . .we have to remember we'll want other providers around should AWS ever go off track.

There's another aspect to Amazon: it has huge revenues and doesn't care if it makes a loss or a very small profit. 2012 revenues of $64 billion and it still managed to lose money. And importantly: its shareholders stick with it.

That's not true for Rackspace, Hewlett-Packard, IBM, Microsoft, etc. If they miss earnings then Wall Street punishes them. 

Who can win against a competitor that isn't all that concerned about making money?