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Say That Again

Say That Again

by Mike Masnick


Filed Under:
advertising, business models, economics, free, jon miller

Companies:
aol, news corp.



News Corp. Digital Boss Says Free Doesn't Work, Doesn't Bother To Explain How Pay Will Work

from the good-luck dept

A bunch of folks have been sending in various versions of the fact that News Corps. digital media boss Jon Miller apparently said that "free doesn't work," though that isn't quite what he actually said. He said that ad-supported content doesn't work. Now, it may be true that he's making the (false) assumption that the only way to make money off of free content is advertising, but that's not the same as saying "free" doesn't work. Either way, I'd argue he's wrong. Ad supported free content has been shown for ages to work in various different ways if you do it right. Perhaps the problem is that he's not doing it right. Either way, his suggestions for where News Corp. is heading don't sound very promising:

"It's pretty clear that there has to be some recognition of value," said Jon Miller.... Miller noted that Web companies will have to figure out a way to charge consumers for content they have grown accustomed to getting for free, noting that cable television service providers learned how to charge for television shows. Miller also said he expected to see the rise of Internet micro-payments.
If there's one nearly universal truth out there, it's that you can never go back to charging for content people were used to getting for free. You may be able to charge for new content or services, but never what they're already used to getting for free.

But the real root of the problem is Miller's opening statement. That there needs "to be some recognition of value." There is a recognition of value. Otherwise people wouldn't consume your content. But that doesn't mean they'll pay for it. Notice what he doesn't say. He never says that they need to give people a reason to buy. He's talking about putting up a paywall, not providing a reason to buy. That's destined to fail.

The reason that cable providers learned to charge for television shows was because there was a scarcity there... and even then there's a big push to break out of that and move to free television shows online as well. Trying to cram the internet into that dying model sounds like a terrible idea.

The most ironic thing about all of this is that, if anyone should understand all of this, it's Jon Miller. After all, he was the one who realized that AOL's walled gardens were killing the company, and put in place its strategy of opening up and going free. So now he wants to do the opposite for Fox Interactive? Good luck!

41 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
advertisements, email, lawsuits

Companies:
aol



AOL Sued For Putting Ads In Email

from the you've-got-lawsuits! dept

We Americans sure do love filing lawsuits for just about any reason. The latest is a guy who has sued AOL for putting text ads in his email messages, claiming that because he pays for his AOL account (that might be his first mistake), these ads are "fraud, unjust enrichment" and a violation of California business codes. He's trying to turn it into a class action lawsuit as well. Here's another suggestion: switch your email account. Hopefully this gets thrown out quickly.

57 Comments | Leave a Comment..

 
Failures

Failures

by Mike Masnick


Filed Under:
content, failures

Companies:
aol, google



AOL To Nuke Users' Content On Halloween

from the bye-bye dept

theodp writes "Blaming an unquantified decline in usage, AOL has notified users it's decided the best thing to do is delete all of their blogs and files on October 31st. Want to save that precious blog of yours? AOL not-so-helpfully suggests: 'The quickest and easiest way to do this is by copying and pasting your content into a word processing document such as Microsoft Word, Notepad or even into an email and mailing it back to yourself. If you have any images we suggest you save them separately by right clicking on the image, choosing "Save Picture As" and allocate the drive on your PC where you would like to save them to.' Gee, thanks. And don't get too smug, Google users - the search giant has put its users on notice that Google Page Creator will be a thing of the past by year-end, although details of the transition have yet to be provided."

These are just a few more in a long line of attempts by big companies to enable user generated content without much of a plan. With so much attention in the space, plenty of large companies (including Yahoo and Microsoft, in addition to Google and AOL mentioned here) rushed out various tools for users, but forgot to explain to them why they might want to use them. For the most part, they just launched them and figured users would show up willingly. It turns out that, even if you're a big company, it's not so easy to get user adoption if you don't offer anything particularly special compared to what's already out there.

11 Comments | Leave a Comment..

 
Politics

Politics

by Mike Masnick


Filed Under:
andrew cuomo, isp blocking, porn

Companies:
aol, at&t



Andrew Cuomo Gloats Over Getting AOL To Do What It Already Does

from the nice-work dept

We've already pointed out how ridiculous it is for NY Attorney General Andrew Cuomo to be pressuring ISPs to start blocking news groups and access to certain websites with "objectionable" content. Doing so actually makes the problems Cuomo is trying to fix worse. That's because he's not actually going after the source of the problem, meaning that it will continue to exist and just be harder for law enforcement officials to track down. This is pure political theater with Cuomo getting his name in the headlines for pretending to solve the problem, when all he's really done is get some ISPs to sweep the problem under the rug -- where it's only going to fester more.

Even more ridiculous, however, is the latest announcement from Cuomo, gloating over the fact that two more ISPs, AT&T and AOL will join with the ISPs from the original announcement and cut off access to newsgroups and objectionable websites. In the case of AOL, this is especially ridiculous since it's already done this for many years. Declan McCullagh even got AOL to admit: "We have not changed any policies or procedures as part of today's announcement."

Of course, "we're doing what we've always done" doesn't make good headlines for ambitious politicians.

8 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
patents, visual voicemail

Companies:
aol, apple, at&t, ebay, klausner, vonage



Apple, eBay And AT&T All Give In On Visual Voicemail Patents

from the sad-to-hear dept

The reason patent hoarding firms are often successful in getting companies to pay up has little to do with the quality of their patents, but the fact that fighting these lawsuits out in court is so very expensive and time consuming. It's often much easier and cheaper to just settle. Klausner Technologies has been very successful in getting companies to pay up for daring to use the concept of "visual voicemail." Klausner for years has basically claimed ownership to any sort of "visual" phone info, such as the time it sued AOL for daring to display caller ID info on your screen -- something that clearly no one would have ever thought of if not for Klausner's patent. AOL just settled rather than deal with the mess of fighting it. Ditto for a similar lawsuit against Vonage. The latest trio to settle up are Apple, eBay and AT&T. With Apple and AT&T the lawsuit was over the visual voicemail feature found on the iPhone -- guess all those patents Steve Jobs hyped up didn't protect it from patent lawsuits.

So now Klausner has even more money to go after others (Comcast and Cablevision are listed as targets) -- and it will use the fact that all these big name companies settled as "evidence" that its patents are valid, even if the only thing it really means is that companies did the math and realized it's cheaper to settle. Even the press is falling for this false claim. News.com notes that Apple, AT&T and eBay probably would have lost because AOL and Vonage licensed the patent. That's not at all true. Both companies settled because it was cheaper and easier, rather than due to any acknowledgment that the patents are valid. The fact that some firms settle have no bearing on whether or not other companies could have won in court.

23 Comments | Leave a Comment..

 
Scams

Scams

by Mike Masnick


Filed Under:
ads, dot com bubble, revenue, sec

Companies:
aol



SEC Sues Former AOL Execs For Ad Scam

from the the-case-that-keeps-on-giving dept

It's somewhat amazing that this case is still going on, but AOL's sneaky ad deals to boost its own revenue are still the target of lawsuits. Back in 2006, we noted that federal prosecutors had decided that it wasn't worth prosecuting the executives involved. However, it appears that the SEC feels differently. It's now sued eight former AOL execs for taking part in the scam -- though, four of them have already settled. If you don't recall, AOL had this nice little trick where it would "swap" ads with other sites, where no money changed hands, but both sides would record revenue. That let them boost revenue (up to a billion dollars for AOL) without any actual revenue coming in. It's a nice little trick... and it's also illegal. Though, it all took place in the 2000/2001 timeframe, so it's not clear why it took the SEC seven years to do something about it.

3 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
ascap, copyright, rate court, royalties, songwriters

Companies:
aol, ascap, realnetworks, yahoo



Do Songwriters Deserve A Cut Of Yahoo Search Revenue?

from the highway-robbery dept

You may recall a couple weeks ago that a judge set new rates to be paid to ASCAP by AOL, Yahoo and RealNetworks. ASCAP represents the songwriters, and those three companies and ASCAP could not agree on licensing terms for music streamed online. While ASCAP ran around touting the (somewhat made up) $100 million owed, there was plenty more in the decision that deserved discussion. At last week's San Francisco Music Tech Summit, I got into an interesting discussion with a few folks who had read through the 153 page decision thoroughly, and noticed a variety of problems. You can read the whole decision (pdf) yourself, if you want, but there are a few key points that are extremely disturbing, and could spell a lot of trouble. Basically, there's a meaningless "formula" that's applied to a very large segment of these companies' revenue, taking a huge chunk of money that seems beyond reasonable.

The judge seems to consider what AOL and Yahoo do somewhat equivalent to the way TV stations use music, and refers back to the rate agreements set up with various TV networks, despite vast differences in the way these websites operate. It suggests a misunderstanding between the difference between broadcast and interactive content. But what's really troublesome, is when you look at the overall formula for how the royalties are set. It clearly overvalues the music, and undervalues just about every other part of these three companies' businesses. The formula is, basically, the total revenue made by any business unit (minus a few specific costs) multiplied by a bizarre fraction (called the music-adjustment fraction): total number of hours that music is streamed, divided by total number of hours used on the website. Then, you take the result of that and multiply it by the "rate fee" of 2.5%.

This formula is applied to revenue coming in from any business unit that is considered to have used music. This includes things like Yahoo's search engine. That's because Yahoo (smartly, from a consumer perspective) allowed users who searched on a musician or song to stream that song directly from the search results. But, in making that so user friendly, the company has now opened up its cash cow search revenue to this formula, despite the fact that it's incredibly difficult to think that music has anything to do with nearly all of the revenue Yahoo makes from this site. Similarly, RealNetworks has almost its entire consumer division revenue included in this formula, despite the fact that it makes a ton of revenue from its gaming business. Wondering why RealNetworks decided to spin off the gaming business a week after this decision was announced? Maybe because a rate court judge just chopped off a huge chunk of revenue from it and handed it over to songwriters who have nothing to do with these games.

As for the formula itself, it makes little sense. The "music-adjustment fraction" is a totally meaningless number. The number of hours music is streamed is hardly an indicator of how much of a site's revenue is actually music based. If I have music streaming in the background all day, but am still using the site for other purposes, it seems ridiculous to include all of that as music-based revenue. The denominator of the fraction is "total number of hours on the website" which is also a totally meaningless and unrelated number. Even worse, since the court notes that none of these sites actually track that information, the judge ruled that everyone should just use Comscore's numbers instead -- the same Comscore that most people admit is not particularly accurate. So, basically, you're dividing a meaningless number by an even more meaningless number and multiplying it by the total revenue of units who often have very little to do with music, and then taking 2.5% of that. If anything, this ruling should make any site think twice before including any streaming audio from any ASCAP-affiliated songwriters.

35 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
ascap, compulsory licensing, royalties, songwriters

Companies:
aol, realnetworks, yahoo



District Court Tells Yahoo, AOL To Pay Millions To Songwriters

from the watch-for-the-appeal dept

In the latest of many arguments about the various rights and payments companies need to pay for streaming music online, a district court has ruled that AOL, Yahoo and RealNetworks most likely owe millions to ASCAP for songs that they streamed to users between 2002 and today (and continuing on to 2009). This has nothing to do with the record labels -- ASCAP represents the songwriters -- but is yet another extraneous "license" where the terms are hardly clear, but basically serve to make it more difficult for anyone to play music. It was never in question that these sites would need to pay some kind of royalty -- the question was how much. The odd part of this ruling, though, is that the rate set by the judge is likely to be higher than the rate that traditional terrestrial radio pays. If there ever were a formula for making companies less interested in streaming music online -- this might be it. Of course, it's quite likely that this ruling will be appealed, so it's far from over.

40 Comments | Leave a Comment..

 
Failures

Failures

by Mike Masnick


Filed Under:
internet access, mergers, synergies

Companies:
aol, time warner, time warner cable



So Much For Those Synergies Between Time Warner Cable And AOL, Huh?

from the nice-work,-guys dept

While the AOL/Time Warner merger has gone down in the record books as one of the worst mergers ever, I still contend that it could have gone much better if stronger management had been in place. Most specifically, there were obvious synergies between aspects of Time Warner and AOL -- but petty squabbles and turf wars kept most of those synergies from being realized. The most glaring and obvious of these was Time Warner Cable (or RoadRunner) and AOL. Both offered internet access, and it seemed perfectly reasonable to merge the two properties, and use RoadRunner to upgrade all those dialup users onto broadband, and then keep them engaged with all the Time Warner content. Of course, the Time Warner content people freaked out about content on the internet of course, so that would never have worked -- but the failure to link up RoadRunner and AOL never made any sense.

In fact, the two services began aggressively competing with each other. Then, after three years, someone finally realized that maybe the two should work together and made an announcement saying so. Of course... an announcement without action is worthless. So, another year goes by and another exec trots out with an announcement that the two divisions will work closely again. And again... nothing. Give it almost another year... and yet another announcement. Sense a pattern? In the end, the two groups never actually did combine, and with today's announcement that Time Warner is selling off the cable business entirely, it just puts an exclamation point on all these years of keeping the two businesses separate. Of course, in selling off Time Warner Cable, it will also likely lead to speculation that the company will sell off AOL (or merge it with Yahoo -- remember that plan?) as well -- though, as an entirely separate entity.

While I tend to be skeptical of mergers based on vague "synergies," it's still rather amazing that in all this time, no one at Time Warner ever got these two divisions together -- and now the company may end up selling each off separately. In the end, this was a deal that only worked out for the investment bankers. Remember, they love to convince companies to consolidate one year and diversify the next -- because they make money on both transactions.

1 Comments | Leave a Comment..

 
Rumors, Conspiracies, etc.

Rumors, Conspiracies, etc.

by Mike Masnick


Filed Under:
big players, mergers, rumors

Companies:
aol, google, microsoft, news corp, time warner, yahoo



Can Yahoo, Microsoft, Google, AOL And News Corp Sit Down And Just Divvy Up The Internet Already?

from the thanks dept

Well, well, well. So, apparently, the earlier news about Yahoo using Google ads was just the appetizer to the more meaty story, which is apparently... well... that just about all the big name internet players are going to do a bit of horse trading to figure out who owns who in the end. There seems to be a lot of speculating in the WSJ article, but apparently step one is that Yahoo and AOL might merge their internet properties (something that's been rumored before). That pairing would likely lead to Google taking over the ads (it already handles the ads for AOL and owns a stake of AOL). At the same time, the article reports that News Corp., once rumored to be a suitor of Yahoo until it vehemently denied the story, may actually be teaming up with Microsoft to make a joint bid for Yahoo. Who else did we leave out? Nobody?

Anyway, I stand my by original assessment of a potential AOL-Yahoo merger ("like trying to keep a wild animal from eating you by covering yourself with feces"), but honestly, this gathering of the big players should actually be seen as a huge opportunity for everyone else. Basically, the big boys are about to make a big mess, and there will be tremendous opportunities that spill out while they try to figure out what went wrong. People are just starting to realize that you don't innovate by building up huge mega-corporations -- you do it by being small and nimble. These megamergers are going in the wrong direction and will open up huge opportunities for small, quick firms that think big.

19 Comments | Leave a Comment..

 
Overhype

Overhype

by IC Expert,
Timothy Lee


Filed Under:
control, net neutrality, networks

Companies:
aol, comcast, meebo



Ownership Doesn't Always Mean Control

from the network-neutrality dept

In the first post in my network neutrality series, I discussed the fear that without network neutrality rules, major telecom companies would engage in censorship of their customers' communications. I pointed out that if the government of Iran has trouble restricting the flow of information to its citizens, it's hard to imagine a company like AT&T or Verizon being able to do so. Today I'm going to expand on this point by looking at the more general assumption that the owner of a communications network has fine-grained control over the kind of traffic that gets transmitted across the wire. It's common for people on both sides of the debate to talk about network owners blocking, filtering, promoting, speeding up, or slowing down various content and applications. It's almost always taken for granted that if you own a pipe, it's straightforward to decide how that pipe will be used. I don't think that's as obvious as it might seem at first glance.

This is illustrated by a story that came out a couple of weeks ago: AOL is opening its IM network to third-party developers. This seems like a smart move, although as Matt Asay argues, they could have gone a lot further than they actually did. What's really interesting about this development is the back story. In reality, AOL's instant messaging network has been a de facto open network for years, despite the best efforts of AOL. During the first half of this decade, AOL became embroiled in "an elaborate game of cat and mouse" with third-party clients like Trillian. AOL would make changes to its own software designed to shut third-party clients out of their networks. The other clients would respond within hours with patches that restored compatibility. This went on for months, and Microsoft and Yahoo! tried similar tactics. Ultimately, all three companies gave up. The constant upgrades were annoying their own users and it became increasingly clear that the third party developers weren't going to back down.

This isn't technically a network neutrality question because AOL's IM "network" isn't a network in the traditional computer science sense. But I think the story has some important lessons for the network neutrality debate. One is that we should be skeptical of claims that ownership of physical infrastructure gives companies unlimited control over how that infrastructure will be used by users. One might have thought that AOL's ownership of its IM servers would give it the ability to lock out third-party clients it didn't approve of, but that's not how things worked out. Third party clients found it relatively easy to evade AOL's efforts to lock them out. And AOL was constrained in its options because it needed to preserve a reasonable level of service for its official client.

Second, the story suggests that not only can users evade blocks by network owners, but in many cases, the evasion techniques can be downright user-friendly. I was using a Mac OS X client called Fire at the time, and all I had to do to restore connectivity after AOL made one of these changes was download an updater and install it. I assume the Trillian experience was similar. While there are certainly some people who don't know how to download and install an update, there are millions of people who do, and these people served as the customer base for the third-party client.

Finally, it's worth noting how the third-party clients were able to respond so quickly when one of the IM networks tried to shut them out. Over time, the various third-party clients began sharing the libraries they were using to achieve interoperability with various IM networks. That meant that when AOL made a change to its protocol, just one person needed to make the necessary changes to the shared library, which was then quickly integrated into all the other clients. This allow them to respond much more quickly than if each client had to develop its own workarounds, and it was especially helpful for niche clients that might otherwise have lacked the manpower to keep up with AOL's changes.

Of course, it would be over-stating things to say that this proves that a network provider could never block applications or content it didn't approve of. But I think it does suggest that network providers would find content or application blocking more challenging than is commonly supposed. A broadband provider that began filtering its customers' traffic would get locked into a cat-and-mouse game with its customers, with the customers developing new ways to evade the filters and the network owners beefing up its filtering software. This would, at a minimum, be a headache for the firm's engineers and a source of bad publicity. At worst, it might begin to cut into the network owner's bottom line, because efforts to block certain applications would degrade the quality of Internet access in general and spark cancellations.

Indeed, we're already starting to see hints of the kinds of difficulties ISPs will face with Comcast's war against BitTorrent. One of the major results of Comcast's policy has been to accelerate the adoption of clients with "header encryption" functionality. As a result, the techniques Comcast is currently using to control BitTorrent use are likely to get less and less effective over time, and Comcast will have to spend still more money developing more sophisticated filtering software. It's unlikely that either side will "win" this cat-and-mouse game. But at some point, Comcast may decide it's more trouble than it's worth.


Other posts in this series:

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

10 Comments | Leave a Comment..

 
Deals

Deals

by Mike Masnick


Filed Under:
acquisitions, instant messaging, social networks

Companies:
aol, bebo, time warner



AOL Realizes Way Too Late That AIM Should Have Been A Social Network

from the catching-up-four-years-late dept

As social networks like Friendster and then MySpace first came to prominence in the 2003/2004 time frame, we wondered why the big players (AOL/Yahoo/Microsoft) in the instant messaging space didn't recognize that those instant messaging networks were better social networks than the networks. Whereas most social networks had little to do once you connected, most people used instant messaging to communicate all the time. Those instant messaging systems already knew who all your "friends" were, and it shouldn't be that hard to then take that information and convert it into a more standard social network, with instant messaging features built right in. Yet, nothing really happened. Yahoo and Microsoft made some half-hearted attempts at social networking with little success, keeping them mostly separate from their vibrant instant messaging networks. Now, it appears that AOL has finally woken up and realized this possibility, but since it's so late to the game, it's decided to just buy Bebo for $850 million and integrate it with AIM.

While $850 million is less than was earlier rumored, and suggests that Bebo's growth rate isn't as strong as it would like, the site does have plenty of users (mostly in the UK). When I was over in the UK a few months ago, everyone was talking about Bebo the way people talk about Facebook here. That said, linking AIM to Bebo in a way that gets people interested may be difficult. There's certainly a bit of social network fatigue going on these days, and it seems as though people are beginning to wonder why they should join yet another social network unless it really provides something different and compelling than the last social network. Yes, AOL should be turning AIM into a social network, but they should have done it four years ago when it still made sense. As it stands, this seems likely to go nowhere fast -- especially with the cloud over AOL's future strategy.

8 Comments | Leave a Comment..

 
Rumors, Conspiracies, etc.

Rumors, Conspiracies, etc.

by Mike Masnick


Filed Under:
desperation, mergers

Companies:
aol, google, microsoft, time warner, yahoo



Yahoo Now Thinks AOL Will Be A Savior?

from the seriously? dept

Over the weekend, reports quickly came out that Yahoo's board had apparently decided to reject Microsoft's takeover bid, which wasn't too surprising, given what the company had been hinting at all week. There was plenty of talk about looking for other suitors, but one by one, the few obvious candidates all backed away. Then, late Sunday a new rumor arose: Yahoo! might try to keep Microsoft away by merging with AOL. That seems sort of like trying to keep a wild animal from eating you by covering yourself with feces. It might make awful sense for about a second, but it's just a bad, bad idea. First, it's unlikely to work -- and, second, it's just pathetic. As much as it seemed like Microsoft merging its web operations with Yahoo would be two also-rans pretending a merger would somehow make them into a web operation people cared about, merging with AOL would be even worse. Of course, the folks over at Google must be laughing hysterically at the possibility. Not only would an AOL/Yahoo merger appear to be less of a competitive worry than a Yahoo/Microsoft merger, Google might actually make out quite well in the deal, since it owns a piece of AOL. So, in the unlikely chance that Yahoo merges with AOL and fends off Microsoft, Google would cash out of AOL, watch Yahoo struggle to merge with AOL and see Microsoft left without a big internet partner. That has to be Google's dream scenario.

33 Comments | Leave a Comment..

 
Deals

Deals

by Mike Masnick


Filed Under:
broadband, mergers, portals, spinoff, strategy

Companies:
aol, time warner



Time Warner Takes Steps To Finally Spin Off AOL

from the a-bit-late dept

As part of Time Warner's earnings conference call, the company noted that it will be splitting AOL into two parts: cutting the rapidly shrinking access subscriber business from the content/advertising business. Many folks are assuming this is in preparation to finally sell AOL off. Of course, like so much that AOL/Time Warner has done over the years, this is too little too late. Remember the happy days in the 90's when AOL would come out with a press release announcing every million new subscribers? Funny that they don't do that for every million lost subscribers... However, it's been those subscribers that have hindered AOL's ability to adjust. For years, they were afraid to do too much with free content to lose that subscription base, even as that subscription base was figuring out that they could already go elsewhere and get the same content for free (and buy access for much less). So, when the company finally adopted a free model, it was too late to simply throw the doors open. People just weren't that interested. The same is true now. Time Warner had a chance to salvage AOL years back, if they had aggressively tied it to a broadband strategy rather than competing with itself and giving lip service to a more complete strategy which never actually seemed to happen. Finally separating out the dwindling access business is hardly going to catapult the rest of the business forward, as most people have simply moved on to other sources. While the sheer size of AOL's traffic can hold it up for a while (and may make it an attractive buyout for someone looking only to buy some traffic), it's lack of innovation and growth have pretty much doomed it to also-ran status.

13 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
patents, solitaire

Companies:
aol, cnet, digg, google, ign, ny times, yahoo, youtube



Digg And Others Sued For Infringing Infamous Computer Solitaire Patent

from the aren't-patents-great? dept

The Patent Troll Tracker is back from holiday vacation and he's got quite a post listing out a bunch of interesting (i.e., depressing) lawsuits involving questionable patents and even more questionable patent holders. In one case, the Troll Tracker even manages to track down a bizarre set of circumstances making it look like an associate at a well known IP law firm spent millions of dollars scooping up a bunch of patents for himself.

However, perhaps the most interesting is the third case discussed by the Troll Tracker. It involves the somewhat infamous patents of Sheldon Goldberg, which got plenty of attention back in 2004 when he started claiming that computer solitaire was covered by his patents. The two key patents are for a network gaming system and a method for playing games on a network.

It appears that after years of threats about these patents, Goldberg has now actually started filing lawsuits -- and some of the targets are a bit surprising. The one that stood out was Digg, as you don't often see companies like Digg involved in patent infringement suits (and, as far as I can tell, the news that Digg was being sued for patent infringement hasn't been mentioned anywhere else). Others sued over those same patents include some of the "usual targets" such as Google, AOL and Yahoo. However, it also includes a variety of media properties both big and small -- including the NY Times, The Washington Post, CNET, Tribune Interactive and (another slightly odd one) eBaum's World. While the patents themselves seem quite questionable, it's even harder to understand how these sites could possibly be violating those patents. Either way, perhaps the fact that Digg is now on the receiving end of a silly patent infringement lawsuit, it'll get more of the Digg crowd even more interested in the massive problems with the patent system. Update: Since a few people asked, the story is on Digg itself now.

50 Comments | Leave a Comment..

 
Failures

Failures

by Mike Masnick


Filed Under:
browser, netscape

Companies:
aol



Wait... AOL Was Still Making A Netscape Browser?

from the those-7-users-must-be-upset dept

While AOL's purchase of Time Warner is often considered one of the biggest M&A blunders of all time (and I'd still argue that the problem was in the execution, not the concept), it's at least worth pointing out that prior to that acquisition, AOL made another huge blunder in purchasing Netscape for over $4 billion dollars in 1998, just as Microsoft's Internet Explorer was finally taking over Netscape's marketshare (AOL apparently believes in the buy high, sell low philosophy). This seemed odd, even at the time, as AOL had long been using a modified version of Microsoft's Internet Explorer as its browser of choice (even back when IE was awful compared to Netscape). Even after the acquisition, AOL continued to use IE as its browser choice, and about the only thing that Netscape was good for was allowing AOL to sue Microsoft for antitrust violations. Microsoft eventually paid $750 million to AOL to settle the charges, leading many to assume that AOL was then going to kill off Netscape. While Mozilla (which was effectively spun out of Netscape) continued to gain traction, it made little sense for AOL to keep offering a "Netscape" browser, even if built on Mozilla code. Yet, in 2004 we were surprised to hear that AOL was still releasing a new Netscape browser. Since then, we'd pretty much forgotten that AOL actually offered Netscape as a browser and had assumed that it had been killed off. While that may have been effectively true, the reality was that the company was still working on a Netscape browser... until now. AOL has officially announced that it will be ending support for the Netscape browser for the six or seven people who still use it. While it won't impact very many people, it certainly is an "end of an era" type moment. While there may be some post mortems to suggest that Microsoft "killed" Netscape, the reality is that bad strategic decisions at Netscape (wanting to charge for the browser, getting distracted with other projects, bloat, bloat, bloat) were more to blame for its real demise a decade ago.

31 Comments | Leave a Comment..

 
News You Could Do Without

News You Could Do Without

by Mike Masnick


Filed Under:
advertising, business models, free

Companies:
aol, time warner



AOL Learns That You Can't Just Go 'Free, With Ads.' You Need To Give People Reasons To Visit

from the business-model-101 dept

It's been a little over a year since AOL made the big decision to go free. It was about the only thing the company could do at the time. It's subscriptions were dropping rapidly. It held little to differentiate itself from the many free services out there. It had failed to build a real broadband strategy for years. The problem, though, was that the decision to go free was made way too late and, most importantly, without much additional strategy behind it. It seemed like the strategy was basically just "if we go free, we'll sell ads." They left out the important middle step though: the company needed to actually give people a reason to visit and give advertisers a reason to buy ads. Without that step, it really isn't surprising that the company is realizing its "free, with ads" strategy isn't working as well as planned. On the same day that AOL officially bought another online ad company, it was revealed that the growth in ad revenue has been slowing, and it lost a big advertising partner. This is a good reminder, though, for other companies out there who are trying to figure out how to embrace "free" as a part of their business model. You can't really neglect the rest of your business model.

10 Comments | Leave a Comment..

 
News You Could Do Without

News You Could Do Without

by Mike Masnick


Filed Under:
advertising, behavioral targeting, do not track

Companies:
aol



Do Not Track List Won't Make Advertisers Happy

from the resistance-is-futile dept

Just as Facebook is looking to launch its own behavioral advertising network, AOL and some privacy groups are pitching the idea of a "Do Not Track" list that would effectively let people opt-out of behavioral advertising tracking. It's a challenging issue to deal with. Advertisers, obviously, want more data and information about who is viewing their ads, as well as having the ability to better target those ads. At the same time, the theory is that people are much more receptive to highly targeted, relevant ads. The problem, though, is that many internet surfers have no idea how much information they're handing over and how it's being used (and many would argue that the more relevant ads aren't actually appearing). If they knew how much data was being collected, however, many would probably be quite upset. The purpose of the Do Not Track list would be to give them back some control. Advertisers, of course, won't like this idea at all, as they often feel it's their divine right to have as much information as possible. They'll also complain that without this data, advertisements will actually be less relevant and less useful -- which might actually be true. In the end, though, it seems like while a "Do Not Track" may get lots of publicity, but how many people will actually sign up? Certainly I'd expect techies who are more concerned about this kind of thing to sign up -- but the average consumer? Unlike the "Do Not Call" list, most people don't even realize that they're being tracked, and so are much less likely to have the incentive to opt out of being tracked.

40 Comments | Leave a Comment..

 
Failures

Failures

by IC Expert,
Timothy Lee


Filed Under:
business models, media, technology

Companies:
aol



AOL Struggling With Life Outside The Walled Garden

from the what-business-are-you-in? dept

On Tuesday morning 1200 AOL employees received their severance packages as the company continues trying to find its footing outside of the walled garden. Evidently, the transition to an advertising-supported web portal isn't going as well as they hoped. A memo from AOL CEO Randy Falco suggests a couple of the reasons they might be having problems. First, it's not clear whether they consider themselves fundamentally a technology company or a media company. Some of their products—especially email and MapQuest—face technology-focused competitors like Google and Yahoo who have been rapidly improving their products' capabilities. Others, such as "Food" and "Money & Finance," are competing more with traditional media outlets like CNN or the New York Times. The two types of companies tend to have different corporate cultures and pursue different business strategies, so being evenly split between the two might not be such a good strategy. Falco's memo also focuses a lot on AOL's advertising platform, but that seems like putting the cart before the horse; if you don't have a compelling product and growing traffic numbers, the best advertising platform in the world won't help. AOL may also be handicapped by the perception by many (including me) that AOL is the Internet for beginners. That was a great perception to cultivate when a lot of people were using the Internet for the first time, but it's not so great once most Internet users start to feel comfortable with the Internet and want to take the training wheels off. I have a feeling that this week's layoffs won't be the last of the painful changes at AOL.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

7 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
business models, patents

Companies:
aol, google, microsoft, yahoo



Google, AOL, Yahoo And Microsoft All Sued Over Excessively Broad Auction Patent

from the innovation-at-work dept

In the latest silly patent lawsuit to be filed in Marshall, Texas a company holding a patent on using gaming to determine the final price of an auction system. The company is now claiming that Google, AOL, Yahoo and Microsoft are all violating the patent with their ad auction models. The interesting thing here is that the patent is clearly talking about a very different system. It describes a process of setting a range for a price, and then allowing some sort of game ("a video game, electronic board game, sports bet, card game") to determine what the actual final price is within that range. Of course, that doesn't sound at all like what the various companies listed here are doing. However, that's where whoever drafted the patent earned his or her money. Rather than limiting it to games like those listed, the following phrase was also added: "or any other activity." This is right out of the standard patent attorney's playbook for creating super broad patents -- though it goes against the entire purpose of the patent system. None of the companies involved built their businesses based on this patent. They certainly didn't get the idea for an ad auction based on this patent. Instead, this is just some company taking an overly broad patent and trying to apply it to big, rich companies, in the hopes of scoring some kind of cash settlement. That's not what the patent system is designed to do.

11 Comments | Leave a Comment..

 

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