The 3 Biggest Stories in Social Media This Morning

Welcome to this morning’s edition of “First To Know,” a series in which we keep you in the know on what’s happening in the digital world. We’re keeping our eyes on three particular stories of interest today.

Facebook Halts Phone & Address Sharing (For Now)

Following widespread displeasure over its recent decision to allow application developers to request access to a user’s address and mobile phone number, Facebook has decided to temporarily disable this feature until it implements changes that will help users make better informed decisions about their privacy.

Facebook Generated $1.86B in Ad Revenue in 2010

According to recently released figures from eMarketer, Facebook‘s revenue for advertising alone — which excludes revenue for virtual currencies and other sources — came to an impressive $1.86 billion in 2010.

Cheezburger Network Scores $30 Million in Funding

The Cheezburger Network, an Internet publisher known for popular memes like LOLcats and FAILS, has just scored a $30 million Series A led by Foundry Group, with participation from Madrona Venture Group, Avalon Ventures and SoftBank Capital.

Further News

* The World-Wide Web Consortium (W3C) has unveiled a new logo for HTML5.
* Mysterious UK guerilla artist Banksy is about to be unceremoniously identified to the highest bidder in an eBay auction.
* A new version of Instagram, featuring two new filters and the return of an old one, has hit the iOS App Store
* HP is bringing a new kind of comedy show to YouTubein which actors from the Upright Citizens Bridgade Theater will take skit ideas from viewers and perform them live on Google’s video-sharing site.

Not making money as a YouTube partner? Here are some tips from YouTube itself

YouTube hosted a live event today to help partners get the most out of their YouTube revenue.

Phil Farhi of YouTube, began the event by telling partners about a few of the new initiatives that YouTube is working on, to help make partners as successful as possible. He started by bringing us through the history of advertising on YouTube.

Phil mentioned that just 3 short years ago, YouTube began using in-video and overlay ads, the first step in monetizing videos. And following the first format of ads, YouTube brought Ad Sense ads, enabling smaller advertisers/customers to get on board, allowing YouTube to capture a broader range of advertisers.

Next came in-Stream Ads (mid and pre-roll ads), a format that was launched about two years ago. YouTube said this has been popular because advertisers will pay more for ads that are similar to the format on TV. At almost the same time, promoted ads were introduced and it was proven to drive traffic to videos that were featured using the ‘promoted video’ format.

A few months ago, a new ad format for partners called TrueView was rolled-out. This format lets users watching a video skip the ad after five seconds. An ad format that YouTube says is less interruptive and doesn’t risk annoying your audience because it gives them the chance to hit stop.

Phil asked the question “ What makes a movie a successful?” Using the movie industry as an analogy, he went on to explain that there are many factors that come into play that make up the overall picture; ticket prices, seats filled, distribution etc. It’s the same with YouTube as he pointed out. Partners shouldn’t look at one aspect such as RPM (revenue per thousand page views) or CPM (cost per thousand, as an example $1 or $5 per thousand views), they should look at everything including geography.

A few points to take away

Good partners focus on overall revenue and aren’t fixated on “ticket price”. They also work hard at building a strong audience as well as trying to increase views. Good partners look at geography, RPM and CPM.

Bad partners look at the wrong metrics and don’t build up their audience. Partners who only focus on RPM might think everything is fine however, it’s critical that users concentrate on CPM as well and continue to build audience loyalty.

YouTube says advertisers are creating content that competes with user content, and millions of users are watching advertisements on the site. Think about the popularity of Superbowl ads.

Keep experimenting! Compare ad formats by type and geography and play around with different scenarios. Try enabling ads after your loyal audience has seen them or try it in reverse. Play with different recipes and see what happens when ad formats are enabled/disabled. There is a wide variety of ways to make revenue.

Take a good look at revenue break downs and compare formats; True View, in-Stream, etc.

Better reporting for ad formats coming soon. YouTube admits that partners don’t have the best reporting feature right now.

YouTube will be adding an option for partners to opt-in to just TrueView Ads without needing to be signed up with other formats.

Ensure the metadata on videos have the correct information and enough words to help YouTube’s algorithm bring the best targeted ads to your videos.

Facebook Apps’ New Access to Contact Information

On Friday, Facebook announced that it will allow application developers to request access to a user’s address and mobile phone number. Although the company is making strides to point out that the request is optional and must be explicitly granted by the user, the feature is already drawing criticism from privacy advocates and security experts.

Historically, Facebook applications have been able to request certain bits of information about a user. This information can include basic tidbits, like a person’s name, gender, list of friends and other publicly viewable information. More recently, Facebook has also allowed applications to request access to a user’s e-mail address. An application may then use this data to better serve the user.

On its developer blog, Facebook stresses that access to this data is governed by Facebook’s Platform Policies. These policies are supposed to ensure that user data is only used for legitimate purposes. Of course, that’s easier said than done.

As Graham Cluley, senior technology consultant at Sophos points out, some of the hysteria surrounding this new feature is perhaps being blown out of proportion. “This change isn’t as drastic as it might first appear, because users will need to give permission for third-party Facebook applications to access this data,” he says.

That doesn’t mean that the feature is without its foibles. Cluely continues, “It still sounds like a recipe for disaster, given the prevalence of rogue scam applications already on Facebook — all of which benefit from apparently being blessed by the Facebook name and brand.”

In fact, our real problem with the new feature is that it can be used by developers regardless of their intentions. Rogue Facebook apps continue to spread like wildfire and now those apps will potentially have access to even more user information.

Clueley makes the suggestion that only approved developers should have access to information like phone numbers and addresses. We agree. While we’re sure there are legitimate use cases for giving an application access to such information (though we can’t think of that many offhand), if Facebook is really concerned about its users privacy, it should impose stricter standards on app developers before giving them keys to the kingdom.

Furthermore, the notion that the feature is opt-in seems disingenuous. This might be accurate, but in most scenarios, requests for this kind of information are going to be made during the initial sign-up/install process. In other words, users are forced (and usually programmed) to allow the permissions request if an app is to be used. At the very least, for apps that don’t absolutely rely on needing a telephone number or address, there should be an option to allow partial access to public information, while still keeping phone numbers and addresses private.

The comments on the Facebook Developers blog entry are overwhelmingly negative — and many of those negative responses are from developers. Many are advocating that users remove their phone number and address data from Facebook.

That’s not a bad idea — although it seems to be an extreme response to a problem that realistically shouldn’t exist in the first place. If Facebook would take a harder stance on rogue applications, allow more granular permission types and do more to ensure that developers actually respect their platform policies, maybe users would feel less squeamish about offering up their personal information to the service.

Morning Tech Wrap: Groupon, Wikipedia, Facebook

Groupon CEO Andrew Mason has made a grovelling apology to Japanese customers this morning following a New Year’s deal that went wrong:



The subtitled message uploaded to YouTube on Monday has Mason saying that Groupon “really messed up” after it offered a deal for delivering “osechi,” a traditional New Year’s meal. Many of the 500 osechi sets that were sold arrived late while others were in “terrible condition,” Mason said.

It’s not all bad news in Asia for the young company, though. Groupon is meanwhile talks to partner with Chinese Internet giant Tencent, All Things Digital reports, citing several sources with knowledge of the situation. It is likely to involve some sort of co-branded joint venture effort between the two, the report adds. This is a key strategic move for Groupon, given the hard-to-penetrate-if-you’re-not-Chinese, Chinese market.


Wikipedia, the online encyclopaedia that’s helped kids all over the world cut and paste their homework, turned 10 on Saturday. Founded by Ayn Rand devotees Jimmy Wales and Larry Sanger, the collaborative repository of information is the fifth most visited web site in the world. But will it last another ten years? The Economist recently said that Wikipedia’s English-language contributors dropped from 54,000 in March 2007 to 35,000 last September. But Todd Wasserman at Mashable points out that may just be because as the site gets more comprehensive, fewer entries need to be written. “I have no desire to go back to the days of printed Funk & Wagnalls,” he adds.

Facebook has announced that developers of its apps can now gather the personal contact information of their users, including home addresses and phone numbers. The news has left some wary of the potential privacy issues. Graham Cluley at Naked Security says he realises that Facebook users will only have their personal information accessed if they “allow” the app to do so, “but there are just too many attacks happening on a daily basis which trick users into doing precisely this.”


Mozilla has released its Firefox 4 Beta 9 web browser a month ahead of the planned launch of its full version in February. The release includes faster start-up time, bookmarking and a smoother look to complex animations, the not-for-profit Mozilla Foundation says on its blog. It also features full support for HTML5, offering developers a chance to create features like WebM and HD video, 3D graphic rendering with WebGL, hardware acceleration and the Mozilla Audio API to help create visual experiences for sound.


Two major record labels have opened up a new front in the war against online piracy. Universal and Sony Music in the United Kingdom are making new singles available to download and buy on the same day they debut on the radio. Songs used to receive up to six weeks radio airplay before they were released for sale – a practice known as “setting up” a record, The Guardian reports. “Wait is not a word in the vocabulary of the current generation,” said Universal Music’s chief, David Joseph. “It’s out of date to think that you can build up demand for a song by playing it for several weeks on radio in advance.”

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WordPress 3.0, the recent self-hosted version of the world’s most popular blogging platform, surpassed 30 million downloads Sunday morning, The Next Web reports. WordPress employs a counter on its website, counting each and every download of the WordPress software. The blogging platform is owned by Automatic, the company founded by Matt Mullenweg.

How Google Sells Its Free Products

Modern commercials are a funny thing. Ad agencies are trying to figure out how to give their commercials viral appeal while balancing that against providing company or product information.

The Old Spice guy campaign is more or less universally lauded as an example of how to reboot a company’s image and turn a commercial idea into a viral phenomenon. However, the videos, and the campaign’s subsequent expansion onto Twitter, focused on entertainment and branding: We knew what kind of brand Old Spice wanted to be and we laughed at (most of) Isaiah Mustafa’s quips and sound bites. Old Spice prioritized those elements instead of explaining how its products work or even what they smell like.

That worked for Old Spice, because most people can intuit how deodorant works; the company wasn’t reinventing the wheel, it was reinventing its brand. Old Spice didn’t need to provide detailed product information to make its campaign successful. Other companies, like Google, don’t have the same luxury.

Google’s products are often less obvious to an everyday audience. Google Goggles? Do you wear them? Are they on your phone? Is that some Mountain View euphemism? Google has the task of both explaining its new tech and providing a viral kick with its ads — that’s not easy.

Despite the odds, the technology giant has done a great job with its latest round of marketing campaigns by applying some basic principles in some very creative ways. Read on for a look at what Google did right and what it could do better.

Make Your Audience Feel Smart



Google was not a company known for its commercials until last year’s Super Bowl “search” ad that simultaneously showed the narrative arc of a budding romance and the vast possibilities of Google’s core product all via search terms.

The next batch of commercials focused on the speed of its web browser, Chrome, by testing how quickly Chrome could load a page compared to a (usually silly or messy) science experiment, such as lightning hitting a small boat or shooting a potato gun.

The real gem is Google’s latest commercial focusing on Google Instant. While Google still handily owns the market for searches, it’s had real competition from Microsoft’s Bing. Google Instant was supposed to tip the balance by letting you see search results as you were typing — no need to hit enter. The idea is technologically complicated but not especially awe inspiring. To make the technology more compelling, Google put together a commercial that emphasized how much we take that instant gratification for granted while at the same time making the viewer feel smart (the video is embedded above).

People enjoy repeating patterns, and people especially like being able to recognize those patterns and start to solve them. “Humpty… ” “Fee Fi Fo… ” Both phrases are relatively simple to complete, but there is a certain satisfaction in being able to figure it out, as simple as it may be. That’s the concept behind the commercial: display a list of recognizable phrases that the viewer can piece quickly together as they watch. It’s an incredibly smart way of congratulating the user and making the case for Google Instant at the same time.

As smart as the commercial may be, it doesn’t have the same entertainment value or viral capacity as some of Google’s sillier campaigns. With just 22,000 views, the ads seem to be geared toward selling their product rather than making it onto sites like Reddit.


Make Your Audience Care



It is difficult to get people to care about things on the Internet. The Internet has a lot of things on it, and the average attention span is depressingly low. Still, there is one way to guarantee that people sit up and take notice: Put them in it. People are more likely to care about a product if they had some hand in its development.

The Google Demo Slam challenges users to come up with the funniest or most creative videos showcasing new Google technologies, like the aforementioned Google Goggles. It’s a total win for Google, combining the viral ridiculousness of dressing up like Mount Rushmore to test Google Maps, for example, while getting real people to demonstrate how the technology actually works.

There are some celebrity spots (like Maria Sharapova pelting helmeted reps with tennis balls), but many of the submissions come from independent groups (like Sony) or everyday people trying to out-do their competition. Submissions are screened by Google and then randomly paired against one another where users can vote for their favorites.

The interactive, gaming element helps draw the viewer into the competition (champions will be eventually named). The format of the Slam also necessitates that people spend some time on the site, creating stickiness and enticing people to watch more and more videos (each of which essentially is a commercial for a Google product). Google has started using the some of the videos as stand alone commercials, but they don’t necessarily play as well without the competitive aspect of the site.

By putting its faith into users to come up with interesting and genuinely funny videos, however, Google is potentially assuming some risk. It’s also hard to believe that all the videos submitted to the campaign are purely user-generated given their professional look and feel.


Offer Value in More Creative Ways

It may not take a lot of creativity to make your RSS feed into a mobile app; it does take some thinking to quietly sponsor an experimental music video that, by virtue of its complexity, showcases the power of Chrome. “The Wilderness Downtown” is a Chrome experiment directed by Chris Milk. It uses Arcade Fire’s song “We Used to Wait” and interactive HTML5 elements, synchronized pop-up windows and a spinning panorama using Google Maps. Not only was it an inventive and touching video, but it was an excellent showcase of Google products.

Of course, the video can be run on other browsers, and if you don’t like Arcade Fire or the chosen song, the video experiment won’t have much of an impact. So clearly not every view was a win for Google.

Google is far from a perfect company, but its marketing campaigns are often an intelligent blend of viral goodness and thoughtful product showcases. What do you think? What commercials or campaigns did you find memorable or smart? What were some of Googles major flops or missteps? Let us know below.

Why the Future of Online Video Is in Serious Trouble: Google vs Apple and Microsoft

The Social Analyst is a column by Mashable Co-Editor Ben Parr, where he digs into social media trends and how they are affecting companies in the space.

Google is preparing for war with Apple and Microsoft over the future of web video, and the rest of will be caught in the crossfire.

Earlier this week, Google quietly announced that it would be phasing out Chrome support for H.264, the video codec and standard supported by Adobe Flash, Blu-ray, Internet Explorer, Safari and others. Instead, it will be supporting WebM and Ogg Theora, which are supported by Mozilla and Opera.

What Google hoped would be a small footnote turned into a tidal wave of criticism. Google was chastised for turning its back on “open innovation” by dropping a more widely used codec for a lesser-used one. Compounded by the fact that Google is a strong supporter of Adobe and Flash, and it’s easy to see why the firestorm started in the first place.


Why Is Google Against H.264?



After several days of being slammed in the media, Google finally responded and wrote the post it should have written in the first place.

First, Google’s Mike Jazayeri clarified that Google Chrome would only stop supporting H.264 in HTML5, not in Flash or other forms of media. Then he dove into the problem surrounding the HTML5

10 Cool Twitter Tips And Tricks

Twitter is pretty straightforward. Post a message. Your followers see it. Repeat.

But if you want a truly customizable and controlled experience, there are several tricks to make Twitter work for you.

From animated avatars to the best way to find what you're searching for, we came up with some great tips that will turn you into a power Twitter user.


Make a cool background

Twitter comes with a few standard backgrounds to choose from. But if those aren't good enough, there are some cool online tools that will help you customize your background. If you run a business, it's a good idea to add your contact information and website to your Twitter page's background. We suggest trying Free Twitter Designer. It links to your Twitter account and lets you create a custom background in the browser.


Use Google to search Twitter

Twitter's search function is good for finding people, but Google can help you look deeper. Type "site:twitter.com" and enter your search term. You'll find all the tweets containing the information you're looking for.


Create an animated avatar

Buzzfeed wrote this great tip for animating your Twitter avatar in just a few simple steps:

Head over to 3fram.es and upload three photos you'd like to use for your avatar. You can also use your webcam to take three shots on the fly. 3fram.es will mash your photos together into an animated GIF. Download the GIF and use this free resizing tool from Free Art & Technology before uploading to Twitter.


Make a list

Twitter's list feature lets you curate groups of people with similar interests. It will help you keep friends, coworkers, news sources, etc. separate. If you make your lists public, it can help other people find new tweeters to follow.


Find a Twitter client that works for you

Using Twitter's website to check tweets is fine for many people, but there are a ton of great clients that add extra functionality you won't get there.

If you manage multiple Twitter accounts, or want a way to easily track mentions, direct messages, and new followers all at once, use TweetDeck or HootSuite. You can arrange columns for each category and view updates in real time.


Shrink URLs when sharing links

Twitter helped speed along the popularity of URL shorteners like bit.ly and TinyURL. Even if the link you're sharing fits within 140 characters, do your followers a favor and shorten the link anyway. It looks cleaner and less cluttered.

Many Twitter clients like TweetDeck and Twitter for iPhone and iPad have URL shorteners built in, so take advantage.


Use the proper retweet function

The popularity of retweets grew organically from the community of early Twitter adopters. Now Twitter has a built-in retweet button that makes it easy to share someone else's tweet with your followers.

If you want to add commentary to someone's tweet before retweeting, copy and paste the Tweet and type "RT" before it. TweetDeck makes this easy. It includes an option to automatically copy the tweet along with "RT" before it.


Avoid a direct message fail

We've seen it before, and we'll see it again. People accidentally send direct messages as tweets and embarrass themselves. Before sending a direct message and possibly damaging your reputation in front of your Twitter followers, double check you are posting the message correctly. One way to avoid the future errors is to turn off direct messaging over SMS


Learn the lingo

If you're relatively new to Twitter, the lingo can be confusing. We broke it down for you in an earlier post, but here are some of the basics you're likely to see:

* RT = Retweet
* NSFW = Not safe for work.
* OH = Overheard
* DM = Direct Message


Create filters for topics you want to follow

When you conduct a search on Twitter, you have the option to keep the term saved for quick reference later.

You can also set up columns in TweetDeck or HootSuite to update your favorite search terms or hash tags in real time.

This Is Mark Zuckerberg's New House (Photos)

After we published photos of his old house—and he gave Oprah a tour—Facebook CEO Mark Zuckerberg moved out, relocating to a new security camera-studded home a few blocks away. Now his neighbors are gossiping—and they've sent us pictures.

Zuckerberg has been conquering the world lately, but the 26-year-old's real estate movements have been fairly constrained.

His new place is in the same small Palo Alto neighborhood of College Terrace as his old four-bedroom house, which was put up for rent last month. And while Zuckerberg's former home is a mere seven blocks away, his new digs make commuting to work even easier: It's just down the street from Facebook's headquarters, where Zuckerberg reportedly spends 16 hours a day.

His half-mile move didn't go unnoticed. The Facebook founder's new home was the talk of the neighborhood over the holidays. "Everybody's aware that Zuckerberg moved here," one College Terrace neighbor told us.

Zuckerberg's new house, which is another rental, is slightly larger than his previous place. It has five bedrooms and around 3,800 square feet, according to internet listings, versus four bedrooms and around 2,350 square feet for the old place. No fewer than three satellite dishes are attached the roof. Out in front, you'll find Zuckerberg's black Acura—which we photographed in the driveway of his old place back in July—parked curbside.

The new home's security cameras are perhaps the clearest indicator that it's now occupied by the world's youngest billionaire. The cams are newly installed, another neighbor said, coinciding with Zuckerberg's arrival. With a $50 billion valuation on the line, Facebook's investors, some well versed in rough business tactics, no doubt want to ensure the security of their 26-year-old founding CEO.

Another big advantage of the new place: It's been kept out of the spotlight. Our photographer was the first to capture images of Zuckerberg's old house back in July, when we turned the Facebook CEO's privacy ethos on Zuckerberg himself. The social networking king then invited talk-show host Oprah Winfrey's cameras inside the property in September, in a move that seemed to signal Zuckerberg had come to accept his celebrity status. But three months later, he's moved.

Needless to say, we've tracked Zuckerberg down again. And we've got pictures, below, which were provided to us by one of his neighbors.

The place is very modest by the standards of tech royalty like Steve Jobs and Bill Gates, whose homes have been the object of endless news articles and even a Wikipedia entry. (Even Zuckerberg's basketball hoop is pint-sized.) But surely the man who facilitates millions of instances of petty gawking each day didn't think that would keep it out of the news.

Source: Business Insider

HOW TO: Buy & Sell Music Directly on Facebook

If you’re in a band or if you’re a big music fan, you’ve probably despaired over the state of music on Facebook.

Unlike with MySpace, music and recording artists just aren’t a huge part of Facebook. Certainly, it’s easy for a band to create an online presence on the ubiquitous social network, but other than throwing up a simple page or two, there just aren’t a lot of integrated tools for musicians to connect with potential fans.

This includes opportunities for buying and selling music on Facebook.

Fortunately, we’ve just found an excellent new way for bands and fans to do exactly that: listen to, market, buy and sell music directly from a musician’s Facebook profile or page.

Moontoast, a startup we’ve been watching for some time now, has just take the wraps off Impulse, a new way for musicians to use Facebook.

With Impulse, fans can listen to a band’s songs directly on the band’s page through an integrated music player. They can share the music they find on Facebook and Twitter, and they can buy albums or single tracks directly from the artist without ever leaving Facebook.

Artists can track what their fans are buying and sharing, as well, allowing them to make more informed decisions in the future.

In the near future, Impulse will also be used for selling physical goods, including autographed items, physical/digital packages and more. We would even speculate that the platform might include a show ticketing solution, but that’s not something that Moontoast has confirmed.

Setting up a Moontoast Impulse music store on Facebook is easy and leaves you with a simple, uncluttered interface for your Facebook page. It processes payments through Paypal and allows you to upload custom images and choose a custom color.

We see this product as a boon to indie artists and major labels alike, and we can’t wait to see where Moontoast goes with it. Here’s what Impulse looks like on an artist’s Facebook page:

Originally, Moontoast launched in early 2009 as a platform for giving and receiving lessons online. Based in Nashville, TN, and founded by guitarist Bucky Baxter, the startup was almost guaranteed to have a strong foundation in music.

What features do you think would make Impulse even better and simpler for musicians and music fans on Facebook? Let us know in the comments.

Are We Too Obsessed With Facebook?

Facebook profiles are like belly buttons: Everybody’s got one.

Perhaps that statement’s still a bit of an exaggeration, but by the numbers, we (that is, Internet users around the globe) are becoming more obsessed with Facebook by the day.

One out of every 13 Earthlings and three out of four Americans is on Facebook, and one out of 26 signs into Facebook on a daily basis.

We could rattle off stats like until the cows come home, but instead, we’d like to show you this fascinating infographic from SocialHype and OnlineSchools.org.

Here, in a visual nutshell, are some highlights about Facebook usage, 2010 trends, adoption numbers and a great deal more.

Take a good look at this information (or click here for the full-size version), and in the comments, let us know what you think about our global fascination with Facebook. Is Facebook an amazing connective medium? A plague that preys on the easily addicted? A little bit of both, or something else entirely?

MySpace Slashes Its staff by 47%

NEW YORK (CNNMoney.com) -- MySpace said Tuesday that it is laying off 500 employees, cutting its staff by 47%.

"Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability," CEO Mike Jones said in a written statement. "These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product."

The company announced the long-rumored staff chop at the exact moment most of the tech world's attention was riveted elsewhere, on Verizon's hotly anticipated announcement that it will soon begin selling Apple's iPhone.

MySpace's management kept most of the site's developers but gutted nearly every other job role, according to a staffer who survived the cuts.

Once king of the social networking world, seven-year-old MySpace has fallen behind younger and nimbler rival Facebook. Acquired by News Corp. (NWS, Fortune 500) in 2005 for $580 million in cash, the site's active user base now hovers around 130 million -- far short of Facebook's 500 million.

Trying to reposition itself, the Los Angeles-based network recently rolled out a new interface focusing on music and social entertainment.

It also unveiled a Facebook link that allows MySpace users to integrate their profile data and log in through Facebook -- a move some took as a sign that MySpace is waving the white flag.

Jones tried to quash those rumors in his announcement of the company's deep layoffs.

"While it's still early days, the new MySpace is trending positively and the good news is we have already seen an uptick in returning and new users," he wrote.

But in a recent interview with Fortune, Jones acknowledged the sharp challenges the company faces in trying to rebuild.

"My belief is that MySpace got very, very diverse in its offering, and didn't really have a specialized service that users understood," he said. "As we broadened our service over time, I think we lost some of the core strategic functions that MySpace offered early on that delighted its customers."

FACEBOOK: Now It All Makes Sense

Now it all makes sense. 

The reason it doesn't matter that Goldman's Facebook investment vehicle almost certainly violates the SEC's rules is that Facebook has announced that it will exceed 500 shareholders this year regardless of whether

Goldman's clients are treated as a single shareholder or as many shareholders.

Because of this, Facebook will have to file detailed disclosures with the SEC by May 1, 2012, 120 days after the end of the fiscal year in which it breaks the 500 shareholder threshold.

Prior to this announcement, many observers had been left scratching their heads as to how the SEC could permit Goldman to use such an investment mechanism, which seemed obviously designed to avoid increasing Facebook's shareholder count above 500 (Goldman's clients will invest via a "special purpose vehicle" in which all of Goldman's Facebook investors will be aggregated into a single fund). Using such SPVs for this purpose is against SEC rules, and there seemed no other logical explanation for why Goldman would do it.

And there still is no obvious other explanation, except perhaps saving Facebook the trouble of having to deal with so many new shareholders and allowing Goldman to charge its clients massive entry AND exit fees that it wouldn't be able to charge if it were merely selling them Facebook stock.

(Actually, come to think of it, those are two pretty good explanations!)

But, in any event, it's all moot.

Now that Facebook has said it will exceed the 500 shareholder threshold this year regardless, the SEC's likely "remedy" has already been achieved.  By the end of April of 2012, if not before, everyone will finally know the full details about Facebook's financial performance and business.

Bear in mind, however, that this does NOT mean the company has to go public. All it has to do is file financial statements.

So the crazed masses who are being shut out of Goldman's "private Facebook IPO" may even then still have to watch from the sidelines.

Endless Facebook Speculation that Have to Be Said: Sara Lacy Article

I’ve avoided writing something about the Goldman Sachs- Facebook deal, because God knows the rest of the blogosphere has been doing enough speculation for the entire world. But four things I’ve read in the last 24-hours need a serious rebuttal.


1. Facebook is still not “essentially” a public company. I don’t care if it reaches 500 indirect individual shareholders through the Goldman transaction, a public company is one where the general public is able to invest and existing shareholders are able to sell shares, without approval from the company first. That isn’t happening.

Deals like these have indeed been Facebook’s way of avoiding the pressures that would force a company to go public for some time now, so there are IPO-like ramifications from these deals. But that doesn’t change the fact that a tiny fraction of people are able to buy and sell shares. That’s a huge fundamental difference that affects everything about the way a company operates. Anyone who has run, worked at or covered a public company and a private company for any period of time knows that. Beyond that, it’s just an argument of semantics.

2. Some people are drawing a comparison between Google’s let’s-empower-the-users IPO by dutch auction and Facebook’s selling of shares to Goldman’s richest clients as if it’s an indication of some Robin Hood vs. Sheriff of Nottingham moral battlefield. These two deals are not apples-to-apples comparisons, by any means. For one thing, this isn’t an IPO no matter how badly some members of the tech press want it to be. (See point #1) To my knowledge, Google never let its users or everyday people buy pre-IPO shares.

But beyond that, the comparison misses a fundamental difference in the relationship between Silicon Valley and Wall Street from the days when Google was founded and today. This difference has been widely documented, is far broader than just Facebook, and has been brewing for more than ten years. It’s part of a continuum that started with the excesses of the dot com bubble, culminated with huge changes on Wall Street that hurt the ability for smaller companies to go public and the desire for entrepreneurs to take them public, and has been rippling through several trends like partial liquidations, secondary exchanges and buyouts. This is about an industry as a whole looking for other ways to get liquidity that don’t sacrifice price and independence. That’s the reason deals like these aren’t confined to Facebook.

What’s more, Facebook and companies like it are actually following in Google’s footsteps, in many respects. Compared to its generation, Google waited an extraordinarily long period of time to go public and did so very much on its own terms, so that it could protect its ability to be nimble and above the whims of activist, short-term hedge funds and traders. For all of its marketing, you could argue Google’s IPO was anti-the-little-guy, because it pioneered the modern use of a dual class of voting and the company refused to give earnings estimates or play other annoying Wall Street games. The company boldly drew a line in the sand and essentially said, “You want to own shares in us? Here’s the deal.” And for its generation, Google initially offered a pretty small float of shares, which was one reason the price soared.

If you look at the reasons behind why Facebook is doing what it’s doing, I’d say Mark Zuckerberg is following the spirit of the Google playbook, not going against it.

3. Being a public company isn’t a way to force Facebook to be “good.” I have a lot of respect for John Battelle, but I just don’t get this argument that Facebook trading on the Nasdaq or New York Stock Exchange means the company is a more responsible steward of our data. This is more of the hangover from that Google “do no evil” nonsense.

For-profit companies are financially motivated not morally motivated, and nothing makes you more financially motivated than being publicly traded and having to produce quarterly results to please Wall Street. Look at what happened to daily newspapers once they were owned by publicly traded companies who cared more about seeing 10% growth year-over-year than being stewards of local news.

Battelle raises a good point about the risk of Facebook using all it knows about us for selfish gains, but I don’t see how reporting quarterly numbers suddenly makes that go away. Does anyone feel like they know everything Google is doing with our data by reading its SEC filings or listening to a scripted conference call? I don’t. And frankly, I’m more worried about the things Google knows about me. The information about me on Facebook is what I have volunteered to share with people. Google has information on everything I’ve ever searched in the privacy of my own home and the content of my inbox. That’s a hell of a lot scarier if used for its own gain.

But as a user, I still trust Google with all of this, because it’s ultimately in its best interest as a company not to abuse that public trust for short term gains. Same goes for Facebook whether I can buy a share of it or not. Going public doesn’t force a company to be good, anymore than a wedding ring forces a man to be faithful. (See Enron.)

4. The SEC forcing Facebook to disclose financials will not “force” the company to go public. The reason entrepreneurs like Zuckerberg, Reid Hoffman, and countless others who opted to sell their companies in the last few years do not want to go public has nothing to do with disclosing quarterly numbers. It has to do with the brain drain of employees leaving for the next hot, pre-IPO company. It has to do with a CEO’s job becoming more about managing Wall Street and the press than building the business. Being public brings with it an almost inevitable shorter-term focus. And most important for someone like Zuckerberg, it means the CEO can’t spend his time obsessing on product, which is mostly what he cares about.

I remember discussing this with Zuckerberg back in 2007, as he was anticipating passing the 500-shareholding-employee mark. This was reportedly one of the things that pushed Google to go public in 2005, and this conversation was well-before Facebook came to a settlement with the SEC that allowed the company to skirt the rule about reporting numbers if a company has more than 500 individual shareholders. I asked Zuckerberg if it would be a trigger to go public, and he said no and added, “disclosing information is the least of the issues I have with being a public company.”

Now, two things are obvious: A lot has changed since those early days, and Facebook will go public one day. That has always been the plan. No one has argued otherwise. And by virtue of time, growth and continued outside investment that date is a lot closer now than it was then. None of us really know for sure if it’ll happen sooner or later, but based on everything I know about Zuckerberg, disclosing financials isn’t going to make a bit of a difference on the timing.

Like Google in its pre-IPO days, Facebook is operating from the ultimate position of strength. Even if the Goldman deal hadn’t happened, the company wouldn’t hurt for cash. No one is going to force this company to go public before it is ready, and all the steps it’s taken in the secondary market make it less likely to happen any time soon, not more likely because they are addressing the very reasons companies used to go public.

Facebook Pushes New Profile to All Users

Back in December, Facebook introduced its new profiles to the world. For the first month, users could choose between the new profile and the old profile. Starting today, all accounts will be upgraded to the new profile.

The new Facebook profiles feature a revamped interface, as well as easy access to photos of the user. The profiles also offer more details about work and education information, while letting users put friends into distinct categories, list various interests, and fill out a nifty new “about me” user summary.

We’ve already seen some fantastic examples of creative Facebook profile photo hacks that really showcase just how unique and inventive these profiles can be with a little work.

If you haven’t already customized a new Facebook profile page for your own account, be sure to check Mashable’s guide on the subject. Beverage maker Schweppes also has its own profile app that can aid in the customization process.

For those users who preferred the old interface, we can’t really offer you any alternatives, but remember this is Facebook. Chances are, the company will revamp this interface again anyway.

Are you already using the new Facebook profiles? Have you run across any epic profile hacks? Let us know in the comments.

Facebook Says It’s NOT Shutting Down March 15

There’s a silly rumor exploding on the Internet this weekend, alleging that Facebook is shutting down on March 15 because CEO Mark Zuckerberg “wants his old life back,” and desires to “put an end to all the madness.”

We have official confirmation from Facebook Director of Corporate Communications Larry Yu that the rumor is false. We asked him via e-mail if Facebook was shutting down on March 15, to which he responded, “The answer is no, so please help us put an end to this silliness.” He added, “We didn’t get the memo about shutting down and there’s lots to do, so we’ll just keep cranking away like always.”

Let’s think about this for a minute. Would Facebook decide to shut down the company just a few days after announcing a round of funding, consisting of $450 million from Goldman Sachs and $50 million from Russian investment firm Digital Sky Technologies, on a valuation of $50 billion?

The spurious report was started by a site to which we refuse to link, known for its reports of impending attacks of alien spaceships and false reports of a Michelle Obama pregnancy.

The fact that this absurd hoax spread so efficiently makes us wonder: Will people believe anything?

Twitter Subpoenaed by U.S. Government for Wikileaks Accounts

The U.S. government has asked Twitter to hand over private messages sent to and from WikiLeaks founder Julian Assange and other WikiLeaks staffers.

In all likelihood, it’s also contacting other web services Assange may have used to get contact details and personal information about Assage’s activities and supporters.

According to a report just filed by The New York Times, Twitter() has been subpoenaed by the U.S. government in connection to the ongoing WikiLeaks() investigation.

Twitter, like most web companies, has a “spy guide,” documents pertaining to compliance with request from governments and law enforcement into criminal investigations. These requests are supposed to be accompanied by subpoenas or warrants.

According to Twitter’s specific guide [PDF], “In accordance with our Privacy Policy and Terms of Service, non-public information about Twitter users is not released unless we have received a subpoena, court order or other legal process document.” Such requests would only be valid if sent by law enforcement.

In this particular case, every indication would point to the speedy release of Assange’s direct messages and other data to the U.S. government.

A court order [PDF] was sent to Twitter by the Department of Justice on Decemer 14, 2010. Stating that information held by Twitter was “relevant and material” to the WikiLeaks investigation, the district court ordered the startup to hand over:

session times and connection records
telephone numbers
credit card information
e-mail and IP addresses
correspondence and notes of record
The court ordered Twitter to surrender the above information for accounts belonging to Assange, WikiLeaks, Pfc. Bradley Manning (widely suspected to be the original source responsible for transfering cables to WikiLeaks), and several WikiLeaks associates and volunteers, including Birgitta Jonsdottir, Rop Gongrijp, and San Francisco-based programmer Jacob Appelbaum.

Google() and other web and social media services all have the same kinds of spy guide documents governing compliance; we’d be shocked if Twitter was the only company that got a WikiLeaks-related court order to surrender information. And we’re pretty sure other services have much more sensitive information on Assange et al.

We’ll continue to keep you updated as this story develops.