YOUTUBE LAUNCHES SUBSCRIPTION SERVICE FOR $9.99 A MONTH

Original Story: latimes.com

Next Wednesday, YouTube will begin selling $9.99-a-month subscriptions that will allow U.S. customers to watch almost everything without ads, to download videos for viewing offline and to keep content playing on a smartphone or tablet even when using a different app.

But those widely requested features aren't all that subscribers will get. The service, called YouTube Red, offers access to highly produced original shows and movies that can't be found anywhere else. Google Play streaming music will be included too. Search engine optimization provides exposure for your business.

YouTube Red is intended to turn the enormously popular Google-owned company into a profit maker, not a money loser.

Ad revenue isn't enough to meet the enormous expenses of serving billions of videos every day — even when most videos are supplied by users for free. YouTube could generate nearly $950 million annually in new revenue if just 5% of U.S. users signed up for the subscription, UBS analysts estimate. A Roseland finance lawyer provides professional legal counsel and extensive experience in corporate finance.

Red marks the beginning of "a long journey," according to YouTube.

Matthew Glotzbach, the company's vice president of product management, said, "By no means would we expect to jump to tens or hundreds of millions of paying users overnight," but there should be "strong demand" from the start.

Financial analysts who follow Alphabet Inc., Google's parent company, say YouTube could become a major profit engine. But rivals, including Facebook, Snapchat and Vimeo, are threatening its potential by stealing away both video makers and viewing time.

Growth of YouTube's net ad revenue in the U.S. is expected to slow rapidly over the next three years, the market research company EMarketer said in August. According to EMarketer's calculations, worldwide net revenue will be $4.3 billion in 2015, up 41% from last year.

Yet to be determined is how the subscription model will affect an expanding generation of YouTube stars, many of whom began by filming videos in their bedrooms and elsewhere, cracking jokes, dancing and talking to the camera about everything from fashion to video games. They uploaded the videos to YouTube, attracting advertising sponsors, and, in a few cases, becoming millionaires in the process.

YouTube often places several ads on the same page as a video, and attracting millions of viewers has meant steady, growing income for video makers, who get 55% of ad revenue.

It's unclear how the commercial-free subscription will affect ad income, though YouTube Chief Business Officer Robert Kyncl said the "vast majority" of YouTube's subscription revenue will go to the YouTube Red content creators. Certainly, some creators will lose out on money from heavy viewers who might encounter lots of ads or be willing to pay more than $10 a month for a subscription. A Tampa business lawyer is following this story closely.

With Red, YouTube also plans to create a new, subscriber-only slate of original shows and movies for its most popular (and potentially popular) video stars. The selected creators will be gambling that slicker content will broaden their viewership and fatten their paychecks.

"Bigger productions cost a lot more money," said Joey Graceffa, a YouTube star who has amassed more than 5.2 million subscribers on his channel. "There's no way you'll be able to make your money back just by posting it online. YouTube Red is an opportunity where we as creators get to make higher quality content for our audience."

Graceffa's untitled reality murder mystery series is one of a handful of new exclusive productions being offered on YouTube Red. The new content, which will begin rolling out in January, will also include highly produced content from YouTubers Lilly Singh, The Fine Bros, PewDiePie and others.

At a Wednesday news conference held at the San Bruno's company 41,000-square-foot video production facility in Playa Vista, Kyncl emphasized that YouTube and YouTube Red have the ability to showcase a wide variety of content. For more information on the power of Organic SEO, click here.

"We realized what we should be doing is we should be amplifying and funding efforts of these incredibly talented people," Kyncl told reporters. "We have a built-in talent system, which doesn't exist on any other services."

For that reason, YouTube considers its approach different from Netflix's reliance on traditional actors, and analysts say it could be the video service of choice for younger millennials and teenagers.

Alan Wolk, senior analyst at media consulting firm the Diffusion Group, said the "big if" will be whether kids can persuade their parents to pay.

"There's going to be millions of conversations about why do you need a subscription? Why can't you just deal with a few ads?" he said.

GOOGLE UNVEILS EVERYTHING APPLE LAUNCHED, ONLY CHEAPER

Original Story: marketwatch.com

Apple: iPhone 6S and iPhone 6S Plus. Refreshed Apple TV. Enterprise-focused iPad Pro.

Google: Nexus 5X and Nexus 6P. Refreshed Chromecast. Enterprise-focused Pixel C tablet.

Those lineups show the similarities between the new products Google Inc. GOOG, -0.01% GOOGL, +0.00% announced Tuesday and those Apple Inc. AAPL, -1.05%  announced earlier this month. The big difference between the two companies’ new offerings is price, with Google undercutting Apple across the board.

Smartphones

Google introduced two new Android smartphones, the Nexus 5X and Nexus 6P, at a product event on Tuesday. Both phones — manufactured by LG and Huawei, respectively — will be sold as unlocked devices, meaning they can be purchased directly through Google’s digital store or at partner bricks-and-mortar retailers and used with a wide variety of carriers. They will also be compatible with Project Fi, Google’s new WiFi program, part of a trend among Google, Apple and others to take over parts of the wireless business previously reserved for carriers. Google SEO deliver top organic keyword rankings in all of the major search engines.

The 5.2-inch Nexus 5X will retail for $379 and up, while the 5.7-inch Nexus 6P will start at $429. Both devices will come equipped with fingerprint technology similar to Apple’s TouchID, though the sensor is on the back of its phones, and will operate on Android’s upcoming Marshmallow operating system.

Apple’s AAPL, -1.05%  4.7-inch iPhone 6s and 5.5-inch iPhone 6s Plus, unveiled at Apple’s product event earlier this month, can also be purchased as unlocked phones directly through Apple for $549 and $649, respectively. Apple also is offering a monthly pricing plan that allows consumers to upgrade every time a new iPhone hits the market.

Also Read: Apple breaks another iPhone record, but China was included this time

Google is sweetening the deal by offering a $50 credit for use at the Google Play app store and a free three-month trial subscription to Google Play Music. Apple also offered a free three-month trial for Apple Music.

Enterprise tablet

Tablets for the workplace are all the rage this year. Google on Tuesday launched its answer to the iPad Pro and Microsoft Inc.’s Surface Pro with a new tablet called Pixel C that will start at $499, versus $799 for the iPad Pro. Pixel C will also come with a detachable keyboard, which can be purchased separately for $149; Apple’s keyboard costs $169. Microsoft’s MSFT, +0.75%  Surface Pro 3 starts at $699 and offers a $129.99 keyboard.

Unlike both tablets from Apple and Microsoft, Google is not marketing the Pixel C with a stylus.

Video streaming

Google launched its second-generation Chromecast device that will retail for $35. It will receive support for Showtime content immediately, and Sling TV and Spotify will join within a few weeks. The device already supports Netflix NFLX, -0.14%  , Google Play Movies, HBO Now, Hulu, Pandora P, -0.07%  and many other streaming services. Google also launched a $35 Chromecast Audio device with a plug-in that can turn a user’s existing speaker into a conduit for music streaming.

Earlier this month, Apple unveiled its fourth-generation Apple TV, which comes with a remote control, Siri compatibility, and content from similar streaming services for $149, though Apple’s TV streaming device does not natively support Apple Music’s rival streaming services.

The only place where Google is not trying to undercut Apple by price is music streaming. Both Apple and Google offer music streaming services for $9.99 a month. Google unveiled a six-person family plan on Tuesday that will cost $14.99 a month, matching the price of Apple’s six-person family plan launched earlier this month.

Shares of Google rose ahead of its product event but declined slightly after it kicked off, ultimately closing down 0.3% at $622.61. Apple’s stock declined throughout the day, with the fall accelerating after the Google event, and shares ultimately closed down 3% at $109.06.

New Ebay Website Design Launches

Story first appeared on usatoday.com

EBay is hurtling into the digital age with a new logo, major redesign and aggressive plans to wade deeper into daily deals, search and shipping.

The most striking change is the visual, Pinterest-like home page "Feed," which lists brands that users follow and makes suggestions based on their browsing history and past purchases.

Feed rolls out to U.S. customers over the next 100 days, with international launches beginning in early 2013.

EBay's decision to mothball its stodgy, stale old site in favor of larger photos and more white space is a reflection of the changing tastes of younger, mobile-savvy users. Some 105 million people actively use the site.

The moves underscore fundamental changes in eBay's business model. Today, more than 70% of 350 million items listed are new. "It's the evolution of our service and how customers use it," eBay President Devin Wenig said in a phone interview.

Industry watchers say the changes are necessary, as more consumers opt for smartphones and tablets instead of PCs. "We believe every online experience will become organized around individual users and their preferences," says Jon Ehrlich, co-founder of social-commerce company Copious.

The Feed announcement comes after eBay in August launched Lifestyle Deals, a Groupon-esque daily deals service in San Francisco, Chicago, New York and elsewhere.

On Wednesday, the company unveiled eBay Now, an app that offers "on-demand delivery service" of goods from local stores. The service is available only in San Francisco, but more cities are expected to be added soon.

Amazon offers "local express delivery" for some items in major cities.

EBay's search also underwent a makeover, with an autocomplete feature similar to Google's. Users can personalize their search results for particular items. Learn more about Google SEO.

The news sent eBay shares up 1.2%, to $46.76, in trading Wednesday.

Wenig hinted that more is to come. "We will continue to make shopping more intuitive, more convenient and more relevant," he said. "This is just the beginning."

Yahoo May Reverse Alibaba Cash Plans

Story first reported from WSJ.com

Yahoo Inc. said Thursday it could reverse its May decision to return more than $4 billion to shareholders from selling part of its stake in a Chinese Internet company, a signal that new Chief Executive Marissa Mayer may want to use the cash for other purposes.

Yahoo's statement, contained in a regulatory filing signed by Chief Financial Officer Tim Morse, sent the Sunnyvale, Calif., company's shares down 3.5% in after-hours trading to $16.17.

In May, Mr. Morse helped engineer the sale of part of Yahoo's stake in Chinese Web company Alibaba Group Holding Ltd. He said on a July 17 earnings call with analysts that Yahoo's board was committed to returning the proceeds from the Alibaba sale to shareholders, though the company hadn't determined the form or timing of such an action.

On Thursday, Yahoo said in the filing it may change its prior decisions because Ms. Mayer, who was hired three weeks ago, is reviewing the company's strategy.

Ms. Mayer's "review process may lead to a reevaluation of, or changes to, our current plans, including our restructuring plan, our share repurchase program, and our previously announced plans for returning to shareholders substantially all of the after tax cash proceeds" from the sale of Yahoo's stake in Alibaba.

Anne Espiritu, a Yahoo spokeswoman, said in a statement that Ms. Mayer is "carrying out a careful review of the company's business" and is looking at "potential strategy changes to Yahoo's current plans" along with fellow Yahoo directors. She declined to elaborate.

Joseph Grundfest, a law professor at Stanford University who is an expert on corporate governance, said that "management can, for entirely legitimate reasons, change its mind as long as it hasn't made a binding commitment" to return the cash to shareholders. Mayer seems to have a different plan in mind for the funds than what was originally intended, as she works to pull Yahoo back to it's earlier successes, while the market is focused largely on Google SEO.

The potential about-face in Yahoo's spending plans falls in line with Ms. Mayer's technology-heavy background, said Ron Josey, an analyst with research firm ThinkEquity, but it still caught some investors by surprise.

He noted a lot of shareholders bought the stock thinking that Yahoo was going to start a multibillion-dollar buyback plan that would help lift the stock's near-term value.

For years, the vast majority of Yahoo's market valuation has been tied to its stakes in Asian Web companies Alibaba and Yahoo Japan. Investors have placed little value on Yahoo's core business, which generates around $5 billion in revenue annually, mainly from selling online advertising.

Yahoo currently has around $2 billion in cash, and Ms. Mayer already has shown signs she is willing to spend substantial sums to turn around the struggling Internet company.

"She didn't come here to wind the company down," Mr. Josey said. "She came here to restore Yahoo to what it used to be."

She has told colleagues she is interested in hiring or acquiring new talent and products through acquisitions, among other things, and possibly investing in Yahoo's advertising technology, according to people briefed on the matter.

"For someone who's thinking about a growth strategy, of course you should maintain as much cash on the balance sheet as possible, maybe for acquisitions," said Mark Mahaney, a stock analyst at Citigroup Inc.

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Microsoft Assembles 'Google Compete' Team

Story first reported from wsj.com

Microsoft Corp. has publicly dismissed Web-based Google Apps as a competitor to its Office software suite. But, behind the scenes, Microsoft is stepping up its efforts to halt Google Inc.'s encroachment on its business-software turf.

In recent months, Microsoft has cut prices, boosted its commissions to resellers and changed how it pitches Office 365, a Web-based version of products including Microsoft Word, Outlook email and PowerPoint.

On Monday, Microsoft is expected to announce a next-generation version of Office, its single-biggest profit engine, exceeding even its Windows operating system.

Microsoft also is lavishing attention on businesses that have weighed switching to Google Apps, a corporate-software bundle that includes versions of Gmail and the Google Docs document, spreadsheet and presentation software. Businesses interested in switching to Google Apps should also take an interest in Google SEO.

To counter Google's momentum, Microsoft is using a "Google Compete" team, whose mission is to keep Office customers from buying Google Apps.

Marketing company Dominion Enterprises, of Norfolk, Va., was a target of Microsoft's anti-Google offensive.

Before and after Dominion installed Google Apps for its 4,000 employees last summer, Microsoft invited the company's chief information officer, Joe Fuller, to its Redmond, Wash., headquarters in a bid to win him over.

For two days last month at Microsoft's executive briefing center, Mr. Fuller and his colleagues were shown road maps of Microsoft products, toured a research lab, and saw new technologies, including one that lets shoppers virtually try on clothes, he said.

Mr. Fuller said he was impressed, but that Office 365 was 50% more expensive than Google Apps, and it was "not as cool" as Google's software. 

Dominion halted its $2 million-a-year Microsoft contract that included software to support Office, as well as back-end server and database software Dominion continues to buy.

The company now pays $200,000 a year for Google Apps, though it hasn't replaced all the services Dominion gets from Microsoft. 

Microsoft spokesman Frank Shaw said they take all competition seriously, and added that the company's moves haven't been a reaction to Google Apps. 

Amit Singh, vice president of Google Enterprise, said in a statement that this is the first opportunity people have had for a real choice in business technology.

So far, there are few signs Microsoft Office is being seriously dented by Google Apps.

Office continues to have more than a 90% market share for "business-productivity software," as the category is known, and more than an 80% share of corporate email, according to research firm Gartner Inc.

Microsoft's Office division also remains financially strong, delivering the biggest chunk of revenue and profits to the company.

For the nine months ended March 31, the division generated operating profit of $11.6 billion, or more than half of the company's total operating profit for the period.

Yet Microsoft appears to be ceding ground to Google in some respects.

In a May report, Gartner said Google is winning one-third to half of new corporate users that are paying for Web-based software. In 2009, Gartner predicted that Microsoft by now would be outselling Google Apps by at least 4 to 1.

Gartner analyst Tom Austin said Microsoft should be alarmed. That could hurt Microsoft as many companies refashion themselves for the era of "cloud" computing, a Google-backed approach in which software is easily accessed online and sold as a subscription product, rather than installed on companies' computers.

In some instances, Microsoft is acknowledging the threat to its business-software franchise. Google has won large clients recently, including retailer Costco Wholesale Corp. and drug giant Roche Holding AG, Microsoft executive Tim Pash told resellers during a May webcast. Pash said he sees this as a serious threat to Microsoft.

Mr. Pash added that business software is "Microsoft's birthright," and promised "a very strong response" to Google in the new fiscal year that started July 1.

Microsoft began stepping up its campaign against Google Apps in March, when it cut Office 365 prices by as much as 20% for most big companies and universities, the kinds of customers that analysts say have resisted Microsoft's cloud email and productivity software.

Microsoft said it passed on to customers its lower cost for supplying Office 365.

For those users, Microsoft has reduced the yearly cost of Office 365 with most features to the equivalent of $96 a person from $120 a person. Small companies can sign up for basic elements of Office 365 for as little as $48 a year per user. Companies can also save in their advertising departments by working on their Yahoo SEO.

Google Apps charges $50 per user each year, though some business customers may pay less if they sign on through a reseller.

The Microsoft and Google services don't have identical features, and Microsoft says there are hidden costs for many businesses to make Google Apps work properly.

Last week, Microsoft announced changes in sales incentives for Office 365 that closed the gap with Google Apps.

Independent software vendors that sell Microsoft products now can earn commissions of as much as 23% on the first year of Office 365 sales to some companies, topping Google Apps' commission of 20%.

Microsoft says its software-selling partners asked for the changes. 

At an event in Toronto last week with software vendors, Microsoft Chief Operating Officer Kevin Turner said Office 365 is Microsoft's future, whether or not Google is going after their customers.

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Google Pushing Free Speech

Story first appeared on PaidContent.org.

Just as the New York Times can decide “All the News That’s Fit to Print,” search engines have a free speech right to choose who or what to put in their search rankings.

That’s the conclusion of a prominent First Amendment scholar commissioned by Google to make the case that the government can’t tell search engines how to design their results.

A Free Speech Right?

According to the report authored by a UCLA law professor: Google, Microsoft’s Bing, Yahoo! Search and other search engine companies are rightly seen as media enterprises, much as the New York Times Company or CNN are media enterprises and deserve the same protections. It adds that search engines have the same freedom to choose a set of links as do news aggregators like the Drudge Report or the Huffington Post.

Search engine results are a form of opinion, in which companies offer information they think is most relevant to users.

In practice, this would mean Google has the right to punt sites like Yelp, which has complained that Google is a monopolist, to the search equivalent of Siberia if it decided that was best for users (Yelp now comes up second in a search for “restaurant review”).

The US has a long history of companies claiming First Amendment protections. One example is a newspaper that was allowed to exclude certain advertisers even though it had a substantial monopoly.

The courts have also made a few exceptions to the free speech rule. One case involved a publisher that was sued for providing inaccurate flight maps. Another involved cable providers which, did not have a free speech right to exclude certain channels.

The report says that those free speech exceptions don’t apply to search engines because, unlike cable providers, it’s not just a pipe for information. It also echoes Google position that consumers can easily use a competing search engine.

Google’s situation is also similar to a 1980′s case in which an author launched a failed suit against the New York Times’ over the accuracy of the newspaper’s weekly best-seller list.

Google’s strategy shift
In response to an email query, a source at Google stated that the company thought these issues were worth exploring in more depth by a noted First Amendment scholar.

There is another likely explanation for Google’s decision to release the report — to thwart the government from regulating its search results. Recall that the company is in the middle of an ongoing federal investigation into whether it’s using its dominance to choke competition. If Google refuses to settle the matter, the Justice Department may consider filing an anti-trust suit.

Google may have released the report, then, to try and persuade government lawyers that they would lose an anti-trust case on First Amendment grounds.

The report also marks a strategy shift for Google. In the past, the company has responded to anti-trust allegations by saying that it didn’t have a dominant market position and that, in any case, it didn’t discriminate in its results. Google only claimed free speech as a fallback argument.

Now, Google appears to have given up claiming that its results are always neutral and is instead betting the farm on the First Amendment argument.

Only in America?

Courts so far appear to support Google’s view that search rankings are simply another form of opinion that is protected by the First Amendment.

In 2003  an Oklahoma ad company accused Google of harming its business when it downgraded the company in search listings. A federal judge threw out the case on free speech grounds. At the same time, in 2007,  a California court said Google’s rankings were “private property” in response to a company that complained that a low ranking violated its free speech rights. Low rankings can easily be remedied by investing in a Top SEO Company, as Google results are largely based on keyword dominance and relevant content useage.

Overall, in the US, Google may have a strong case that its free speech rights override the federal government’s antitrust concerns about its search results.

This argument, however, is unlikely to fare as well in other countries that lack America’s robust free speech protections. In places like Europe and South Korea where Google is also under investigation, the company’s claim that its results are an “opinion” could put it in deeper trouble.


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Search Keywords Mean Business

Information Week

Companies spend a fortune protecting their brands. But in the context of local search advertising, keywords may matter more than trademarks.

Google claims that more people (82%) use online search engines like Google than any other medium to find local information. The number of mobile searches with a local focus is estimated to be almost 30%, according to The Kelsey Group.

And local search is only becoming more important, thanks to the proliferation of smartphones and the tech industry's focus on location-oriented data and services.

Small businesses that focus on their own brand, says Bret Fitzgerald, VP of business development for marketing services company Clearlink, are losing out on a significant amount of online traffic if they ignore generic keywords.

The reason is that far more people conduct local searches for generic terms like "pizza" or "coffee" than bother with a branded search like "Round Table Pizza" or "Peet's Coffee."

"Generally speaking, you see more searches around categorical terms than branded ones," said Kelly Hansen, local search director of operations at Clearlink.

For example, Clearlink, which manages local and map search listings for small businesses, tracked some 2,400 searches for "pizza phoenix" in the Phoenix, Arizona, area last month, but only 1,600 searches for "pizza hut phoenix" and 320 searches for "dominoes pizza phoenix."

In Austin, Texas, the preference for generic terms was even more pronounced. Clearlink saw 3,600 searches for "pizza austin," 91 searches for "pizza hut austin," and 170 searches for "dominoes pizza austin."

Fitzgerald says that it's imperative for businesses to understand that they can bring in customers if their local listings are managed properly in terms of Google SEO, so that they show up for the appropriate generic queries in Google Maps, for example.

Google In Talks To Purchase Yelp

NY Times

SAN FRANCISCO — In a sign that Google is interested in broadening its reach among local businesses, the search giant is in acquisition talks with Yelp, the review site for local businesses, according to three people with knowledge of the deal.

The two companies have had conversations for several years, but a more serious round of acquisition talks began two months ago, one of the people said late Thursday. The companies have discussed a price and are negotiating the details, but have not yet signed an agreement.

Both Google and Yelp declined to comment on Friday.

The people with knowledge of the deal would not disclose the acquisition price, but one said that it was more than $500 million, the figure cited by TechCrunch, the industry blog that first reported the news Thursday evening.

Yelp, which has raised $31 million in venture capital, is on track to bring in about $30 million in revenue this year, one person said.

Yelp, which was founded in 2004 by two PayPal veterans, Jeremy Stoppelman and Russel Simmons, dominates the market for local business listings and ads in big American cities, and has listings in Canada and Britain. It gets more visitors than its closest rival, Citysearch, and many of them review local businesses prolifically.

Yelp makes money selling sponsorships to these businesses. For $300 to $1,000 a month, their ads appear on top of search results and on the profile pages of competitors, and businesses can post slide shows of photographs and prevent competitors from advertising on their page.

Google has been showing greater interest in the local business market in the United States. It has expanded its profile pages for local businesses, which include location and hours, maps and reviews from other Web sites. In June, Google gave local businesses the ability to manage what people see on their profile pages, similar to what Yelp does.

Google has been reaching out to local businesses with simpler ways to advertise on the search engine and achieve better Google SEO results. It is also distributing stickers that businesses post in their windows and passers-by can scan with cellphones to get coupons or information about the business.

The deal between Google and Yelp could still unravel, one person said, particularly if another acquirer comes forward now that details have leaked.

Web Advertising Making A Comeback

From Sun-Sentinel

After bogging down in the recession, Internet advertising is regaining the momentum that has made it the decade's most disruptive marketing machine.

The signs of an online revival are emerging even while advertising in print and broadcasts remain in a slump that has triggered mass layoffs, pay cuts and other upheaval.

Companies seem reluctant to spend on elaborate online campaigns, such as the highly visual display ads on Yahoo.com, partly because they tend to be more expensive and not as well-aimed as search ads. The reticence is the main reason Yahoo reported its third-consecutive quarterly decline in ad sales Tuesday. Yahoo's ad revenue fell 12 percent after declining 13 percent in the first half of the year.

Even so, Yahoo isn't being hit as badly as newspaper publishers, and Google SEO is as important as ever.

Internet advertising was just about the only bright spot in the third-quarter reports of newspaper publishers Gannett Co. and McClatchy Co. Meanwhile the companies are dealing with steep declines in print ads — an imbalance most analysts predict will take years to address.

The reality is that much of the advertising in long-established media, particularly in the classified sections of newspapers, will never rebound to pre-recession levels, said Lauren Rich Fine, a longtime media analyst who is now a professor at Kent State University.

That grim outlook contrasts with the fact that advertisers are allocating more of their budgets to the Web. Rates are less expensive, and the returns on online ad investments are easier to quantify.

These trends will give Internet advertising 19 percent, or nearly $87 billion, of the worldwide ad market in 2013, up from just 4 percent, or about $18 billion, in 2004, according to PricewaterhouseCoopers and Wilkofsky Gruen Associates.

That would make the Internet the third-largest marketing medium, and search engine optimization one of the most important investments a company can now make in its future. Television is expected to remain on top, with $168 billion, or 36 percent of the global ad market, down from 35 percent in 2004. Newspapers would still be No. 2, but their $92 billion in advertising revenue is projected to account for 20 percent of the global ad market, down from 28 percent in 2004.

For now, though, some types of Internet advertising — real estate, travel and help-wanted, in particular — remain in the funk they fell into in the first half of the year, when U.S. ad revenue on the Web fell 5 percent. (That was still far better than the 12 percent to 29 percent declines suffered by U.S. newspapers, radio stations and television broadcasters.)

The most compelling evidence for an online recovery is being made by Google Inc., whose search engine powers an online network that has grown from $411 million in worldwide ad revenue in 2002 to more than $22 billion annually now. The company's ad revenue rose 8 percent in the third quarter, the fastest pace so far this year, and Google's executives indicated they are gearing up for even more rapid growth in the months ahead.

The greater flexibility online makes it easier to gauge the mood of consumers by buying Internet search ads before ramping up spending in other areas, Fine said.

"I think a lot of (advertisers) are experimenting right now, hoping they can stimulate a little more demand."

Google's Gmail Goof-Up

By Business Week


It's too bad the National Transportation Safety Board can't investigate Google to find out just why Gmail crashed Tuesday as Google's explanations for its outages (via its dashboard) are short and kindergarten-like.

The NTSB would seek out the root cause of the outage, hold hearings and issue a report with recommendations for fixing the problem. But Google follows the standard operating practice of cloud and SaaS (Software-as-a-Service) providers, and that is to tell customers as little as possible about an outage. They treat their customers like dumb bunnies.

A Gmail outage isn't on the scale of a contaminated food supply incident, the discovery of lead paint on children's toys, or a plane crash—all events that trigger a federal investigation and detailed reports that flesh out causes and remedies.

But what happens if Google wins contracts to provide applications and mail services for Los Angeles and other government entities?

Cloud and SaaS providers increasingly want to manage critical services for government. And in time, outages that are now annoyances may have critical implications to them. Los Angeles' IT department is recommending the city move to Google Apps and says the company's services "often exceed the current city level."

That's a plus for Google but if something goes wrong with LA's IT systems, at least there is still a clear line of accountability to the managers responsible and an opportunity to probe.

But along with telling customers as little as possible, hosting, cloud and SaaS providers indemnify themselves as much as possible from any business losses resulting from an outage.

In theory, the accountability is provided by the market: a customer can move to new service provider. But a migration to the cloud may be a path of no return. LA, in its assessment of cloud services, said that if it ditches its current infrastructure, "it may be cost-prohibitive to return to the city-owned and operated structure."

Today, the harm is mostly economic. When eBay Inc.'s PayPal service crashed last month, it was just something customers had to deal with it.

PayPal blamed the failure on a "back-end router" and some redundancy issues, and left it at that. That meant the companies like Sailrite Enterprises Inc., a sailing supply company, which relied exclusively on PayPal, were unlikely to learn what happened and had to suffer the loss.

But if cloud and SaaS providers manage government services then it's unlikely that an informed public will settle for incomplete explanations about outages.

If the service is critical, they will want to know what went wrong. Was the equipment upgraded, patched? Was staffing at proper levels? When was the last time someone tested the emergency generators? And so on.

Answers to fair and legitimate questions will be sought and little "dashboards" aren't going to cut it.

The Gmail outage also affected the Google SEO search results. Searchers were getting queries that were not relevant to their searches, but, Google has resolved the problem and everything is now functioning properly.

Google's results show slowing growth as online advertisers cut back

MercuryNews.com

As the toll of the financial collapse mounts, add one more victim: Google's go-go growth.

On Thursday, the search giant announced second-quarter revenue was essentially flat compared with the first quarter.

Profit rose, but that's because the Mountain View company slashed spending on computer technology and the giant data centers that power its business. And the company continued shedding jobs, after years of adding hundreds or even thousands of new Googlers every quarter.

Google's report adds to a mixed picture about the health of the technology industry. Earlier this week, Dell forecast that weak demand from big corporate customers would keep pressuring its profit, while Intel delivered a bullish report that led to a market rally Wednesday. And late Thursday, IBM delivered an especially upbeat assessment about the rest of the year.

CEO Eric Schmidt said Google's advertising business had stabilized. "We are not at the moment looking at the downward spiral we thought we might see six months ago," Schmidt told analysts in a conference call, noting that "a quarter ago, we had no idea where the bottom was."

But Schmidt could not identify signs of a recovery. The best news was that enough of Google's big advertisers have come back that the company was able to ring up $5.52 billion in revenue during the second quarter. That was $10 million better than the first quarter, when the company's revenue declined for the first time ever from the quarter before that and it looked like the economy was falling off a cliff. Advertisers, however, are spending less than they used to.

"For the first time, we saw a really big drop in revenue per search," said Jeffrey Lindsay of Bernstein Research. "We thought it wouldn't have deteriorated much for the first quarter, but obviously it has gotten worse." Revenue per search is a measure analysts watch. It goes down when advertisers pay less for ads or buy fewer ads.

The silver lining? The amount advertisers are willing to pay is "no longer declining now as a general rule across the board," said Jonathan Rosenberg, senior vice president for product management.

Google did manage to increase profit 18 percent as net income rose to $1.48 billion, or $4.66 a share, compared with $1.25 billion, or $3.92 a share, a year ago.

But that increase only came because of the cuts in hiring and technology spending, as well as an unusually low tax rate.

The number of employees at Google dropped by 378 to 19,786, marking a definitive end to a madcap hiring spree that characterized the company in the early years following its IPO.

Spending on capital projects plunged to $139 million. Two years ago, it was $575 million.

In an interview with the Mercury News, Chief Financial Officer Patrick Pichette praised employees for being frugal but said it would be wrong to assume that austerity had come to the Googleplex.

"We still have free food," he said. "We still have massages. There is still a doctor on site."

"It's mixed results," said Ron Gruia, an analyst with Frost & Sullivan who praised Google for its discipline. "It's the lowest growth rate since the company went public five years ago."

And if Google, one of the most profitable companies on the planet, is struggling, other smaller Internet companies are fighting for survival.

Schmidt and other executives described how Google has been pulling out the stops to turn YouTube into a profitable business and to begin selling meaningful amounts of display advertising — graphical ads that may soon increasingly replace the smaller, unobtrusive text ads that fueled Google's early growth.

"I think that is the next area where online advertising is going to shift and we are going to see tremendous growth," said Nikesh Arora, president of global sales. Arora said he was also pleased with the "trajectory of YouTube," which is selling more ads. "In the not long too distant future we see a profitable business," he said.

Google stock rose 1 percent to close at $442.60 in regular trading Thursday. But it fell as low as $427.67 in after-hours trading.

Google Shares Some Secrets
Story from Mercury News

Google shared one of the closely guarded secrets of its success with a roomful of developers this morning, revealing the tricks it uses to get Web pages to load in less than a second.

At Google Its All About Speed

"We really think that if the Web gets better and the Web gets faster it is good for everyone," Marissa Mayer, a vice president of search products, told attendees of the O'Reilly Velocity Conference. From its launch in 1998, Google distinguished itself from competitors with a focus on speed. While Excite and Yahoo weighed down their home pages by turning them into massive portals, Google's page featured mostly white space.

For years, Sergey Brin, Google's co-founder, has joked that the reason was he refused to learn HTML, a computer language used to design Web pages. But there was another important motivation: White space loaded instantaneously. When Mayer started working at the search engine 10 years ago, she recalled, her boss closely monitored her code to make sure that she didn't add a single extraneous byte of data.

As Google grew, the number of Internet searches its computers conducted from several hundred thousand in 1999 to several billion in 2009. Speed became more important than ever. The home page was pared down and new products were vetted in a "latency lab" that measured how long a user would be forced to wait. The results sometimes led to surprising decisions. When Google launched an online payments system in 2006 called Google Checkout, engineers were instructed to render the blue shopping cart, which was the site's identifying icon, in painstaking HTML.

It was as if a newspaper, which use computers to produce each day's edition, had reverted to hot-type technology, which used massive machines to set type in a painstaking process. "Who would have thought that this big blob of HTML would load faster," Mayer said. "But the latency lab showed that it did."

It turns out that a delay as short of the blink of an eye — about 400 milliseconds — could turn users off. Last year, Mayer said, Google experimented by injecting a 400 millisecond delay into its delivery of search results. Searches per user started dropping. After six weeks, searches per user had fallen nearly 1 percent. That seemingly small figure represented several hundred million dollars a year in potential ad revenue, Mayer noted.

Mayer said Google has started sharing tips for speeding up Web pages, because it believes the faster the Web becomes the more people will ultimately use it — and use Google. In July 2009 Google unveiled a new Web site it had created for developers containing tutorials and performance tools. "Many Web sites can become faster with little effort, and collective attention to performance can speed up the entire Web," senior vice presidents Urs Hoelzle and Bill Coughran wrote in a blog post.

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