Saturday, January 21, 2012

The Latest from TechCrunch

The Latest from TechCrunch

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What Happened To Kodak’s Moment?

Posted: 21 Jan 2012 08:05 AM PST

A Kodak Moment: a rare, one-time moment that is captured by a picture, or should have been captured by a picture


We all had them: times you reached for a camera to stop life for a second, to grab a memory. For decades, Kodak was the rock solid standard in photography and as the 131-year old company files for Chapter 11 bankruptcy, “Kodak moments” may be all that’s left of what was once one of the most powerful companies in the world. Kodak can’t compete let alone survive in this new world. The only thing keeping them alive is a trove of 11,000 patents, and even those don’t seem to be piquing anyone’s interest.


From household name to also-ran in a few years. This isn’t a story of a stubborn buggy-whip manufacturer going out of business for refusing to change. This is a carriage maker making a seemingly successful transition to the automobile and then, just as quickly, failing catastrophically.

So what happened?


A Digital Decline

Digital photography took off and Kodak wasn’t ready for it. From the late 90s until about 2008 (which is also when camera phones became mainstream), the digital still camera market in the U.S. grew from 4.5 million units shipped in 2000 to 28.3 million units in 2007, according to PMA.

What’s interesting is that Kodak actually invented the first digital camera in 1975, but it was Sony who first introduced a digital camera to the people in the form of the Sony Mavica in 1981. Kodak, on the other hand, focused its digital technology on high-end, niche markets. They came to bat with a hybrid approach of sorts — offering sensors to other companies rather than building their own consumer products (Leica used their sensors for years and don’t even ask how that turned out) — because many of them couldn’t imagine a world in which selling one digital camera to a few power users would be more profitable than selling one-time-use film cameras to the masses… over and over again. A classic case of a disruptive technology coming in right under the incumbent’s nose.

Under CEO George Fisher, Kodak had been planning its digital strategy for most of the 90s. The problem was that the estimates for growth in the digital imaging sector were rather low anywhere outside of Japan during the late 90s. According to a study out of the University of Michigan business school, “the total volume of digital cameras sold outside Japan in 1997 was estimated to be only 400,000 units,” and many of them were believed to be for power users, not the general public.

Plus, Kodak’s presence in Japan was weak, at best, with Fuji absolutely dominating the Japanese film and camera market during the 90s.

That left Kodak leadership with a big decision. Should Kodak make a huge push into digital and risk cannibalizing its still-strong core business? That was the question, and the answers varied.

Here are two quotes from Kodak corporate literature from the UM study:

The keys to Eastman’s success in making photography a popular leisure-time activity for the masses were his development of roll film and the inexpensive box camera. Although film and cameras are far more sophisticated and versatile today, the fundamental principles behind his inventions have not changed.

Four years ago, when we talked about the possibilities of digital photography, people laughed. Today, the high-tech world is stampeding to get a piece of the action, calling digital imaging perhaps the greatest growth opportunity in the computer world. And, it may be.

Obviously, there was not a consensus and why would there be? Fuji dominated in Japan, and right at the moment that Kodak should have been pushing hard into the digital realm, estimates for anywhere outside of Japan remained low.

Clearly those estimates were wrong and Kodak was inevitably late to the game. Their first digital imaging offering was not a camera, but what they were calling the “Photo CD” in 1991. In 1996, Kodak made another small push with its pocket-sized DC20. At the time, digital was in its infancy and Kodak failed to see the possibilities, instead focusing on other digital products like scanners. In fact, Reuters reports that Kodak spent $5 billion on digital imaging research in 1993, only to delegate it to 23 separate scanner projects.

Five years after the DC20, however, Kodak made its biggest push into digital cameras with its EasyShare line. Dan Carp had taken control of the company and knew to a degree that if they didn’t at least try in digital, it would be a mistake. But by 2001, the market was crowded. Canon and Sony had already made huge leaps in the sector, and Kodak had some major ground to cover.

Fear of change is understandable, to an extent, but it’s also the kind of backwards, old-fashioned thinking we’re seeing today out of the RIM playbook (pun intended).

A big part of the issue there was talent. The same employees that may be geniuses in film and film cameras aren’t necessarily as advanced in electronics. This, of course, did nothing for company solidarity as Kodak’s digital and film branches were at odds. Kodak had plenty of great people and great photographers, but they couldn’t keep them on the payroll as other major players dropped into the digital game after 2000.

The company spread itself too thin in the mid-90s and on into the next millennium, spending millions on research only to release incrementally updated products in a number of different fields. Already behind, this only made matters worse.

Then in 2007, the company made a huge mistake in selling off its health imaging business for $2.35 billion, which was meant to go toward its consumer camera business. Unfortunately, health imaging had been good to Kodak and the firm sold off the business just in time to miss out on baby boomer retirement. Reuters recounts that Kodak didn’t want to spend the money required to migrate the health industry from analog to digital.

By 2008, the digital camera market was already starting its decline. A new technology had emerged: 120 million camera phones were in use in 2008, just in the U.S. alone, according to PMA. Also in the U.S., 2008 brought about the first drop in digital still camera sales, down from 28.3 million in 2007 to 27.7 million. The sector would experience a slow but steady decline from then on.

But what slowed Kodak down so much between the 90′s and now?

Already Broken

To start, the retail landscape here in the U.S. changed dramatically over the 80s and 90s. Walmart, for one, saw a huge growth spurt in the 80s and opened its first superstore in 1988. And while Kodak was happy to be sold in big box chains, others were just as pleased to put their products in stores like Walmart.

You see, in the 70s and 80s, every little town had a tiny film store. Kodak owned the market wholesale, with between 80 and 90 percent share. Then Walmart, along with Sears, Costco, and other big box retailers, swallowed these little mom and pop stores up. Retailers learned that diversity, scrambled marketing, and one-stop shopping were important to consumers, and the only way to keep costs low was to squeeze the manufacturers into providing high-quality products at lower prices.

That’s where Fuji comes into play, and it seemed as though Kodak never saw it coming.

Kodak held between 7 and 10 percent of the Japanese market in the mid-90s, while Fuji had a dominant position. In fact, each of the companies held a rather dominant market share on their home turf, with Fuji representing 17 percent of the U.S. market. But distribution channels in the two countries were very different. While Kodak and Fuji were selling their products directly to retailers here in the States, distributors played middle-man over in Japan. Fuji, not surprisingly, had strong ties with the four major distributors in Japan, and Kodak… well, they didn’t like it.

In 1995, Kodak filed with the United States Trade Representative (USTR) for an investigation under Section 301 over whether or not the Japanese government had allowed anti-competitive practices. After two and a half years of litigation, the World Trade Organization in Geneva issued a "sweeping rejection of Kodak's complaints" regarding Japan’s film market.

By dominating their own market and steadily making inroads in the U.S., Fuji had quite a bit of cash lying around to buy itself into new markets. And that’s exactly what it did. According to a case study [PDF] out of Pace University, “while the U.S. based Eastman Kodak Company was sleeping, the Japanese firm Fuji Photo Film opened its first film-production plant in the U.S., cut prices, marketed aggressively and stole valuable market share.”

This was between 1996 and 1997, when Kodak still held approximately 80 percent of the U.S. market and was focused primarily on roll film and film cameras. But Fuji was now prepared to duke it out in price wars, and though both companies denied actively engaging in such a thing, Kodak fired back hard each time Fuji cut prices. But it was too little, too late. In the years leading up to this, Kodak refused to cut prices for fear of profit erosion.

In 1996, however, Kodak signed an exclusive agreement with Costco that left Fuji with 2.5 million rolls of excess film. To avoid expiration, the company offered a 10 to 15 percent price cut. Kodak resisted engaging, and rightfully so (perhaps), as Salomon Smith Barney analyst Jonathan Rosenzweig figured that “for every 1 percent cut in Kodak film prices, a 1 percent drop in earnings per share results.”

Meanwhile, the American consumer was changing. While people still felt pride when they were “buying American,” imports became more and more attractive. A few years later, in January of 1999, the United States would record its single largest trade deficit month to date at $17 billion. To put it bluntly imports outweighed exports, and Fuji with its low-priced film fit into the U.S. market swimmingly.

By 1998, however, the competition between Fuji and Kodak seemed to slow down. Most of the price wars happened in the form of promotional deals rather than every day prices, but something even more fatal than Fuji was creeping up on Kodak: the digital revolution.

The Only Hope

Kodak’s market share had already been eroded by Fuji, but the company, over a century old, had too much pride to change. When all is said and done, pride and nostalgia brought Kodak to its knees. But today there is (or was, rather) one saving grace.

Kodak holds 11,000 patents which analysts value around $1 billion. Since Kodak invented the first digital camera, and research was one of the four pillars of Kodak’s business strategy, it only makes sense that where digital imaging is concerned they own the technology.

But it’s too late to act like the technology in those patents is groundbreaking. It’s everywhere, and thus Kodak is suing everyone: RIM, Apple, HTC, Fujifilm, and Samsung. The company knows that its patents are its only solid source of revenue, whether it’s by selling them or licensing them.

Unfortunately, litigation takes years, and no one seems all that interested in buying Kodak’s patents. Which brings us to today.

After filing for Chapter 11 bankruptcy on January 19, 2012, Bloomberg is reporting that the company intends to shift its business toward printers and its ink. Selling off its camera unit and perhaps its patents should allow for more cash which can be invested in further patent litigation and licensing.

But this is a far cry from the Kodak of yesteryear. Once dominant, the 131-year old company is now fighting for survival and without a massive leap forward in terms of innovation, this may be the end.

There will still be kodak moments, but there may no longer be a Kodak.

Daily Crunch: New Eyes

Posted: 21 Jan 2012 01:00 AM PST

The Dawn of Social Lobbying

Posted: 20 Jan 2012 11:19 PM PST


Editor's note: TechCrunch contributor Semil Shah is an entrepreneur interested in digital media, consumer Internet, and social networks. Shah currently works at Votizen and is based in Palo Alto; you can follow him on twitter @semil

The word "lobbyist" surely doesn't have the best connotation in the world. Depending on your reading of the definition, it generally signifies an attempt to influence government decisions, traditionally by targeting legislators or regulators. What isn't often taken into consideration, however, is that while there are lobbyists in dark suits roaming the halls of Congress funded by entities such as big oil and pharmaceutical companies, "lobbying" is also conducted by nonprofit groups funded by different kinds of special interests. We think of efforts, however, as "activism," but at the end of the day, they’re just another form of lobbying.

Now, a new form of "lobbying" has emerged, but instead corporate checks or individuals donations, the currency has shifted from cash to social connections, where financial power will be trumped by network power: "social lobbying."

To understand why lobbyists get such a bad rap, look no further than Jack Abramoff, one America's most notorious "suits" who served over three years for all forms of corruption up and down Washington D.C.

To briefly oversimplify his intricate web of deception, clients would hire Abramoff for handsome fees to lobby on their behalf and push or protect special interests, typically by working with Congressional staffers to shape, trim, bend, and massage the language contained in official bills of law too dense for any normal human to read. Abramoff's trick was to "buy" the loyalties of current Congressional staffers with the carrot of potentially hiring them on his dole for two to three times their current salaries. That incentive alone was enough to buy Abramoff (and by proxy, his clients) choice phrases inserted into bills that eventually became law. (I'd recommend watching this recent 60 Minutes interview with Abramoff, who explains his system in greater detail.)

These "suits," funded by private, corporate dollars gave rise to "activists" who — in another oversimplification — rallied around causes to combat special interests. These entities typically form as nonprofit or nongovernmental organizations and raise money through foundation grants (which are often funded by wealthy families/individuals or corporations) and individual donations, typically from individuals wealthy enough to let go of the disposable income yet savvy enough to understand the implications of the corresponding tax write-offs. Activist-funded lobbying exerts its influence in different ways, and depending on where you sit, embody just as much of a dark art as their "suit" counterparts.

Two sides of the same coin, right? Probably. But now a new form of lobbying is emerging, one where lobbyists aren't necessarily hired for money, but rather organized and recruited through the social graph of connections we've mapped out while we're busy sharing and liking pictures and honoring our friends' requests to retweet this or that piece of content. And, instead of lobbying that's fueled entirely by cash (yes, cash is still involved), the new form of currency is tied closely to social networks.

While recent events have demonstrated, at least in one case, the advantage of networks over cash in a lobbying sense, it still remains to be seen whether this new form of lobbying — social lobbying — will deliver results across a broader range issues that cut into the mainstream or reside out on the long-tail of retail politics. It's impossible to predict where and when this kind of lobbying will pop up again, but this much is sure — whatever issues social lobbying sets its targets on, there's a greater chance that those interests could theoretically advance positions that benefit a greater majority of people relative to those who could be affected: not a perfect democracy, but inching closer, if ever so slightly, and given recent abysmal U.S. Congressional approval ratings, perhaps a small step in the right direction.

Photo Credit: Creative Commons Flickr / Images of Money

Analyst: All These Concerns Over EA And Star Wars Are “Overdone”

Posted: 20 Jan 2012 09:07 PM PST


So, there’s been some hubbub around Electronic Arts over the last few days, as the company ramps up for the release of its third quarter earnings on February 1st. Yesterday, EA’s stock closed at $17.54 per share, which, in context, meant that the gaming goliath’s stock was down 30 percent since hitting its 52-week high in early November. This drop was mostly due to the collective shock relating to the news concerning its recently released title, Star Wars: The Old Republic, which now has a ridiculous price tag attached to it — as Wall Street is estimating the cost to be between $150 and $200 million.

EA’s studio responsible for creating the much-touted online game, BioWare, spent some six-odd years developing Star Wars, and obviously there are concerns over whether or not the game will be able to satisfy the geeky desires and high expectations of both Star Wars fans and the avid World of Warcraft-playing, MMO gaming fans — especially as they’ll need to sell millions. Not always an easy audience to satisfy, but an eager and quick-to-spend audience if the game meets expectations — as the LA Times points out. (Though Trion has been having some serious success in this arena — see our post from yesterday.)

Some are saying that it could be the most expensive online game in history, and at $60 a pop, obviously there are those concerned that the deficit will be too great. However, analysts at Macquerie Equities Research today said that they believe initial sales of Star Wars will still be relatively good, and are still on track to hit their target of 1.5 million. It also helps that the costs were already absorbed into EAs financials.

Macquerie said that how the stock will perform will be largely affected by Star Wars’ sales, but if sales get close to their projection of 1.5 million, the firm expects the stock to make a bounce-back. While some are saying that, because EA hasn’t announced sales numbers yet, the likelihood is that sales have been not-so-good. Instead, EA has only said that it’s in a “quiet period” and will not be commenting as a result. Fair enough.

Others have said that the analysis of the game’s server loads show that there isn’t as much activity, but Macquerie would like to remind those people that it’s not easy to make accurate estimates of the numbers of users based on server loads — especially without knowledge of how they’re allocating server loads.

Glitches and mechanical problems have also been mentioned as influencing poor sales and low excitement, but, again, Macquerie defends EA, saying that, while this could affect the long-term outlook for the game, these kinds of problems are expected at initial release, and may not have as big of an affect as some might believe.

Thus, Macquerie isn’t having any of this nay-saying, and is expecting EA’s stock to outperform — and be on the rise. The game will need about 500,000 subscribers to get close to even, and, of course, the other side is that, they could be way ahead of the ball, and if they were to get several million, well than what one analyst called “the single largest bet” of the EA CEO’s career might just turn out to be an enormous, money-raining win.

What do you think?

If The Tech Industry Had Its Way, Hollywood Would Be Zynga

Posted: 20 Jan 2012 08:44 PM PST

Screen Shot 2012-01-20 at 8.27.20 PM

Like all of y’all I just read Paul Graham’s SOPA-soaked call for a tech startup that would kill Hollywood.  You would have to be a complete idiot to think Hollywood (or at least some part of Hollywood) isn’t ripe for disruption BUT …

“The people who run it are so mean and so politically connected that they could do a lot of damage to civil liberties and the world economy on the way down. It would therefore be a good thing if competitors hastened their demise.”

Damn. What I’m getting from this post is that Hollywood should die, because people are mean. I don’t know about you, but I’ve met plenty of mean people right here in SF Silicon Valley.

Graham recommends, “The best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?”  After asking a bunch of smart people in the tech industry where they thought the industry would be in 20 years and hearing the same answer from most of them (“Something like Zynga …”) I finally asked Graham and YCombinator partner Harjeet Taggar what they thought people would be doing in 20 years, for fun.

Their answer:

“I’d guess a lot more games. Zynga type games are likely only the start. Console video games are already essentially interactive movies.  Smartphones and tablets are making games more accessible than ever, in the future it’ll be bizarre to think that people ever purchased devices with the single function of loading games from a disc.

It’s probably impossible to predict *what* exactly people will be doing in 20 years but it’s likely a safe bet to say that the current model of going to a physical place where the only content available has been selected for me by a group of money men somewhere, won’t be around.”*

What I’ve never understood is this, it is some function of Hollywood, Silicon Valley and the New York media industry to tell human stories and distribute them — they are all symbiotic. If this is the case then why can’t we all just get along?

At the end of the day all three industries feed each other, one provides the content, one (increasingly) provides the distribution and the other covers it all, with some interchange of roles between all three. What is happening now (and what Graham might be conflating) is that there is a conflict between who controls the platform, and therefore distribution, versus who controls production. And the only reason Hollywood has more power here is that it’s been around the longest — the tech industry’s got nothing, so it’s got nothing to lose.

Sure there are some people in the content industry who refuse to admit that their old models don’t work (just like how there are people in the tech industry who work on Bing). But to kill the whole thing off would get rid of a wealth of creative talent skilled in the cinematic portrayal of the human narrative, and replace it with what? A souped up Farmville?

The truth is that both Hollywood and Silicon Valley have valid arguments with regards to digital rights and neither can put itself in the other’s shoes.  If Hollywood spends $50 million dollars on a film, it can’t pivot while YCombinator can invest $50K in startups and have 2/3rds of them fail. And even if they do succeed it doesn’t matter, as the tech industry reinvents itself every five years! Hollywood on the other hand …

The real moral to this story is we all should dream, and we should dream like Hollywood but we should invent the future build like Silicon Valley. There’s no YCombinator for film because that kind of business behavior doesn’t work  in traditional media. And even the most genius tech people haven’t yet solved the problem of privacy. (If someone has the answer please raise your hand, because you’re going to be the richest person on the planet.)

Please, raise your hand. Anyone? Bueller?

* For the record, I’d rather watch my Instagram feed than watch a movie.

Google Trims The Fat

Posted: 20 Jan 2012 07:55 PM PST

Google Thin Logo

Google has more than 40 core products, and hundreds of products depending on how you count them. Even with over 30,000 employees, that’s a lot to support. In the name of refocusing, today the company announced that Picnik, Sky Map, Urchin, Needlebase, Google Message Continuity, and the Social Graph API are all headed for the deadpool, open source, or absorption into more central divisions.

Today’s culling follows this summer’s shut downs of Google Labs and most of the products internally developed by former acquisition Slide. While Google has long encouraged experimentation, its found itself overextended. The company needs all hands on deck fighting the wars for social, mobile, and the cloud.

Google typically reassigns employees from scrapped projects rather than fire them. The teams from Picnik and Sky Map could increase the concentration of product leaders working on Google+. With any luck they can give Google’s social network a more human feel.

Now, the fate  of the forsaken:

Picnik – The browser-based photo editor Picnik will be shut down on April 19th and its team likely integrated in to Google+ and Picasa. Premium customers will receive refunds. Google+ already offer Creative Kit, which includes basic editing, filters, and decorations. Picnik uses almost an identical interface, but includes advanced editing , frames, and seasonal effects that could soon show up in Google’s other photo products soon.

Google Sky Map – The augmented reality star gazing Android app will become open source. Google appears to be moving away from standalone apps, given the recent deaths of Disco, Photovine, and Pool Party. This will make it easier for the iOS developers of Starmap and Star Walk to develop Android versions.

Social Graph API – Google’s graph of public interconnections between people on services like Twitter and Flickr will be deprecated on April 20th. The API allowed developers to pull in information about their users to improve their products, but Google says “The API isn't experiencing the kind of adoption we'd like”. Google will instead be working on catching up to Facebook by developing its own social graph with Google+.

Google Message Continuity – No more resources will be wasted on a cloud backup system for on-premise enterprise email. Google will dedicate itself to support for its fully cloud-based enterprise system Apps, which has proven much more popular.

Urchin and Needlebase – The acquired client-based predecessor to Google analytics and its data management platform are being formally shut down. The Urchin team is now work on browser-based analytics, while Google is still considering whether to integrate or simply eliminate Needlebase.

A firm handshake and hearty pat on the back to all those working on these projects. Remember, you don’t have to toil away on more small features. Consider this your opportunity to go Do Great Things.

Delicious Adds Collaboration and One-Ups Pinterest With Privacy

Posted: 20 Jan 2012 04:32 PM PST

Delicious Collaborative Stacks

Delicious has just announced 4 new features to make its stacks, or collections of links, more social. Because the only thing better than a bundle of your favorite kitten websites is bundle co-created by you and your friends. You can now collaboratively build stacks, comment on whole stacks, respond to a stack with a stack similar to a YouTube response, and create private stacks. The features will permit new use cases like stealth cooperation and give Delicious an advantage over Pinterest which doesn’t offer private boards yet.

Private stacks make Delicious more than just a broadcast channel for your taste. You can stealthily hoard links and keep them to yourself forever, including sites you wouldn’t want your boss or mom to see.

In conjunction with the new collaboration feature, you can also silently assemble and discuss links with others, and later decide to present them to the world. Delicious offers a perfect example of how you could “share favorite engagement rings with your yet-to-be-announced fiancee.”

Pinterest doesn’t offer private boards yet. It told one Quora user that feature might one day be offered as a premium service, but that it wasn’t a priority because the site focuses on sharing. This gives Delicious an opening to exploit.

The collaboration feature lets you invite friends to edit your stacks. This could help teams cooperate on research, or let friends compile a set of favorite links around a topic.

Commenting on entire stacks lets you have conversations about the interconnections between links. You can also suggest links you think would enhance someone else’s stack.

Stack responses lets you battle over who can find the best content around a topic, or offer a contrasting collection. For example, if you’re worried your friends might actually buy something from their Atrocious Sweaters stack, persuade them not to ruin their image in the name of irony by responding with a stack of stylish sweaters.

Delicious is still less flexible than some group sharing platforms such as Facebook Groups, and doesn’t have the momentum of Pinterest. To stay relevant it needs to nail its core purpose — stable presentation of curated links, which isn’t as well supported by feed-based and photo-centric services.

Watch This Delightful Crowdsourced Star Wars Fan Film Immediately

Posted: 20 Jan 2012 04:08 PM PST


You can’t always count on the wisdom of crowds. But this particular project turned out not merely good, but amazing. Star Wars Uncut is a project by filmmaker Casey Pugh (and edited by Aaron Valdez and Michael Pugh), in which Star Wars: A New Hope was divided into 15-second segments, each of which was replicated by fans in whatever way they chose. Connect the new segments and voila! Crowdsourced magic.

You can watch the whole thing, with each component hand-picked for your viewing pleasure, here:

It’s stuff like this that reassures me that the Internet is, in the end, a collaborative and positive force. Not that all it is for is silly videos, but think about the fact that just a few years ago, this project would literally be impossible for a number of reasons. Not only now has the ability to produce and share video become mainstream, a trivial task even, but also the ability to collaborate globally, with no regard for distance, language, or other factors.

To see something as light and fun as this produced using these powerful tools of ours is not, as some might expect, depressing, as if we are incapable of anything better. I think it is representative of the versatility of those tools and the willingness of people to use them. That’s a heartening though. Today, a Star Wars reshoot. Tomorrow, an independent film by dissenters in Iran. It’s really not such a great leap between these two things.

At any rate, enjoy the film. It’s ridiculous all the way through, and apparently Adam Savage is in there somewhere. It’s also available on Vimeo if you prefer that.

Investors Bet On Social Gambling, $ZNGA Closes Up 6.57%, Now At $9.09 A Share

Posted: 20 Jan 2012 03:48 PM PST


The social gaming industry has been getting more and more interested in a potentially big new way to make money: online gambling. And investors, who are now able to buy stock in market leader Zynga, are following suit.

Today, Zynga told All Things D that it was considering how to approach the new opportunity: "We build games and experiences that our players want and love. Zynga Poker is the world's largest online poker game with more than 7 million people playing every day and over 30 million each month. We know from listening to our players that there's an interest in the real money gambling market. We're in active conversations with potential partners to better understand and explore this new opportunity."

The market, which has not been sure what to make of Zynga’s virtual goods revenue model since the company went public at $10 a share last month, reacted by driving its stock up by $0.56, or 6.57%, to close at $9.09 today.

Zynga’s move follows a potential loosening up on the issue by the two platforms it relies on most: Facebook, and the United States government. Recent statements by the US Department of Justice suggested that online gambling might be legal in many states. And Facebook is reportedly looking at allowing gambling in countries where the pasttime/vice is already allowed.

Beyond Zynga Poker, which has dominated the winnings-free gambling category of games on Facebook since it launched in 2007, a few other companies have been building hit games (and getting acquired). Playtika, which owns slot-machine game Slotomania, was bought by gambling empire Caesars Entertainment Corporation for more than $90 million back in May. Meanwhile, Double Down Interactive, creator of mult-game app Double Down Casino, was just bought by International Game Technologies in a deal worth up to $500 million.

Groupon Buys Social Shopping Platform Mertado To Bolster Groupon Goods

Posted: 20 Jan 2012 03:45 PM PST

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We’ve been hearing rumbles about Groupon taking its Groupon Goods initiative more seriously, including rumors that it was talking with various eCommerce companies about partnering up. Those rumbles have a little more weight today, as the company has acquired YCombinator startup Mertado, the social shopping service that uses Facebook as a distribution platform.

From the Mertado blog:

“Our mission at Mertado has always been to expose a selection of high quality, unique, lifestyle-oriented products to consumers wherever they spend their time. Working toward this goal, we have strived to create shopping experiences that build bridges between content, commerce & community.

Today, we’re pleased to announce that we are continuing this journey by becoming a part of the Groupon family. Groupon has been a pioneer in social commerce in many ways, and when we started talking with them, it became extremely clear that they shared the same set of values as us.”

The startup says in the same post that it will shut the service down on February 28, 2012 and that existing customers will have customer service access until then. Their blog post implies that Groupon Goods is an alternative to Mertado, with the following heavy-handed appeasement, “If you enjoyed shopping on Mertado, we think you’ll love the great local experiences and goods that Groupon offers. Groupon’s subscription is opt-in, and you can register at”

Prior to its acquisition, Mertado raised $2.3 million in funding from Rustic Canyon PartnersBlumberg CapitalRedpoint Ventures and Y Combinator.

TCTV Debate: Can SOPA Be Fixed Or Should It Stay Dead?

Posted: 20 Jan 2012 03:38 PM PST

SOPA Debate Part

The controversial Stop Online Piracy Act (SOPA) has been pulled and its Senate counterpart, the Protect IP Act (PIPA) is on hold. The Internet won this round, it seems. But don’t celebrate just yet. The forces behind these acts are simply regrouping. Should SOPA and PIPA be killed, or can they be fixed? We invited Viacom’s General Counsel and EVP Michael Fricklas and David Sohn, General Counsel and Director of the Center for Democracy And Technology, to debate the issue in the video above.

This is Part I of the debate. We will put up the rest later.

DreamHost Hacked, Password Changes Made Mandatory

Posted: 20 Jan 2012 03:37 PM PST


Another day, another hack. The company whose data was compromised this time? DreamHost.

According to DreamHost’s status blog, the company detected “unauthorized activity within one of [their] databases”. In other words: someone was snooping around where they shouldn’t have been snooping, and DreamHost noticed the foot prints.

Alas, the company isn’t divulging much information as to the nature of the hack, beyond that they “don't have evidence that customer passwords were taken at this time”. Still, they’re requiring password resets for all Shell/FTP accounts (read: not the account that DreamHost customers use to login to the billing/backend system, but the user accounts they use to access and maintain their actual websites.) for what seems to be all DreamHost customers. If you find yourself having trouble logging into your DreamHost FTP accounts today, it’s because your password has already been disabled.

Perhaps it goes without saying, but: If you’re a DreamHost customer and you use a similar password elsewhere around the Internet, now’s the time to switch them all up.

How-Tos: Entrepreneurs Talk Customer Acquisition, Social Media & More In New Video Series

Posted: 20 Jan 2012 03:14 PM PST

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Last year, New York City-based Grovo raised a round of funding with an honorable, if not lofty pursuit for all the web novices out there. Grovo was looking to become "the field guide to the Internet,” as much as there could be such a thing; in other words, the startup was building an online education and training platform to enable Web users to find and learn how to use the Web's most-frequented sites (and vice versa) — beginning with sites like Twitter, Mint, and Amazon.

Grovo also added support for small businesses and startups, offering them an easy (video-based) way to train and educate their employees — and their customers. It’s a great tool for startups to improve their customer experience, especially if they have features or products that may take some explaining — let’s be honest, there are few ways in which a “How-To” video can hurt your user experience.

Since we last covered Grovo, the startup has rounded out its offerings and now contains over 1,300 video lessons and provides education for over 100 leading sites. The team expects to add several thousand new lessons in 2012.

Building on their education and training videos for startups and SMBs, Grovo is today launching an “Expert Series” that aims to “shed light on the evolving world of Web 2.0,” in which entrepreneurs, small business owners, celebrities, journalists, and investors will offer insights into successful operation strategies, brand building, differentiation, how to leverage social media, and everything in between. The goal is to not only help others understand how to use popular web services and tools, but why they’re important and how they’ve helped grow their own businesses.

The Expert Series premieres with an eight-part video featuring Andy Dunn, the co-founder and cEO of Bonobos, a premium, web-driven men's apparel brand and eTailer. Dunn talks about how he and his team have leveraged social media to help build a vertically integrated product and improve customer service, and also touches on some approaches to brand building, customer acquisition, and eCommerce that he’s found successful.

Next week, Grovo will feature Ben Lerer, Co-founder/CEO of Thrillist and partner at Lerer Ventures, who will be discussing how he built Thrillist, how to leverage email marketing, social media, user segmentation, and data to grow a thriving business. He will be followed by Managing Director of TechStars David Tisch, who’s gonna inform your brain about what he looks for in companies, along with laying out some of the characteristics of successful startups. It’s good stuff, check it out.

This follows on the heels of a somewhat similar initiative launched by Sprinkle Labs, called “Now I Know,” which offers lessons learned, memorable experiences, and personal philosophies from different notable figures in the tech space. (You can read our coverage here for more, as well as some other fodder for thought for startups and entrepreneurs.)

Grovo’s content is produced in-house by Grovo's expert team of writers, editors and voice-over talent, and is constantly updated; the team will be rolling out a new video in its Expert Series each week beginning today.

For more on Grovo’s Expert Series, find it here. Below are the first two chapters from Andy Dunn’s video, and an excerpt from Ben Lerer.

More Crunchies Tickets Just Released

Posted: 20 Jan 2012 02:50 PM PST


Have you voted for your favorite startups of 2011? Well what are you waiting for? Vote NOW.

The Crunchies Awards are only a week away and we have been hustling behind the scenes getting ready for the big event. For those of you who do not know what the Crunchies Awards are about, think of them as the Oscars for technology. We host the awards show every year with our co-hosts GigaOm and VentureBeat and every year it’s a smash hit with all-star guests and winners. We have categories ranging from Best Technology Achievement, to CEO of the Year, all the way to Best Startup of the Year. For this year’s awards show, you can take a look at all of the final nominees up for the award here.

Every year we have special surprises at the Crunchies Awards and this year will not disappoint including a hot DJ courtesy our friends @RedBullSFO, cocktails from SVEDKA, and a special opening performance you have to see to believe. The award show will be taking place at the grand Louise M. Davies Sympthony Hall in San Francisco on Tuesday, January 31st, at 7:30pm.

Come start the new year right and support your favorite startups. We just released more tickets today. See you there!

Math-Blind AI Teaches Itself Basic Number Sense

Posted: 20 Jan 2012 02:44 PM PST


Imagine you’re a hunter-killer robot, hovering over the broken wasteland that used to be the world of men. You have surprised a group of biologicals in an act of petty insurrection, and they have split into two groups and begun to flee. You can only pursue and eliminate one group, but you don’t have the spare milliseconds to analyze your high-definition imagery; yet you must determine which group is greater if you want to meet your termination quota.

It’s a good thing that back in 2012, a university lab in Italy helped machines like you evolve approximate number sense!

Yes, Marco Zorzi and Ivilin Stoianov have opened the Pandora’s box of guesstimation in their shadowy “laboratorio” at the University of Padua. Or rather, it opened itself, as the ability seems to have emerged naturally from basic learning processes and not from any programmed understanding of numerosity.

Seriously, though, this is very interesting research. Zorzi and Stoianov created a virtual neural network simulating a basic retina-like structure that “sees” pixels, and then two deeper layers of nodes that sort and analyze the input from the “retina” layer. Strictly speaking, the retina is already composed of several layers with various levels of analysis, but we’ll let that go for now, for science.

The self-revising neural network model they used (in other words, a small-scale, learning AI) was not given any lessons on numbers — it did not know the difference between 2 and 4, integers or fractional numbers, higher or lower numbers, anything like that. This was intended to mimic the early stages of development in creatures that demonstrate ANS: approximate number sense, described as the ability to determine basic numeric qualities such as greater or lesser without actually understanding the numbers themselves. Infants demonstrate it before learning basic arithmetic, and fish demonstrate it when choosing larger and therefore safer shoals to swim with, when presumably they are not counting their colleagues’ numbers exactly. Many other animals show it as well, in situations you can probably imagine.

Zorzi exposed the neural network to a series of 51,800 images comprising various numbers and sizes of rectangles spread around a field. The network attempted to recreate in its own way the images and determine rules governing them. After a number of exposures, the network exhibited on the “lowest” level of neurons (i.e. the most meta-analytical) that there were some neurons firing more or less in correlation with the number of rectangles, but not the total surface area taken up by those rectangles, indicating that the AI was detecting numbers and not simply contrast or the like. Remember, this AI doesn’t even know what numbers are.

They further solidified their findings by letting the computer estimate whether a given image had more or fewer objects than a given number. It had indeed developed a rudimentary ANS system. Interestingly, there are actual neurons in the parietal cortex that exhibit this same behavior.

This type of research typifies the next phase in the real-world/computer interface: natural learning and fuzzy logic. The ability to take what has been detected and turn that into a system of rules, much like the way our own minds are formed, is going to be increasingly important. There might be little things like — your Kinect hears the front door open between this and that hour, and automatically turns on the TV and queues up the show you always watch on that day of the week. Or a security camera learns the faces it needs to pay attention to, or a helper robot learns when to follow master and when not to based on cues the creators might not have foreseen, or anything else you can think of.

Basing our devices on ourselves is one of the ways to make them easy to relate to, though it’s not a guarantee that they will be useful. There’s no use training up a car-painting robot from babyhood, but it would make sense for more domestic devices. Having our devices think and act like us is a natural path, though, and while at the moment our resources seem to limit us to simulating functions we as humans (and fish) develop in the cradle, that doesn’t mean more sophisticated abilities can’t or won’t be developed. Indeed, it is easy to underestimate the sophistication of the most basic functions we as active, conscious beings exhibit every day without even noticing.

The paper, “Emergence of a ‘visual number sense’ in hierarchical generative models,” was published earlier this month in Nature.

Home Depot Acquires Home Services Marketplace Redbeacon

Posted: 20 Jan 2012 02:04 PM PST


Big-box retailer Home Depot has acquired home services marketplace and TechCrunch50 winner Redbeacon. Financial terms of the deal were not disclosed.

Redbeacon lets users search, browse and book local home service providers, including plumbers, roofers, painters, and house cleaners, on its website. Service providers pay a fee to Redbeacon for new paying customers for a lead. The company has expanded from San Francisco to New York, Chicago, Los Angeles, Washington DC, Atlanta, Seattle, and Houston.

The company also offers a mobile app that allows users to get quotes for services on the go without having to make service professionals visit their homes. Redbeacon's iPhone app lets users select from common home service providers like Handyman, Electrician, House Cleaner, Plumber and Yard Worker to make a request for services. It uses the phone's GPS to locate the job and matches the request with quality pros in the area, who then compete for the job and provide quotes.

Founded by former Googlers Aaron Lee, Ethan Anderson and Yaron Binur, Redbeacon has raised $7.4 million in funding led by Mayfield Fund and Venrock.

Home Depot didn’t comment extensively on how the retailer will be incorporating Redbeacon into its operations, but there could be plenty of synergies considering the crossover in the home services space. Consumers who are using the app are probably dealing with plenty of contractors and providers who are also Home Depot customers, and vice versa.

Radio App TuneIn Tunes In To Mega Funding Round

Posted: 20 Jan 2012 01:46 PM PST

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With a reported 30 million monthly unique users, the bragging rights of being the top iOS music app last October and a slew of newly released auto integrations at CES, the under-the-radar TuneIn is sitting pretty. The service, which like iheartradio takes terrestrial radio stations and streams them online, differentiates itself from other contenders in the music space like Pandora and Spotify by offering up traditional radio mainstays like DJs and contests, etc.

And as of this week the company is sitting a little prettier, on some freshly signed terms sheets for a new round of funding from existing investor Sequoia Capital and new investor General Catalyst Partners.

In addition to its previous undisclosed round of $6 million, the company has received between $20 – $30 million from the two investors, according to a source who knows what’s up. I’m still not clear on the exact valuation or whether anyone else will be participating.

The “diamond in the rough” service had super humble beginnings, starting out as the Dallas-based RadioTime and then skyrocketing in usership after it acquired the popular iPhone app TuneIn Radio.

TuneIn is available on the iOS, Android and almost everywhere else.

Bing Brings Postagram To Sundance, Sponsors Postcards For The Movie Stars

Posted: 20 Jan 2012 01:26 PM PST

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Postagram, the mobile app from Sincerely that lets you create and mail real-life postcards from your phone photos, has worked out a clever real-world integration with Bing for the Sundance film festival this weekend. A street team is wandering the snowy roads of Park City, Utah, taking photos of attendees, collecting their addresses, and mailing them Bing-sponsored postcards.

“Your mailbox has a few bills in it, and other boring stuff like that. The thing that’s going to stick out is when you get a card with pictures of you or your friends,” founder Matt Brezina explains. Especially if it’s a photo of you with your favorite actor. The Sundance Postagrams show the Bing sponsorship logo on the backing board for the photo, and include a link to get a free postcard courtesy of Microsoft’s search engine.

Sincerely’s main business model is still charging for the mail. Brezina isn’t sharing too much about these revenues, but he notes that the average person who sent Sincerely Ink holiday cards this past season spent $23 (each card costs at least $1.69). Sponsorships, meanwhile, are turning out to be an interesting secondary revenue stream. The Bing deal isn’t the first event that the company has done. The Kansas Speedway previously used it as part of a promotion at a NASCAR event, where fans could get photos taken with the cars, drivers, and trophies, then receive the branded mailings.

Brezina tells me that he’s been getting a lot of inbound inquiries from other companies around doing more things like this. Physical postcards may not be something that people will care about in the future as the world gets more and more digital, but right now they’re a key way to share and commemorate the good times, and that makes them a natural tie-in for event sponsorships.

More broadly, consider the Bing (and Kansas Speedway) deals as another indicator of large companies getting savvier about marketing to key audiences. Bing also has a Foursquare integration and a GroupMe setup to get people into its Bing Bar at Sundance. Facebook pages and Twitter accounts may be the bedrock of social media marketing today, but these other companies offer unique ways of reaching people, that cut out the noise from the larger services.

Heyzap Announces Mobile Gaming Partners: PocketGems And More

Posted: 20 Jan 2012 01:00 PM PST

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Gaming startup Heyzap first launched its social discovery service for mobile games nearly a year ago. Now it’s unveiling the first list of partners who are using the service.

Some of these partnerships weren’t exactly a secret before — you could just open up the Heyzap app and see which games were available. But now the startup is really trumpeting those partnerships, in part to show off some of the big names who are buying into its vision.

“Foursquare has its location network, Instagram has its picture network, Socialcam has its version of that,” says co-founder Jude Gomila. “No one’s really built the gaming community yet. They’ve done it in hardcore gaming … but no one’s done it for the Angry Birds and Farmville generation.”

Specifically, with the Heyzap Android and iOS apps, users can share the mobile games they’re playing by checking in, and they can also find new games and new people to play with.

Heyzap says it now partners with a total of more than 800 game developers. The new partner list includes Spacetime Studios (which integrates Heyzap into Pocket Legends and Star Legends), Nubee (Japan Life), PocketGems (Tap Zoo and Tap Zoo: Santa’s Quest), Bionic Panda Games (Aqua Pets), Magma Mobile (Bubble Blast Sports and MatchUp People), Digital Chocolate (Millionaire City), GameDuell (Fluffy Birds), Animoca (Pretty Pet Salon and My Car Salon), Fluik (Office Jerk and Office Zombie), Get Set Games (Mega Jump), BBC (Torchwood: Web of Lies), and Vostu (Elemental and Meow).

New Google Accounts Require Gmail And G+ Account Creation

Posted: 20 Jan 2012 12:26 PM PST


Google appears to have made some changes to its account creation process. Whereas before, all it took was an email address of any kind and some basic demographic data, now you are required to create both a Gmail account and a presence on Google+. This doesn’t strike me as a user-friendly change.

On one hand, it’s harmless in a way: you create a throwaway email address and a dummy G+ account if you don’t want to use them. Problem solved. But is that really a step people should have to take if they just want to use Google Docs or YouTube? Certainly Google will say that this is all about the integration of services, but part of the attraction of Google services has always been how you can just use one or the other. This forced-signup device smells of an attempt to boost G+ numbers, and is reminiscent not of the Google of yore, but of the Apple and Facebook of today.

Some services haven’t yet updated their account creation pages, and at the moment you can use this URL to go straight to the old account creation screen. It seems doubtful that this loophole will remain open for long.

Not only will this lead to the creation of many derelict G+ and Gmail accounts, but people who are not interested in G+ and have not cared to educate themselves on it may be bothered by the notifications, circlings, and other features they didn’t ask for. I know that G+ is the new glue holding Google’s services together, but it’s a little early to be forcing it down people’s throats, don’t you think?

And note that in the G+ sign-up screen, it is not explicitly mentioned that you are “joining Google+,” though that is clearly what you are doing. Instead, you “create your Google profile. It’s how you represent yourself publicly on the web.” Then, seemingly apropos of nothing, it describes Google+, again without saying you’re joining it. Is this a mere technical bugaboo that most people will not care about? Maybe. But Google’s definition and application of G+ is already nebulous enough without this deliberately vague initiation.

Google can’t be afraid people aren’t engaging with its products, Gmail included. Google+ perhaps, though it’s still new and fairly unformed. But why this clumsy, user-unfriendly solution? Why not just ask if people want to create an account? Or if a Google+ account is just the sharing features of your Google account, why not be straightforward about it?

[via Google Operating System and Hacker News]

Update: for reference, here’s what the old account signup screen looked like (DOB, location, CAPTCHA, EULA below):

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