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Report: Facebook IPO Could Arrive Next Week With Hopes Of $10 Billion

Tom Krazit — Fri, 27 Jan 2012 11:12:55 PST

The long-awaited Facebook IPO might arrive as soon as next week, according to a new report. When the company does get around to filing the paperwork it will set Facebook on the path toward one of the richest IPOs in tech history.

Facebook could raise as much as $10 billion when shares of its stock are sold to the public, and the usual “people familiar with the matter” are telling the Wall Street Journal that the first step could come by next Wednesday. It is believed to be preparing an offer that values the company between $75 billion and $100 billion, according to the report.

That will also allow the public to get a peek at Facebook’s financial statements, a chance to see how effectively the social giant is making money on its 800 million users. Facebook is believed to be solidly profitable, unlike a few other tech IPOs from last year, and is increasingly making Google (NSDQ: GOOG) nervous with its ability to provide extremely targeted data to advertisers.

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Jesta Digital Finally Kills Bitbop Mobile Video Service

Ingrid Lunden — Fri, 27 Jan 2012 10:20:06 PST

It looks like the death spiral that was the Bitbop mobile video service is finally no longer. PaidContent understands that the service—once built and owned by News Corporation (NSDQ: NWS) and sold, along with the rest of Fox Mobile, to IT services company Jesta when News Corp. couldn’t make a business out of it—is today laying off most of the staff that worked on Bitbop and shutting down the service.

According to a source, there are about 50 people getting laid off—people who worked on the Bitbop mobile video service. A small group will stay on to help with the final wind-down of operations, which should take about four weeks. The services that were live in the U.S. and Germany are getting shut down today, we have been told.

There were once big hopes for Bitbop, but things took a challenging turn as competition in the form of Hulu, Netflix (NSDQ: NFLX) and others invested heavily in their streaming services and delivering them to mobile devices.

However, this is not the end of Jesta Digital. The Jamba ringtones business—a German company that News Corp. once paid nearly $400 million to purchase in 2008—is still a healthy cash generator, and it will continue to operate.

Bitbop is understood to have some 20,000 subscribers who pay $9.99 per month to receive premium mobile video services. But with the service never getting a coveted outlet via an iPad app, it’s had a hard time scaling up, and with many of its original content deals up for renewal at the moment, it looks like it became clear that Bitbop’s business model was no longer sustainable.

Earlier in January, we noted the problems at the company, including some executive departures. At the time, Jesta told paidContent in a statement that it would continue to develop new mobile products in the future, without specifying what they were.

We will update this story as we learn more.

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Former Palm CEO Rubinstein Leaving HP After Demise Of WebOS

Tom Krazit — Fri, 27 Jan 2012 09:52:19 PST

Jon Rubinstein, the former Palm CEO who revived the company under WebOS but was never able to produce a breakthrough product after HP paid $1.2 billion for Palm, is leaving HP (NYSE: HPQ). His departure is not exactly a surprise, coming six months after he was reassigned just before HP began to wind down its mobile strategy.

Rubinstein, a former Apple (NSDQ: AAPL) executive who played a key role in the development of the iPod and the iPhone, had been working in a fuzzy role within HP’s Personal Systems Group after ceding day-to-day control of the WebOS business unit to Stephen DeWitt in July. Of course, by August the WebOS business itself was put out to pasture following then-CEO Leo Apotheker’s decision to halt development of the Touchpad.

His next destination, however, will be quite interesting. AllThingsD, which first reported the news, said that the timing of his departure was related to a commitment made to HP following the Palm deal in 2010 to stay on for 12 to 24 months.

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As Goodreads Ends Sourcing From Amazon, Users Fear Lost Books

Laura Hazard Owen — Fri, 27 Jan 2012 09:36:53 PST

Book-centered social networking site Goodreads, which allows users to keep records of the books they read and share the information with others, has long sourced most of its basic book data from Amazon (NSDQ: AMZN). Now, saying Amazon’s API terms have become “more and more restrictive,” Goodreads is switching data providers and entering an agreement with book wholesaler Ingram—alarming some users who fear their reading records will be lost.

Goodreads used Amazon’s public Product Advertising API to source basic book data like title, author, page count and publication date.

Goodreads’ situation illustrates the risks of building a site around any retailer’s API, since that retailer can change its terms at any time. Amazon’s Product Advertising API license agreement has not changed since April 2011 but “the terms now required by Amazon have become so restrictive that it makes better business sense to work with other data sources,” the company told me.

Specifically, Goodreads finds two requirements of Amazon’s API licensing agreement too restrictive. Amazon requires sites that use its API to link that content back to the Amazon site exclusively—so a book page on Goodreads would have to link only to its product page on Amazon, and not to any other source or retailer. Goodreads links to many online retailers. “Our goal is to be an open place for all readers to discover and buy books from all retailers, both online and offline,” the company told me. Amazon also does not allow any content from its API to be used on mobile sites and apps.

The changes take place January 30. Goodreads’ new data source is book wholesaler Ingram. Goodreads will pay to license data from Ingram, and will supplement it with book records from the Library of Congress and other sources.

Goodreads stresses that most book records will be safe: “Not a single review, comment, shelving, or rating will be lost in this transition. That’s the most important thing—your data is 100% safe.” It’s calling on “Goodreads librarians”—users who’ve applied for and received permission to edit data in the catalog—to help verify data for some titles that may be deleted otherwise. Here are the books that need to be “rescued”—including many foreign-language titles.

Books that are only available through Amazon, like Kindle editions ands self-published Kindle books, have no alternative data sources. “We anticipate keeping these, and will bend over backwards for all our authors who publish via Kindle to make sure their readers on Goodreads have a smooth transition,” the company says.

Why CNN's Digital Strength May Cause Problems For Fox

Daniel Frankel — Fri, 27 Jan 2012 07:53:33 PST

CNN has become a prime-time ratings afterthought in the cable news business it started three decades ago, as Fox (NSDQ: NWS) News continues to dominate a traditional television realm mostly supported by older viewers. But online and on mobile, the tables are turned.

Driven by a flurry of big breaking-news events in 2011 – everything from the Japanese tsunami to the Egyptian uprising – Time (NYSE: TWX) Warner-owned CNN Digital averaged 73 million unique viewers a month last year across its various platforms, according to comScore (NSDQ: SCOR). Fox News Channel, far and away the leading cable news outlet in prime time, averaged less than 30 million unique users across its channels, while No. 2 network MSNBC (NSDQ: CMCSA) averaged just over 50 million.

Given that other Time Warner sites including Time.com and People.com are folded into the CNN Networks metric, just comparing unique users overstates CNN’s advantage. But in the social networking universe, the 1 million fans on CNN’s Facebook page dwarf those for Fox News by a factor of eight. And with a combined total of 9.4 million followers, @CNN and the rest of the news brand’s Twitter handles have 1.8 million more followers than the closest news competitor, the New York Times.

CNN.com served up 135.9 million page views last March when the earthquake and tsunami ravaged the Japanese coastline, and it averaged 101.3 million video starts a month, a 19 percent uptick over 2010. Sections including Belief (up 64 percent to 7.8 million page views), World (up 23 percent) and This Just In (up 29 percent) also posted big gains.

CNN Digital also remained No. 1 in mobile news for a fourth straight year, averaging 19.4 million unique users, a 60 percent edge over Fox News Digital. (For its part, Fox News is quick to note that it has an engagement metric advantage – according to comScore, the average user spent 10.7 minutes on Fox News sites compared to just 2.2 minutes for CNN.)

These digital rankings, of course, are a complete reversal from what has been happening on cable news television over the last decade.

The Atlanta-based CNN ranked No. 3 in prime-time cable news ratings last year—despite its 16 percent uptick in average nightly prime-time viewers and Fox News Channel’s 9 percent decline. For the year, Fox averaged 2.2 million watchers in prime time, MSNBC came in second averaging 902,000, followed by CNN with 735,000. This, according to TV ratings tracker Nielsen.

Perhaps most key, CNN trailed Fox in the all-important adults 25-54 viewer demographic, averaging less than half of Fox’s 522,000 in the category in which advertising sales are based on. So what’s with the discrepancy between digital and cable performances?

According to Brad Adgate, senior VP and director of research for ad-buying firm Horizon Media, the very programming attributes that seem to give Fox News an advantage over CNN on cable television also seem to have a converse effect online. Focused on what Adgate calls “infotainment” and leveraging the opinions of strong, ideologically minded personalities like Sean Hannity and Bill O’Reilly, Fox News’ programming is thematically different from that of CNN, which is rooted in breaking news. In short, CNN has more pure news product that can be easily converted into text and optimized for search.

“If news breaks, and you’re searching for something specific, you go to CNN,” Adgate said. (For their part, CNN officials contend their digital numbers are not all based on breaking news search, noting its Opinion section posted 54 percent traffic growth over 2010.)

Larry Kramer, founder and former CEO of CBS (NYSE: CBS) Marketwatch.com, agrees: “When you first hear about news now, you’re generally not in front of a TV. Your first inclination to go to a site, and for a lot of people, that’s CNN. When news breaks, you’re going to see them get the biggest burst.” Kramer said that Fox’s opinionated personalities have resonated and stood out amid a cluttered cable news spectrum. “But that kind of voice is not unique at all on the web,” he added.

In 2010, when Time Warner actually broke out financial data for its cable news division, revenue from digital platforms matched sales of advertising from U.S. prime-time programming—both accounted for about 10 percent of the company’s bottom line. (Time Warner listed operating income as $500 million that year.)

Despite its growing strength in online and mobile platforms, CNN is unlikely to try to transition into a pure-play digital company anytime soon. Here’s why: While the No. 3 prime-time audience share for the CNN flagship channel may harm the news company’s domestic advertising sales revenue, its cable carriage fees remain among the highest in the TV industry, according to Kramer. Indeed, in 2010, CNN and its related brands grossed nearly half of their revenue from U.S. and international carriage fees. “That’s a far more significant revenue stream than anything they’ll get on the web,” Kramer said.

Looking forward, the real opportunity for CNN, Kramer added, is to be a true global, multi-platform news provider, in which a centralized news-gathering force services all distribution points. Kramer specifically cited CNN.com’s user-generated-content initiative iReport, which added 250,000 registered users last year. Just like the early days of CNN, when viewer-supplied camcorder video helped transform the cable channel into a must-see destination, iReport could be equally transformative for the brand in an age of camera-equipped smart phones. “There’s no other brand, save for Reuters (NYSE: TRI), that’s so solely associated with news,” Kramer said. “This is one of the only pure-play news brands that really exists internationally.”

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Analyst: Google Threat To Big Ad Agencies Like WPP, Publicis 'Unwarranted'

Ingrid Lunden — Fri, 27 Jan 2012 07:26:53 PST

Google (NSDQ: GOOG) is a massive player in the digital advertising world, but given that this remains only a part of the overall ad market, the Internet giant will not soon pose a real threat to big ad agencies of the world like WPP, Interpublic and Omnicom, according to a report out today from Pivotal Research Group.

Pivotal, which today initiated coverage on WPP, Interpublic and Omnicom, wrote in a lengthy report that its analysts “remain skeptical” the companies that have made a big splash in online advertising, like Google, Microsoft (NSDQ: MSFT)—or presumably Facebook—will ever actively compete with agencies.

The reason for this, they write, is that digital media companies will want to retain their margins, which are “signficantly higher” than those that big agencies get for their services. Pivotal’s analysts also emphasize that agencies still continue to offer a greater degree of independence to brands when advising on how and where to spend ad dollars online.

There have been a few hits and misses up to now among internet companies that have tried to bring their ad technology to non-online mediums: Google in 2009 pulled out of its own attempt at serving radio ads; but it continues to have a business in selling TV ad inventory (with one recent deal, with Cox, announced during CES earlier this month).

Despite that, Google, it seems is just a big fish in a still-small pond: according to ZenithOptimedia, in 2011 digital advertising made up just under 16 percent of total ad spend worldwide, or $73.8 billion. Google last week reported that it made $36.53 billion in advertising revenues, just under half of ZenithOptimedia’s estimated total.

So what is the bigger threat to agencies? It may surprise you to hear Pivotal’s opinion: IT services firms along the lines of Accenture and IBM, who are building platforms to help execute media campaigns, and to leverage the business and strategic consulting positions they already have with these brands. One recent deal, in which Deloitte picked up a mobile app developer called Ubermind—one of whose biggest clients is Apple (NSDQ: AAPL), among a number of other big brands—very much attests to this theory of the encroaching role of the IT services company.

One more possible competitive threat—another surprise here—are some of the businesses that have traditionally been seen as the recipients of agencies’ work: publishers. Pivotal cites both Hearst and Meredith (NYSE: MDP) as two publishers that have built up positions in ad technology like search engine marketing, areas where ad agencies are also looking to get more business. This, too, comes as no surprise: many of these publishers have seen their ad revenues in traditional business like print magazines get eroded over time—a trend that looks set to continue—and so they too need to look at new aspects of the advertising business model to find new sources of income.

Big agencies, of course, are not standing by idly, either—they are all spending serious money building up their digital assets. WPP is highlighted by Pivotal for thinking ahead on multiple fronts is not just investing into digital ad businesses, but doing so particularly to build out their holdings in emerging regions, like Asia.

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Virtual Pet Owners Sue Google Over Lost 'Gold'

Jeff Roberts — Fri, 27 Jan 2012 07:46:11 PST

Angry game owners are demanding Google (NSDQ: GOOG) compensate them for wiping out their investments in online pets. The loss of a virtual kitty may seem like a trifle to some but, in the big picture, the new lawsuit could be a bellwether for how the law treats what is an exploding market in online goods and currencies.

For those more familiar with real-life Rovers, the new legal disputes turns on SuperPoke Pets, an online game in which players chose a pet (dog, frog, sheep, etc) and then care for it an online realm with other pet owners. Many owners purchased “gold” using real life money and used the gold to buy items in the game.

That gold is now worthless after Google, which had purchased the game from a company called Slide, decided to axe it last summer. (As of March 6, the website will be gone though players will be able to load their pet onto a display case of sorts).

As Liz Gannes of All Things D reported last fall, furious players were seeking a law firm to bring a class action against Google. They appear to have found one and filed a lawsuit in late December. The case was transferred to federal court in San Jose this week.

The lead plaintiff is Christalee Abreu who says she spent more than a thousand dollars on virtual gold. The lawsuit purports to represents thousands of people across the US in two categories: those who purchased gold and those who subscribed to a $4.95/month VIP subscription.

As Gannes has noted, Google is likely to rely on a license agreement common to games that effectively tells users “them’s the breaks” if the game goes away.

The plaintiffs, however, have a sympathetic case. According to the lawsuit, some players rushed to stockpile virtual items after the company announced that it would stop offering gold-based transactions. These players hoped to sell their items on a secondary market (basically, a Craigslist of sorts for items like virtual doggy bones) but those hopes were dashed when Google said it would kibosh the game.

Disputes over SuperPoke gold and other online currencies were once the stuff of futurists and law school hypotheticals. But now it’s big business—observers suspect the sale of virtual goods counts for a healthy portion of Faceook’s revenue. And Forbes magazine recently asked if the social network should be considered a central bank in light of the spread of Facebook Credits.

The SuperPoke lawsuit may help define the legal rules of the road for virtual currencies.

SuperPoke Pets State complaint

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Can A Streaming Audiobooks Service Work?

Laura Hazard Owen — Fri, 27 Jan 2012 05:50:07 PST

Audiobooks.com, a cloud-based streaming audio service for iOS and Android, launches this week as a would-be competitor to the Amazon (NSDQ: AMZN) owned-Audible.com. Considering how many people listen to audiobooks while they are in transit, though, is a streaming service actually a workable solution?

Audiobooks.com charges users $24.95 per month to listen to an unlimited number of audiobooks from a catalog of around 11,000 titles. Compare that to Audible.com, which has a catalog nearly ten times as large—over 100,000 titles for individual download—and requires users to purchase download credits. At Audible, one credit generally corresponds to one audiobook and a one-credit monthly plan is $14.95 (after an limited-time introductory rate).

Audiobooks’ pitch is that users can listen to as many audiobooks as they want “with no need to return audio books, no long-term contracts and no time constraints on audio book use.” The audiobooks sync automatically, so a user can stop listening on one device and pick up the story again later on a different one. The service works on iOS and Android as well as laptops and desktop computers. “There are no storage constraints because the content resides on the cloud,” the company promises, “and users can access and play audio books instantly with no downloading necessary.”

Yet as anybody who has tried to use the Pandora (NYSE: P) app on a 3G connection while walking around knows, streaming content can be a hassle without a WiFi connection. Since many people listen to audiobooks while they’re on the move—in the car or on the train, for example—relying on a cloud-based streaming service seems less than ideal, and in many cases it would be impossible. Sure, cloud-based streaming means the content isn’t taking up space on mobile devices, but many audiobooks are at least several hours long and so on a 3G plan data usage would be considerable. “This is a tricky question because audio book titles vary in size. “We suggest having at least 150MB of storage available,” the company says.

Audiobooks.com general manager Ian Small says “the cloud-based service delivers the book in parts so it will allow some time for lost connection—average a few minutes but we can increase this based on customer feedback.” And he says a Q2 2012 update to the Audiobooks.com app “will have the logic for ‘airplane mode’ preparation where the end user will be able to download the title to the app on their phone over WiFi and not need a 3G connection.” Overall, he says, “we’re limiting how much in advance we put on the portable device to save using up too much of their data plan.”

The service is clearly in its early stages and the selection is limited compared to Audible’s, but Audiobooks.com says titles from “Recorded Books, Simon & Schuster (NYSE: CBS), HarperCollins Random House Audio and Blackstone Audio” are available and more are being added. I have asked the company for more details on how publishers are compensated and will update the post with the new information.

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The Morning Lowdown 1-27-12

Laura Hazard Owen — Fri, 27 Jan 2012 05:47:21 PST

Some of the stories people are talking about this morning:

» Twitter faces censorship backlash (paidContent)

» How the Daily Mail (LSE: DMGT) became the web’s biggest newspaper (GigaOm)

» Netflix (NSDQ: NFLX) sees overseas losses doubling to $118 million this quarter (paidContent)

» For $2 a star, an online retailer gets 5-star product reviews (NYT)

» The Awl’s unconventional ad strategy (Digiday)

» Spotify not throttling Americans, subscriptions hit three million (paidContent)

» NYT publishes Chinese translation of story about workers who make Apple (NSDQ: AAPL) products (Poynter.)

» HBO offers “Luck” episode a week early via HBO Go (ClickZ)

» Samsung: Smartphones up 30 percent but you have to guess how many we’ve sold (paidContent)

» New York Times Co. (NYSE: NYT) faces leadership vacuum (Bloomberg)

» Can subscriptions offer salvation for the music industry? (Digital Pennies)

Twitter Faces Censorship Backlash

Charles Arthur — Fri, 27 Jan 2012 04:56:19 PST

The social network Twitter is facing a storm of criticism from users, after revealing that it has implemented a system that would let it withhold particular tweets from specific countries.

The company has insisted that it will not use the gagging system in a blanket fashion, but would apply it on a case-by-case basis, as already happens when governments or organisations complain about individual tweets.

The new system, which can filter tweets on a country-by-country basis and has already been incorporated into the site’s output, will not change Twitter’s approach to freedom of expression, sources there indicated.

In theory it could have been used last year in the UK to block tweets exposing details hidden by superinjunctions about celebrities, or in 2010 when Trafigura used a superinjunction to block the Guardian and BBC from revealing details about a report on activities in Africa.

A number of superinjunctions have been abandoned after details leaked on Twitter, to the displeasure of some judges.

However, activists in countries such as Syria or China might be concerned that they would be unable to see information they need to know.

Twitter insists that the system will only formalise a system it already uses, where tweets are blocked or deleted following full judicial process. Being able to limit tweets to particular countries, rather than blocking them altogether, expands its ability to “let tweets flow”.

In a blogpost, it points out that France and Germany restrict pro-Nazi content; under the US’s First Amendment, tweets with such view would be legal in the US while illegal in those countries.

Google (NSDQ: GOOG), Yahoo (NSDQ: YHOO), eBay (NSDQ: EBAY) and Facebook already use similar systems to control what content is shown in which countries.

In China, Google indicates when a search result has been censored. In the same way, blocked tweets will say: “This tweet from [username] is withheld.” The blocking can work at the individual tweet or account level.

But some users have been critical of the move, which has already seen an update to Twitter’s API, the means through which programs access and show tweets.

Every tweet includes fields such as the user’s name, time of the tweet and the tweet’s content. But now it will also include a “withheld_in_countries” field.

Terence Eden, a London-based mobile developer, complained on Twitter: “I don’t want to develop on an API which contains a ‘withheld_in_countries’ field. What’s next, a ‘for_your_own_good’ field?” He added: “I helped develop a Twitter client that Chinese pro-democracy activists used. Guess that’s dead now. Thanks, Twitter.”

Eden, who describes the move as censorship, said it would be difficult to work around because Twitter will identify which country a user is in by their internet address. “You can spot the censorship, but it’s hard to route around it,” he said.

Twitter says it will continue to post requests for the blocking or censoring of tweets the Chilling Effects site where it has recorded requests to remove tweets from its service.

Netflix Sees Overseas Losses Doubling To $118 Million This Quarter

Robert Andrews — Fri, 27 Jan 2012 04:02:14 PST

Netflix (NSDQ: NFLX) expects overseas losses to double in just three months, as it spends more and more on vital local video content and marketing.

In Q4, its overseas costs doubled to $89 million, while revenue rose by a third to $29 million. International loss came in better than expected at $60 million. But the company is committing to spend more for the movies and TV shows that might attract lucrative recurring subscribers…

Q1 international forecast:

Loss: $108 million to $118 million
Subscribers: 2.5 million to 3.1 million (1.9 million to 2.45 million paid)
Revenue: $38 million to $44 million

The company expanded to Canada and 43 Latin American countries in 2011. Quarterly overeas subscriber additions declined by a quarter to 380,000 in Q4, from the 510,000 added during the big LatAm push three months earlier. Netflix now has 1.86 million overseas subscribers.

The marked up-tick in international spending since Q4 reflects just how much Netflix is investing in its UK and Ireland launch, which began in January, as well as in ongoing marketing and content in Canada and Latin America.

“In future quarters, we intend to continue to increase our investment in the content libraries in each market, just as we have done in Canada since launch,” according to the company’s Q4 disclosure.

“Doing so improves the consumer experience, builds strong word of mouth and positive brand awareness, and drives additional acquisition, all elements of a strong foundation for long- term success. As we improve the service, we grow membership and thus we expect the quarterly international losses to moderate slightly.”

Netflix expects the big international losses to give it a company-wide loss of $9 to $27 million in Q1, with company losses remaining “modest” throughout the year and no further globalisation until a return to profit.

Long-term, there is an opportunity to build one of the world’s strongest home entertainment brands, carved out by new home devices with internet connectivity. Netflix’s challenge is to manage its domestic conversion from DVD to streaming well enough that its core business remains in tact. If it can do so, international expenditure should remain acceptable in pursuit of the global goal.

Netfix Overseas Snapshot

Canada—“The market opportunity in Canada is exciting enough that we continue to invest in the content library, meaning that we’ll run at roughly break even for two quarters, and we expect to return to a positive contribution profit starting in Q3 of this year, two years after our initial launch.”

Latin America—“We are quickly learning what content works best in the region, and are adjusting our content library accordingly ... we’ve found that processing ecommerce consumer payments is quite challenging as compared with North America and Europe. To overcome this challenge, we are working with our local payment partners to optimize our systems, exploring adding new payment methods and testing various trial campaigns to improve conversion.”

UK & Ireland—Unquantified “very successful” launch. No numbers. “Over the coming years, we hope to be able to grow large enough to outbid Sky for one or more major studio output deals, as we did this year for MGM.”

Nokia Tottering At The Top Of Mobile Rankings; Apple Leading Smartphones

Ingrid Lunden — Fri, 27 Jan 2012 04:04:27 PST

With most of the major handset makers having reported earnings for the quarter that ended in December, analyst houses are laying out their rankings in global smartphone and overall mobile shipments. Nokia (NYSE: NOK) has just about managed to keep its top position overall, while Apple’s phenomenal quarter has put it into pole position among smartphone makers—but only by a fraction of a percentage point.

New figures from Strategy Analytics show that Nokia, with shipments (which Nokia terms “sales”: more on that below) of 113.5 million, has continued to hold on to its position as the number-one phone maker in Q4. Its lead has narrowed by quite some way over last year: it was at 26.9 percent for the quarter and 25.5 percent for the year, compared to 30.9 percent and 33.3 percent for the quarter and year in 2010.

Samsung, shipping 95 million units, made smaller gains than Nokia lost: 1.1 percent on the quarter and 0.5 percent on the year to claim the number two-slot.

What stood in its way to overtaking Nokia? Apple (NSDQ: AAPL). On the strength of its smartphone-only portfolio, it made the biggest gain in market share of the top-three, picking up 4.3 percentage points for the quarter on shipments (like Nokia, Apple calls them “sales”) of 37 million units, to take an 8.3 percent share of the market for the quarter, and 6 percent for the year.

That’s sort of comparing apples with oranges, though. When comparing like-for-like: Apple has edged past Samsung for the quarter with a 0.4 percent lead in market share in smartphones, while over the whole of 2011, Samsung just about still leads Apple, with a 0.9 percent lead.

Nokia trailed the two by nearly twelve percentage points for the quarter, a big reversal from a year ago when it was well in the lead as the biggest-single smartphone maker.

Figures out today from IHS iSuppli, meanwhile, add in two more handset makers to the mix. It says that Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) took the number-four slot after the first three (ranking them in the same order as Strategy Analytics); with Motorola (NYSE: MMI) just behind, with six million and five million devices shipped, respectively. IHS did not include RIM (NSDQ: RIMM), HTC or LG (SEO: 066570)—other notable vendors—in its rankings; they have not reported quarterly figures this week.

In both smartphones and mobile devices overall, “Others” grew numbers in unit terms and made an annual gain on market share to become the biggest group for 2011 market share in Strategy Analytics’ figures. That means still a lot of competition out there from many handset makers, with none of them having a significant enough share to merit placement in the top-three.

On a services level, that speaks to a continuing and strong amount of device fragmentation. That will continue to slow down revenue growth in other areas like mobile content and advertising—areas where it pays for there to be scale to charge the biggest prices. (Case in point: can you imagine what TV advertising or content production would be like if distributors and media buyers had to format ads for different TV set models?)

On shipments versus sales. While these numbers can be instructive, they can also be confusing: If you look at Strategy Analytics’ “shipments” numbers, they are the same as the “sales” numbers that companies like Apple and Nokia reported this week. Neil Mawston, executive director for Strategy Analytics’ global wireless practice, says vendors “tend to use those words interchangeably” even though one refers to actual devices in people’s hands, while the other is for devices that have been shipped to distributors, but not necessarily sold. “They can be open to interpretation,” he admitted. “A lot of companies use smoke and mirrors,” so Strategy Analytics uses other measures such as “channel checks” to measure shipments.

On RIM. It’s notable that RIM didn’t appear in the top-three smartphone makers, so I asked Mawston about their prospects: He says they are “not too far behind number-three” at the moment in overall rankings and smartphones, “and if they had a good quarter or two they could get close.” But the trend so far has been that RIM’s been slowing down and “not providing too much competition” globally. He didn’t mention Motorola or Sony Ericsson, which made iSuppli’s global ranking.

On Samsung. Mawston believes Samsung will stay ahead in smartphones, even with Apple’s strong Q4: “It just has more price points, appeals to both post and prepaid customers, and has a bigger distribution network among carriers,” he said, adding that Apple may well give it a run for its money. “They may trade places for a few quarters.”

He notes that Apple has a massive retail presence in some countries like the U.S. but ultimately it’s the carrier network that really gives device makers that extra leg up in worldwide sales—a key pillar of Nokia‘s fightback strategy, too. “The key thing with carriers is that they can subsidize the iPhone [or another device]. Without operator subsidies, [smartphones] would be nowhere near as large right now.”

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Administrators Seeking Buyers For IP Vision

Robert Andrews — Fri, 27 Jan 2012 03:07:02 PST

The owner of UK internet TV service FetchTV, IP Vision, has gone in to administration after encountering financial difficulties.

The company, which provides pay TV over its internet-enabled boxes, is now operated by administrators UHY Hacker Young. The company is making a public play for buyers, through its own statement...

“IP Vision (UK) Limited (‘the Company’) has initiated a process to sell its hybrid DTT/IPTV solutions and premium VOD businesses and assets. This represents the best means of maximizing value for the Company’s creditors and stakeholders.

“In order to facilitate an orderly sales process, the Company has appointed Peter Kubik and Michael Kiely as Joint Administrators of the Company with effect from 22 December 2011. Advanced discussions are underway with interested parties. It is expected that FetchTV, the Company’s video on demand service, will continue to operate during the sales process.

“(CEO) Eddie Abrams commented, “IP Vision is a recognised innovator with a well-deserved reputation in the field of hybrid DTT/IPTV solutions and premium over-the-top video on demand services. Purchasers will be able to take full advantage of the Company’s many strengths in these respective areas which include a fully-operational end-to-end hybrid TV platform and a multi-device, premium video on demand service with broad reach in conjunction with major TV manufacturers and approximately 30 content partners.

“Additional information is available at http://www.ipvision-uk.tv, by email (info@fetchtv.co.uk) or by telephone.”

The Fetch TV box is a Freeview+ tuner with PVR that also carries BBC iPlayer and VOD from providers like Channel 4, Sky Sports News, Discovery Channel and CNN but has expanded to offer paid niche bundles. It has been retailed through John Lewis and Tesco, but IP Vision has never disclosed to us sales figures, suggesting they were low.

The emergence of many new internet TV boxes, TVs with integrated internet services and, if it ever launches, YouView all put the squeeze on IP Vision.

Days before going in to administration, the company announced it would rebundle its paid content bouquets as an app for the connected TV platforms which might once have been considered competitors.

Samsung: Smartphones Up 30 Percent But You Have To Guess How Many We Sold

Tom Krazit — Thu, 26 Jan 2012 18:15:09 PST

Samsung may be king of the Android smartphone world, but it’s playing hard to get. The company declined to release smartphone sales figures late Thursday in reporting record earnings, but it is clearly faring better than some Android competitors against Apple’s iPhone juggernaut.

Record profits were the big story for Samsung during the fourth quarter, in which it recorded $4.7 billion in profit according to Reuters (NYSE: TRI). Revenue was up 13 percent to 47.3 trillion won ($42 billion) and profit rose 16 percent compared to last year. Samsung is of course a huge conglomerate, with businesses ranging from mobile phones and televisions to semiconductors and refrigerators.

Samsung’s mobile unit reported a 54 percent increase in revenue and a 74 percent increase in profits, hours after fellow Android rival Motorola (NYSE: MMI) reported a loss for its fourth quarter. Samsung has had the upper hand in the Android world for several months despite Google’s pending purchase of Motorola, with devices like the Samsung Galaxy S II and Galaxy Nexus leading the way. But it provided no data on tablet sales, several months after the launch of the Galaxy Tab, something even Motorola was able to disclose.

The company would only say that smartphone shipments increased 30 percent compared to the past quarter, which analysts interviewed by Reuters interpreted as around 36 million units, just shy of the 37 million iPhones that Apple (NSDQ: AAPL) sold during its first fiscal quarter. It’s quite disappointing that Samsung would take a cue from Amazon (NSDQ: AMZN) and Nokia (NYSE: NOK) in declining to report actual shipment totals, but it’s understandable why the company may not welcome direct comparisons with competitors.

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Spotify Not Throttling Americans, Subs Hit Three Million

Robert Andrews — Fri, 27 Jan 2012 06:47:27 PST

Early last week, a six-month promotion period, during which U.S. users were exempted from Spotify’s five-plays-per-song, 10-hours-per-month limits, was due to end for the first of the service’s American adopters, if reports were to be believed. But that apparently hasn’t yet happened.

U.S. users are apparently still enjoying desktop streaming with no such limits, if the absence of gripes in social media is anything to go by.

Reasons are not clear, but Spotify is a firm believer in using limited desktop free to drive premium subscriptions. It has been also been experimenting with 48-hour free trials and with free retention periods for cancelling subscribers, as it figures out the most attractive freemium levers to push.

Conversion and adoption

It appears to be working. Speaking during an event at Universal Music Group in London on Thursday, Spotify chief content officer Ken Parks revealed Spotify has now hit three million paying subscribers. That’s up from 2.5 million in November, when Spotify said it had 10 million active users and a 15 percent premium conversion ratio. Now Spotify says it is converting 20 percent to paid; it did not update the active-users count, though mathematics suggests it is 15 million.

This success, as was already known, is driven by ringfencing mobile for premium-only. “This is the one thing people are willing to pay for,” Parks said. “We don’t think there’s a big willingness for people to pay for streaming to the PC.”

Sitting alongside Parks, Universal’s global digital chief Francis Keeling said: “The one thing Spotify has taught us is the necessity to have a free trial period to get consumers to see how good these services are.” Spotify’s Parks added: “Users who are exposing their listening on Facebook are three times as likely to become paid subscribers.

“The vast majority of customers are paying 120 dollars, pounds or euros every year, which is around twice the amount the average user purchases on a download service every year.”

More revenue streams

Where next? Free is not just a premium conversion tool; advertising to free users makes up a sizeable minority of Spotify’s revenue. But Parks said: “We’ve got at least a couple of different revenue streams. Those won’t be the only ones over time.” He told paidContent e-commerce may become Spotify’s third revenue plank.

Now that Spotify has an in-app platform for third-party services like gig ticket seller Songkick, Spotify could take a cut from transactions third parties process inside Spotify, Parks suggested, albeit only speculatively.

Absentees punishing

Separately, Parks made a pitch to the small number of artists and labels withholding their music from streaming services like his over payouts.

“Withholding a record from Spotify doesn’t mean that it’s not available for streaming,” he argued. “All of this stuff is available on YouTube (NSDQ: GOOG). You’re just pushing them to somewhere it’s not monetisable.

“There’s illogic behind withholding a record. What you really want to do is reward the people who are spending $120 a year, rather than punish them by not making the records available on the platform.”

Most Spotify refuseniks have been cottage-industry, artist-owned labels or artists themselves, citing low payouts from label royalties. But EMI’s Coldplay also withheld its latest album from streaming services for the time being.

Sitting alongside Parks, Universal’s global digital chief Francis Keeling, whose own label - the world’s largest - includes some artists holding out from Spotify, echoed Parks’ comments: “The only thing those artists are doing are alienating their fanbase.

“Our agreements with artists are on a case-by-case basis. Over time, we’re trying to convince our artists that streaming services are the right thing to do and these services should be supported.”

Refuseniks make up just a tiny fraction of Spotify’s total addressable label partner base. Spotify explains that it mostly pays labels, not artists.

Industry Moves: ESPN; Yahoo; Wikia; AdoTube

Amanda Natividad — Fri, 27 Jan 2012 09:20:16 PST

—ESPN: The sports network is seeing a reorg: John Kosner has been promoted to EVP, digital and print media, from SVP and GM of the divisions. Marie Donoghue has been promoted to SVP, global strategy, from SVP, business affairs and business development. Meanwhile, longtime leaders John Wildhack and Norby Williamson will switch roles. Wildhack is now EVP, production and Williamson is EVP, programming and acquisitions. The four executives will continue to report to President John Skipper.

—Yahoo: MaryBeth Malcolm has been promoted to senior director, Yahoo (NSDQ: YHOO) category development and marketing solutions. The company also announced two new category leads: Debbie Menin to lead entertainment and travel, and Karina Montgomery heading up CPG/FMCG and health. Menin and Montgomery report to Malcolm, who reports to Elizabeth Ritzcovan, VP, marketing solutions. Throughout her tenure at Yahoo, Malcolm has overseen development of advertising programs on the Yahoo Homepage, Mail, Messenger, Mobile, Finance and Flickr. Previously, Montgomery was VP, sales development at SocialVibe, while Menin was entertainment practice head at AOL.

—Wikia: Hilary Goldstein joins as gaming category manager and Eric Moro is now entertainment category manager. They’ll lead Wikia’s community by curating and creating content as well as industry partnerships. Goldstein was previously editor-in-chief of IGN Games, while Moro was editor-in-chief of IGN’s movies, TV and Blu-ray/DVD site.

—AdoTube: Thomas MacLean has been hired to lead the new Detroit office as VP of sales. He previously was strategic accounts manager at Kontera. AdoTube also has new account executives, Bia Parente and Carter Wall.

Judge: Ron Paul Can't Force Twitter, YouTube To Identify 'Impostors'

Jeff Roberts — Thu, 26 Jan 2012 14:19:15 PST

Ron Paul’s campaign suffered a setback this week in its effort to identify who uploaded videos that appear to show the presidential candidate bashing a former rival’s ties to China.

A federal judge yesterday refused the campaign’s request for an order that would have forced YouTube (NSDQ: GOOG) and Twitter to disclose details about “NHLiberty4Paul.” That name is associated with a Twitter and YouTube handle, likely from New Hampshire, that issued messages suggesting former Republican candidate Jon Huntsman is a Chinese agent.

The Paul campaign, which has disavowed the allegations, responded with a lawsuit earlier this month. Here is an excerpt:

The Video also questions Mr. Huntsman’s religious faith, refers to Mr. Huntsman as “China Jon” and asks whether his daughters are “even adopted.” The Video ends with a fictitious depiction of Mr. Huntsman in a Mao Zedong uniform and the text “American Values and Liberty — Vote Ron Paul,” thereby falsely implying that Plaintiff created, endorsed or is affiliated in some way with the Video and its content.

The people associated with NHLiberty4Paul also issued a series of tweets that insult Huntsman and claim Paul is the only real conservative in the GOP race.

In a recent filing, the Paul campaign asked US Magistrate Judge Maria-Elena James to grant an order that would have forced Twitter, YouTube and other third parties to provide information about NHLiberty4Paul.

In a two-page order (shown below), James stated that the Paul campaign had not met the “good cause” criteria necessary to obtain the order.

This means that the campaign can’t for now obtain the identities of the defendants who are listed in the lawsuit as “John Doe.”

Jerrold Abeles, an attorney for the Paul campaign, said in a phone interview that the order is not the end of the road for the Paul campaign. Abeles said the campaign still has the option to file an amended request seeking to unmask the John Does.

The lawsuit accuses the defendants of false advertising, trademark infringement and libel. The suit is unusual because free speech principles of American law make it nearly impossible for a national political figure like Paul to win a defamation case.

Ron Paul is a libertarian whose followers rabidly support his philosophy of small government and a non-interventionist foreign policy.

Ron Paul 2012 v. Does, C 12-0240 (N.D. Cal.; Jan 25 2012)

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Motorola Lost $285 Million In 2011 Selling Phones

Tom Krazit — Thu, 26 Jan 2012 13:46:54 PST

Having already warned investors that its fourth quarter was going to be rough, Motorola (NYSE: MMI) didn’t disappoint when the actual numbers arrived Thursday. Smartphone shipments were up slightly but the company continues to lose money on mobile sales while everyone waits for a ruling on the Google (NSDQ: GOOG) deal.

Revenue was in line with the lowered guidance Motorola provided in December of $3.4 billion. Excluding special items, earnings per share were $0.20, far greater than expectations of $0.06, but using the GAAP standard Motorola recorded a net loss of $80 million compared to a net income of $80 million in last year’s fourth quarter.

Smartphone shipments came in at 5.3 million units, up from 4.9 million units a year ago, while tablet shipments remained anemic at just 200,000 units. For the full year Motorola shipped 18.7 million smartphones and 1 million tablets, it said.

But Motorola’s mobile division had a scary year: the group recorded an operating loss of $285 million for the full year, and an operating loss of $70 million in the fourth quarter. Motorola didn’t make any money selling phones last year, either, losing $70 million for the full year.

Those totals include sales of regular old feature phones, still a big part of Motorola’s overall business. The company sold 10.5 million mobile devices in the fourth quarter and 42.4 million devices for the year.

Motorola is still waiting to hear if regulators will approve Google’s bid to purchase the company for $12.5 billion, and as a result it no longer holds the customary conference call following the release of an earnings report.

(Updated 4:46 p.m. ET: I changed the original headline and a couple of references in the text to make it clear that Motorola’s losses were across all of its mobile devices, not just smartphones.)

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Distimo: When It's Time For A Mobile App Sale, Choose Your Price Wisely

Tom Krazit — Thu, 26 Jan 2012 15:03:49 PST

In an insanely crowded mobile apps marketplace, pricing is one of the ways to stand out from the competition: for better or worse. Distimo shared some data Thursday on app-pricing strategies as well as the old-fashioned retail concept of the sale.

If you’re a mobile developer who isn’t sure about the whole “freemium” thing—as in, getting customers in the door for free and finding 400 little ways to charge them once they’ve arrived—application pricing is critical. Those who have erred on the high side and aren’t getting the response they would like should consider a sale: in Apple’s App Store average revenue rose 41 percent on the first day of a sale and by 22 percent over the course of 15 days, Distimo said in a new report on app pricing.

You still have to be smart about choosing the new price. Applications on the expensive side of things, those up around $10, tended to lose revenue overall if they made a timid cut to the price, Distimo said. But steeper cuts paid off: “For example, offering a discount of one dollar on an application that normally costs $7.99, lowers the revenue, whereas offering a discount of three dollars on average increased the revenue by 131 percent,” the app-marketing company wrote in the report.

Those considering a change to the price of their app can sign up to download the full report here. The report covers the activity in Apple’s App Store and Google’s Android Market during the last three months of 2011 in the U.S.

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Netflix Stock Jumps More Than 20%, Equity Analysts 'Bullish' Again

Daniel Frankel — Thu, 26 Jan 2012 13:47:49 PST

Netflix (NSDQ: NFLX) stock jumped over 20 percent, with a number of equity analysts bumping up the movie rental company’s price target following its better-than-expected fourth quarter earnings report.

As of late-day trading on the Nasdaq, the stock was up about 23 percent to $117.17 – that’s also up about 27 percent from where Netflix stock was priced at Wednesday’s opening bell.

Netflix Stock Chart by YCharts

Given Netflix’s precipitous autumn plunge from a price zenith of nearly $300 a share in July—the result of an ill-fated price hike and aborted attempt to spin off its DVD business—“rebound” might be too strong a word. But equity analysts seemed to have like what they saw Wednesday. Analysts at Citigroup upgraded ratings for Netflix from “neutral” to “buy,” while setting a price target at $130 in a note to investors Thursday. In its own investor missive, Oppenheimer also raised its price target to $130, while issuing an “outperform” rating.

There were still some areas of concern, though. Citing factors that came out in Wednesday’s conference call with top Netflix officials – notably, a slower than expected launch in Latin America – equity analyst Sterne Agee’s Arvind Bhatia contends that the recent run-up of the stock may have it priced too high. Last summer, Netflix announced that it would expand into Latin America, which has broadband penetration rates that are about four times higher than Canada, according to the company. Netflix highlighted plans to launch in 43 countries in Latin America and the Caribbean with hopes that this expansion would go as smoothly as its transition into Canada in 2010.

But in a conference call with investors Wednesday, Netflix CEO Reed Hastings conceded that this southern infiltration is going slower than had been anticipated. He said a “lack of device penetration” and little “U.S. halo effect” has made the expansion go much more slowly than in Canada. As a model, Hastings cited DirecTV’s launch of its Latin American service several years ago, a process he said took about two years to get off the ground.

Overall, Netflix told investors Wednesday that it had added 380,000 foreign subscribers in the fourth quarter and that its total now stands at 1.86 million. The company’s international operations lost $60 million for the period.

Some other Netflix news that flowed from Wednesday’s call:

—Not only do customers have to wait 56 days after a disc premieres to rent DVD and Blu-ray titles from Warner Bros. (NYSE: TWX), they have to wait 28 days just to put those movies in their queue. The Los Angeles Times confirmed that this is part of Netflix’s new agreement with Warner that goes into effect Feb. 1.

—Netflix plans to put some work into its user interface, developing features, for example, that create separate movie queues for parents and children. In other words, mom and dad can cull from a selection of adult dramas without having to scroll through Power Ranger episodes.

—Hastings explained Netflix’s strategy of releasing all first-season episodes of its first original series, Lilyhammer, at once. The traditional TV model, of course, is to trickle them out one at a time and let the buzz build: “The Netflix brand for TV shows is really about binge viewing,” he said. “It’s the ability to get hooked and watch episode after episode.”

—Meanwhile, asked if Netflix would consider bidding on current episodes of television content, Hatings said he has no interest in getting into a “cord-cutting battle” with cable networks and would continue to offer complete episode collections of prior seasons.

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