Britain’s best-selling daily, The Sun, is putting up a paywall later this year. That means fans of the tabloid — known for topless “Page 3″ girls and headlines like “Harry The Nazi” (when Prince Harry wore a Nazi outfit to a costume party) and “George Michael Shunts Trucker in Rear” (about a car accident involving the musician) — will have to pay up to read it online.

News International Ltd. Chief Executive Officer Mike Darcey announced the move last night over drinks at Rupert Murdoch’s London headquarters. Darcey, a former gymnast who can still turn backflips, came from pay-TV operator BSkyB. He said television offers lessons for print on convincing consumers to pay for a medium they’re used to getting for free.

“It’s not rocket science but it can be done,” said the New Zealander, who also oversees Murdoch’s other U.K. paper, The Times of London. Darcey credited “strongly differentiated content” for the success of BSkyB (40 percent owned by Murdoch) against free broadcasters like the BBC.

Britain’s Daily Telegraph also announced plans for a paywall yesterday, taking a similar approach to the Financial Times and New York Times, which require subscriptions only after readers have viewed a certain number of articles in any given month. The Times of London has a strict paywall, blocking all viewing without a subscription.

Darcey declined to give specifics on how the paywall will be implemented. The Sun had an average daily circulation of 2.28 million last month, while the online version gets 30 million users a month.

Original post is Eclipsing the Sun: Murdoch’s British Tabloid to Erect Paywall by Tech Blog.

Careful viewers of Indian soap opera “Pavitra Rishta” might think that husband and wife Manav and Archana are fans of Tilda, a brand of packaged rice. There it is, after all, on the shelf. Anyone watching the show being filmed, though, won’t necessarily come to the same conclusion, because on the set there’s no Tilda. Instead, the package of rice is digitally added to scenes in the drama from broadcaster Zee TV.

Zee’s owner, Indian billionaire Subhash Chandra, likes the idea so much that he’s investing 3 million pounds ($4.6 million) in MirriAd, the London company that sells the digital product placement technology. Earlier backers will kick in another 600,000 pounds.

Zee, one of Asia’s largest media businesses, with theme parks, online gaming and telecoms operations, aims to use digital product placement across India and elsewhere in Asia.

MirriAd says its technology helps advertisers reach more eyeballs since TV viewing drops off by an average 25 percent during breaks and audiences find banner ads and pop-up messages annoying. The startup has built an impressive client list, both among advertisers and media companies. For pet owners concerned with doggie dental care, Pedigree DentaStix were featured in a “dogumentary” on Sky1. To lure thirsty Brits, MirriAd placed the PGTips tea brand on contestants’ mugs in Channel 4′s “Deal or No Deal.” An ad for Disney Pixar’s Scottish fantasy film “Brave” found its way into a TV promotion for Scotland.

Original post is Coming to a Screen Near You: Virtual Product Placement by Tech Blog.

As much as the mobile-advertising company is growing, it’s not enough to meet its own targets or the expectations of analysts. While putting ads on phones and tablets may be the industry’s future, predicting the industry’s growth is turning out to be difficult as companies compete to find successful models.

Paul Palmieri, a former Verizon executive who co-founded Millennial in 2006, now answers to shareholders as the CEO of the only publicly traded company focused solely on mobile advertising. He personally called about eight of them to explain why they shouldn’t panic after the stock dropped 38 percent following Millennial’s earnings report. Fourth-quarter revenue of $58 million fell a few million short of what the company had said it would be.

Palmieri’s message: “Don’t worry about the stock.” While it’s dropped around 60 percent since the company’s first day of trading last March, he’s trying to steer investors’ focus to long-term growth. If Millennial were facing too much competition from Google or Apple or one of the private company networks, you would have seen the company’s profits fall. Profit margins will stay between 40 and 42 percent, he said.

The experience hasn’t made Palmieri shy away from forecasts, either.

“We’re very serious about hitting our numbers,” he said. For 2013, Millennial expects sales of $270 million to $280 million, from $177.7 million in 2012.

Since Millennial, unlike competitors, has to publish its numbers for the world to see, it’s something of a barometer for an industry that’s still in its early days, with high expectations. There are few easy comparisons Millennial investors can make, for better or for worse. That makes for a volatile stock.

For example, in an eMarketer report on mobile display advertising, the firm says it expects Millennial’s annual growth rate to be 45.8 percent — slower than the industry average of 70.5 percent, according to the research firm. But the competitors eMarketer includes in that average are Google, Pandora, Apple, Facebook and Twitter, none of which run a mobile advertising platform like Millennial’s.

In the end, that will be the advantage, as Apple, Google and the others prioritize putting ads in their own ecosystems, leaving plenty of space for Millennial to sell, Palmieri said.

“There are very few markets where there’s a true role for an independent player,” he said. “This is one of them.”

Original post is In Fast-Growing Mobile Ad Business, How Fast Is Fast Enough? by Tech Blog.

So, even as Time Warner Cable raises your rates, it isn’t keeping up with how much it’s paying for the content.

In other words, you’re only partially right to blame your cable company for why you’re shelling out big bucks each year. You also have to look further downstream at the content companies or programmers who are charging the cable operators — News Corp., Disney, CBS, etc.

Now, even cable operators are becoming content companies. Time Warner Cable just agreed to buy the right to carry LA Dodgers games through a new regional sports network. Last year, the company debuted another regional sports network that carries LA Lakers games. Comcast and DirecTV also own sports networks. Plus, Comcast owns 51 percent of NBC Universal, one of the largest programmers.

So the picture is muddled. But for the most part, cable economics is straightforward: Operators pay cable and broadcast networks money for the right to broadcast content, and the cable and broadcast networks make a profit from these deals. Then, the cable operators charge you more money so they can pass along some of those costs and make a profit themselves.

Lots of people are sick of their cable bills rising — including Britt, who again today labeled the current cable TV ecosystem as anti-consumer.

So why not let customers choose which networks they want and pay for only them? Not everybody wants sports channels anyway, right? And who really needs 800 channels? If you think that idea — called a la carte pricing – would work, think again. The math just doesn’t work.

For a video explanation with some cool graphics, check this out.

Let’s take ESPN, one of the most popular cable networks. I’m going to borrow this general line of thinking from Craig Moffett, cable and satellite TV guru, who has written at length about this.

Disney, which owns ESPN, makes almost $6 per month for every single basic cable customer. You don’t watch ESPN? Too bad. You’re paying $6 a month for it.

If you could suddenly just pay for only the channels you want to watch, let’s say 50 percent of you would pay for ESPN. That’s probably too high, but let’s run with that.

Disney would immediately have to charge $12 a month for ESPN to make up for the lost revenue. They’ve just lost half their viewers. Plus, ESPN makes money from all of the other networks they make cable providers buy to get access to ESPN — like ESPN2, ESPN Classic, etc. That’s another few bucks per month.

And then there’s advertising revenue — in an a la carte world with half the audience, ad rates just dropped, big time, on ESPN. And then there’s the lost advertising on the other networks, such as ESPN2 and ESPN Classic.

Now Disney is charging, say, $25 a month just for ESPN to make up for the lost revenue. Just one channel. And chances are you probably want at least a few more  — MTV, Comedy Central, AMC, TNT, whatever. Those may not cost you $25 each but the same math applies. They’re going to cost more than you think.

Dish CEO Joseph Clayton says he knows there’s an audience of 18- to 28-year-olds that just wants to pay $20 a month for video — preferably streamed online. But Dish has struggled to figure out a way of giving consumers the content they actually want for that price, because programmers aren’t exactly handing it over at low cost. Clayton once told me he could put up a channel of the moon for very low cost — but that doesn’t mean people would actually watch.

This isn’t to say that the current system is always here to stay. What’s likely to happen is that cable operators will begin to offer you smaller, more personalized packages of channels. In other words, you may still have to pay for ESPN, ESPN2 and ESPN8 The “Ocho“ if you’re a sports fan — but you may not have to pay for three cooking channels in addition if watching food isn’t your thing.

The cost will be lower and you’ll get more channels you actually watch. So stop focusing on a la carte, and refocus your attention to mini-packages, because that’s what is far more likely to occur.

Original post is Your Cable Bill’s Going Up Again, But Forget a la Carte Pricing by Tech Blog.

Photograph by Noah Berger/Bloomberg

Facebook CEO Mark Zuckerberg expressed optimism about mobile, but the numbers aren’t there yet.

Mark Zuckerberg described Facebook today as a “mobile company,” but he has a long way to go to prove that mobile is a viable business.

Zuckerberg’s opening statements on Facebook’s earnings call lasted about seven and a half minutes, and the chief executive officer spent more than half of that time talking about mobile. He touted the effectiveness of advertisements on mobile phones, and how more users are checking the social network each day from their phones than from a computer.

“More people are starting to understand that mobile is a great opportunity for us,” Zuckerberg said. “Today, there is no argument. Facebook is a mobile company.”

Investors seem to be arguing about whether that is a good thing. The stock is down 3.5 percent in after-hours trading. Facebook executives had a lot of promising numbers to back up the bet on mobile, but the ones that matter — revenue and market share — aren’t there yet.

Mobile accounted for 23 percent of Facebook’s total ad revenue last quarter, the company said. Considering it was 14 percent in the third quarter, growth is going in the right direction. But mobile revenue still significantly lags actual usage as 680 million people, or 64.2 percent of Facebook users, are browsing the service on their phones.

Competition will also be tough. In the U.S. mobile ad market, Facebook is estimated to have a 12 percent share this year, which would be dwarfed by Google’s 57 percent, according to EMarketer.

None of these signs should cause investors to unfriend Facebook in droves, but the top executives shouldn’t necessarily be jumping up and down over the results.

“We were hoping for a little bit more,” Gene Munster, an analyst at Piper Jaffray, said in an interview on Bloomberg West. “The mobile business is in tact. So I think that that’s a good part.”

There is, of course, plenty of room for Facebook to grow. Zuckerberg expressed optimism about refining the mobile ads that appear in the News Feed and making those more personalized based on usage.

Sheryl Sandberg, Facebook’s chief operating officer, talked about measuring how the network’s ads convert into purchases in stores, which, if proven, could allow the company to charge more. She was unusually cagey about discussing a mobile version of Facebook Exchange, the ad-bidding tool that was successfully rolled out for the website last year. (One thing Facebook isn’t doing: “We’re not going to build a phone,” Zuckerberg said.)

The question about whether the great shift to mobile computing would unravel Facebook’s business has dogged the company ever since its initial public offering last year. Despite the intense optimism from its executives, who all mentioned the inroads being made in mobile advertising, Facebook’s performance last quarter doesn’t put those concerns to bed. Facebook acknowledged as much in today’s filing with the Securities and Exchange Commission, which lists the familiar risk factor: “our ability to monetize our mobile products.”

Original post is Facebook Is a ‘Mobile Company,’ But Is That a Good Business? by Tech Blog.

Photograph by Globe Photos/Zuma Press

Ben Curtis, Dell’s pitchman a decade ago, is now an actor and producer. But he’s open to returning to his glory role.

Ben Curtis, the actor made famous by his role in Dell commercials early last decade, says he’s got the solution to the problems that led Michael Dell to seek a leveraged buyout: Resurrect the “Dell Dude.”

Dell was an unstoppable force in the early 2000s when Curtis was the PC maker’s television pitchman. Steven the Dell Dude, as he was known, would show up unannounced during shopping excursions and graduation ceremonies to utter the catchphrase, “Dude, you’re getting a Dell.” It was both memorable and effective. Lots of dudes and dudettes got Dells.

Now, the company is at a crossroads. Dell has dropped to third in global PC sales after holding the top spot at the height of its marketing blitz in 2002, according to research firm IDC. Bloomberg broke the news last week that Dell is in talks with private-equity firms to take itself private. Silver Lake Management and partners are close to lining up about $15 billion for the deal, my colleagues reported. Microsoft is discussing providing part of the funding, people with knowledge of the matter said.

“I think they’re making a huge mistake and simply need to bring back the Dell Dude!” Curtis wrote to me in an e-mail. “That’s it. That’s all they need to do. If they brought me back, their sales, stock and media presence would skyrocket. That is by FAR the smartest move they could make.”

Curtis was 19 when he won the Dell Dude role in 2000. He lost his job in 2003 after he was arrested in New York while trying to buy a bag of marijuana. He also happened to be wearing a kilt at the time. Since then, Curtis has done some voice acting, including for the game “Bully,” and has appeared in NBC’s “Law & Order,” among other projects.

While Curtis still clearly has some emotional ties to Dell, as Felix Gillette’s “Branded for Life” feature in Bloomberg Businessweek illustrates, the actor is convinced that he’s not the only one who believes in his marketing power.

“America agrees,” Curtis wrote in the e-mail. “My fans are the ones that say and know this. I’m just the messenger.”

Original post is ‘Dell Dude’ Says He Can Fix Dell by Tech Blog.

Photograph by Michael Nagle/Bloomberg

The New York Times instituted a paywall on its website last year, a controversial move that has yielded great results.

Ever since the New York Times rolled out its so-called paywall in March 2011, a perennial dispute has waged. Anxious publishers say they can’t afford to give away their content for free, while the blogger set claim paywalls tend to turn off readers accustomed to a free and open Web.

More than a year and a half later, it’s clear the New York Times’ paywall is not only valuable, it’s helped turn the paper’s subscription dollars, which once might have been considered the equivalent of a generous tithing, into a significant revenue-generating business. As of this year, the company is expected to make more money from subscriptions than from advertising — the first time that’s happened.

Digital subscriptions will generate $91 million this year, according to Douglas Arthur, an analyst with Evercore Partners. The paywall, by his estimate, will account for 12 percent of total subscription sales, which will top $768.3 million this year. That’s $52.8 million more than advertising. Those figures are for the Times newspaper and the International Herald Tribune, largely considered the European edition of the Times.

It’s a milestone that upends the traditional 80-20 ratio between ads and circulation that publishers once considered a healthy mix and that is now no longer tenable given the industrywide decline in newsprint advertising. Annual ad dollars at the Times, for example, has fallen for five straight years.

More importantly, subscription sales are rising faster than ad dollars are falling. During the 12 months after the paywall was implemented, the Times and the International Herald Tribune increased circulation dollars 7.1 percent compared with the previous 12-month period, while advertising fell 3.7 percent. Subscription sales more than compensated for the ad losses, surpassing them by $19.2 million in the first year they started charging readers online.

Those numbers also underscore how much the Boston Globe — its only remaining asset outside the Times media brand — has dragged down the company’s total sales. Had the Times sold the Globe when it offloaded its regional newspapers, it’d most likely be reporting a sales spike this year instead of a decline.

The Times’ online paywall lets visitors read 10 articles per month before prompting them to subscribe. Readers can still see articles linked from an authorized social network, such as Facebook or Twitter.

Part of the argument against paywalls is that newspapers could make more from open access. More readers means more sharing and is thereby sure to mount increased traffic. Online advertising, however, sells at much lower rates than print ads. Also, the common tactics for attracting eyeballs on the Web may not work as well for the Times, which has a reputation to protect.

That said, the company doesn’t separate digital ad and circulation sales figures from those in its print business. What we do know is the Times and IHT had 566,000 paying online subscribers as of the end of September, an 11 percent increase since June, while print readers have been on the decline. Sunday print editions slipped 1.6 percent this year from a year earlier, while weekday circulation dropped 6.9 percent to 717,513, according to the Alliance for Audited Media. That means paid Web readership is quickly coming to rival those in print.

To be sure, the digital subscription business isn’t the only reason for the increase in distribution sales. The Times raised print delivery prices by 4 percent this year and plans to raise prices again next year by 5 percent. But those increases may have only offset the drop in print circulation as outlined above. It’s also possible those price increases caused some to drop their print subscriptions.

Despite the metrics, the larger significance of the Times’ newfound subscription wealth is that readers, not advertisers, are now more directly responsible for the Times’ business — minus a few stubborn bloggers.

Original post is The New York Times Paywall Is Working Better Than Anyone Had Guessed by Tech Blog.

Photograph by Getty Images

Online advertising firm Epic Marketplace is accused by the FTC of spying on Internet users' browsing histories.

There are few things as creepy in online marketing as digging into someone’s health history, without their knowledge, to advertise to them. Yet that’s precisely what New York-based Epic Marketplace is accused of doing.

According to the online advertising company’s settlement with the U.S. Federal Trade Commission, Epic used a technique to snoop on people’s Internet browsing histories and sold that information to marketers, my colleague Sara Forden reported.

The company exploited a flaw that existed widely in Internet browsers until about two years ago to accomplish its surveillance, according to the FTC’s complaint against Epic. The flaw allowed websites to check whether visitors had also viewed other sites — a boon for underhanded marketers and site owners, as well as a gigantic privacy violation. Most modern browsers are protected.

Epic, whose tracking technologies existed on tens of thousands of partner sites, would ping visitors’ browsers for evidence that they visited any of more than 54,000 other domains, and record whether they saw pages related to fertility, impotence, menopause and incontinence, as well as non-health-related topics such as credit repair and personal bankruptcy. That information was then included in the profiles that Epic built and used to target people with advertisements, according to the FTC.

Stanford University graduate student Jonathan Mayer exposed Epic’s practices last year.

Epic could not be reached for comment. Three phone numbers listed for the company were disconnected. Key executives went on to found another firm, Kinetic Social, after some Epic partners said earlier this year that Epic had stopped paying its bills. Hank Kim, a spokesman for Kinetic, said the history-sniffing technology was used by a firm that Epic bought and was not disclosed to the marketing company at the time of the deal. Epic took steps to stop the practice once it was discovered, Kim said.

The flaw that Epic is accused of exploiting dealt with the way websites could query visitors’ browsers and get answers about which other sites they’d visited. Sites that had been visited would display a hyperlink in purple, and those Web pages that had not would display in blue.

To make matters worse: Even if someone cleared their tracking cookies and employed other privacy measures, their browsers would still silently betray them, offering up a record of other places they’d been on the Web.

The settlement bars Epic from using “history sniffing” technology in the future and mandates that it destroy all data collected using it, according to the FTC. Epic’s privacy policy had promised visitors that they would only be tracked on the more than 45,000 sites that Epic partners with, not sites outside of that network. The history sniffing code constituted a deceptive business practice, the FTC said.

“Consumers searching the Internet shouldn’t have to worry about whether someone is going to go sniffing through the sensitive, personal details of their browsing history without their knowledge,” FTC Chairman Jon Leibowitz said in a statement. “This type of unscrupulous behavior undermines consumers’ confidence, and we won’t tolerate it.”

The case is a vivid example of the lengths that some online marketers will go to fill their databases and carve out a niche in a highly competitive industry. As the social networks have illustrated, people are often the product online, and we’re the ones being shopped, not the other way around.

It’s an agreement we’re often OK with, a reasonable tradeoff for a valuable service like free e-mail. But the case against Epic shows in stark terms that there are corners of the consumer Internet where even services that do business with high-profile, legitimate sites may go over the boundary of acceptable behavior.

Epic was no fringe entity.

According to the FTC, the history-sniffing code was used on more than 24,000 sites that partnered with Epic to serve up targeted advertisements. Some of them are quite popular, including cnn.com, papajohns.com, redcross.com, and orbitz.com. The sites may have had no idea their visitors were being violated in this way.

Original post is How Online Marketer Peered Into People’s Health Histories by Tech Blog.

Image courtesy of Waze

The ads on Waze's mobile GPS app can show up when the user drives by a business.

Waze, the free mobile mapping app with 30 million users, is ready to make some money by showing advertisements to drivers.

Starting today, people using Waze on a smartphone will see pins showing logos for Dunkin’ Donuts, Jamba Juice, Wyndham Worldwide hotels such as Ramada and Days Inn, and other locations. No more than three sponsored pins will show up on the screen at any given time, alongside the roadwork warnings, traffic alerts and driver avatars that populate the Waze world, said Chief Executive Officer Noam Bardin.

The drive toward ads comes after Waze had experimented with various types of revenue models. Waze is known for its refined driving directions based on information from users currently on the road, but an attempt two years ago to sell the crowd-sourced traffic reports proved not to be a viable business, Bardin said in an interview.

Similar to advertisements on the web, ads have become a popular business in mobile apps, but the implementations are often different.

“Having banner ads on mobile is like the concept of taking newspaper ads and throwing them up on the web, and hoping it will all work out,” Bardin said. “This is a way of taking billboards, where people are driving by, and making them digital.”

Waze still offers some of the data contributed by its users to partners, including Apple, though it no longer sells that information, Bardin said. He declined to comment on the details of the arrangement with Apple.

Tim Cook, Apple’s CEO, gave the mapping startup a leg up in September in a letter apologizing to customers for Apple Maps. Cook recommended Waze, along with two other apps and two websites, as alternatives for people who are dissatisfied with Apple’s software.

Integrated ads are an effective way to monetize the increased traffic coming into the Waze system, where users spend an average of 7 hours and 20 minutes a month, according to the company. Waze has 10 of its 90 employees focused on this effort full time. The Palo Alto, California-based startup plans to provide users with more tailored advertising based on a person’s demographics data from Facebook or the ads they’ve clicked on, Bardin said.

Waze’s advertisements can include coupons, which present themselves when the app recognizes the user driving past a particular store. The latest version of the app has an inbox for organizing deals a user has requested.

“You have no reason to walk around with your Groupon app open,” Bardin said. “If you’re stopped at a stop sign and close to an offer, we’ll push it to you.”

Of course, given how easily drivers can get annoyed, Waze will need to steer clear of pushing too much, at the risk of users taking an alternate route to mobile mapping.

Original post is Mobile Mapping App Waze on the Road to Revenue With Ads by Tech Blog.

Photograph by Eric McCangles/ABC Family via Getty Images

“Pretty Little Liars" is a hit on TV and social media, garnering 1.6 million Twitter comments for the season finale.

Thirteen-year-old Gracie Marx is obsessed with the ABC Family show “Pretty Little Liars.”

The Beverly Hills, California, middle-schooler posts images related to the series on Facebook Inc.’s Instagram site, texts with friends while watching and has a whiteboard at home counting the days to the Oct. 23 Halloween special. When cast member Ashley Benson posted on Twitter.com that she was at a nearby cupcake shop, Marx convinced her mother to drive her there and found a small army of girls already snapping photos.

“It’s just a good mystery,” Marx said, when asked why she likes the program.

“Liars” and its online marketing represent an effort by the Walt Disney Co. cable network to keep young audiences watching its broadcasts, including commercials. ABC Family executives accomplish that by creating a kind of virtual watercooler where viewers chat before, during and immediately following each episode.

“Watching this show after the fact is like watching the Super Bowl the next morning,” said Robert Thompson, who teaches television and popular culture at Syracuse University in Syracuse, New York. “For scripted programming that’s really tough to do.”

Programmers are in a constant fight for viewers, battling diversions that take people away from the set and recording technology that lets them skip commercials. In the first quarter, the average person cut their TV time by about 3 percent from a year earlier, according to a Nielsen report.

“Liars,” which began airing in 2010, is the most-watched show in ABC Family’s 11-year history. It averaged 3.7 million viewers, including recorded episodes, in its third season from May to August and was the No. 1 scripted show in its target audience of 18-to-34-year-olds, Disney said, citing Nielsen.

It’s a social-media hit, too, garnering 1.6 million Twitter comments for the Aug. 28 season finale, a record for a TV episode, according to researcher Bluefinn Labs.

Technology is a constant feature in the show, which is based on a popular line of young adult novels. The protagonist, a never-seen character named “A,” communicates via text messages with four high-school friends who dodge murderers and entanglements with a string of attractive co-stars.

Cast members are encouraged to reach out to fans via social media, Lucy Hale, one of the stars, said in an interview. She frequently posts pictures of things she likes, such as new shoes and music videos.

“All of us have been doing this from the beginning,” said the 23-year-old, who has more than 1.7 million Twitter followers. “It was like a wildfire.”

Disney monitors online chatter for opportunities to promote the show. After noticing fans posting pictures of the letter “A” in everything from bathwater bubbles to sand, Disney held a contest for the best “A” picture, generating thousands of photos and 2 million Facebook page views. The 17-year-old winner got a trip to a taping.

“This demographic loves to see themselves in the spotlight,” said Danielle Mullin, ABC Family’s vice president of marketing. “You post your art, we tweet to you, the talent tweets you. That couldn’t happen in the days when you were waiting for Shaun Cassidy to send you a signed photo.”

Disney is now renting out its online army to promote other fare, such as Universal Pictures’ recent film “Pitch Perfect.” “Liars” fans were offered an exclusive web-only clip of the TV show if they clicked “like” on the movie’s Facebook page. More than 100,000 obliged.

“I have three daughters who follow everything about that show,” said Doug Neil, senior vice president of digital marketing at Universal Pictures, part of Philadelphia-based Comcast Corp. “They’ve done a great job in using social media to connect to their base.”

Original post is ABC Family Tweets to Keep ‘Pretty Little Liars’ Viewers Tuned In by Tech Blog.