Eric Garland, CEO of an online piracy research firm, told the Wall Street Journal Disney's investment in 56.com is "ironic" and "shocking." John Ball, Steamboat's managing director, says the company invested in part to help 56.com curb pirated videos. But 56.com is just one of six Chinese companies in Steamboat's portfolio, all of which aim to distribute movies and videogames online.

And that's the dirty secret of Disney and other media companies. They don't ultimately care about shows like Hannah Montana. What matters is their channels of distribution, through which such evanescent fare courses — and 56.com promises to be another one. Viacom isn't suing YouTube for $1 billion because it's upset about piracy. It's upset about piracy happening on a channel it doesn't own.

Here's some back of the envelope math on Facebook's burn rate. Figure the company's operating expenses are divided roughly half in labor, half in operations like running its servers. Count $100,000 in salary per employee, and double that in benefits and other overhead; double that again to account for the company's non-labor costs. You end up with an annual cost structure of $400 million. Facebook's revenues for this year are projected to be $300 million to $350 million; if the company isn't already operating in the red, it's headed there fast.

Microsoft's $240 million investment? Most of that is already gone towards buying servers — and it's not like Facebook can stop buying servers as usage of its site continues to boom.

Publicly, Zuckerberg has talked about the company making growth its priority. But a $400 million a year ship can sink fast, especially if the advertising market faces a hard contraction and media buyers cut back on their more experimental ad buys. And none of Facebook's new ad formats have proven to be a breakout hit, as Google's AdWords was earlier this decade.

That's why I think Facebook's braintrust is talking about whether they can afford to keep hiring — and whether they need to cull their existing ranks.

Here's where Facebook COO Sheryl Sandberg, the law-and-order type Zuckerberg hired from Google, comes in. She's already made hiring considerably more bureaucratic, instituting new requirements straight out of the Googleplex, like a 3.5 GPA from a top school.

Getting strict on recruiting is just the start. Facebookers should expect to see more rules, rules, rules. And even the slightest violation will prove cause for firing — especially for employees who are within weeks of vesting their first batch of stock options, which only come after a year on the job.

Sandberg's very savvy about keeping up appearances. Google thrived in part because, in the darkest days of the dotcom crash, from 2001 through 2003, it was the only company hiring. Until it bought DoubleClick, Google had never done a layoff. That's part of Google's image, and I'm sure Sandberg wants it to be part of Facebook's image, too.

So we won't hear about a Facebook hiring freeze. We certainly won't hear about layoffs. Whatever happens will be quiet: Candidates won't get called back about jobs they applied for. Managers will find their hiring requests tied up in bureaucracy. And employees will quietly box up their things and go.

The sad thing is that those Facebookers will think they screwed up. They won't even have the saving grace of a layoff — the corporate kiss-off that says, "Hey, kid, chin up — it's not you, it's me." A layoff would be the honest thing. But it's the one cost-cutting move Facebook can't afford.

Why, Google did, according to Davos party correspondent Meghan Asha, the sometimes girlfriend of TechCrunch editor Michael Arrington, who got her in. Google's affair included Norman Jay, a British house-music DJ. There you have it: Larry and Sergey are at fault for distracting the world's best and brightest from preventing the meltdown we now face. If Schwab is serious about keeping thing's serious at the next WEF, we recommend disinviting Page and Brin. And Arrington and Asha.

"Follow spam" is what happens when a Twitter user sets up an automated script to subscribe to thousands of individual users' feeds, found by crawling Twitter's pages. Follow-spammers aren't interested in reading all those people's updates. They're actually hoping their new pretend-friends will follow them back in exchange, creating an opt-in list for their messages. These may be marketing, or just personal drama.

It seems like a victimless crime, but there are two problems caused by comment spam:

• 1. Each user gets a notice whenever a comment spammer starts following them. If you're getting Twitter on your cellphone, it means frequent interruption by annoying "TotalStranger is now following you on Twitter" text messages. If you don't have an unlimited messaging plan, the messages cost you as much as 15 cents each.
• 2. Williams's servers are already overloaded. "In extreme cases," he writes, "these automated accounts have followed so many people they've threatened the performance of the entire system."

That's it. I know, hardly a crisis. White people need something to be uptight about, and Ev Williams has delivered. I give it another three months before there's a service mag called Twitterer at my local Borders.

It doesn't necessarily sell more hardware but it does provide end users with a richer browser experience, said Jeff Klaus, marketing director for Intel Mash Maker, who admitted that the product is a bit of a departure for the company.

"VC fund raising is very cyclical," said Emily Mendell. "A lot of firms have gone out in the last two or three years and fewer firms in the fund raising mode — that's why there aren't that many new funds." Put another way, VC firms would be foolish to go out hat in hand seeking money now. Their customers, largely pension funds and other large institutions, have other worries right now. And there's not much for VCs to brag about in their sales pitches: Only five venture-backed companies went public last quarter, and in those three months, only 56 companies were acquired, compared to 83 in the fourth quarter.

For starters, more Web applications mean more pages running Google-brokered ads. App Engine also runs on Google's preferred programming language, Python, not PHP or Ruby — meaning the developers of tomorrow now know definitively what scripting environment to work in, and the company's talent pool will grow. But ZDnet might have the winning theory: it will make the cost of acquiring startups much lower for Google.

Take YouTube, for example. The company succeeded partly on the merits of being able to keep its databases running. While other video sharing services wilted under their popularity, while YouTube remained online. But once Google purchased YouTube, it had to invest engineers and time into translating the company's backend into something that would work in their other systems. Next time, the transition will be nearly seamless.

So for the startup ecosystem, developers can either go Google or go elsewhere. And if they go Google and build something successful, there will be a threshhold of traffic where they'll be presented with two choices — either pay to play on Google's servers, or sell to Google. In any but the first scenario, Google is all up in your balance sheet. Doesn't look good for Amazon.com and Oracle, which powers Amazon's SimpleDB.

PayPal "has gone to great pains to ... not be a bank" according to Christa Quarles, managing director of Thomas Weisel Partners. Some users think the company is holding the cash to make money on the interest, but it's a small enough amount — an estimated $10 million a quarter, tops — that it doesn't make a significant impact on eBay's bottom line. (If it hadn't taken a massive writeoff for its Skype purchase last year, eBay would have made more than $1 billion in net profit.) Instead, PayPal's move is likely an attempt to reduce fraudulent purchases by keeping money in de facto escrow until the purchase has been finalized. Sellers may not like it, but the alternative — PayPal letting sketchy transactions go through, and then recovering the money later — sounds worse.

(Photo by AP/Paul Sakuma)

Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal.

That early IPO — a preemptive strike against long-forgotten competitors — was a blessing and a curse. It was great PR, but it also meant that Yahoo had to please shareholders from an early age.

In the '90s, it did so with aplomb. No one personified Yahoo's cockiness more than its president, Jeff Mallett. A former soccer player, Mallett was more often the public face of the company than its reticent CEO, Tim Koogle. He often was quoted when Yahoo struck a large advertising deal; he was an expert at squeezing cash and stock from startups desperate to get traffic from Yahoo. Mallett had his share of mistakes, like the $6 billion purchase of Broadcast.com from Mark Cuban in 1999. But he was, at the least, bold and decisive.

Terry Semel became CEO in 2001, pushing Mallett aside. A new management team came in, full of ad-sales specialists. From 2001 through 2005, Yahoo patiently courted Madison Avenue, building a formidable banner-ad business with blue-chip clients.

Semel also got Yahoo into the search business, buying Inktomi and Overture. But he failed to capitalize on their promise. Many insiders blame Sue Decker, then Yahoo's CFO, now its president, for milking those businesses for cash while Google was investing millions in its algorithms. Semel's other big acquisition push into user-generated content brought it properties like Flickr and Del.icio.us. But it stalled when prices started to rise in 2006. Semel balked at paying big prices for YouTube and Facebook, and they slipped from his grasp.

The rise of Sue Decker roughly parallels the decline of Yahoo. Decker is — no, was — an expert at catering to Wall Street, and a killer at board-room politics. Insiders believe she edged out Dan Rosensweig in a 2006 reorganization. She then, they say, lobbied the board to oust Semel as CEO, using Rosensweig's departure as part of the rationale. Cheeky, but clever.

Both moves backfired on Decker. She'd hoped to put Rosensweig in a lesser role, but he balked and left the company without anyone running its content businesses. Semel left, but Decker did not get the CEO job she'd hoped for. Instead, the company was left looking rudderless, with founder Jerry Yang stepping in as CEO.

Another Decker mistake: Her disgraceful treatment of Wenda Harris Millard, the company's beloved U.S. sales chief. When Millard told Decker she was leaving for Martha Stewart, Decker reacted furiously, locking Millard out of her office and issuing a press release that suggested Millard was out of touch and had been fired. Unsurprisingly, Yahoo's banner-ad sales have suffered since Millard's departures.

Which brings us, more or less, to the present. It's not surprising that Microsoft seized this moment to issue its $44.6 billion offer. Yahoo's poor earnings and gloomy forecast provided one opening; management's incompetent dithering over layoffs provided another.

It's possible that Yahoo might somehow escape Microsoft's grasp. But whatever course Yahoo takes from here, it's clear that it will be even further diminished. Yahoo will be best remembered in business schools, where it's taught as a case study: How quickly tech empires can fall.

Most of those people know how to use Tumblr responsibly and only post when they have something worthwhile to say. Others don't. First execution: Julia Allison. 40 posts a day? Are you f—-ing kidding?

Just three easy steps and it's off with their head. Click where the arrow points.


And now they're dead! Yay!

A scary 2005 BBC documentary overplayed the doomsday angle. The planet has actually gotten brighter over the past 15 years. The term "global dimming" refers to the reduction of solar radiation hitting the planet's surface, caused by the proliferation of aerosols in the atmosphere. Though industrial soot plays a role, nothing affects sunlight like an erupting volcano. Since 1991, when the eruption of Mount Pinatubo caused the Earth to get much dimmer for about two years, there has been an overall brightening trend. According to NASA worldwide aerosol levels in 2005 were 20 percent off their late 1980s peak. But the amount of sunlight hitting each square yard of Chinese soil has declined by 3.7 watts in the past 50 years; India has experienced a similar decrease. The two nations' surge in aerosol-producing economic activity hasn't been accompanied by regulations to control emissions. Aerosols may actually mask global warming at the planet's surface, but recent research shows the brown cloud over Asia is heating up the lower atmosphere from approximately 6,500 to 16,500 feet. That's bad news for the Himalayan glaciers, which are melting at a rapid clip.

There are a number of unwritten rules to blogging. One of the more common — and more grievous — violations is "hotlinking." This is when a blogger uses HTML code to display an image hosted on someone else's website. Though you haven't copied the image, some lawyers say displaying the image on another Web page could still be considered using the image without permission. More annoyingly, the image loads directly from the original server, using their bandwidth, not yours.

Now, in the age of cheap bandwidth and free picture hosting, this isn't as big a deal as it used to be, but it is a bit of a slap in the face to the person whose image is used. In a post about reform of the Foreign Intelligence Surveillance Act, one of Dvorak's editors hotlinked an image from a post by Mike Harding of Montara Energy ventures.

One way to rectify the situation is to email the hotlinker and ask him to stop. However, some people like to take this one step further. Because the photo is being loaded directly from the victim's site, he can easily change the image to something else, generally something offensive and Not Safe For Work ^TM as a punishment. Luckily for Dvorak though, as you can see above, Mike Harding merely put a notice in the image that it was being stolen.

Since then, however, Dvorak's post has changed the image so that it is now being hosted locally, but without any apology or explanation for their screwup. As Harding says in his post on the matter to Dvorak: "You're in the biz, you know better than this."

My favorite hotlinking story involves John McCain's MySpace page. Some intern in the McCain campaign took, without attribution, the MySpace profile design of Newsvine's Mike Davidson, including a hotlinked image from Davidson's account. Davidson replaced the image and suddenly McCain proclaimed his support for gay marriage, "particularly ... between passionate females." Sweet!

SimpleDB lacks some of the most basic features of "relational" databases, the entrenched enterprise products which pay the salaries of those pasty sysadmins who natter on for hours about stored procedures and triggers when you just want them to run a report. As Uncov has smartly observed, SimpleDB is 18 times less efficent than other databases.

But that's not a bug, that's a feature. Amazon has designed a database which transmits data inefficiently, and then charges users by the amount of data transmitted. The MBA who put together this business plan deserves a raise. This isn't a database; it's a Ponzi scheme. One designed to transfer money from venture capitalists to Amazon.

So who's the patsy? Well, startups who have already gotten hooked on Amazon's other cloud-computing services, like S3 (storage) and EC2 (computing). They're a natural target. Amazon helps them get up and running with a proof-of-concept website. Never mind that it won't scale cost-effectively. By the time a real CTO gets hired and figures that out, they'll already have raised $40 million from unwitting venture capitalists. In the meantime, the startuppers get to tell users that their data is safely stored with Amazon, a name consumers trust. Win-win-win.

SimpleDB's perfect for anyone who's not aiming to serve millions of users. In other words, most of the Web 2.0 startups today that won't be around two years from now. If your ambitions are low, your technical skills lower, and your sense of shame lower yet, Jeff Bezos has the database for you.

What's it take to get to the home page? It's the algorithm, stupid!

• Digg's algorithm accounts for recent participation rank of user and followers.
• Frequent success makes subsequent success more difficult. Take a few days off sometimes.
• Get a quick succession of diggs from "high-value" users.
• The number of diggs needed to reach the homepage correlates to the number of diggs being cast at any given time, and how your story compares to the average.
• Competition in categories Technology, World and Business is fiercer than in Sports or Entertainment. 50 diggs will get a story promoted if it is tops in its category.
• The faster a story gets votes, the lower the vote count has to be at which it is promoted. But diversity is important. Stories dugg by "voting rings" will sit at the top of the queue for hours.
• Too many buries and your story will be removed from the queue.
• Comments can help push a story over the edge. Not fake ones, though.
• Wrong: An absolute number of votes is required.
• Wrong: You're doomed if your story isn't submitted by a top user.
• Wrong: Number of friends is important. Digg looks for is diversity in the Diggs a story receives.
• Wrong: There is a 24-hour window for success.

On some levels, Popfly is nothing new. It's similar to Yahoo Pipes, Apple's soon-to-be-released widget builder Dashcode, personalization tools in various Google properties, and any number of new portals which allow you to build your own web applications. None of these Web mashup builders have attracted the hoped-for audience.

Why? Nondevelopers simply do not develop applications; hence the "non-" prefix. When they do, they build bad applications when there are plenty of existing, free alternatives. Social networks, the Web, and desktops are already overrun by thousands of redundant, useless widgets. This crowded market is dominated by a few quality Web applications built by professional developers who do it for a living. The next innovation is not going to come from an amateur using a dumbed-down beta product.

If someone tries to get you excited about a Popfly widget, the odds are high five other widgets performing the same function already exist. The odds will be low that the Popfly widget will be the best of the class.

But Microsoft should, nevertheless, be excited about Popfly. Rarely has Redmond produced such a simple, visually appealing tool for developers. After playing with Popfly, talented developers will likely migrate to more powerful tools. But Microsoft is badly losing in the battle with Adobe's Flash. Anything that gives Popfly, and the Silverlight technology it's based on, a bit of buzz will redound to Microsoft's long-term benefit. Even if you and I never end up finding a single Popfly-based application worth using.

H.264 makes it possible for dramatic quality improvements in Internet video, it's true. However, most loser-generated content is still being produced with crappy cameras, on home computers with cheap editing software. The update to Flash will not create a tidal wave of better content. It only removes one of many roadblocks.

And, needless to say, a more advanced algorithm won't improve the subject matter of Web videos. YouTube will remain just as inane and crappy as before. The difference between professional and amateur content, however, will become more and more distinct. We'll still be inundated with videos of dressed-up pets and teenagers lip syncing two feet away from the camera (always original and entertaining). We'll just be more aware that we're watching crap.

For Adobe, it's a timely move. Content producers were beginning to eschew Flash video's universality for higher-quality download formats; startups like Joost were hoping to develop alternative video delivery mechanisms by emphasizing better image resolution; and Microsoft thought it saw an open door to compete with Flash through Silverlight, its competing multimedia platform which supports another HD-video format. Adobe just closed the door on competitors and cemented its control of online video for the foreseeable future. And if it renders people's home videos that much more tiresome, all the better.

For one thing, AOL doesn't really own TMZ. It's a joint venture between AOL and a unit of Warner Bros. While the venture itself is a rare example of co-operation between warring branches of the Time Warner media conglomerate, it's unlikely that Warner Bros. would ever let go of the brand. Time Warner lore has it that when the cable division first proposed using Warner's Road Runner character as the name for its high-speed Internet product, Warner asked for a billion-dollar license fee.

And TMZ, while popular and growing, unlike most of AOL's services, is too narrow a brand, ultimately, to cover AOL's full range of services. (TMZ refers to Hollywood's "thirty-mile zone" enshrined in studio contracts.)

And finally, Warner is launching a "TMZ" television series this fall. It's running on News Corp.-owned Fox stations, and it's hard to imagine News Corp. CEO Rupert Murdoch tolerating his TV broadcasts promoting services which compete with MySpace.

No, what Alvey didn't mention — but would make more sense — would be to free TMZ from its warring parents, and all their conflicts. With 9.4 million unique visitors a month, TMZ could easily stand on its own. Forget an AOL spinoff. Bring on the TMZ spinoff.

First, a caveat: Fortunes have been made and lost trying to suss out the psychology of the stock market, and if I truly understood it, I'd be working on Wall Street. But, like a psychic reading tea leaves, every so often, I might glimpse a pattern that fits the situation.

Apple shares have run past most analysts' targets and, some believe, past the economic realities of how Apple can perform. The rumors sweeping Wall Street of cutbacks in production of iPhones — from 9 million to 4.5 million — are just a sign that people are looking for a way out of their own overblown expectations. Apple has long said it expects to sell 10 million iPhones next year. Not this year.

What's ludicrous is that anyone believed that Apple, famous for its lean supply chain and careful inventory management, would have put in firm orders for 9 million iPhones in the first place. If there are any cutbacks being made, it's in Wall Street traders' lurid fantasies. And as they rein in their imaginations, they inevitably rein in Apple's high-flying stock.

(Chart by Yahoo Finance)

The name Ooma was chosen because it invokes curiosity, Mr. Frame said. Also it has four letters and the IP address was readily available.

A domain name, of course, is the user-friendly address you type into a Web browser, like "redherring.com." An IP address, on the other hand, is a series of numbers like "65.206.214.61," assigned to a machine connected to the Internet, used by other machines to look it up. A telecom reporter who doesn't know the difference between an IP address and a domain name, writing about a startup which fundamentally misunderstands its market. They sound well-matched.

I don't mean to pick on Medford, of course. The error isn't a reflection on him as much as it is on his bosses. At a stable, well-funded publication, I'm sure he'd do well as a junior reporter learning the beat under the tutelage of experienced editors. And he'd be getting a steady paycheck, to boot. At the Herring, of course, he's managed, if at all, by Joel Dreyfuss, an editor-in-chief who's distracted by efforts to save the company from owner Alex Vieux's financial mismanagement. With sloppily reported, poorly edited stories like this, though, I'd ask which will die first: The Red Herring brand, or the company which owns it?

Google began its campaign to woo the papers first, in November 2006, with a very limited test: Only 100 advertisers and 50 newspapers, and it only involved advertisers shifting online ads to print. Yahoo responded quickly with a more ambitious plan. At least in theory. The initial phase involved some 176 newspapers posting employment ads to Yahoo's HotJobs website, and the newspapers using HotJobs technology on their own career-listing webpages. The goal, down the road, was to share advertisers with the papers and also lock in content-distribution agreements to bolster Yahoo's websites.

In April, Yahoo showed the first signs of moving towards its goals. It announced that its newspaper alliance had grown to 264 papers and claimed "the newspaper industry's first full-fledged integrated online advertising network." The grandiose plan involved four initiatives: having Yahoo serve ads to newspapers' websites; letting Yahoo's sales force sell newspaper ads to their advertisers and letting newspaper salespeople sell local ads on Yahoo; placing Yahoo's search into newspaper websites; and distributing newspaper articles across Yahoo's network.

Yahoo's advertising plan, on the surface, appeared more far-reaching and ambitious than Google's experiment. But the reality? Google's moving faster than Yahoo, thanks to its more modest short-term goals. Back to Decker's comments yesterday:

We've launched 49 Hot Jobs co-branded career sites and have an exciting product road map which includes display and search advertising, distribution of newspaper content on Yahoo!, and cooperative sales opportunities.

Meanwhile, Google was quietly preparing to launch print ads to its simple, well-known AdWords system to hundreds of thousands of its loyal advertisers. Without involving the complications of cobranded job websites, content agreements, and sales forces, Google can become an actual, not aspirational, "partner of choice" by allowing newspapers to keep most of the revenue and enticing advertisers with $1,000 in money to spend on newspaper print ads. And content distribution? It's hard to find a better deal than Google News, which actually drives tons of readers to newspapers' websites without charge.

Yahoo touts elaborate plans and extensive partnerships, but we've heard this all before. And Yahoo has failed to deliver, time and again. Google, by contrast, continues to succeed by quietly growing and delivering simple plans that benefit its business partners, to the surprise of rivals and investors alike.

• Nielsen seems to be the most established Internet ratings service with advertisers, beating Comscore and Hitwise. Those two services might feel pressure to copy Nielsen's shift.
• Web 2.0 sites often let users do more on one page. For example, a YouTube user can comment on a video without refreshing the page. The new ratings system should help sites with dynamic interaction compete against pageview-crazy sites like MySpace.
• Of course, pageviews still matter for the bottom of the ad market, like those True.com ads that are more likely to get clicked if they serve up more photos of cute girls. But even those advertisers are using video ads that benefit from one long pageview.
• For all these reasons, "total time spent" may feel like a more reliable metric. But it has its own problems. As one analyst says, this metric makes AOL the most popular site, thanks to its AIM service, even though many users don't see a single ad attached to that.
• Video video video!
• In addition to tricks to get more pageviews, now we'll have to put up with tricks to get more viewing time. Hello slow page loads!

WHO: Casey Serin is a 24-year-old real estate swindler entrepreneur who blogged his failure at life in "I Am Facing Foreclosure." He says he's over $2 mil in debt; which dampens the joy of his blog's success (he's earned a few thou from Google ads).

WHO ELSE: Griefers calling themselves "haterz" — you can tell they're an original sort of crowd — joined Serin's site to kick him while he's down. They've peppered the web with parodies and even a Caseypedia to document the whole affair. They've discovered a secret business plan and figured out that Casey's cohort Marty Stewart may be an alternate Casey personality.

IS IT OKAY TO HATE HIM: Yes. Casey is unremorseful about defrauding investors of hundreds of thousands of dollars; he apparently abandoned his wife when he recently fled the country. (The haterz have suggested raising her a divorce fund.)

WHY IS THIS SO FAMILIAR: Casey seems a lot like Michael Crook, who wrote a fraudulent Craigslist post and published private responses with identifying information. Crook then tried to silence his detractors. Like Casey Serin, Crook took on multiple personalities, once calling a critic on the phone and pretending to be his own gay lover.

Photo: Casey Serin