Category: Internet

Google announced last fall that its social networking site was home to 400 million members with more than 100 million active monthly users. Despite these numbers, many people are apparently continuing to ignore Google+, a service that has been labeled a ghost town. Perhaps even more concerning is Google’s inability to win over brands and businesses that have instead turned to connect with customers on competing websites.

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Reed Hastings has emerged from hiding. Well, maybe not hiding — he was still posting on Facebook and talking to the occasional magazine writer. But by his previous standards, the Netflix co-founder and CEO had been laying uncharacteristically low in the almost two years since the Great Qwikster Fiasco. It took a clear recovery from the company’s missteps, as evidenced by a blowout earnings report last month, to convince the Netflix PR team (and/or Hastings himself) that it was time to unleash him.

First came a manifesto penned by Hastings that describes the competitive landscape in which Netflix finds itself and why Hastings thinks his company has what it takes to survive. Then Hastings talked to James B. Stewart at The New York Times about what he’d learned from his abortive effort to jettison Netflix’s DVD-rental business (lesson no. 1: don’t do things that “hurt people’s real love for Netflix”). And now, in the latest Bloomberg Businessweek, Ashlee Vance offers a fascinating cover-story look at how Netflix and Hastings work (complete with a visit to the glass cube atop Netflix’s HQ where Hastings goes for quiet time).

Hastings’ return to the spotlight is excellent news for anyone interested in business. He is quite entertaining, as CEOs go. And more important, his company keeps posing such fascinating questions. Such as, how does it keep making money?

Netflix competes in an industry where control of distribution channels was long key to success. If you owned the pipes, as it were, you owned the customers. Netflix piggybacks on distribution networks built by others. For DVD delivery, that distribution network is at least a neutral carrier: the U.S. Postal Service. For streaming, though, Netflix relies on internet service providers such as Comcast and AT&T, data centers owned by Amazon, and tablets and digital media receivers made by Apple (and Microsoft, and Samsung, and others) to get its movies and TV shows to customers. All these companies are much bigger than Netflix and are all direct or near-direct competitors. Yet it survives and, seemingly, thrives among them. According to BusinessWeek, Netflix now accounts for about a third of all downstream Internet traffic in North America on an average weeknight. It is becoming the mistletoe of the media business — a parasite (sort of) that is more prominent and beloved than its hosts.

It’s fair to say that this continuing success has surprised a lot of people. Search on the phrase “Netflix doomed,” and you come across a bounty of dire predictions. Part of this must be psychological. While writing this post, I have repeatedly caught myself typing “Netscape” — an association that does Netflix no favors. But there have also been real reasons to be skeptical.

In the DVD-rental business, Netflix faced content costs that weren’t appreciably different from those of bigger archrival Blockbuster, and had a much lower-cost delivery system. As venture capitalist Bill Gurley explained a couple of years ago, a 1908 Supreme Court ruling made it impossible to stop Netflix from buying and renting out any DVDs it wanted. So Netflix could exploit its advantages — a subscription-based business model, a huge catalog of titles, an ever-improving recommendation engine, and a super-efficient system for getting DVDs to your local post office — without having to fear that its reservoir of content would dry up.

In streaming, Netflix has to cut deals with content owners for movies and TV shows, and as it has grown it has had to pay ever more. Last year, Netflix reported spending $30 million on DVDs — and $2.8 billion on streaming content. And it’s constantly losing content as licensing deals expire — forcing it to sign new deals at higher prices, and pay to develop its own shows.

As a result, Netflix’s margins are much lower in the streaming business (21% in the most recent quarter) than in the DVD business (46%). But streaming is the future, DVDs are a declining business, and the last quarter was the first in which Netflix made more profit domestically from streaming than from DVDs.

So how does Netflix stay profitable in streaming? One answer — probably the most important answer — is that it’s really good at software engineering. Hastings is a veteran software engineer, and Netflix pays its engineers more than the competition and sets them loose to solve interesting problems. Delivering its programming via tens of thousands of Amazon Web Services data centers and getting it to work seamlessly on myriad gaming consoles, tablets, smartphones, and other devices takes tons of code and some really smart design. “We’re using Amazon more efficiently than the retail arm of Amazon is,” Netflix’s cloud architect told Businessweek‘s Vance.

Engineering is also key to figuring out what customers will like. Netflix’s recommendation engine has become a huge asset, driving 75% of viewing. Data on customer viewing habits is also increasingly driving Netflix’s decisions on which content to acquire and how much to pay for it.

Netflix’s calculation is that if it can continue using its engineering prowess to keep its customers happy, and help it acquire new ones, its frenemies in the content and delivery business will decide that they can make much more money working with it than trying to thwart it. It’s also betting that once it has established itself as one of the big players in streaming, it won’t go away anytime soon. “Once a subscription video service has achieved profitability and scale in a market (20% to 30% of households),” Hastings writes in his “Long-Term View” manifesto, “it is very likely to be able to sustain that profit stream for many decades. At that percentage of households, our advantages in content acquisition and member acquisition are considerable.”

This still feels a lot more tenuous than the competitive positions held by broadcast networks for decades, and the cable networks now. Quitting Netflix is easy; its subscriber churn rate is an estimated 40% to 50% a year. Holding on to customers will require continual upgrades in technology and content (not to mention avoiding Qwikster-like missteps).

But upgrades are what software engineers do. Netflix has figured out how to succeed, for now at least, in a world where it doesn’t own the pipes and can never afford to stop improving. A lot of its would-be competitors really don’t.

If you don’t see the point of keeping data you have stored across assorted Google services separate then you’re in luck: The company agrees with you. Google announced on Monday that it is giving users “15 GB of unified storage for free to use… between Drive, Gmail, and Google+ Photos,” thus giving them more flexibility to use their data space as they see fit. Users who want more storage across multiple services can pay $4.99 a month for 100GB of additional space as well, the company said. The new unified data plan will give a particular boost to Google Drive since the cloud storage service will act as the hub for online storage across all Google services.

Google on Thursday announced the launch of a pilot program that will allow a select group of YouTube partners to charge users a subscription fee to access their content. Companies like Sesame Street will be offering full episodes on their paid channels, while UFC plans to give users access to classic fights. Premium content can be accessed for free with a 14-day trial, after which a subscription will be required. Google noted that fees will begin at $0.99 per month, though many providers will offer discounted yearly rates. After subscribing to a channel, users can access it from a computer, phone, tablet or a smart TV. Paid channels will be available today for select partners and will be available as a self-service feature for “qualifying partners” in the coming weeks.

We knew that the Internet would bring with it a whole wave of new media disruption. We were unprepared for just how massive the disruption has been. You needn’t look any farther than this one staggering statistic to understand the scale of change: Google’s advertising revenue is larger than that of the entire print industry’s revenue.

In the past short while, we have seen a rise in new ways for advertisers to connect with consumers like never before. We’re also seeing an increasing amount of media budgets shifting from traditional channels to digital advertising. You can’t throw a marketer down a flight of stairs these days without hearing terms like real-time bidding, big data, retargeting and native advertising tumbling off of his tongue. It’s beginning to make social media, mobile marketing and plain-old digital advertising seem somewhat antiquated.

So, where do you, the business leader, place those ad dollars? Do you spend them with the latest and greatest shiny object? Do you stick to your traditional guns? Do you sprinkle them around in the hopes of hitting the jackpot on the advertising table of roulette?

What we need is a framework that helps us transcend the many different ways that consumers are connecting with brands and lets us see the bigger picture.

What if we tossed away the terms we have used to date? What if we forgot all about traditional media, social media, mobile marketing, banner ads, QR codes and the rest and simplified the advertising process by simply asking if the media in question is active or passive? Passive media is any form of media where the consumer can’t physically do anything with it, except for consume it (newspaper, television, radio, etc). Active media is any form of media where the consumer can physically engage with it (Facebook, Twitter, Google, etc).

But there’s a catch to this (there is always a catch, isn’t there?). We can’t just look at one aspect of the experience to see whether it is active or passive. To find the right marketing mix, we have to look at four elements of the modern media experience:

1. The Consumer. When is the consumer active or passive with the media channel? Do all consumers want to tweet, share, chat and create when they are engrossed in a TV show late in the evening, or are they most comfortable sitting back and watching the drama unfold? We live in a world where television broadcasters are pushing at a feverish pace to make what was a very passive media channel (sitting back and watching) into an active one (adding widgets and tickers, encouraging tweeters to use special hashtags, etc). Understanding how the audience consumes the medium is core to understanding what type of advertising they will best embrace. So yes, you can tell TV show viewers to follow along on Facebook, but how many of them simply want to sit back, watch the TV show, and fall asleep?

2. The Media. How do you think Google — as a search engine — would be performing if the sole form of revenue was driven by banner advertising on the search results and not the contextually relevant format of AdWords? In fact, banner ads are a very simplistic and non-active type of media. They essentially replicate the print model: “We have content on a web page, why not put an ad next to it like we do with magazines and newspaper?” While banner advertising still generates billions of dollars in media advertising, the truth is that it is a very passive advertising format that was simply copy and pasted over to the a very active new medium. We could talk about how “interactive” these banner ads are (or were promised to be), but the numbers don’t lie: banner ads couldn’t perform any worse. Well over 99% of banner ads fail to generate any kind of click. They are passive forms of media that are out of touch with their very active digital channels.

3. The Channel. Are you the same person on Google that you are on Facebook that you are reading this post on Harvard Business Review? These are very different types of digital channels and digital consumers act differently depending on which channels they are using. When you are doing a search on Google, you have a very different intent and mindset than when you’re on Facebook and connecting with friends or catching up with acquaintances. It becomes abundantly clear that you’re also in a dramatically different media mindset as you read these words than when you’re creating a board on Pinterest. Understanding how these channels independently operate, and which types of advertising match the consumer’s intent, is critical to building a successful advertising campaign.

4. The Platform. The word “platform” gets thrown around a lot. Here’s what I mean by it: the Internet is the platform that the Facebook channel resides on; television is the platform that the HGTV specialty channel resides on. So before you allocate those marketing dollars, ask yourself: is the platform an active or passive one? Think about digital books as a platform. Do readers really want links, embedded video, extended audio interviews, sharing capabilities and more in a book? Will they, intuitively, turn what has traditionally been a very passive platform into an active one, simply because book publishers feel they are competing for attention with the Internet? As we watch the “smartening” of the television, it will be interesting to see just how many viewers truly dive into the myriad new ways of engaging with television. Certainly, those in the TV business hope that lots of them will. Most newer televisions are Internet enabled, but what is the true number of households that actually connect their TV sets to the Internet? According to eMarketer, nearly one quarter of US households now have a TV connected to the Internet, so we’re about to find out just how active this typically passive platform can become.

One important caveat: it is not a zero sum game when it comes to active and passive media. The ways that consumers engage with different forms of media is not an absolute. While some will claim that Twitter is useless unless you’re constantly tweeting and retweeting, there is a large user base that is simply interested in following celebrities (these people are very passive in an active channel). And, for every person who watches The Voice while building up a hearty Doritos stain on their jammies, there is a ever-growing segment that will tweet, share, chat, and follow every move that that Team Usher makes (these people are very active in a passive channel). So, instead of worrying about social media marketing, mobile marketing and more, why not sit back as ask yourself these questions:

• When are our consumers active or passive with our brand?
• Is our advertising active when they’re active and passive when they’re passive?
• Are the channels that we’re advertising on active when the consumers are active and passive when they are passive?
• And, lastly, is the platform — in and of itself — a predominantly active or passive one?

From there, you can truly start to better understand what a proper advertising mix can look like, be better at defining which opportunities could potentially work against others, and know which ones are just woefully flawed.

Here’s some disconcerting news for Microsoft: It may not matter how good Bing really is because most consumers will always assume it’s not as good as Google. Search Engine Land reports that a new study conducted by SurveyMonkey has found that most consumers will prefer any search results that have the Google label on top of them, even if they’re actually the search results pulled up by Bing. When given a choice between Bing search results that are labelled as Google and Google search results labeled as Bing, respondents chose the Google-labeled results by a ratio of roughly 2 to 1. When users were presented with the search results without any labels on them, Google’s lead over Bing shrinks dramatically as 57% chose Google and 43% chose Bing. The study concludes that consumers are “biased toward Google as a result of the brand,” which has been a major reason that Bing has not yet made significant inroads against it.

Yahoo has apparently had enough of Bing powering its searches. An unnamed source tells The Wall Street Journal that Yahoo has been “quietly trying to find a way out of its struggling Web-search partnership with Microsoft… but has so far failed in that effort.” The Journal’s source says that Yahoo CEO Marissa Mayer, a former Google executive, has been trying to free the company from the search deal ever since she took over last year but that Microsoft has been unwilling to cooperate. Mayer wants to scrap Yahoo’s Bing deal because “Yahoo’s revenue per search has been worse under the Microsoft deal than when it operated its own Web-search technology and advertising system,” the Journal writes.

Yahoo CEO Marissa Mayer is reportedly looking to step up the competition with her former employer. According to AllThingsD, Mayer has held preliminary talks with Hulu executives to discuss a potential bid for the video-streaming service. The move to acquire Hulu, which offers movies, TV episodes, trailers, clips and behind-the-scenes footage from NBC, Fox, ABC, TBS and other networks, would put Yahoo in further competition with Google as it prepares to take on traditional television with its YouTube service.

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Anonymous was praised for its recent cyberattacks on North Korea, however the hacking collective has shown that it is a friend to no one. The group late last month declared its latest target and this time it isn’t a communist regime or oppressive government, but rather the United States. The group stated that on May 7th, Anonymous will start phase 1 of Operation USA, which is a response to acts of “multiple war crimes in Iraq, Afghanistan, Pakistan” and “in your own country.” The group is protesting the Obama Administration’s uses of targeted drone attacks that have resulted in the deaths of “hundreds of innocent children and families.”

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Currently in the business world we are witnessing something like the epic collision of two galaxies — a rapid convergence of two very unlike systems that will cause the elements of both to realign. It’s all thanks to the Internet of Things.

If you are not familiar with the term, the Internet of Things refers to a dramatic development in the internet’s function: the fact that, even more than among people, it now enables communication among physical objects. By 2015, according to my own firm’s projections, not only will 75 percent of the world’s population have access to the internet. So will some six billion devices. The fact that there will be a global system of interconnected computer networks, sensors, actuators, and devices all using the internet protocol holds so much potential to change our lives that it is often referred to as the internet’s next generation.

For managers, this development creates challenges both long term and urgent. They need to envision the valuable new offerings that become possible when the physical world is merged with the virtual world and potentially every physical object can be both intelligent and networked. And, starting now, they must create the organizations and web-based business models that can turn these ideas into reality.

As consumers, we have all had a glimpse of how the relationship between buyer and seller changes when devices are connected to the internet. Nobody these days carries a Sony Walkman and cassettes; instead we carry Apple iPods — and our major access point for music has become the online iTunes Store, also by Apple. The company sells the devices and the music, profiting handsomely from both. In the same way, industrial product buyers are seeing their relationship to equipment manufacturers changed by smart, connected things. In the field of mechanical and plant engineering, consider the advent of predictive maintenance. When a machine is fitted with sensors, it can know what condition it is in and, whenever necessary, initiate its own maintenance.

Clearly, when things are networked, that has an impact on how actual value is produced. In many cases, it is no longer the industrially manufactured product that is the focus, but rather the web-based service that users access through that device. So, for example, we see the Daimler Group investing in mobility services such as car2go, myTaxi, and moovel; GE using what it prefers to call the “Industrial Internet” for mechanical and plant engineering services; LG paving the way to “smart homes” with IP-enabled televisions and home appliances and related services.

A study undertaken by researchers from the Institute of Technology Management at the University of St. Gallen in Switzerland (Service Business Development: Strategies for Value Creation in Manufacturing Firms) concludes that these services are most definitely lucrative for traditional manufacturers. Considering the example of a papermaking machine, they note that the sale of the machine itself generates a margin of around one to three percent, while selling a related service yields five to ten times as much. The ratio is much the same for the sale of rail cars versus related mobility and maintenance services.

For “Old Economy” companies, the mere prospect of remaking traditional products into smart and connected ones is daunting. (My own company, for example, the Bosch Group, produces over half a million things each day across more than 1,500 product categories.) But embedding them into a services-based business model is much more fundamentally challenging. The new models have major impacts on processes at the corporate center such as product management and production and sales planning. And given the dynamism of the net, the innovations will have to come more quickly. In short order at Bosch we have founded Bosch Software Innovations as a new software and systems unit; launched an electromobility service in Singapore; introduced cloud-based security products; an IP-enabled Bosch security camera , and provided customers with an iPhone app for remote access to heating systems. (We also demonstrated ideas about the near-future of networked living at the Consumer Electronics Show (CES) in Las Vegas.)

In many and diverse sectors of the global economy, new web-based business models being hatched for the Internet of Things are bringing together market players who previously had no business dealings with each other. Through partnerships and acquisitions, Old Economy and New Economy (software based) companies are combining complementary strengths so they can move quickly into vast spaces of “blue ocean.” In real time they are having to sort out how they will coordinate their business development efforts with customers and interfaces with other stakeholders.

What we have, then, is a competitive arena full of Old and New Economy companies, all jostling for position and attempting to shape the future. Long-standing producers in traditional industrial fields — whether they make coffee machines, cars, air conditioners, home gym equipment, or shoes — are suddenly not only competing with companies of their own breed; they are also confronting players the likes of which they have never faced before.

Most know that their strategy going forward will have to balance two imperatives. They have to protect the turf they already own — today’s product business — while pursuing growth through service offerings that leverage the fact that the product is in place to offer a richer overall value proposition to customers. (What no traditional manufacturer should conclude is that the Internet of Things is a threat that must be fought off in order to preserve the value of the manufactured product and safeguard the capital tied up in production facilities.) Given the reality of limited resources, this lands many traditional product companies at a crossroads. Every new investment they make can go either to strengthening their product-centric facilities, supply chains, human resources, and brands, or to stretching them into the new territory of higher-margin services. The wisest course, most find, is to make investments in both directions, looking to achieve that magic balance that maximizes margins.

As a result, not only in the marketplace but also within firms, completely contrasting business practices, corporate structures, and cultures are crashing into each other. And indeed, for the Internet of Things to fully emerge, they must collide.

As the New Economy and Old Economy galaxies clash, people tend to anticipate that one will destroy the other — and many would observe that the greater momentum is on the New Economy side. Certainly, many differences will need to be overcome before the Old Economy and the New Economy fit together. (Controlled systems on the one hand are opposed by open communities on the other. One keeps a vigilant eye on scant resources, whereas the other in essence gives its services away for free.) But most likely, the two galaxies will morph — as the Milky Way and Andromeda are expected to do: a new system with new dynamics will be created. In the dance around new centers of gravity, new solar systems of partnership will be formed. The question for you is: in this new cyber-physical galaxy, will your company become a new sun, a planet, a minor moon — or be reduced to stardust?

The Marketplace Fairness Act – a piece of legislation that will force online businesses to collect state sales tax regardless of their physical location – was set to go before the Senate for a final vote last night. It was expected to pass, and the Senate did not disappoint.

The Hill reports that the Senate approved the Marketplace Fairness Act by a wide margin (69-27) with plenty of bi-partisan support. The passage was met with applause from retail organizations, including the National Retail Federation. The organization’s president and CEO Matthew Shay said that passage in the Senate is a “significant step for sales tax fairness.”

Now the bill must go before the House where it is expected to meet far more resistance from representatives opposed to any new tax legislation. Anti-taxation groups and small online businesses will also be doubling their efforts in the House to ensure that the bill doesn’t pass, or that it at least contains some protective measures to ensure small businesses aren’t hurt by it.

Despite these challenges, the NRF says it’s not worried. In a statement, Shay said that he’s looking forward to working with the House to ensure the bill’s passage:

“This bill and its companion in the House will level the playing field for all retailers – both online and off – while safeguarding states’ rights. And the bill does it all without raising taxes, new government mandates or adding to the deficit. NRF and our broad cross-section of members will work closely with our bipartisan sponsors in the House, Reps. Womack and Speier, and Chairman Goodlatte to ensure that efairness is debated honestly and on its merits. When brought to a vote, we believe the House will pass the bill and it will be signed into law.”

The NRF might have its way as well considering that the Marketplace Fairness Act has the support of the President, and more importantly, the support of many prominent Republican governors around the country. Their support may go a long way in convincing those currently opposed to the bill that it might not be such a bad idea after all.

Either way, the debate over online sales tax is going to get a lot more interesting in the coming months. The House is noisier than the Senate, and there’s going to be a lot of political grandstanding on both sides of the issue. You might as well break out the popcorn now.

One of the more controversial rumors surrounding the next Xbox is that it would require an always online Internet connection. Some rumors even said that the next Xbox can only remain offline for three minutes before interrupting a game to troubleshoot the connection. Those concerned will be happy to know then that Microsoft won’t require an always online connection, at least for some activities, in the next Xbox.

Ars Technica got its hands on an internal Microsoft email that lays out its policy regarding Internet connections on the next Xbox:

“Durango is designed to deliver the future of entertainment while engineered to be tolerant of today’s Internet. There are a number of scenarios that our users expect to work without an Internet connection, and those should ‘just work’ regardless of their current connection status. Those include, but are not limited to: playing a Blu-ray disc, watching live TV, and yes playing a single player game.”

It’s pointed out that the above email seemingly confirms that the next Xbox will route through a set-top box to deliver an Xbox-branded TV experience to consumers. It’s good then that Microsoft won’t be forcing any kind of online connectivity on those who just want to watch TV.

Going back to games, what does this mean for all those rumors of DRM and blocking used games? Well, the next Xbox could still incorporate DRM that’s similar to what many PC games now do. The console would use an Internet connection for a one-time activation, and then the game could be played offline afterwards. It could also be used to block used games from being played on the system so there is still some concern there.

That being said, the next Xbox will at least be partially consumer friendly. That’s only a good thing as it looked like Microsoft was readying to shoot itself in the foot in the upcoming generation if it were to move ahead with an always online DRM scheme.

We’ll find out more about the next Xbox, and hopefully more clarification regarding any DRM, at a dedicated event on May 21.

The creators of two popular cat-related internet memes are suing Warner Bros for using their creations in video games dating backt to 2009.

The plaintiffs in the case, Charles Schmidt and Christopher Orlando Torres*, are the creators of Keyboard Cat and Nyan Cat, respectively. They allege that Warner Bros’ use of the characters in various Scribblenauts games amounts to copyright and trademark infringement. The game’s developer, 5th Cell, is also named in the suit.

Here’s what Schmidt and Torres are accusing Warner Bros of:

Plaintiffs accuse Warner Bros and 5th Cell of including, without any licenses or authorizations, the Keyboard Cat and Nyan Cat characters in their original Scribblenauts videogame released in 2009, the 2010 Super Scribblenauts, 2011 Scribblenauts Remix, and the 2012 Scribblenauts Unlimited. Defendants are accused of shamelessly using identifying “Nyan Cat” and “Keyboard Cat” by name to promote and market their games. Plaintiffs claim that Warner Bros and 5th Cell’s trademark infringement was willful and intentional and are requesting an award of treble damages

Maybe the best part of this whole thing is the lawyers’ descriptions of the memes. Especially Nyan Cat:

“Nyan Cat is a cartoon. Nyan cat, a character with a cat’s face and body resembling a horizontal breakfast bar with pink frosting sprinkled with light red dots, flies across the screen, leaving a stram of exhaust in the form of a bright rainbow in its wake.”

The lawsuit explains hows both videos were viral sensations, Keyboard Cat being named to many “greatest viral videos” lists and Nyan Cat winning the 2012 Webby award for “meme of the year.”

Both Schmidt and Torres have copyrights for their memes registered with the U.S. Copyright Office. Schmidt has two pending trademark applications and Torres has one.

*It’s important to note that Torres created the Nyan Cat animation, but is not the one to set it to that famously annoying music and throw it up on YouTube.

[Milord & Associates via Ars Technica]

Google has just announced another expansion of their Fiber service – one that’s pretty close to “home base.”

Home base being Kansas City, the location of Google’s Fiber’s first installment. The next town to be blessed with Google’s super-fast internet is Shawnee, Kansas, which is located south-west of Kansas City. Google won’t have to expand their service that far to accomodate the people of Shawnee.

“Shawnee, which is right outside of Kansas City, is known as a tight-knit community and a great place to do business. We’ve also been impressed by Shawnee’s vision to keep their citizens informed and involved using the Internet. Recently, the City modernized their website, so that locals can easily access city info—from crime maps to fiscal reports to streamed audio of city council meetings.

This is a great example of how access to information via the web can help make communities stronger. Google Fiber—and widespread connectivity throughout Shawnee—will be a great complement to the great work the City is already doing,” says Google Fiber Community Manager Rachel Hack.

Google says that they don’t yet have an estimate on when things will get underway.

Today’s announcement comes during a period of many expansion announcement for Google Fiber. Last month, Google announced that Fiber would we coming to Austin, Texas by mid-2014. Less than two weeks later, it was Provo, Utah that was added to the list.

On the heels of Google’s 1Gbps advances, other ISPs have announced plans to up their game. We’ve just recently seen ISPs in Vermont and Tennessee detail plans for Gigabit internet. Not to be outdone, AT&T has also announced plans to build a 1Gbps Fiber network in Austin. Call it the Google Fiber effect, but it has people thinking. And acting.

[Image via Facebook]

HBO’s chief executive Richard Plepler made waves earlier this year when he indicated that the company may expand its HBO GO offering to non-cable subscribers. The executive noted that in the future, HBO could potentially team up with Internet providers to offer the popular streaming service to customers separately from pay-TV packages. Cord cutters shouldn’t celebrate just yet, however. Jeff Bewkes, CEO of HBO’s parent company Time Warner, said on Wednesday that the company has no plans to offer HBO GO without a cable subscription.

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Content owners say piracy is the number one problem facing content owners. These groups have tried almost everything to stop piracy, but none of it has really worked. Now content owners have a new tactic to regain revenue lost due to piracy – an Internet tax.

Ars Technica reports that Sabam, the Belgian equivalent of the RIAA, have taken Belgium’s ISPs to court demanding they pay 3.4 percent of what they get from customers to content owners. In other words, Sabam is suggesting that ISPs pay an Internet tax to make up for what it perceives as lost revenue due to piracy.

Apparently, Sabam has been trying to get reach an agreement with ISPs over such a “tax” since 2011. It only brought the matter to the courts when the deal fell through. ISPs are saying an Internet tax to be paid to content owners “lacks any legal basis,” but content owners obviously don’t think that way.

Now, this situation brings up a really intriguing concept. Would you be willing to pay a few extra dollars per month on your Internet bill to continue pirating content? Even if you didn’t pirate content yourself, you would still be paying for those who did. Would that be fair to all the people who buy their content from legitimate sources? Such a tax would remove the need for efforts like the Copyright Alert System and other three/six strikes systems that punish Internet users for downloading pirated content.

Of course, the flip side to such a “tax” is that it would embolden content owners and other industries to demand similar fees from ISPs. ISPs would then pass off the extra cost to the consumer resulting in even more expensive monthly subscription fees.

Still, it’s an interesting proposal – is there a way to only charge those who pirate to satisfy content owners without threatening the sanctity of the Internet? Some have suggested that torrent trackers go private, start charging a monthly fee to downloaders, and pay those fees directly to content owners. It sounds good on paper, but content owners probably wouldn’t go for it. They’re already neurotic about people promoting content on BitTorrent so I highly doubt they would be fine with supporting “paid piracy.”

Kim Dotcom’s Mega file-sharing site could get a mega boost with the launch of its mobile apps. New Zealand’s Stuff reports that Mega chief executive Vikram Kumar “expects the number of people using Dotcom’s new Mega online file storage service to double in about a month to more than 6 million” now that the site is on the verge of releasing mobile apps for both Android and iOS. Kumar predicts that the apps will have mass appeal because “people are really waiting… for Mega to have the equivalent functionality of DropBox which is when people get these apps and the ability to synchronise with their desktops.” Dotcom launched Mega this past January and claimed that the site had attracted more than 3 million users in just its first month of operation.

Netflix on Wednesday lost almost 1,800 titles from its streaming library as licensing deals with studios like MGM, Warner Bros. and Universal expired. Titles now removed from the catalog include all 15 seasons of South Park, classic James Bond films like Dr. No and Goldfinger, and Woody Allen’s Stardust Memories. A Netflix spokesperson told The Verge that “Netflix is a dynamic service, we constantly update the TV shows and movies that are available to our members.” He added that as of May 1st, the company added more than 500 new titles such as ParaNorman and The Hunger Games. The spokesperson said that a “vast majority” of the expired titles were older features from an expired deal with Epix, noting that “this ebb and flow happens all the time.”

Seven years ago, Nicholas Carr and Yochai Benkler made a bet. They did this in the comments section of a blog post, there was no money at stake, they never followed up Benkler’s suggestion that they appoint “between one and three people” (I’d call that two) to determine the winner, and they never decided when exactly the bet would come due (two years? five years? ten?).

For a time, though, it seemed like a big deal. Carr, the former HBR executive editor who now writes brilliantly skeptical books about the digital revolution, had observed entrepreneur Jason Calacanis’s attempt to unseat news aggregator Digg by offering paid jobs to the most influential diggers, and proposed that “large-scale social media” was on the verge of being “subsumed into professional media.” Benkler, the law professor (then at Yale, now at Harvard) and prophet of the transformative power of “commons-based peer production,” responded with a suggestion that they make it a formal wager:

We could decide to appoint between one and three people who, on some date certain — let’s say two years from now, on August 1st 2008 — survey the web or blogosphere, and seek out the most influential sites in some major category: for example, relevance and filtration (like Digg); or visual images (like Flickr). And they will then decide whether they are peer production processes or whether they are price-incentivized systems. While it is possible that there will be a price-based player there, I predict that the major systems will be primarily peer-based.

Carr said that was a good idea, but the term should really be ten years, or maybe five. And the bet was on, sort of. The Guardian wrote about it. Tim O’Reilly wrote about it. I wrote about it in my column for Time. And, of course, somebody created a Wikipedia page about it.

And then, well, most everybody forgot about it. I finally thought a couple months ago to check in on where things stood and discovered that, last year, Carr and Benkler had each claimed victory. Sigh.

After watching the collisions and collusions between peer-based and professional media during the hunt for the Boston marathon bombers, I decided to look again. I found that Matthew Ingram, a professional journalist with great enthusiasm for social media, had declared Benkler the winner. So had some guy on Quora. Benkler is a neighbor and friend, so I can’t claim to be entirely neutral here, but I think I’m a lot more sympathetic to Carr’s views than Ingram and the Quora guy (his name is Lee Ballentine) are. Still, given the wording of the bet, I’ve also got to say Benkler is the winner, so far (it seems like we ought to check back in one last time in 2016). Jason Calacanis’s professionals didn’t displace Digg, the volunteer users of reddit and Twitter and Facebook did. And if you survey the traffic-giants of the Internet, as Benkler did in his claim of victory, it’s clear that more of them are, to use the terms that Benkler laid down in 2006 and Carr agreed to, “peer production processes” than “price-incentivized systems.”

What most them aren’t, though, is charitable organizations. Of Alexa’s 25 top sites globally, only Wikipedia is nonprofit. The vast majority of the content created and shared on Facebook and YouTube and Blogger and Twitter may not be “price-incentivized,” but much of it is promotional and self-interested, as Carr noted in his claim of victory, while the people maintaining the infrastructure and determining the rules are definitely profit-incentivized.

As far as the wager goes, this is irrelevant. While Benkler is clearly a big fan of Wikipedia, Project Gutenberg, and other such cooperative efforts, he never said the “peer production” he was talking about had to be nonprofit. In the 2002 Yale Law Journal article in which he introduced the concept, Benkler mentioned Google’s PageRank, Amazon’s customer reviews, and Sony’s EverQuest (a massively multiplayer game) as examples of it.

But the coexistence of peer production and money making within the same organization does carry with it lots of potential for conflict. As Benkler writes in his latest book, The Penguin and the Leviathan: How Cooperation Triumphs Over Self-Interest, the evidence that humans are motivated by things other than money keeps growing every day. But the context in which we act can determine whether we emphasize self-interest or cooperation. Benkler cites a study by Varda Liberman, Steven M. Samuels, and Lee Ross in which they had subjects play the Prisoner’s Dilemma game, in which two people are given a choice between cooperating or not. When they labeled this the “Community Game,” subjects cooperated 70% of the time; when they called it the “Wall Street Game,” that dropped to 33%.

This is a reality that all the for-profit empires built upon peer-production may eventually have to face. All of them have succeeded by persuading users to treat them as Community Games, and share freely. They have done this in large part by, to borrow Tim O’Reilly’s phrase, creating more value than they capture. But you have to wonder if, as companies like Google and Facebook and Twitter inevitably become more entwined in the Wall Street Game, they’ll be pressured to capture more of the value they create, and the willingness of their users to engage in unpaid commons-based peer production will diminish. If that happens, the results of the Liberman-Samuels-Ross experiment would seem to indicate that the fall-off would be not gradual but precipitous. Capitalizing on others’ unpaid labor is great business — until suddenly it’s not.

Last week, The Pirate Bay moved to Iceland’s .is domain in hopes of escaping the ever watchful eye of the entertainment industry and its army of lawyers. It seemed that the infamous site would be safe for at least a while, but that has turned out not to be the case.

TorrentFreak reports that The Pirate Bay has moved yet again. Those looking for the site will now be directed to a .sx domain. The .sx TLD belongs to the small island nation of Sint Maarten, a constituent country owned by both The Netherlands and France.

So, what prompted the move to a new domain? It seems that the Swedish authorities have finally moved to take the .se domain that The Pirate Bay operated under for over a year. While they were at it, the authorities also filed a motion to seize the .is domain that The Pirate Bay recently moved to last week.

The folks behind The Pirate Bay saw this coming earlier this year, and have long since vacated the .se domain. Those visiting the site’s .se domain will be redirected to the new .sx domain though. If the authorities are successful in seizing the domain, those visiting the .se or .is domains will no longer be automatically redirected to whichever home The Pirate Bay decides to move to.

Of course, this latest development might bring a novel legal fight to the forefront as Sweden argues it has jurisdiction over the .is domain because it’s owned by a Swedish national. The company that operates the .is domain – INSIC – told TorrentFreak that Sweden’s argument may not hold much weight in court because the domain is still owned by INSIC, an Icelandic company subject only to Icelandic laws.

In short, The Pirate Bay might get to keep the its .is domain if Sweden’s jurisdiction argument doesn’t hold up in court. Even if it does, The Pirate Bay can fall back on its new .sx domain. If that fails, The Pirate Bay still has hundreds of TLDs in which it can fall back on. Like I said last year, The Pirate Bay is in a war of attrition and it’s winning.