District Court Tells Yahoo, AOL To Pay Millions To Songwriters

from the watch-for-the-appeal dept

In the latest of many arguments about the various rights and payments companies need to pay for streaming music online, a district court has ruled that AOL, Yahoo and RealNetworks most likely owe millions to ASCAP for songs that they streamed to users between 2002 and today (and continuing on to 2009). This has nothing to do with the record labels -- ASCAP represents the songwriters -- but is yet another extraneous "license" where the terms are hardly clear, but basically serve to make it more difficult for anyone to play music. It was never in question that these sites would need to pay some kind of royalty -- the question was how much. The odd part of this ruling, though, is that the rate set by the judge is likely to be higher than the rate that traditional terrestrial radio pays. If there ever were a formula for making companies less interested in streaming music online -- this might be it. Of course, it's quite likely that this ruling will be appealed, so it's far from over.

Filed Under: ascap, compulsory licensing, royalties, songwriters
Companies: aol, realnetworks, yahoo

A Hostile Microsoft Bid For Yahoo! Would Likely Be A Pyrrhic Victory

from the culture-clash dept

Marc Andreessen has an interesting post looking at the consequences if Microsoft officially goes hostile in its bid for Yahoo! Thus far, the two firms have been engaged in a careful dance where each side has left the door open for a negotiated settlement. But with neither side showing any sign of backing down, it's looking increasingly likely that Microsoft will be forced to make an overt bid for control of Yahoo's shares. There are two basic strategies Microsoft could pursue. One would be a tender offer, in which Microsoft attempts to purchase a majority of Yahoo!'s stock. The other would be a proxy fight, in which Microsoft nominates a competing slate to Yahoo!'s board of directors, on the understanding that the new slate would accept Microsoft's existing offer. Either of these options would spark litigation from the losing party. Then, it would have to clear regulatory hurdles, and after that would come the hard work of actually integrating the two companies, something that will be made more difficult if Yahoo's senior management is still bearing grudges from the takeover fight. I've pointed out before that culture is extremely important in high tech firms. Companies need to attract the best talent, and talented programmers want to work where the most innovative work is being done. Right now, Google already has an edge over Yahoo! and Microsoft on that front, and the gap is only going to widen if they spend the next two years beating each others' brains out. It's not at all clear that the Microsoft-Yahoo merger would make sense even if it were done with the support of Yahoo's current management; it's a doubly bad idea if it involves all the nastiness that would come with a hostile takeover.

Filed Under: acquisitions, hostile bid, integration
Companies: microsoft, yahoo

Can Yahoo, Microsoft, Google, AOL And News Corp Sit Down And Just Divvy Up The Internet Already?

from the thanks dept

Well, well, well. So, apparently, the earlier news about Yahoo using Google ads was just the appetizer to the more meaty story, which is apparently... well... that just about all the big name internet players are going to do a bit of horse trading to figure out who owns who in the end. There seems to be a lot of speculating in the WSJ article, but apparently step one is that Yahoo and AOL might merge their internet properties (something that's been rumored before). That pairing would likely lead to Google taking over the ads (it already handles the ads for AOL and owns a stake of AOL). At the same time, the article reports that News Corp., once rumored to be a suitor of Yahoo until it vehemently denied the story, may actually be teaming up with Microsoft to make a joint bid for Yahoo. Who else did we leave out? Nobody?

Anyway, I stand my by original assessment of a potential AOL-Yahoo merger ("like trying to keep a wild animal from eating you by covering yourself with feces"), but honestly, this gathering of the big players should actually be seen as a huge opportunity for everyone else. Basically, the big boys are about to make a big mess, and there will be tremendous opportunities that spill out while they try to figure out what went wrong. People are just starting to realize that you don't innovate by building up huge mega-corporations -- you do it by being small and nimble. These megamergers are going in the wrong direction and will open up huge opportunities for small, quick firms that think big.

Filed Under: big players, mergers, rumors
Companies: aol, google, microsoft, news corp, time warner, yahoo

Yahoo So Desperate To Stay Away From Microsoft, It's Starting To Use Google Ads

from the now-that's-desperation dept

Last summer there was speculation that a bold step for Yahoo to take to revive its sagging prospects would be to ditch its own ad system and outsource it to Google. Despite Yahoo trying to catch up for many years, Google's ad system just works much, much better. It would save Yahoo a ton of money and probably create better returns -- even if it would help fuel Google too. However, Yahoo pretty much laughed off the suggestion... until now. Being aggressively pursued by Microsoft can have that effect -- especially as white knight rescuers seem few and far between (i.e., they don't seem to exist at all). So, with that, the news is breaking that Yahoo is finally going to test running Google's ads. It's a "small scale" test, only running for a couple weeks and only on a small percentage (less than 3%) of Yahoo's inventory. But, assuming it goes well, it'll likely lead to a much bigger shift. Of course, Microsoft was quick to denounce the deal, claiming that the Justice Department would have a field day over the antitrust issues raised, but so far Microsoft doesn't have such a great track record in getting the DOJ to act on its antitrust complaints.

Filed Under: ads, antitrust, outsourcing, partnerships
Companies: google, microsoft, yahoo

If You Advertise An 'Unlimited' Email Service, It Had Better Be Actually Unlimited

from the truth-in-advertising dept

A year ago we praised Yahoo! for taking the bold step of offering its email customers unlimited storage space. It was a great concept, but Lee Gomes at the Wall Street Journal recently discovered that we should all start putting scare quotes around "unlimited." It seems that if you leave too many messages in your Yahoo! Mail inbox, you start running into problems. Gomes got a mysterious error message, followed by several years worth of email disappearing. Yahoo! says it can get the messages back in a few hours (presumably restoring them from backup tapes). But this is still pretty embarrassing for Yahoo!, and it's unfortunately all too common in the tech world. Companies love to advertise unlimited service when their systems aren't actually set up for "unlimited" usage. Yahoo! shouldn't advertise an unlimited service unless it's actually unlimited, and somebody should have given some thought to what happens when people store a ton of messages in their inbox. Maybe there's something to be said for Google and Microsoft's approach: instead of claiming that your service is unlimited, pick limits that are high enough (2 GB in Microsoft's case, 6 and constantly growing in Google's) that most users will never have to worry about them, but still give the IT guys a specific number to aim for.

Filed Under: email, unlimited, web email
Companies: yahoo

Culture Clash Could Doom Microhoo!

from the internal-frictions dept

We don't link to anthropologists much on Techdirt, but Grant McCracken recently wrote a really interesting post on the cultural dimension of corporate mergers. McCracken points out that culture matters a lot in a company's success. Every really successful firm succeeds by developing a distinctive corporate culture that boosts productivity by giving employees a shared set of assumptions about how to do business. In many cases, employees become like the proverbial fish in water: the corporate culture is so pervasive that the employee barely notices it. In other cases, employees explicitly debate the meaning of their shared corporate identity: Google employees commonly debate the most "Googly" way to approach a particular problem.

When two firms merge, the existence of a shared corporate culture can no longer be assumed. Differing cultural assumptions among employees are likely to produce new frictions. One company might be more bureaucratic, work longer hours, have different procedures for evaluating new products, or have any number of other differences in the way they do business. Any of these disagreements can be a barrier to the smooth functioning of the merged company. If the two separate firms are to become a single, organic one, management must find a way to convince employees of the acquired firm to embrace the culture of the acquiring firm. If they fail, the company will limp along with simmering disagreements over strategy and tactics. That was a big part of the problem with the AOL Time Warner merger, for example.

These kinds of cultural assumptions are particularly important in the software industry, where success is often driven by the ability to recruit and retain the most talented programmers. One of Google's key advantage over the last few years has been the perception that it's a more cutting-edge place to work than Yahoo! or (especially) Microsoft. Many smart programmers view Microsoft as too big, bureaucratic, and slow-moving to develop really innovative products, and since they want to work on hot new technologies, they often go elsewhere. Acquiring another multi-billion-dollar company is likely to exacerbate this perception, especially if it causes some of Yahoo!'s best programmers to jump ship in the process.

Filed Under: culture, mergers, software development
Companies: microsoft, yahoo

UK Court Recognizes That Keyword Advertising Isn't A Trademark Violation

from the mr-spicy-mr-spicy-mr-spicy dept

While US courts have gotten much better lately at realizing that keyword advertising is not, by itself a violation of trademark law, judges in some other countries have had trouble recognizing the same thing. France, in particular, seems to have judges who consistently are confused over the matter. Remember, the purpose of trademark law is not to give total control over the mark to the holder, but to prevent consumer confusion. It's so they're not tricked into buying Bob's Cola thinking that it's Coca Cola. If someone does a search on a trademarked term, and it shows a variety of ads, including from competitors to the holder of the trademark, that's not a violation of trademark -- it's just competition. It certainly isn't trademark infringement on the part of the search engine, who is merely hosting the ad. If anything, it might be trademark infringement on the part of the advertiser, but only if the ad itself is somehow designed to confuse the consumer.

Thankfully, it looks like the High Court in the UK has recognized the issues at play and has come out with a ruling more like the American courts than the French courts, noting that there is no trademark violation for search engines in these cases. This specific case involved Yahoo, who was getting sued by someone who owned a trademark on "Mr Spicy." He claimed that competitor's ads were showing up when someone searched on "Mr Spicy." That was true, but it wasn't even because anyone had set up keywords on "Mr. Spicy." They had merely set up keywords on "spicy," which still showed up on a search for "Mr Spicy." Of course, even if it had been on "Mr. Spicy" it wouldn't have mattered much, since it still wasn't Yahoo's issue. Also, the court seems to recognize that since the ads themselves don't even refer to Mr Spicy, it's hard to see how there's any loss or confusion that would violate the trademark. Hopefully other courts around the world will start employing similar logic as well.

Filed Under: keyword advertising, trademarks, uk
Companies: yahoo

Competition Isn't War

from the scorched-earth dept

Ben Worthen theorizes that Microsoft is acquiring Yahoo not to increase its own profits but to damage Google. Worthen is suggesting that by slashing prices for its ads, Microhoo could "chip into Google’s profit center," slowing down Google's expansion. I haven't talked to Steve Ballmer about this, but I really doubt this what he has in mind. In the first place, it's not clear that aggressive price-cutting by Yahoo! would even hurt Google that much. Aggressive price-cutting only hurts your competition significantly if you've got enough inventory to satisfy the market at the new, lower price. But Yahoo! has significantly fewer eyeballs than Google, so even if Yahoo! gave away its ads for free, there would still be a lot of unmet demand that Google could cater to. Secondly, trying to "chip away at" Google's ad revenue seems like exactly the wrong way to attack Google. Google has plenty of cash on hand, and its still-astronomical share price makes it easy to raise more. Google employees have told me that the limiting factor for the company at the moment isn't money but the ability to recruit new employees.

More fundamentally, the war metaphor is misleading in this kind of discussion. In a competitive market like this one, companies make profits by creating value for their customers. Especially in a growing market like this one, there isn't a fixed pie to be divided. So there's no reason to think that lowering Google's profits would improve Microsoft's fortunes. Microsoft should acquire Yahoo! if the combined company will be more profitable than they would be separately. Obviously, competition with Google is a big factor to consider, but it gets things backwards to view hurting Google, in and of itself, as a win for Microsoft.

Filed Under: deals, mergers, value, war
Companies: google, microsoft, yahoo

Isn't Yahoo! Management Supposed To Work For Its Shareholders?

from the that's-what-I-thought dept

I've been puzzled by a lot of the coverage of the Microsoft-Yahoo merger talks. Take yesterday's write-up of the story in the New York Times, for example. The article starts off talking about Yahoo!'s efforts to "avoid defeat in its battle with Microsoft." If I were a Yahoo! shareholder, I'd be pretty unhappy that things are being framed that way. Yahoo! management has a fiduciary responsibility to me, the shareholder, to maximize the value of my investment. Yahoo! management ought to be excited by the idea of a deal where shareholders get paid a big premium for their shares. Of course, if Yahoo! can get an even better offer from another company, or use the threat of going elsewhere to get a bigger offer from Microsoft, that would be great. But the types of machinations described in this article sound more like Yahoo! management trying to hold onto their jobs than anything else. It's hard to see how shareholders benefit from delaying the shareholders meeting in order to prevent Microsoft from starting a proxy fight. If shareholders don't think Microsoft's offer is fair, they're free to vote it down. Likewise, a deal with News Corp or AOL might make business sense, but unless it causes the price of Yahoo! shares to rise higher than Microsoft's current offer, it's not clear why those deals would cause shareholders to reject the Microsoft deal. More generally, I think it's misguided to describe this type of negotiation as a battle to be won or lost by Yahoo! "Losing" in this case means Yahoo! shareholders get paid a big premium for their stock shares, while "winning" would, I guess, mean the deal falls through and Yahoo! shareholders don't get a big payday. That seems backwards to me.

Filed Under: fiduciary responsibility, mergers
Companies: microsoft, yahoo

Did Yahoo Delete The Pirate Bay From Search Results?

from the making-friends?--or-enemies? dept

There's a lot of buzz going around concerning reports that Yahoo has deleted The Pirate Bay from its search index, though it appears not everyone is seeing it. There hasn't been an official explanation just yet -- and it could be an accidental move or simply a hiccup, but it raises some questions about Yahoo's search index when such a site disappears. This is especially true given the controversial (deserved or not) nature of The Pirate Bay, and the efforts by the entertainment industry to shut the site down. Initially, we're willing to give Yahoo the benefit of the doubt, but a full explanation of what happened would be useful at this point.

Filed Under: missing sites, pirate bay, search index
Companies: pirate bay, yahoo