History > 2006 > USA > Internet (V-VI)

Experts say Google

will be No. 1 in visitors in '07

Updated 12/28/2006
3:12 AM ET
USA Today
By Jefferson Graham

Internet search giant Google, which defied gravity this year, is set to become the world's most visited Internet site in 2007.
Google's revenue hit $7.2 billion for the first three quarters of 2006. Its stock topped the $500-a-share mark (now at $468). Most significant, Google in

October acquired highflying video site YouTube for $1.7 billion. Measurement services ComScore Media Metrix and Nielsen/NetRatings plan to add YouTube to Google's overall rankings next year.

That "assures that Google will be No. 1 in both worldwide and U.S. visitors," says Danny Sullivan, editor of the Search Engine Land blog.

Even without YouTube, in November Google (GOOG) surpassed Yahoo for the first time as the second-most-visited site worldwide, ComScore says.

Microsoft is the top site in ComScore's worldwide rankings — fueled in part by downloads of Microsoft software updates. In the USA, ComScore has Yahoo as the top site, with 130 million visitors, to 108 million for Google.

Yahoo has been the most-visited Internet property in the USA for more than 10 years, thanks to its popular e-mail, instant messaging and directory applications. But it trails Google in revenue: Yahoo reported revenue of $4.5 billion in the first three quarters of 2006.

Google taking the No. 2 spot in worldwide traffic "is a big deal," Sullivan says. "Google's critics say the company is a one-trick pony, and is focused too much on just search. This just shows how powerful search is."

Only 10% of Yahoo's traffic comes from search, according to rival measurement firm Hitwise. At Google, meanwhile, 87% comes from search. Yahoo's top traffic generator is e-mail, at 33%.

Yahoo has struggled in the shadow of Google this year. Its revamped search advertising system was delayed until early 2007. Its stock trades at around $26 a share, from more than $40 in January. And it has announced a restructuring to get back on track.

Earlier this year, Citigroup analyst Mark Mahaney predicted Google would top Yahoo and Microsoft in traffic even without YouTube. "It's a matter of math," he says. "The Internet population is growing at 10% a year, and Google's audience is growing at 9% to 15%," compared with 6% to 12% for Yahoo, and 4% to 7% for Microsoft. He also says Google's stock will hit the $600-a-share mark by the end of 2007. "The rise in traffic shows that the new applications they've been adding are being widely accepted," he says.

Experts say Google will be No. 1 in visitors in '07, UT, 28.12.2006, http://www.usatoday.com/tech/news/2006-12-27-webleader_x.htm

Google Passes Yahoo

in Tally of Visitors

December 23, 2006
By BLOOMBERG NEWS
The New York Times

Google, the search engine company, displaced Yahoo as the world’s second-most-visited Web site in November and closed in on the leader, Microsoft, a market researcher said yesterday.

Visitors to Google’s sites rose 9.1 percent, to 475.7 million in November from a year earlier, while those to Yahoo sites rose 5.2 percent, to 475.3 million, the researcher, ComScore Networks, said. Both sites trail Microsoft, which had 501.7 million visitors, ComScore said.

It was the first time that Google, based in Mountain View, Calif., attracted more visitors than Yahoo, reflecting Google’s growing popularity outside the United States. Yahoo, based in Sunnyvale, Calif., is still the most-visited site within the United States, ComScore said. Microsoft’s visitors increased 3.3 percent from a year earlier.

Visitors to Fox Interactive Media sites, owned by the News Corporation, rose almost fivefold, to 130.4 million, in November from a year ago, reflecting a surge from the purchase of MySpace.com.

Visitors at YouTube, bought by Google for $1.65 billion in November, rose more than 24-fold to 107.9 million, ComScore said.

    Google Passes Yahoo in Tally of Visitors, NYT, 23.12.2006, http://www.nytimes.com/2006/12/23/technology/23google.html

Google Steps More Boldly Into PayPal’s Territory

December 20, 2006
The New York Times
By MIGUEL HELFT

SAN FRANCISCO, Dec. 19 — Steven Grossberg, who sells video games online from his home in Wellington, Fla., recently sent an enticing offer to 20,000 customers: $10 off any purchase over $30 using a new payment service, Google Checkout.

Traffic on his site more than tripled, and best of all, he said, Google picked up the tab for the promotion.

“I think it’s fantastic,” he said. “I’m selling the product. Google is getting tons of customers to sign up for Checkout. Customers are happy because they are getting a monster deal.”

And Google is not charging merchants any processing fees through the end of 2007.

As a result, getting customers to use Checkout will increase profits, Mr. Grossberg said.

So starting next year, he plans to take some of the money he spends to list items on eBay and try a new marketing strategy: placing ads alongside Google’s search results.

That is exactly what Google wants to hear.

When Google introduced Checkout in June, it was seen as a formidable rival to PayPal, eBay’s online payment service. And with Google aggressively promoting Checkout during the holiday season and beyond, its use with some merchants has already surpassed PayPal’s.

But Google’s plan for Checkout has always been about more than online payments. The service is a calculated effort to expand Google’s base of advertisers, which provide the bulk of the company’s revenues.

And Google has made a substantial financial commitment to the service’s success. Goldman Sachs estimates that Checkout promotions will cost Google about $20 million in the current quarter.

The campaign to promote Checkout also says something else about Google: As rivals Yahoo and Microsoft are working on getting the basics right in their search and advertising systems, Google is racing ahead to consolidate its lead.

“I believe that Google’s advantage is widening with time and this is one example,” said Scott Devitt, an analyst with Stifel Nicolaus & Company. “Checkout could be a game changer, and the competitors are doing nothing of the sort.”

Unlike PayPal, a full-fledged payment system that can be used to transfer money between individuals and can draw funds directly from bank accounts, Checkout merely offers users an easy way to use their credit cards. Checkout users enter their credit card information, shipping and billing address into Google’s system. Then, they can pay with Checkout at participating stores without having to enter their personal information again and again.

Google says thousands of merchants are using the service. That is dwarfed by PayPal, which has millions of merchants and 123 million users around the world. In the most recent quarter, PayPal processed $9.1 billion in transactions, up 37 percent from a year earlier. While most of those were payments between eBay buyers and sellers, the number of PayPal transactions outside eBay rose 59 percent, to $3.3 billion.

Google has not released figures on the number of Checkout users. Still, there are signs that with the heavy promotions, the service is making significant inroads.

GSI Commerce, a company that runs about 60 online stores, including toysrus.com, levis.com and timberland.com, said that one in five holiday sales at its partners’ stores through the end of November were completed with payment systems other than credit cards, which include PayPal, a service called BillMeLater and Checkout. Of the three, “Google is the biggest by far,” said Michael Rubin, chief executive of GSI Commerce.

At StarbucksStore.com, Checkout transactions topped PayPal transactions by about a third, said Tracy Randall, president of Cooking.com, which operates StarbucksStore.com.

Checkout’s gains have not necessarily heralded a PayPal decline. A Goldman Sachs report this week said that based on conversations with various merchants, Checkout appeared to be making gains against traditional payment options and that PayPal’s share of online transactions was also growing.

Regardless, it is clear that the promotions have played an important role in Checkout’s quick adoption.

When Google introduced Checkout in June, it charged merchants 20 cents plus 2 percent of the purchase price for every transaction. (PayPal charges 1.9 percent to 2.9 percent plus 30 cents a transaction, while credit companies typically charge about 1.95 percent and 30 cents for every purchase.)

Yet, to lure merchants to its advertising system, Google offered them $10 worth of free transaction processing for every $1 in advertising they spent on Google.

But Google recently got more aggressive. On Nov. 8, it waived transaction fees for all merchants, regardless of whether or not they were Google advertisers, through the end of the year. Then, on Nov. 27, it began offering Checkout users $10 off $30 purchases at many e-commerce sites and, in some cases, $20 off $50 orders. And on Dec. 5, it announced that transaction processing would remain free to merchants through the end of 2007.

In other words, Google plans to lose money on every Checkout transaction for more than a year. Yet the company believes it will be worth it.

“It’s a way to incentivize more merchants to join our network,” said Benjamin Ling, a product manager for Checkout. “We want everyone who sells online to be a Google advertiser.”

The incentives offered by Google could benefit merchants and the company in several ways, according to online marketing experts.

Consider first that the ads of stores who accept Checkout are highlighted with an icon — a Checkout shopping cart. That increases the likelihood that users will click on those ads, which creates revenue for Google. What’s more, once users click on an ad, the availability of Checkout makes it more likely that they’ll complete a transaction.

In other words, Checkout generates more sales leads for online retailers — what online advertisers call click-through rates — and more of those leads turn into actual sales.

But the system offers merchants ancillary benefits, said Scot Wingo, the chief executive of ChannelAdvisor.com, an e-commerce services company that helps independent store owners sell on multiple online marketplaces, including eBay, Amazon and their own Web sites.

Google ranks ads based on a secret algorithm that combines factors like the price advertisers are willing to pay and the click-through rate of a particular ad. The idea is that ads that are clicked most frequently are those that users find more relevant.

So by having a Checkout icon that increases click-through rates, over time advertisers will have to pay less to get the same ranking for their ads. Or, they could pay the same amount for more ads with better placement, Mr. Wingo said.

“When you factor all of these together, it can have a pretty significant impact on your economics as a retailer,” Mr. Wingo said, adding that many merchants are likely to plow any savings back into Google.

There are other ways in which Google could benefit from Checkout, according to analysts. Checkout gives Google detailed knowledge of its users’ buying habits, which the company could use to customize the delivery of ads or search results to specific users.

And the system could make it easier for Google to develop a new advertising model in which advertisers pay only when a user completes a transaction, rather than every time a user clicks on an ad. This model, known as “pay-per-action,” could bring additional revenue to Google.

Mr. Ling said Google had no plans to tie search results to buying habits or to use Checkout to move to a cost-per-action ad model. But he added: “If there is a service that is of value to consumers, we will consider it.”

Not everything has been smooth sailing for Checkout. In the middle of the holiday shopping season, the electronics merchant J & R suspended the use of Checkout, telling customers that it was experiencing delays in processing orders due to the popularity of the system. And Ms. Randall, of Cooking.com, said there had been some “operational issues” with Checkout at StarbucksStore.com, but that Google had worked quickly to resolve them.

Google acknowledged the problems. “We have experienced some growing pains,” said Douglas Merrill, a vice president of engineering at Google who is responsible for Checkout. “Whenever we find issues, we drop everything else to fix them.”

That is in part why laptopsforless .com, a retailer in Anaheim, Calif., chose to expand payment options by implementing PayPal first, said Jeff Gardner, vice president for marketing and e-commerce. “We feel like we want to wait until the bugs are worked out before jumping into it,” he said about Checkout. But come next year, he added, “it is our intent to offer our customers both.”

    Google Steps More Boldly Into PayPal’s Territory, NYT, 20.12.2006, http://www.nytimes.com/2006/12/20/technology/20checkout.html

EBay Is Expected to Close Its Auction Site in China

December 19, 2006
The New York Times
By KATIE HAFNER and BRAD STONE

Acknowledging that the online auction market in China is enticingly fast-growing but frustratingly tough to crack, eBay will shut its main Web site in China and enter into a joint venture with a Chinese company instead, a person briefed on the plans of the companies said yesterday.

EBay will take a 49 percent stake in the venture, he said, with Tom Online Inc., an Internet company based in Beijing, taking the majority share and administering the venture, which has yet to be named.

The plans call for eBay to put $40 million into the venture and Tom Online to contribute $20 million. Meg Whitman, eBay’s chief executive, is to make the announcement tomorrow at eBay’s office in Shanghai.

EBay, which has already spent hundreds of millions of dollars trying to establish its presence in China, declined to comment yesterday.

Analysts said the move was not a surprise. “It’s an admission that they failed in China, on their own at least,” said Tim Boyd, an analyst with Caris & Company. “But I think that’s something the market already knew.”

The decision was also seen as a sign of the pressure Chinese government regulations put on foreign companies to set up joint ventures, even when they may be reluctant to do so for fear of helping to turn their Chinese partners into global rivals.

Ina Steiner, the editor of AuctionBytes.com, an online newsletter, said that “a bailout in China would be a huge concession by eBay.” She noted that last year, Ms. Whitman touted China as eBay’s biggest long-term opportunity in local markets.

“The company sold analysts on China as a way to counter slowing growth rates in its more mature markets like the U.S. and Germany,” Ms. Steiner said.

China has not been easy territory for eBay. The company established itself in China as early as 2002, when it pulled out of Japan in a concession to Yahoo’s sizable lead there, and bought a third of Eachnet.com, China’s principal online auction site.

The next year, eBay acquired the rest of Eachnet, bringing the total price to $180 million. In 2005, eBay spent another $100 million on marketing in China. Ms. Whitman predicted in 2002 that within four years, e-commerce revenue from all sources in China would grow nearly twelvefold, to more than $16 billion.

The projections were on the mark, Mr. Boyd said. “But the problem has not been the growth in e-commerce in China. The problem has been that eBay is losing market share.”

EBay has steadily been lagging behind Taobao, the consumer auction arm of Alibaba.com, China’s largest e-commerce company. The research firm Analysys International said that in 2005, Taobao’s share of the Chinese online auction market was 57.7 percent, compared with 31.5 percent for eBay Eachnet.

EBay’s move is similar to a partnership Yahoo struck last year with Alibaba. With its own Chinese operations failing to gain traction, Yahoo paid $1 billion to hand over operations to Alibaba in exchange for a 40 percent stake in the company.

Both deals represent new thinking among Internet companies that what works in other countries does not necessarily work in China, where strong local managers are needed.

Last September, Martin Wu, the chief executive of eBay Eachnet, resigned after just a year, and since then rumors have swirled that the company would quit the market.

Ms. Steiner also said eBay failed to understand the Chinese marketplace and culture. For example, she said, in contrast to Taobao, eBay Eachnet provided no phone support and discouraged buyer-seller contact that could lead to haggling.

Also, she said, eBay failed to react quickly enough when Taobao entered the market with no user fees. In January, eBay Eachnet stopped charging transaction fees.

“It has lost market share in China to Taobao and continues to face regulatory and other challenges,” said Ms. Steiner said. “A partnership with Tom Online would be an effort to salvage its Chinese investment.”

A senior executive at Alibaba, Porter Erisman, said, that “ any new deal where eBay changes its model in China would be great for both companies because now we can work out ways to cooperate.”

EBay has played down its troubles in China. As recently as October, in a conference call with analysts and the media, Ms. Whitman sought to dispel speculation that the company might reverse course in China. “We are committed to China for the long term,” she said on the call.

EBay’s stock has been climbing back after hitting a 52-week low of $22.83 in August. Shares closed yesterday at $32.42, down 1.5 percent.

Tom Online, with 75 million subscribers, allows users access to television, music stations and online stores through its Web portal and over wireless networks. In September 2005, it formed a joint venture with eBay in China to distribute the popular Internet telephone service Skype, which eBay owns.

Over all, Mr. Boyd said he was encouraged by the news of eBay’s new alliance. “Now they’re partnering with a strong Chinese presence on the Internet,” he said, referring to Tom Online. “In hindsight, I think they’d say this is the way we should have gone about it at the beginning.”

The person briefed on the plan said that eBay was also considering partnerships and other options for its electronic payments site, PayPal China.

Although eBay’s current site will be shut, he said, a separate site will be maintained to give Chinese users access to international auctions. And eBay’s Kijiji China, a Chinese classified ad site similar to Craigslist in the United States, will continue operations unchanged.

Duncan Clark, the chairman of BDA China Ltd., a technology and media consulting firm in Beijing, said Chinese regulations requiring domestic control over companies engaged in many kinds of financial transactions had limited the ability of eBay’s payment mechanism.

“The end game is who can control online payment,” he said. “They’ve had their hands tied on that.”

The Chinese authorities are preparing to issue 10 licenses for online payment systems, and eBay will have a much better chance of winning one, Mr. Clark said, if its operations are in a joint venture controlled by a Chinese partner.

Keith Bradsher and Howard French contributed reporting.

    EBay Is Expected to Close Its Auction Site in China, NYT, 19.12.2006, http://www.nytimes.com/2006/12/19/technology/19ebay.html

More shoppers take online plunge; sales hit $670 million in record day

Posted 12/17/2006 11:07 PM ET
USA Today
By Jayne O'Donnell

Online retail sales from Nov. 1 through Friday were up 25% over 2005, says Internet market research firm ComScore Networks.

ComScore says last Wednesday was likely the biggest online shopping day of the year and, with nearly $670 million in sales, topped last year's No. 1 day by over $100 million. In fact, sales on 12 days this year have surpassed $600 million.

Last year's single biggest day for Web sales was Dec. 11, when consumers spent $556 million online.

"It's almost like we're seeing a surging as we come down to the deadline day somewhere around (today) when free shipping with guaranteed delivery ends," says ComScore chairman Gian Fulgoni.

"We keep seeing strong growth," says Scott Silverman, executive director of the National Retail Federation (NRF) online division, shop.org. "It's newsworthy when it continues, because each year you're growing off a bigger base."

Retail consulting firm Kurt Salmon Associates polled 1,202 consumers between Nov. 25 and Dec. 5 and found most people planned to spend the same amount as in 2005, but 36% were planning to shop more online.

"We're breaking records in online shopping," says Kurt Salmon interactive strategies expert Chad Doiron. "That's the big winner."

Through Dec. 3, ComScore says, the number of online buyers was up 17% over a year ago, and the average amount spent increased 7%. Kurt Peters, editor in chief of Internet Retailer, says the growth is likely coming from more people shopping online as well as from experienced online shoppers increasing how much they spend. Peters says new buyers spend less than experienced buyers.

The good news for online retailers comes with a warning. Because consumers are trying out many different websites, they get frustrated quickly with the less satisfying ones, Peters says. Consumers' rising expectations usually outstrip websites' abilities, he says.

Doiron says online shoppers will put up with slow or hard-to-use websites this time of year. But they won't forgive being told something is in stock when it's not: "That's when you've lost a customer."

Some of the biggest retailers aren't going to let shipping deadlines steer consumers away from their websites. Starting today, the NRF's cybermonday.com website will be promoting a "buy online, pick up in-store" option for the holidays. Circuit City, Best Buy, Sears and CompUSA are among retailers offering the service.

"Picking up items in a store will be a good option for consumers who don't want to wander around looking for a particular size or color," NRF spokeswoman Ellen Davis says.

    More shoppers take online plunge; sales hit $670 million in record day, UT, 17.12.2006, http://www.usatoday.com/money/industries/technology/2006-12-17-online-retail-usat_x.htm

Web Site Hunts Pedophiles, and TV Goes Along

December 13, 2006
The New York Times
By ALLEN SALKIN

Last month, the Web site Perverted-Justice.com posted news of the conviction of Sean Young, a Wisconsin man sentenced to 10 years in state prison for soliciting sex online from a 14-year-old girl. According to a transcript of an online chat posted on the site, at one point Mr. Young had asked the girl, identified only as Billie, what she was wearing. When she answered “sweats,” Mr. Young typed back that if she were his daughter, “i’d make u wear sexy clthes.”

Billie turned out to be an adult volunteer for Perverted Justice, an anti-pedophile group, and when Mr. Young drove to a house where he expected to meet the teenager for sex, he was arrested by sheriff’s deputies.

The conviction was logged as the 104th that Perverted Justice says it has been responsible for since 2003, a tally that as of yesterday had reached 113. What started as one man’s quest to rid his regional Yahoo chat room of lewd adults has grown into a nationwide force of cyberspace vigilantes, financed by a network television program hungry for ratings.

“It’s a kind of blog that has turned into a crime-fighting resource,” said Robert McCrie, a professor at John Jay College of Criminal Justice in Manhattan.

Perverted Justice is best known for putting its online volunteers at the disposal of the television newsmagazine “Dateline NBC,” which has broadcast 11 highly rated programs in which would-be pedophiles are lured to “sting houses,” only to be surprised by a camera crew and, usually, the police.

Despite that publicity, the inner workings of Perverted Justice and its reclusive founder remain largely a mystery, even as the group has emerged as one of the most effective unofficial law enforcement groups in the country, a kind of Neighborhood Watch of the Net. But the group is also criticized by some legal and law enforcement experts, who accuse it of entrapment, making mistakes that ruin innocent lives and, paradoxically, disseminating its own brand of child pornography.

Peter D. Greenspun, a lawyer who defended a rabbi from Rockville, Md., caught in a “Dateline” sting arranged by Perverted Justice, said that by posting online transcripts of conversations between would-be child molesters and volunteers posing as 12- and 13-year-olds, Perverted Justice was encouraging, rather than deterring, pedophiles.

“They are putting out for unfiltered, unrestricted public consumption the most graphic sexual material that they themselves say is of a perverted nature,” Mr. Greenspun said.

Perverted Justice’s founder, Xavier Von Erck, 27, a former tech-support worker, has a dedication to the cause bordering on obsession, his mother and associates said. Mr. Von Erck lives in an apartment in Portland, Ore., but rarely gives out his address, and he would not allow a reporter to visit because he feared retribution from men exposed by his group. In a telephone interview, he said he worked for his group seven days a week, mostly from a laptop in his bedroom.

“Every waking minute he’s on that computer,” said his mother, Mary Erck-Heard, 46, who raised her son after they fled his father, whom she described as alcoholic. Mr. Von Erck legally changed his name from Phillip John Eide, taking his maternal grandfather’s family name, Erck, and adding the Von.

In many ways, Mr. Von Erck, who said he and his mother moved 13 times when he was in high school because they were often short of money, continues to live that messy life of deprivation. His meals often consist of ramen noodles, he said; his bed is perpetually unmade. For years, he has been trying unsuccessfully to find his father, who, he says, still owes his mother child support.

“I have a low opinion of men in general,” he said. “The most heinous crimes in our society are committed by males.”

Perverted Justice has 41,000 registered users of its online forums dedicated to the cause of stopping predators, 65 volunteers trained as chat room decoys and three salaried leaders: Mr. Von Erck, a woman who is a liaison with law enforcement and a business manager.

Typically, a Perverted Justice volunteer creates a false online profile, posing as, say, a 13-year-old girl on MySpace. The volunteer will wait to receive e-mail messages or will enter a chat room. If an adult contacts the volunteer, the decoy responds and sees if the conversation becomes sexual.

The group’s collaboration with “Dateline” since 2004 has been lucrative. A person familiar with Perverted Justice’s finances who requested anonymity because he is not authorized to discuss the matter publicly said NBC was paying the group roughly $70,000 for each hour of television produced.

“They do a lot a work for us, and they deserve to be reimbursed for that work,” said David Corvo, the executive producer of “Dateline,” who met with Mr. Von Erck earlier this year in New York to discuss their collaboration.

Mr. Von Erck said the NBC money had been used in part to buy computer servers that would not be overwhelmed every time the group was mentioned on television.

Ratings for the “Dateline” broadcasts, a series called “To Catch a Predator” that has become a network franchise, have averaged 9.1 million viewers, compared with 7 million viewers for other “Dateline” episodes, according to Nielsen Media Research.

Six new episodes are planned for the first half of 2007. Two were shot at a house in Long Beach, Calif.; two in Flagler Beach, Fla.; and two others in Murphy, Tex. The Texas sting drew a burst of publicity in early November, months before the episodes were scheduled to be shown, when a prosecutor implicated as a would-be predator, Louis W. Conradt Jr., shot himself to death as the police approached his home.

Supporters of the NBC broadcasts say they have helped increase awareness of online predators, allowing parents to educate children and spurring law enforcement to action. One in seven youths ages 10 to 17 who have gone online at least once a month for six months have received unwanted sexual solicitations, according to a 2005 study by the Crimes Against Children Research Center at the University of New Hampshire.

Last month, the “Dateline” correspondent Chris Hansen, who is featured on the Perverted Justice specials, addressed about 500 students at a school in Rye Brook, N.Y., about the dangers of Internet predators. One of the first questions was why the stings filmed by “Dateline” were not entrapment.

The answer, legal experts say, is that it is hard for a defendant to prove entrapment, in this context or in any other. Some states allow prosecutions as long as there was a “predisposition” to the conduct. Others require police misconduct for a defendant to claim entrapment.

One concern about Perverted Justice’s nonprofessional force of vigilantes, raised by Lt. Joseph Donohue, head of the New York State Internet Crimes Against Children Task Force, is that decoys impersonating teenagers may be too aggressive, not understanding the need to let predators initiate the sexual chat and therefore not gathering chat-log evidence that will stand up in court.

Mr. Von Erck responded that so far prosecutors had not dropped charges against any man arrested in an investigation begun by Perverted Justice.

Of the 113 convictions Mr. Von Erck’s group claims, some have been for misdemeanors resulting in no jail time, and others have brought stiff sentences, like the one of the Maryland rabbi, David A. Kaye, who on Dec. 1 was sentenced to six and a half years in prison on federal charges of enticement and traveling to meet a minor for illicit sexual contact.

Mr. Von Erck’s most vociferous critic is Scott Morrow, a retired Canadian Air Force serviceman who runs a Web site, Corrupted-Justice.com, chronicling what he says are excesses by Perverted Justice.

“These are anonymous, unaccountable Net junkies doing this work,” Mr. Morrow said in an interview.

He said that Perverted Justice listed personal information for many men it accused of being sexual predators and had sometimes mistaken their identities and humiliated innocent people.

Mr. Von Erck said the criticisms were out-of-date; in its first years the group did post the phone numbers, employers and photographs of men it accused of being predators, and anyone could humiliate the individuals by, say, e-mailing transcripts of a man’s lewd online chats to his friends and colleagues.

But since early this year, Perverted Justice has made a policy of not immediately posting the information it gathers in most cases; instead it contacts law enforcement and encourages pursuit of an arrest.

“We are now a conviction machine,” Mr. Von Erck said.

Mr. Von Erck, who said he was not molested as a child, prefers not to analyze his own motivation for dedicating himself so fully to the effort. Asked to explain why he did it, he did so with spare emotion.

“It gets tiring,” he said, “but when you find somebody that’s already been successful doing something harmful to a child and then you get him arrested, you can’t beat that.”

Happy Blitt contributed research.

    Web Site Hunts Pedophiles, and TV Goes Along, NYT, 13.12.2006, http://www.nytimes.com/2006/12/13/technology/13justice.html?hp&ex=1166072400&en=1df7a90fb611f093&ei=5094&partner=homepage

Spam Doubles, Finding New Ways to Deliver Itself

December 6, 2006
The New York Times
By BRAD STONE

Hearing from a lot of new friends lately? You know, the ones that write “It’s me, Esmeralda,” and tip you off to an obscure stock that is “poised to explode” or a great deal on prescription drugs.

You’re not the only one. Spam is back — in e-mail in-boxes and on everyone’s minds. In the last six months, the problem has gotten measurably worse. Worldwide spam volumes have doubled from last year, according to Ironport, a spam filtering firm, and unsolicited junk mail now accounts for more than 9 of every 10 e-mail messages sent over the Internet.

Much of that flood is made up of a nettlesome new breed of junk e-mail called image spam, in which the words of the advertisement are part of a picture, often fooling traditional spam detectors that look for telltale phrases. Image spam increased fourfold from last year and now represents 25 to 45 percent of all junk e-mail, depending on the day, Ironport says.

The antispam industry is struggling to keep up with the surge. It is adding computer power and developing new techniques in an effort to avoid losing the battle with the most sophisticated spammers.

It wasn’t supposed to turn out this way. Three years ago, Bill Gates, Microsoft’s chairman, made an audacious prediction: the problem of junk e-mail, he said, “will be solved by 2006.” And for a time, there were signs that he was going to be proved right.

Antispam software for companies and individuals became increasingly effective, and many computer users were given hope by the federal Can-Spam Act of 2003, which required spam senders to allow recipients to opt out of receiving future messages and prescribed prison terms for violators.

According to the Federal Trade Commission, the volume of spam declined in the first eight months of last year.

But as many technology administrators will testify, the respite was short-lived.

“At the beginning of the year spam was off our radar,” said Franklin Warlick, senior messaging systems administrator at Cox Communications in Atlanta.

“Now employees are stopping us in the halls to ask us if we turned off our spam filter,” Mr. Warlick said.

Mehran Sabbaghian, a network engineer at the Sacramento Web hosting company Lanset America, said that last month a sudden Internet-wide increase in spam clogged his firm’s servers so badly that the delivery of regular e-mail to customers was delayed by hours.

To relieve the pressure, the company took the drastic step of blocking all messages from several countries in Europe, Latin America and Africa, where much of the spam was originating.

This week, Lanset America plans to start accepting incoming mail from those countries again, but Mr. Sabbaghian said the problem of junk e-mail was “now out of control.”

Antispam companies fought the scourge successfully, for a time, with a blend of three filtering strategies. Their software scanned each e-mail and looked at whom the message was coming from, what words it contained and which Web sites it linked to. The new breed of spam — call it Spam 2.0 — poses a serious challenge to each of those three approaches.

Spammers have effectively foiled the first strategy — analyzing the reputation of the sender — by conscripting vast networks of computers belonging to users who unknowingly downloaded viruses and other rogue programs. The infected computers begin sending out spam without the knowledge of their owners. Secure Computing, an antispam company in San Jose, Calif., reports that 250,000 new computers are captured and added to these spam “botnets” each day.

The sudden appearance of new sources of spam makes it more difficult for companies to rely on blacklists of known junk e-mail distributors. Also, by using other people’s computers to scatter their e-mail across the Internet, spammers vastly increase the number of messages they can send out, without having to pay for the data traffic they generate.

“Because they are stealing other people’s computers to send out the bad stuff, their marginal costs are zero,” said Daniel Drucker, a vice president at the antispam company Postini. “The scary part is that the economics are now tilted in their favor.”

The use of botnets to send spam would not matter as much if e-mail filters could still make effective use of the second spam-fighting strategy: analyzing the content of an incoming message. Traditional antispam software examines the words in a text message and, using statistical techniques, determines if the words are more likely to make up a legitimate message or a piece of spam.

The explosion of image spam this year has largely thwarted that approach. Spammers have used images in their messages for years, in most cases to offer a peek at a pornographic Web site, or to illustrate the effectiveness of their miracle drugs. But as more of their text-based messages started being blocked, spammers searched for new methods and realized that putting their words inside the image could frustrate text filtering. The use of other people’s computers to send their bandwidth-hogging e-mail made the tactic practical.

“They moved their message into our blind spot,” said Paul Judge, chief technology officer of Secure Computing.

Antispam firms spotted the skyrocketing amount of image spam this summer. A technology arms race ensued. The filtering companies adopted an approach called optical character recognition, which scans the images in an e-mail and tries to recognize any letters or words. Spammers responded in turn by littering their images with speckles, polka dots and background bouquets of color, which mean nothing to human eyes but trip up the computer scanners.

Spammers have also figured out ways to elude another common antispam technique: identifying and blocking multiple copies of the same message. Pioneering antispam companies like the San Francisco-based Brightmail, which was bought two years ago year by the software giant Symantec, achieved early victories against spam by recognizing unwanted e-mail as soon as it hit the Internet, noting its “fingerprint” and stopping every subsequent copy. Spammers have defied that technique by writing software that automatically changes a few pixels in each image.

“Imagine an archvillain who has a new thumbprint every time he puts his thumb down,” said Patrick Peterson, vice president for technology at Ironport. “They have taken away so many of the hooks we can use to look for spam.”

But don’t spammers still have to link to the incriminating Web sites where they sell their disreputable wares? Well, not anymore. Many of the messages in the latest spam wave promote penny stocks — part of a scheme that antispam researchers call the “pump and dump.” Spammers buy the inexpensive stock of an obscure company and send out messages hyping it. They sell their shares when the gullible masses respond and snap up the stock. No links to Web sites are needed in the messages.

Though the scam sounds obvious, a joint study by researchers at Purdue University and Oxford University this summer found that spam stock cons work. Enough recipients buy the stock that spammers can make a 5 percent to 6 percent return in two days, the study concluded.

The Securities and Exchange Commission has brought dozens of cases against such fraudsters over the years. But as a result of the Can-Spam Act, which forced domestic e-mail marketers to either give up the practice or risk jail, most active spammers now operate beyond the reach of American law enforcement. Antispam researchers say the current spam hot spots are in Russia, Eastern Europe and Asia.

While spammers are making money, companies are clearly spending more of it to fight the surge. Postini says that the costs for companies trying to fight spam on their own have tripled, mostly because of increased bandwidth costs to handle bulky image spam and lost employee productivity.

The estimates should be taken with a grain of salt, since antispam companies are eager to hawk their expensive filtering systems, which can cost around $20,000 a year for a company of 1,000 employees. But the onslaught of junk e-mail does affect business operations, even if the impact is difficult to quantify.

At the headquarters of the Seattle Mariners this summer, the topic of the worsening spam problem came up regularly in executive meetings, and the team’s top brass began pressuring the technology staff to fix the problem. Ben Nakamura, the Mariners’ network manager, said he tried to tighten spam controls and inadvertently began blocking the regular incoming press notes from opposing teams.

Two weeks ago, the situation grew so dire that the team switched from software provided by Computer Associates, whose suite of security programs sat on the team’s internal server, to a dedicated antispam server from Barracuda Networks, which gets regular updates from Barracuda’s offices in Silicon Valley.

Mr. Nakamura said the new system had greatly improved the situation. On a single day last week, the team received 5,000 e-mail messages and the Barracuda spam appliance blocked all but 300. Still, some employees continue to see two or three pieces of spam in their in-boxes each day.

Some antispam veterans are not optimistic about the future of the spam battle. “As an industry I think we are losing,” Mr. Peterson of Ironport said. “The bad guys are simply outrunning most of the technology out there today.”

    Spam Doubles, Finding New Ways to Deliver Itself, NYT, 6.12.2006, http://www.nytimes.com/2006/12/06/technology/06spam.html?hp&ex=1165467600&en=a3f1a74b08d60443&ei=5094&partner=homepage

Bones of contention: Religious crusader battles auction giant

Posted 11/24/2006 8:21 PM ET
By Brian Murphy, Associated Press
USA Today

Hardly an hour goes by without Thomas Serafin or one of his cyber-sleuths checking what eBay has to offer.

They're not hunting for bargains and never place a bid. Their interest is bone shards, bits of wizened flesh and a contemporary twist on the sacred and the profane: How the ancient trade in the most coveted religious relics has moved into the global flea market of online bidding.

"You can find bone fragments supposedly from St. Augustine being hawked on the Internet along with trinkets and antiques. There is something very wrong here," said Serafin, a professional photographer and Catholic activist based in Los Angeles, who has led an expanding campaign since the late 1990s to block the online sale of objects purported to contain the remains of Christian saints.

Last month, Serafin's group, the International Crusade for Holy Relics, opened a new front that's truly worthy of a David and Goliath metaphor: a call to boycott eBay.

It seeks to pressure the world's largest online auction site to close alleged loopholes used to bypass its ban on allowing bids for human remains.

Hani Durzy, spokesman for eBay, said the San Jose, Calif.-based company is "very willing to reopen talks" with Serafin's group about its concerns after discussions broke off about a year ago.

"As far as the boycott, well, we've really seen no impact to speak of," said Durzy. "We don't know if it's even still in place."

But Serafin said the symbolism is what's important.

"Yes, it's just a blip on the screen," he said. "But we want to make a point. They are taking the same position as Judas. They are selling out the church."

Interest in religious patrimony of all types — from icons to stained glass — has soared in recent years, along with the blockbuster novel The Da Vinci Code, the Christian-themed Left Behind series and major museum exhibits devoted to art and spirituality. At the same time, a flood of ecclesiastical items has entered mainstream antiquarian markets from once-flourishing churches that were closed because of shrinking congregations or population shifts away from older city neighborhoods.

But the sale of so-called "first-class relics" — bone, flesh, hair, nails and fragments of other body parts — remains a murky subculture, one that's increasingly shifting from the back rooms of dealers' shops to the Web's worldwide mall.

Dozens of religious items are on eBay at any time. Most are ordinary objects such as icons, medals or prayer cards. But Serafin believes the strongest interest is for the first-class relics, which he says has accounted for up to 40% of the eBay relic listings at times.

"This is where the real action is," he said. "This is where our fight is."

Serafin describes his motivation as part consciousness raiser and part consumer crusader.

He calls the sale of such relics deeply offensive to believers in their sanctity.

Then there is the caveat emptor — or "let the buyer beware" — factor. Clear documentation on a first-class relic is extremely rare and fraud is as old as faith — as noted more than 600 years ago in a scene from The Canterbury Tales in which pigs' bones and a pillow case are part of a cache of dubious religious relics brought from Rome.

Some recent offerings on eBay include "the air" that Christ breathed, the wing of the Holy Spirit and "the hand" of St. Stephen.

Serafin also says the rules — both canon and eBay's — are on his side.

Most churches with centuries-old traditions in the display and veneration of relics, including the Roman Catholic and Orthodox, prohibit the sale of any objects believed to hold body parts.

The extensive list of eBay's banned items include Nazi paraphernalia, firearms and ammunition and "human parts and remains."

Durzy said eBay has more than 2,000 people assigned to cull prohibited items, but noted that blanket enforcement is a challenge with up to 7 million new items going up for bid every day.

Sellers don't make it any easier.

Many now make a point of saying that the reliquary, or container, is for sale and the actual relic is a "gift." There are even conflicting linguistic signals. On Monday, a seller posted a relic of St. Eymard, a 19th century French priest, that was described as "ex ossibus," Latin for "from the bones." But the fuller text says the relic "does not contain any human parts."

Attempts by The Associated Press to reach the seller — and several other relic dealers on eBay — via e-mail contact information were unsuccessful.

"We just want the same rules that apply to guns, Nazi items or the bones of American Indians," said Serafin, whose group is a loose association of about 200 members around the world ranging from a Russian Orthodox archbishop to Catholic priests and lay people.

Across the time zones, they try to keep a round-the-clock vigil on eBay for any suspicious relics. They fire off e-mails to eBay and the seller — who is often known only by an online nickname and e-mail address — asking for the item to be withdrawn.

But it's a cumbersome process.

In late October, Serafin's group protested what they considered an "ex ossibus" relic of the 19th century St. John Vianney, the patron saint of parish priests. The sale went ahead, starting at $25. Twenty-seven bids later, an anonymous buyer picked it up for $565, plus $12 shipping.

    Bones of contention: Religious crusader battles auction giant, UT, 24.11.2006, http://www.usatoday.com/news/religion/2006-11-24-relics-ebay_x.htm

Point & click holidays: More consumers go online for holiday shopping

Updated 11/24/2006 2:02 AM ET
USA Today
By Jayne O'Donnell and Mindy Fetterman

Retailers want this to be the best cyber-Christmas you've ever had.

HomeDepot.com just introduced do-it-yourself video tips. A week-long sale starts Monday at Walmart.com, where you can get better deals than in Wal-Mart stores. And Staples.com's experts will take the answers to five questions about the person you're shopping for and suggest gifts.

"Consumers are clearly shifting their preferences to online," says Kurt Peters, editor in chief of Internet Retailer magazine. "Retailers who want to have a future will have to have a good website."

More than 80% of retailers' websites now offer free shipping, usually with minimum purchases, to online shoppers. Some let you order online and pick up merchandise at a store. Many offer more selection, different products and hard-to-find sizes that aren't available in stores. And still others bring the best of Web shopping — product comparisons, reviews and easy-to-find products — to the mall with in-store computers.

It's all part of a push to get your foot in the website door and keep you there. Sure, they still want you to come into the bricks-and-mortar stores where most of their sales come from, but they're perfecting how to use the Web to do that.

U.S. online sales, including travel, are predicted to grow by 20% to $211.4 billion this year, including travel, according to Shop.org, a part of the National Retail Federation. More than one-third of all U.S. households shop online, and that's expected to increase to 40% by 2009.

Overall, Internet sales make up just 5% of total retail sales, but stores with catalogs often conduct 50% of their sales online. People who shop both online and offline spend up to 60% more than those who shop only at stores, according to research by retail consulting firm Bain & Co. Those are the customers retailers want to capture.

Today is Black Friday, so-called because retailers depend on the hordes of day-after-Thanksgiving shoppers to push their bottom lines into the black.

But it's Cyber Monday that's getting a lot of retail attention these days. On Monday, millions head back to work and log on to their employers' really high-speed Internet access and start shopping.

Waiting for them: nearly 400 retailers that will have special deals available only online at CyberMonday.com.

Last year, Cyber Monday was the second-biggest online shopping day after Dec. 12, one of the last days most sites offered standard free shipping for delivery by Christmas. Now, the entire week after Thanksgiving is "big and getting bigger," says Carter Cast, CEO of Walmart.com. He expects his site will get more than 30 million visits during the week.

Online shopping on Cyber Monday is about 40% more than online shopping on Black Friday, says Susan Phillips, vice president of marketing for Pay Pal, an online payment company. In 2005, it processed about $61 million in online purchases on the Friday after Thanksgiving. That jumped 54% to $94 million three days later on Cyber Monday.

"People still go to the malls, and they still plunk down a lot of money on Black Friday," Phillips says. "But they go back to work on Monday to find out if they can get a better price online than they can find at the stores."

Andrea Warren, a programs coordinator for the Houston Bar Association, says she loves to shop on the Internet because it's so convenient. "Plus, you can get excited when you buy it and then get excited all over again when it arrives at your home," she says.

Merging online and offline

Many retailers originally kept their websites and bricks-and-mortar stores separate, but they've realized that doesn't make sense. websites have invaluable information about customers' purchasing preferences and can help build brand loyalty.

Darrell Rigby, head of Bain's global retail practice, says, "Online and offline retailing are finally converging."

"Retailers are realizing that when they keep the consumer within their brand, whether it's online or in the store, they win," says Kelly Mooney, president of Resource Interactive, an Internet marketing agency that specializes in retailing.

The merging of operations is "easy to see when you buy something online and try to return it to a physical store," Rigby says.

Mooney says the next step will be an expansion of what consumer electronics stores already offer: allowing products to be reserved online then picked up at a store. She says apparel retailers will be the next to offer this, or at least the ability to have an item held to try on.

Retailers are trying to bring more aspects of the online experience to their stores because they can influence consumers more once they're inside their doors, says Chad Doiron, an e-commerce strategist at Kurt Salmon Associates.

For instance, office supplier Staples has computer kiosks in its stores so customers can do research and check product details before they buy. J.C. Penney, Doiron notes, has added Internet access to all its cash registers so sales associates can get more information about its products.

"Retailers want to take the great service they are providing online and provide it in-store," Doiron says. "It really boils down to treating a customer one-on-one."

Terry Fike of Midland, Ga., prefers to do her shopping online, especially when retailers offer her thumbnail photos of similar items and accessories.

"I don't get that kind of service in a store," Fike says.

Internet sales are retailers' fastest-growing outlet. While store sales are growing by up to 6% a year, online sales are increasing by 25% annually, Peters says.

Mooney predicts Internet sales will increase from 5% now to 10% of retail sales by 2010. While that's still much less than what's sold in stores, online sales can be more profitable. Retailers can sell more types of goods on the Web than they can within the four walls of a retail building, and they don't have to have as many employees to handle those sales.

So retail websites are finding new ways to draw more shoppers to their sites:

•Amazon.com is offering one-of-a-kind deals. The site is asking consumers each week for the next four weeks to pick the products they would most like to see discounted and will offer below-cost deals for a limited number of customers. An Xbox 360, which retails for about $299, went on sale Thanksgiving Day for $100. Amazon will sell 1,000 at that price.

•Bath & Body Works is e-mailing customers to lure them into stores with a gift with purchase. But it is offering the same deal for online customers who want to avoid the holiday crowds.

•FAO Schwarzis offering exclusive online merchandise, including Tutu Couture ballet apparel for children. It offers interactive customization for the tutus, dollhouses, dolls and train sets on its website.

•Sam's Clubis selling luxury packages on its website, including a Super Bowl trip and a Tony Bennett concert in London.

•Crate & Barrel, which conducts 22% of its sales online, is offering free shipping on its heaviest products until Dec. 15. Spokeswoman Bette Kahn says Crate & Barrel's online sales increase up to 10% each year.

"We are always surprised people buy so much furniture through the Internet, because we'd want to sit in it and feel it before we bought it," Kahn says. "It's almost amazing to us and especially to the CEO."

Comparing online

More consumers are comparison shopping online before they show up at a store to buy in person, says Shira Goodman, Staples' marketing executive vice president. That's persuaded Staples to integrate its online and offline marketing. TV commercials can be seen online, and this year's Department of Unexpected Gifts, which features gift suggestions including shredders and leather chairs, is featured online and in stores. A panel of experts, including digital camera aficionado and crooner Engelbert Humperdinck, helps choose gifts for website users.

"A lot of our attention focuses on trying to make shopping online as easy as possible," says John Giusti, who heads Staples' website. Sites used to be "very clunky and not necessarily focused on the user."

"We're more focused on making it easy for customers to learn, easy to shop, easy to find, easy to compare and easy to purchase online," Walmart.com's Cast says.

Retailers are revamping their websites to keep shoppers online longer. They're using interactive tricks such as games and video and cartoon avatars to lure shoppers to linger.

This year, visitors to Home Depot's website can drive Santa's sleigh over a three-dimensional, snow-covered scene or turn the pages in a Mrs. Santa home-decorating book to get tips on holiday decor. You can "hang" different styles of lights on different houses. Or if you have a more-extensive home-improvement project, such as lining a closet with cedar planks or laying tile, the retailer has just started offering video tips online through its Home Depot TV.

"It's the most interactive that we've ever been," says Chief Marketing Officer Roger Adams. "The virtual sleigh ride is like a game, just to have fun while you're on our site. We want kids to say, 'Hey, Mom, let's go to Home Depot.' "

Blue Shirt tips

Best Buy is emphasizing the expertise of its salespeople, known as Blue Shirts. It soon will launch online videos with Blue Shirts giving tips on buying electronics. It also has a new "click to call" button on its website that lets you talk directly to a Blue Shirt; its 800-number now links you immediately to a person, and it has a new website, askablueshirt.com, that lets you chat online with a salesperson.

This month, Walmart.com added more interactivity and third-party experts to its website. Users can, for instance, "peel back" a cover on a baby's room to see all the furnishings, then click on the baby bed and find price and order information.

Online sales won't ever eclipse those of Wal-Mart's retail stores, Cast says. But Walmart.com has surprised some competitors that didn't expect the retailer's customers to be online shoppers.

"A lot of people thought our customers wouldn't shop online, but they've been wrong," says Cast. He says 74% of Wal-Mart customers have access to the Internet. Walmart.com has "the same shopper. They're just a little higher in income, a little higher in education and a little more urban than our typical shopper," he says.

And maybe they're a little less willing to brave the mall crowds this supercharged holiday season.

They aren't alone.

In an online poll this month by Shop.com, almost a quarter of respondents said they would "rather eat their arm off" than visit a store on Black Friday.

    Point & click holidays: More consumers go online for holiday shopping, UT, 24.11.2006, http://www.usatoday.com/money/industries/technology/2006-11-23-online-shopping_x.htm

Armed With Internet Bargains, Travelers Battle High Airfares

November 23, 2006
The New York Times
By JEFF BAILEY

CHICAGO, Nov. 22 — Air travelers, who have endured full flights and a 15 percent increase in ticket prices this year, are exacting revenge with aggressive searches for deals that analysts say are beginning to force down prices.

Airlines use powerful computers to figure out just how much passengers are likely to pay for any given flight at various times of the day. For the last year or so, they have been able to readily increase fares, in part because of the strong economy. Planes have been packed lately, too, which gives the industry more power to raise prices.

But a recent drop in fares suggests that many travelers have had enough. They are balking at paying the higher prices and are scouring the Internet more to find cheaper fares.

That may be a small comfort to the 25 million people packed into full planes to join families for Thanksgiving this season. But it is a sign that the cost, if not the frustration, of flying may be easing.

None of this is good news for the airlines, of course, which always struggle to turn a profit. Airlines have said for some time that Internet shopping has made it harder for them to raise fares. Travelers have never had much sympathy for the industry’s financial plight and they often delight in finding new tricks to discover low fares.

Acacia Newlon-Yafai, a 20-year-old student at the University of California, Los Angeles, is one of them. She searches Web sites like cheaptickets.com for low fares, signs up at airline sites to receive fare-sale alerts by e-mail message and travels only when the price is right.

A month ago, a Southwest Airlines service called Ding sent her an e-mail message about a $128 round-trip fare to San Jose, where her family lives, and her holiday plans were set. “If you look a while, you can figure it out,” Ms. Newlon-Yafai said. “If you want to fly two weeks in advance, you can’t do that.”

Such hard-nosed shopping is on the rise. About 25 percent of air travelers consult online newsletters and other sources of special deals before buying, up from 17 percent last year, according to Henry H. Harteveldt, a travel analyst at Forrester Research. And 17 percent of travelers use Web sites like kayak.com, itasoftware.com or sidestep.com, which scour other Internet sites for travel deals.

“Consumers have access to more and more information,” Mr. Harteveldt said. “It’s exactly what airlines don’t want consumers to have.”

In the long term, the sharp fare increases this year will probably be an anomaly. The 15 percent rise in fares, after all, resulted in large part from a sharp contraction of airline fleets brought on by bankruptcies and a drop in air travel after the terrorist attacks of Sept. 11, 2001. In coming years, the growth of Internet fare shopping, and the expansion of low-cost airlines will most likely help moderate price increases.

Southwest Airlines, for example, acquired 36 additional Boeing 737s this year and is expected to acquire 37 next year, growing as some traditional airlines have shrunk.

“We don’t have enough aircraft,” said Gary C. Kelly, chief executive of Southwest, the biggest low-cost carrier.

Andry Ramandraivonona, an investment banker who lives on the Upper East Side of Manhattan, booked flights to Boston for himself, his wife and their two small children two weeks ago, using itasoftware.com. He paid $100 round trip for each.

The family would like to go home to Paris for Christmas, but was put off by the $1,700-a-person cost. “It’s a bit prohibitive,” Mr. Ramandraivonona said. They may delay the trip or make the trip sooner.

Leisure fares, those bought far in advance with restrictions, averaged $90 one-way last week on domestic routes, 9 percent lower than a year earlier and the 10th consecutive week of decline for leisure prices, according to Harrell Associates, a travel consulting firm in New York.

Business fares, which are typically booked at the last minute and carry few restrictions, averaged $479 one-way last week on domestic routes, 8 percent higher than a year earlier. But the rate of increase has slowed markedly from spring and summer when business fares were rising by 20 percent or more over the same periods a year ago.

While the tide is shifting toward consumers on prices, they should probably give up hope of counting on an empty seat next to them when they fly. The number of planes in the fleets of airlines in the United States is growing slowly. And a reason consumers are able to find more deals online is that airlines are using such systems to fill seats that might go vacant. After all, any revenue they can bring in for a seat is better than nothing.

Industry analysts said that flights could very well average close to 80 percent full for years to come, which means that those on popular routes at convenient times are typically 100 percent full.

One thing could, however, send fares back up sharply, at least temporarily. US Airways offered last week to buy Delta Air Lines, which is operating in bankruptcy, for about $8 billion. US Airways has said it will reduce the carrier’s combined fleets by about 10 percent if the deal goes through.

Taking 80 or so big jetliners out of service would allow the combined airline — and others — to raise fares because there would be less competition in some markets. Delta is opposing the offer and wants to remain independent.

Higher fares appear to have affected many people’s travel plans this year. Many more bought tickets to fly on Thanksgiving Day, arriving at family gatherings a little later but at lower cost, according to Sabre, which operates a vast computer reservation system. And skipping grandma’s house altogether was also more popular, as Las Vegas rose to the No. 3 travel destination over the holiday, from No. 8 last year, Sabre said.

When airlines put their fare information online years ago, their main goal was to cut out traditional travel agents to save the commissions they paid them. But many airlines were surprised to learn how much time consumers were willing to spend shopping for fares.

Dr. Steve Kronick, an emergency room physician in Ann Arbor, Mich., said he searched Internet sites for weeks this summer to find affordable seats to take his wife and two children to Seattle to see friends this week. They paid $1,400 for four round-trip tickets on Northwest Airlines after Dr. Kronick consulted farecast.com, which tries to tell consumers the best time to buy an airfare.

“I don’t know how accurate it is,” Dr. Kronick said, “but it makes you feel better.”

George W. Evans, a graduate business student at Emory University in Atlanta, paid $500, about $100 more than last year, for a round-trip flight this week to visit family in Pelham, N.Y. Earlier this year, he worked on a class project about Delta Air Lines and was part of a group of students who presented their work to some Delta executives.

“They told us their strategy this year was going to be to raise fares,” he said. “I heard it from the horse’s mouth. It was right after I bought my tickets. I felt used.”

Even with the higher fares, of course, the airline industry remains deeply troubled after more than $30 billion of losses in recent years. And airfares, compared with the rising prices of many other goods and services, have remained quite cheap over time.

Kiki Morris, who works in the entertainment industry in Los Angeles, paid $500 a month ago for her ticket to New York on JetBlue Airways. She usually pays $100 for a Lincoln Town Car just to get her to the airport in Los Angeles, but this time took a regular taxi, for $50, instead.

The price to fly one mile on an airliner, about 12 cents on average domestically, has changed little over the last 20 years. And, taking inflation into account, prices have fallen by nearly half.

“Airfares are so cheap,” said Roger King, an analyst at CreditSights. “A brake job on your car at the dealer is like $500 now. The airlines are just killing each other on these fares.”

Still, for many, fares are high enough that the ability to travel is limited. “It made me decide between Thanksgiving and Christmas,” said Tammy Rowe, 30, a public relations worker in Chicago who flew to Atlanta yesterday to meet family. “I noticed back in the spring and summer that fares were kind of jacked up.”

Ramona Collins, 33, of Flushing, N.Y., flew to visit her brother in Arkansas yesterday on Northwest Airlines. Her round-trip ticket cost $402, she said, purchased in mid-October on kayak.com. “It was probably at least $100 more than last year,” she said.

“It makes me think about not going anywhere for Christmas,” she said. Normally, she would go to Arkansas to see her parents.

She is reconsidering, and added, “They don’t know that yet.”

Reporting was contributed by Cindy Chang in Los Angeles, Nick Bunkley in Detroit, Brenda Goodman in Atlanta and Cassi Feldman in New York.

    Armed With Internet Bargains, Travelers Battle High Airfares, NYT, 23.11.2006, http://www.nytimes.com/2006/11/23/business/23air.html?hp&ex=1164344400&en=fdb9072cf8a5fd8e&ei=5094&partner=homepage

NYT        November 21, 2006

A $500 Milestone for Google Believers        NYT        22.11.2006
http://www.nytimes.com/2006/11/22/technology/22google.html

A $500 Milestone

for Google Believers

November 22, 2006
The New York Times
By SAUL HANSELL

When Google’s shares nearly doubled in the first few months after its initial public offering, Mark Mahaney decided it was time for his clients to take advantage of the fervor that had built up around the company. He advised them to sell Google shares and put the money into Yahoo.

“I thought the stock was a little expensive,” said Mr. Mahaney, an analyst then for American Technology Research and now for Citigroup. “It turns out that was a terrible call.”

So by the beginning of 2005, Mr. Mahaney jumped on the Google bandwagon. And so have most of Wall Street’s analysts, along with the portfolio managers who look after big pension and mutual funds.

Yesterday, Google’s shares closed at $509.65, up $14.60, passing the $500 mark for the first time. (Mr. Mahaney, who made his sell recommendation at $137, is now among those predicting that Google shares will rise to $600 within a year.)

Not bad for a company that was forced to reduce its initial offering price to $85 a little more than two years ago because of lackluster demand. It quickly confounded the skeptics, rising to $100 on the first day of trading, and reaching closing prices of $200, $300 and $400 all within the course of 2005.

Google now has a market value of $156 billion, exceeding all but 13 American companies — icons of commerce like Exxon Mobil, Johnson & Johnson and Wal-Mart. It is worth more than any media company and all the technology companies except Microsoft, whose software empire it increasingly threatens, and Cisco Systems.

Google’s success has made its founders, Sergey Brin and Larry Page, the 12th- and 13th-richest people in the United States, according to Forbes — and, at 33, the youngest in the top 400. Their shareholdings are worth more than $15 billion each, on top of the more than $2 billion in cash that each has received for selling some shares.

Yet Google’s rise in value and corporate maturity is not just about accomplishment, but about potential. While most companies slow as they grow, Google so far appears to be accelerating.

Its rising stock price has helped it attract the best engineers, minting an untold number of Google millionaires. It has also allowed important acquisitions, most recently a $1.65 billion all-stock deal for the video-sharing site YouTube. And as Google builds a lucrative franchise in selling advertising all across the Web, it makes more money, invests more and keeps the cycle going.

Anthony Noto, an analyst with Goldman Sachs, calls this a “flywheel.”

“They can reinvest at a faster rate; they can innovate at a faster rate; they can create value for advertisers and users at a faster rate,” he said.

The company is spending money as if it doesn’t expect this growth to stop. Since its offering, Google has quadrupled its staff, to more than 9,000 employees — many with doctorates from the world’s leading universities — and it is hiring more than 100 people a week to fill three dozen or so offices in more than 20 countries; its headquarters are in Mountain View, Calif., in Silicon Valley. Last year, it received more than a million résumés.

Google is pouring billions of dollars a year into research, computers and a global communications network — as well as investments in solar energy, a new campus at a decommissioned naval air station, and an army of private chefs cooking free meals from organic produce and hormone-free meat.

Not everything Google touches has turned to gold. Its homegrown video service, chat software and financial information section lag behind those of popular rivals. It has found itself a magnet for legal threats and, in some cases, lawsuits as it moves aggressively to make a growing body of content searchable online. And some have expressed concern about the volume of personal data it is accumulating about its users.

Still, as Google starts to dabble in all sorts of markets, ranging from wireless Internet access to corporate software, it has become in many ways the center of gravity for the technology industries.

“It feels in many ways like competing with Microsoft in the ’90s,” said Jim Breyer, a venture capitalist with Accel Partners. “In a number of investments, if we are not at the top of our game, we will lose share to Google. Or Google will buy someone who will compete effectively.”

Hanging over all of this, of course, is the specter of the Internet boom and then the bust six years ago, and the paper wealth it created and destroyed. Some see traces of that era’s outsize expectations, if not delusions, in Google’s ascent.

After all, a company called Amazon.com was once going to change the world. Its shares split three times in the late 1990s before reaching a high of $113 at the turn of the millennium — only to fall to single digits within two years. (They have worked their way back above $40.)

But there are big differences. Google’s rise is not a result of a general rapture with technology stocks or even the search-engine category. Indeed, while Google’s stock price has risen almost 50 percent since late March, the shares of its main competitor, Yahoo, have declined nearly 14 percent.

Yet that does not settle the matter. Geoffrey A. Moore, a Silicon Valley marketing consultant and author of books on investing in technology stocks, argues that investors’ fascination with Google will inevitably wear off and its shares will plummet like so many highfliers before it.

“Google has had a spectacular early run,” he said. “The notion that this is a different animal is never the right argument.” He suggested that if Google’s business hit an unexpected slowdown, the company could meet the same fate.

“People will say, How did we ever believe that stuff?” he said. Instead of admiring Google’s practice of allowing its engineers to spend 20 percent of their time on personal projects, investors will start complaining that the company would be “only getting 80 percent productivity out of its work force.”

For now, Mr. Moore is very much in the minority. Many of those analysts who do not think Google shares will rise further express confidence that the current value is justified.

“I do not think there is a bubble about to burst — not even close,” said Benjamin Schachter, an analyst with UBS Securities, who has rated the shares hold all year. He says the stock should trade at $500 a year from now. His concerns are that the growth of Internet searching and text ads will slow and the prospects for Google’s expansion into video ads and other markets have not been proved.

But “over the long term, Google continues to outmaneuver all of its competitors,” he said. “I think it is one of the most important companies on the planet.”

And by some measures, Google’s stock price is not as steep as some stocks were at the turn of the millennium. Google’s market value today, at $156 billion, is marginally higher than the $150 billion Yahoo reached in January 2000. That year Yahoo earned a profit of only $71 million on sales of $1.1 billion; Google, in contrast, is expected to record a profit of $2.8 billion this year on gross revenue of $10 billion.

As with any highflying stock, though, a few investors are actively betting on a reversal of fortune. Fred Hickey, who writes the High-Tech Strategist newsletter from his home in Nashua, N.H., says that Google’s shares are sharply overvalued and will fall as investors notice that the company’s rapid growth is slowing.

He points out that its revenue increased 11 percent from the second quarter to the third quarter — a brisk pace, to be sure, but a lot less than the 18 percent pace in the corresponding time a year earlier.

“Google showed the sharpest revenue slowdown I’ve seen,” he said, “and nobody has paid attention.” He argued further that the company’s expenses are “out of control,” and that if the economy headed into a recession, Google’s revenue would falter and its profits plummet.

“Google will suffer the same fate that Yahoo did in 2000,” he said.

Mr. Hickey has put his money where his mouth is: he sold Google shares short, a bet that the stock price will decline. But not much: the short position is just 50 shares.

“I just wanted to be able to say I was short Google when it blew up,” he said.

    A $500 Milestone for Google Believers, NYT, 22.11.2006, http://www.nytimes.com/2006/11/22/technology/22google.html

NYT        November 18, 2006

Sunny and Gloomy Signs at a Web Crossroads        NYT        19.11.2006
http://www.nytimes.com/2006/11/19/business/yourmoney/19yahoo.html

Investing

Sunny and Gloomy Signs at a Web Crossroads

November 19, 2006
The New York Times
By ROBERT D. HERSHEY Jr.

IN mid-October, Yahoo, the world’s biggest Internet portal, reported a sharp profit skid and warned of a further growth slowdown in two major lines of business — a performance that its unusually contrite chief executive said had failed to fully exploit the company’s strengths.

That was enough for Scott W. Devitt, an analyst based in Manassas, Va., who covers Yahoo for Stifel, Nicolaus & Company, the investment banking firm. Three days later, Mr. Devitt downgraded Yahoo shares — which at the turn of the century traded above $100 and were then about $23 — to a hold from a buy. Fidelity Investments has also soured on the stock, but declined to say why it sold 55.6 million Yahoo shares between midyear and Oct. 31.

But Justin Post, a Merrill Lynch analyst in San Francisco, had the opposite reaction to the grim news from Yahoo. Just before Halloween, Mr. Post, noting the stock’s sharp drop this year, saw “an attractive entry point” and raised his appraisal to buy from neutral.

So is Yahoo stock, which now trades at $26.91, down 31.3 percent this year, a bargain suitable for value investors? Or is the once highflying company — which in its heyday was regarded not unlike today’s Google — destined to bring further disappointment?

Despite contrasting opinions, analysts and stockholders of Yahoo generally agree on what ails it. And there is a consensus that if it remained an underachiever, it would be a candidate for takeover.

The main problem is that Yahoo has not been nearly as good as Google at reaping profits from the huge volume of search traffic it attracts. Yahoo’s search revenue in the third quarter was $191 million, versus $911 million for Google, Mr. Post’s report estimated.

“Yahoo touches one out of every two people on the Internet every month, which is unparalleled reach,” said Randy Befumo, co-director of research at Legg Mason, which holds some 40 million Yahoo shares in various accounts, including funds run by Bill Miller, Legg Mason’s marquee mutual fund manager. Despite the fact that Yahoo actually has more traffic than Google,” Mr. Befumo said, Google has more revenue. “So there definitely is a problem with Yahoo’s monetization.”

According to Mr. Post, who also points to this issue, each domestic search generates about 4 cents for Yahoo, compared with 11 cents a search at Google.

Some analysts see other sources of concern — questions that the market may not have recognized as fully as the lag in converting search traffic to cash. Prominent among these is the strength of challenges to Yahoo’s commanding position in the branded business of display advertising on the Web. Mr. Devitt calls this issue “the new surprise.”

He points to more aggressive investment by Microsoft in MSN.com, its Internet portal; AOL unbundling its business and making it available free; and the rapid emergence of fresh competition from social networking sites like MySpace, Facebook and YouTube.

“That, as well as the traditional media moving on the Internet, has significantly increased the inventory for display advertising alternatives,” Mr. Devitt said. “It’s impacted the pricing pressure and the dominance that Yahoo had in that business.”

Mr. Post of Merrill Lynch acknowledges the drag on Yahoo’s business. The industry’s growth rate is catching up with Yahoo’s in this area, he said. “When someone’s growth rate is declining, it’s hard to know where the bottom is,” Mr. Post said. Still, he said, Wall Street’s worries about this seem overdone, creating a buying opportunity at the beginning of a traditionally strong holiday period for the Internet.

Then there is the problem of eroding revenue from Web sites that are increasingly choosing to link to Google, which can provide better monetization of traffic. “This is something that puts at risk Yahoo’s network business longer-term,” Mr. Devitt said.

Yahoo management, led by its chief executive, Terry S. Semel, is counting heavily on a technological upgrade of its search engine to enhance profits. The delayed upgrade, called Project Panama, is now scheduled for introduction in 2007, and analysts expect it to narrow Yahoo’s search gap with Google. Merrill Lynch figures that the project will raise revenue per search to around 5 cents in 2008, or as much as 7 cents if Panama proves a rousing success.

“Monetization is a hard thing; not too many people do it very well,” said Mr. Befumo at Legg Mason. But, he contended, Yahoo has some appealing alternatives.

“If you have a traffic problem, then you have a fundamental business problem because you have nothing to convert into revenue dollars,” he said. “But if you have a monetization problem, which is what Yahoo effectively has, you always have options.”

If Project Panama falls short, Mr. Befumo said, Yahoo could have Google or Microsoft do Web-searching for it in return for perhaps 5 or 10 percent of the revenue. “You could solve the monetization problem overnight” with such a contract, he said.

Yahoo shares, which have climbed about 11 percent in the past month, have been supported by company buybacks — over $1 billion worth in the third quarter, more than triple the purchases in the second quarter — and by what appears to be increased speculation that the company is a possible target for acquisition, perhaps in a private-equity deal or a leveraged buyout. Yahoo could also buy another company, and Facebook has been mentioned as a possibility.

A spokeswoman for Yahoo said it did not comment on such speculation.

In his report upgrading the shares, Mr. Post wrote that “we think Yahoo’s assets would be compelling for Microsoft or a large media conglomerate looking to build a meaningful online presence.” He set a 12-month price goal of $32 but said that there was a risk they could fall to $22.

MR. POST came up with his $32 figure this way: he assigned a multiple of 25 to projected 2007 free cash flow of $1 — meaning that the stock would be worth $25 on the basis of that flow alone — then added $3 for the value of Yahoo Japan, $1 for the company’s Alibaba operation in China and $3 in cash.

Mr. Devitt, who is more skeptical about the stock, said that it “probably does have upside” potential if Yahoo can stabilize its branded graphic display advertising and derive some benefit from Project Panama next year. In the meantime, he said, the stock is likely to languish. At Legg Mason in Baltimore, Mr. Miller, portfolio manager of Legg Mason Value Trust, told investors in August that the intrinsic current value of Yahoo was perhaps double its market price then of about $27.

The firm’s optimism seems undiminished. Though it has pared its peak Yahoo position, Legg Mason Value Trust still held 19.2 million shares on Sept. 30. Yahoo’s stock decline this year is one reason that the fund may fail to beat the Standard & Poor’s 500-stock index after outperforming it for 15 years in a row. So far, the fund is lagging behind the index by more than nine percentage points.

Mr. Befumo of Legg Mason said that Yahoo’s stock began to be “sort of crazy cheap” last month, and that other “classic value guys are actually starting to sniff around the name because, on a cash-flow basis, it’s particularly cheap.”

Mr. Miller was not available for comment, a spokeswoman said. Mr. Befumo contends that Yahoo’s intrinsic value is in the mid-$40s, pointing to the stepped-up buybacks as evidence that the company agrees. Although he said the stock could drop into the teens if it were ever evaluated like traditional media businesses, he also said that it could leap into the $60s in the perhaps equally unlikely event that it traded at parity with Google.

At the moment, though, the gap between the stock market’s valuations of Google and Yahoo is enormous. Yahoo’s market capitalization is about $36.6 billion, and its price-to-earnings ratio is 34.1, based on trailing earnings. By contrast, Google has a market cap of $152.7 billion and a trailing P/E of 63.3, according to numbers available on the Yahoo Finance site.

Students of Yahoo say that while the company may be acquired, no deal is likely before Project Panama begins to show results, one way or another. Merrill Lynch figures that the project will raise Yahoo’s revenue $250 million to $500 million in 2008 — and warned that investors could be “too late” if they waited to buy until Panama’s rollout risks had passed.

Ultimately, Mr. Befumo said, the search engine business will shake down to a natural worldwide duopoly. “We think that Google and someone else — we think the odds are Yahoo — will do this for a majority of the Internet,” he said. “Very few other people will be able to get the scale of traffic required to make it work.”

    Sunny and Gloomy Signs at a Web Crossroads, NYT, 19.11.2006, http://www.nytimes.com/2006/11/19/business/yourmoney/19yahoo.html

Universal Music Sues MySpace for Copyright Infringement

November 18, 2006
The New York Times
By JEFF LEEDS

The Universal Music Group, the world’s largest music company, filed a copyright infringement lawsuit yesterday against MySpace, the popular social networking Web site, for allowing users to upload and download songs and music videos.

The suit, which also names MySpace’s corporate parent, the News Corporation, comes as the recording industry contends with how to exploit its copyrighted material online. The issue has taken on more importance as services built around user-generated content become popular and generate advertising revenue.

The lawsuit, filed in federal court in Los Angeles, is seen as part of a strategy by Universal to test provisions of a federal law that provides a “safe harbor” to Internet companies that follow certain procedures to filter out copyrighted works. The law requires sites to remove such content after being notified by the copyright holder.

If Universal can win in court, it is likely to gain leverage in negotiating licensing terms with user-driven services — just at the moment that those services are attracting deep-pocketed partners.

Earlier this year, Universal’s chief executive, Doug Morris, publicly identified the YouTube video-sharing site and MySpace as copyright infringers. Universal successfully negotiated to take a stake in YouTube shortly before it was sold to Google for $1.65 billion, according to executives briefed on the deal who spoke on condition of anonymity. But licensing talks with MySpace recently reached an impasse.

MySpace said in a statement yesterday that it complied with the requirements of federal law. The company said it had kept Universal, a unit of Vivendi, “closely apprised of our industry-leading efforts to protect creators’ rights, and it’s unfortunate they decided to file this unnecessary and meritless litigation.”

“We provide users with tools to share their own work — we do not induce, encourage, or condone copyright violation in any way,” MySpace said.

Last month, Universal filed similar copyright claims against two Internet companies that allow video sharing, Grouper Networks and Bolt. But in this instance, the music company is taking on a Web site that has become a cultural phenomenon, drawing tens of millions of users — and one that some see as a powerful tool for performers to get exposure for their music and build networks of fans.

One of the Universal’s own labels, Interscope Records, has a deal to distribute music by artists who are signed to a label run by MySpace. Interscope released a CD from a MySpace act, the Hollywood rap-rock artist Mickey Avalon, earlier this month.

Universal’s lawsuit comes despite an announcement last month by MySpace that it had adopted technology to identify copyrighted material in order to enable compensation for the owners.

MySpace said separately yesterday that it planned to deploy a new tool that would let copyright owners flag videos posted by users without permission; it said it would remove any videos that received such a marking.

In court papers, Universal noted that unauthorized copies of music and video from one of its biggest acts, U2, were easily available on the site, as is material from an unreleased album by the rap star Jay-Z.

In a statement yesterday, Universal said its music and videos “play a key role in building the communities that have created hundreds of millions of dollars of value for the owners of MySpace. Our goal is not to inhibit the creation of these communities, but to ensure that our rights and those of our artists are recognized.”

Anthony Berman, a San Francisco lawyer specializing in entertainment and Internet issues, said that while the procedures for an Internet company to receive a “safe harbor” under the law were unambiguous, there might be room for legal debate about exactly which sorts of services could seek it.

Mr. Berman said Universal’s case was intended more to press MySpace into a lucrative licensing deal rather than into a real court fight. “It’s a way to get MySpace to the table,” he said. “It’s less about piracy. It’s a lot about control.”

    Universal Music Sues MySpace for Copyright Infringement, NYT, 18.11.2006, http://www.nytimes.com/2006/11/18/technology/18myspace.html

The Internet

How to Make Your Web Site Sing for You

November 15, 2006
The New York Times
By ERIC A. TAUB

THE idea that if you build it, they will come, might have worked for Kevin Costner in the movie “Field of Dreams,” but it certainly does not hold true for Web sites.

Build a bad-looking small-business site filled with poorly written text, and your potential customers will go away. Build one that is attractive, compelling and clever, but crucial design mistakes will still guarantee that few people will know that the site exists.

Your Web site is like a digital business card, designers say, the first online look at your company that a customer gets. With luck, it will not be the last.

A site must have addictive content, said Vincent Flanders, a Web design consultant in the Seattle area who is the creator of Webpagesthatsuck.com, a site that analyzes why some pages do not work. “People must be willing to crawl through a sewer for it.”

It is not just small operations that make a mishmash of their sites. Large companies can be just as prone to major design mistakes.

One global company states on its home page that “Indigenous and proven career management tools coupled with a comprehensive series of integrated initiatives have been evolved, to ensure that employees continue to sustain a high performance culture, while recruitment and selection is based on necessary competencies.”

That is “just gobbledygook,” Mr. Flanders said. “The words are not understandable by humans.”

According to Jakob Nielsen, a Web site consultant and author of the book “Prioritizing Web Usability,” it is essential that a Web page get a company’s message across quickly, because visitors are a fickle bunch. Most people do not go beyond what is in front of their faces.

Studies by Mr. Nielsen’s company, the Nielsen Norman Group, an Internet design firm in Fremont, Calif., show that only 50 percent of Web visitors scroll down the screen to see what lies below the visible part on their PC monitor.

“Users spend 30 seconds reviewing a home page,” Mr. Nielsen said. “A business must encapsulate what they do in very few words.”

With findings like those, it is no wonder that Web pages must visually hit a visitor right between the eyes. If a site does not answer a user’s questions about a business, then you have scored one for the competition. For example, the first thing customers visiting any restaurant’s Web site want to know is when it is open. But often that information can be found only by digging through multiple pages. As a result, “the site fails,” Mr. Nielsen said.

“It’s all about the basics,” said Baris Cetinok, Microsoft’s director of product management for Office Live, a site that offers free Web hosting and design tools for small businesses.

Visitors must immediately find out “who you are, what you do and how people can reach you,” Mr. Cetinok said.

Besides good grammar, Mr. Nielsen suggests that companies list a physical address, include a photograph of the building and not ask potential clients to fill out a form simply to ask a question. “That immediately communicates danger,” he said.

Making a site look good is complicated by the fact that no two monitors will necessarily present the Web in the same way. Users can set their browser’s default font size to be bigger or smaller, so it is impossible to know exactly how text will appear to any one person.

And how much of a Web site’s home page can actually be seen by users varies, based on the screen’s resolution.

The problems are made worse by designers being in Los Angeles or New York, and not, say, Texas, so “they think everyone has a large monitor and a fast D.S.L. connection,” said Neil Hettinger, co-owner of Lead Pencil Ad Design, a marketing and design company in Manhattan Beach, Calif. He suggests mixing text and graphics on a Web site, with dark type set against a light background for easy reading.

If you are selling a product, use thumbnail photos that can be enlarged when clicked on, Mr. Nielsen said, not a graphic that can be rotated in every direction. Otherwise “you see products at weird angles.”

“The most important rule in Web page design is to eliminate unnecessary design,” Mr. Flanders said. He recommends not adding large, spinning graphics that take a long time to download.

He also advises business owners not to add introductory splash pages that force a viewer to watch a video or animation.

“Splash pages are only needed for pornography, gambling and multinational Web sites that need to direct users to a particular country’s page,” Mr. Flanders said.

Graphics also do nothing to help a site get discovered by search engines like Google or Yahoo. Those sites troll the Internet for key words, as well as the frequency and quality of one site that links to another.

Text embedded in a graphic, like the name of a shop in a photograph, cannot be seen by search engines. And the old practice of embedding key words in white-on-white type will not increase a site’s page ranking; in fact it will do the opposite.

“The first time a word is used on a site, it’s significant,” said Matt Cutts, a Google software engineer. “If that word is used 50 times, there is a diminishing return.”

“If you put hidden tags on your page, you’re a total moron,” Mr. Flanders said. “You will get caught by search engines, or others will turn you in.”

If your business is local, make sure that the entire geographic area you serve is mentioned in text on the site. To increase the number of sites that link to yours, list your business in online trade directories, and mention it on various blogs.

Google offers free Web master tools that automatically analyze a site to determine if it is being optimized by search engines.

In the end, getting a prominent placement in a search engine is the only way to ensure that your site will be seen by those who can increase your business.

“If your site is not listed on the first page of search results, you might as well not exist,” Mr. Nielsen said.

    How to Make Your Web Site Sing for You, NYT, 15.11.2006, http://www.nytimes.com/2006/11/15/business/smallbusiness/15web.html?em&ex=1163826000&en=41f06c3cc828724f&ei=5087%0A

Media Frenzy

A Struggle Over Dominance and Definition

November 12, 2006
The New York Times
By RICHARD SIKLOS

GOOGLE: mate or menace? That is the burning question of the week — heck, probably of the year — for ye olde media companies.

In the last few weeks an enormous swarm of activity has been coming out of the Googleplex beehive in Mountain View, Calif. — much of it aimed squarely at preparing the search company to move its phenomenally lucrative advertising business beyond Web pages and into video, newspapers and radio.

First, of course, there was Google’s deal to acquire YouTube for $1.65 billion. Media chief executives are making long whistling sounds at the thought of YouTube, an 18-month-old Web-ling, commanding that price. That was followed last week by two smaller but intriguing bits of news. One was the announcement of a test to put Internet ads bought through Google’s advertising network into newspapers, including The New York Times. The other was that Google is bolstering its radio sales staff in what sounds like a similar but perhaps bigger effort in that medium.

Last year, Google agreed to pay as much as $1 billion for dMarc Broadcasting. It will soon use that company’s technology to start a business that serves as a middleman between advertisers and broadcasters. Google’s chief executive, Eric E. Schmidt, has said the company plans eventually to have as many as 1,000 engineers and sales representatives working on the radio industry.

Once the YouTube deal closes, Internet video will become the next frontier for Google. In time, Mr. Schmidt has said, he would like to see Google’s technology applied to television in all its digital glory.

What’s at stake is pretty much everything in the $400 billion global advertising honey pot. Google’s efficiency at putting text ads next to search results is what sets it apart from Yahoo, MSN and the other big boys online.

Even that astute observer of market dominance, Microsoft, has argued that until it or Yahoo or someone else can figure out how to compete with the Google advertising juggernaut, Google has too much power.

“The truth is, what Google is doing now is transferring the wealth out of the hands of rights holders into Google,” Microsoft’s chief executive, Steven A. Ballmer, told BusinessWeek recently. “So media companies around the world are all threatened by Google.”

Well, maybe. For now, Google seems to have far fewer detractors among big media companies than it has partners — including The New York Times Company, Viacom, the News Corporation through its MySpace unit, and Time Warner via AOL. But news organizations and book publishers have filed a handful of lawsuits over the way Google distributes and presents search results and other information against which it places advertising links. Last week, Google disclosed that its online video service had been sued and accused of copyright infringement.

The World Association of Newspapers, a big umbrella group based in Paris that directly or indirectly represents 18,000 publications worldwide, is trying to organize an alliance to adopt a technology that would dictate the terms under which search engines, including Google, could use and present their copyrighted wares when their robots come trawling.

Now, before we take a shot at the aforementioned burning question — Is Google a friend of foe? — let’s ponder another oft-raised and pertinent query: Is Google a media company? The last time I checked, a media company was generally defined as a business that accumulates audiences and sells access to them to marketers.

And Mr. Schmidt said recently: “Ultimately, our goal at Google is to have the strongest advertising network and all the world’s information. That’s part of our mission.” And if it is a media company, it is the world’s biggest, with a market capitalization of $144 billion.

But when I spoke to David Eun, Google’s vice president for content partnerships, he took umbrage with the media designation. He noted that Google did not create or own content — in his mind, part of the definition of a media company. Rather, he said, Google is a technology company: “I would say we’re a conduit connecting our users with content and advertisers.”

The point may be semantic, but it reminded me of the longstanding friction between cable companies and TV broadcasters over whether cable should pay for distributing the free over-the-air signals — or whether cable was doing the broadcasters a favor by putting their signals onto the system through which most people watch television.

Again, Mr. Eun disagreed, noting that Google is not a distributor: it tries to push people to other Web sites and takes immense geek pride in how quickly it does so.

Indeed, a search for “Google” and “friend or foe” took me 0.10 seconds and elicited 271,000 results. It took Mr. Eun not much longer to try to explain to me that Google (a) respects copyrights, (b) gives any content owner a choice of opting in or out of its search results and (c) focuses on ways to help its media partners achieve their goals. “I say firmly: we are friend because we are trying to build your business objectives,” Mr. Eun said.

This is in some ways a debate over subtle but important distinctions. Gavin K. O’Reilly, the president of the World Association of Newspapers, argues that what is missing is that any search engine ought to be asking “explicit permission” to use copyrighted material, and that this should be part of the vaunted automation that has made search the phenomenon it is.

The elephant in the room right now is not publishing but video — and what Google proposes to do with YouTube. Among the site’s millions of downloads are clips incorporating copyrighted material from movies, music videos and television shows. There is much phoning around among the moguls and with Mr. Schmidt to hash out whether the next moves involve lawsuits, licensing deals or pulling content out of the leading showcase for Web video altogether.

PERHAPS the answer to the mate-or-menace question depends on what sort of media business you’re in. If you’re a cable company or local TV station, Google may not yet be your ally. (But be assured that teams of engineers are zipping around on Razor scooters working on it.)

Of course, it is not unusual for media companies to compete in some areas and cooperate in others — in fact, it’s the ultimate sign that you have made the big leagues. But the lines have never been this fuzzy.

Welcome to Googlewood.

    A Struggle Over Dominance and Definition, NYT, 12.11.2006, http://www.nytimes.com/2006/11/12/business/yourmoney/12frenzy.html

Entrepreneurs See a Web Guided by Common Sense

November 12, 2006
The New York Times
By JOHN MARKOFF

SAN FRANCISCO, Nov. 11 — From the billions of documents that form the World Wide Web and the links that weave them together, computer scientists and a growing collection of start-up companies are finding new ways to mine human intelligence.

Their goal is to add a layer of meaning on top of the existing Web that would make it less of a catalog and more of a guide — and even provide the foundation for systems that can reason in a human fashion. That level of artificial intelligence, with machines doing the thinking instead of simply following commands, has eluded researchers for more than half a century.

Referred to as Web 3.0, the effort is in its infancy, and the very idea has given rise to skeptics who have called it an unobtainable vision. But the underlying technologies are rapidly gaining adherents, at big companies like I.B.M. and Google as well as small ones. Their projects often center on simple, practical uses, from producing vacation recommendations to predicting the next hit song.

But in the future, more powerful systems could act as personal advisers in areas as diverse as financial planning, with an intelligent system mapping out a retirement plan for a couple, for instance, or educational consulting, with the Web helping a high school student identify the right college.

The projects aimed at creating Web 3.0 all take advantage of increasingly powerful computers that can quickly and completely scour the Web.

“I call it the World Wide Database,” said Nova Spivack, the founder of a start-up firm whose technology detects relationships between nuggets of information by mining the World Wide Web. “We are going from a Web of connected documents to a Web of connected data.”

Web 2.0, which describes the ability to seamlessly connect applications (like geographic mapping) and services (like photo-sharing) over the Internet, has in recent months become the focus of dot-com-style hype in Silicon Valley. But commercial interest in Web 3.0 — or the “semantic Web,” for the idea of adding meaning — is only now emerging.

The classic example of the Web 2.0 era is the “mash-up” — for example, connecting a rental-housing Web site with Google Maps to create a new, more useful service that automatically shows the location of each rental listing.

In contrast, the Holy Grail for developers of the semantic Web is to build a system that can give a reasonable and complete response to a simple question like: “I’m looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child.”

Under today’s system, such a query can lead to hours of sifting — through lists of flights, hotel, car rentals — and the options are often at odds with one another. Under Web 3.0, the same search would ideally call up a complete vacation package that was planned as meticulously as if it had been assembled by a human travel agent.

How such systems will be built, and how soon they will begin providing meaningful answers, is now a matter of vigorous debate both among academic researchers and commercial technologists. Some are focused on creating a vast new structure to supplant the existing Web; others are developing pragmatic tools that extract meaning from the existing Web.

But all agree that if such systems emerge, they will instantly become more commercially valuable than today’s search engines, which return thousands or even millions of documents but as a rule do not answer questions directly.

Underscoring the potential of mining human knowledge is an extraordinarily profitable example: the basic technology that made Google possible, known as “Page Rank,” systematically exploits human knowledge and decisions about what is significant to order search results. (It interprets a link from one page to another as a “vote,” but votes cast by pages considered popular are weighted more heavily.)

Today researchers are pushing further. Mr. Spivack’s company, Radar Networks, for example, is one of several working to exploit the content of social computing sites, which allow users to collaborate in gathering and adding their thoughts to a wide array of content, from travel to movies.

Radar’s technology is based on a next-generation database system that stores associations, such as one person’s relationship to another (colleague, friend, brother), rather than specific items like text or numbers.

One example that hints at the potential of such systems is KnowItAll, a project by a group of University of Washington faculty members and students that has been financed by Google. One sample system created using the technology is Opine, which is designed to extract and aggregate user-posted information from product and review sites.

One demonstration project focusing on hotels “understands” concepts like room temperature, bed comfort and hotel price, and can distinguish between concepts like “great,” “almost great” and “mostly O.K.” to provide useful direct answers. Whereas today’s travel recommendation sites force people to weed through long lists of comments and observations left by others, the Web. 3.0 system would weigh and rank all of the comments and find, by cognitive deduction, just the right hotel for a particular user.

“The system will know that spotless is better than clean,” said Oren Etzioni, an artificial-intelligence researcher at the University of Washington who is a leader of the project. “There is the growing realization that text on the Web is a tremendous resource.”

In its current state, the Web is often described as being in the Lego phase, with all of its different parts capable of connecting to one another. Those who envision the next phase, Web 3.0, see it as an era when machines will start to do seemingly intelligent things.

Researchers and entrepreneurs say that while it is unlikely that there will be complete artificial-intelligence systems any time soon, if ever, the content of the Web is already growing more intelligent. Smart Webcams watch for intruders, while Web-based e-mail programs recognize dates and locations. Such programs, the researchers say, may signal the impending birth of Web 3.0.

“It’s a hot topic, and people haven’t realized this spooky thing about how much they are depending on A.I.,” said W. Daniel Hillis, a veteran artificial-intelligence researcher who founded Metaweb Technologies here last year.

Like Radar Networks, Metaweb is still not publicly describing what its service or product will be, though the company’s Web site states that Metaweb intends to “build a better infrastructure for the Web.”

“It is pretty clear that human knowledge is out there and more exposed to machines than it ever was before,” Mr. Hillis said.

Both Radar Networks and Metaweb have their roots in part in technology development done originally for the military and intelligence agencies. Early research financed by the National Security Agency, the Central Intelligence Agency and the Defense Advanced Research Projects Agency predated a pioneering call for a semantic Web made in 1999 by Tim Berners-Lee, the creator of the World Wide Web a decade earlier.

Intelligence agencies also helped underwrite the work of Doug Lenat, a computer scientist whose company, Cycorp of Austin, Tex., sells systems and services to the government and large corporations. For the last quarter-century Mr. Lenat has labored on an artificial-intelligence system named Cyc that he claimed would some day be able to answer questions posed in spoken or written language — and to reason.

Cyc was originally built by entering millions of common-sense facts that the computer system would “learn.” But in a lecture given at Google earlier this year, Mr. Lenat said, Cyc is now learning by mining the World Wide Web — a process that is part of how Web 3.0 is being built.

During his talk, he implied that Cyc is now capable of answering a sophisticated natural-language query like: “Which American city would be most vulnerable to an anthrax attack during summer?”

Separately, I.B.M. researchers say they are now routinely using a digital snapshot of the six billion documents that make up the non-pornographic World Wide Web to do survey research and answer questions for corporate customers on diverse topics, such as market research and corporate branding.

Daniel Gruhl, a staff scientist at I.B.M.’s Almaden Research Center in San Jose, Calif., said the data mining system, known as Web Fountain, has been used to determine the attitudes of young people on death for a insurance company and was able to choose between the terms “utility computing” and “grid computing,” for an I.B.M. branding effort.

“It turned out that only geeks liked the term ‘grid computing,’ ” he said.

I.B.M. has used the system to do market research for television networks on the popularity of shows by mining a popular online community site, he said. Additionally, by mining the “buzz” on college music Web sites, the researchers were able to predict songs that would hit the top of the pop charts in the next two weeks — a capability more impressive than today’s market research predictions.

There is debate over whether systems like Cyc will be the driving force behind Web 3.0 or whether intelligence will emerge in a more organic fashion, from technologies that systematically extract meaning from the existing Web. Those in the latter camp say they see early examples in services like del.icio.us and Flickr, the bookmarking and photo-sharing systems acquired by Yahoo, and Digg, a news service that relies on aggregating the opinions of readers to find stories of interest.

In Flickr, for example, users “tag” photos, making it simple to identify images in ways that have eluded scientists in the past.

“With Flickr you can find images that a computer could never find,” said Prabhakar Raghavan, head of research at Yahoo. “Something that defied us for 50 years suddenly became trivial. It wouldn’t have become trivial without the Web.”

    Entrepreneurs See a Web Guided by Common Sense, NYT, 12.11.2006, http://www.nytimes.com/2006/11/12/business/12web.html?hp&ex=1163394000&en=a34a6306f48166fb&ei=5094&partner=homepage

Philly man charged as serial date rapist

Posted 11/3/2006 11:57 PM ET
By Maryclaire Dale, Associated Press
USA Today

PHILADELPHIA — He was an online dater's dream: Tall, clean-cut, with a fashionable address and a taste for upscale bars and restaurants. He said he was a doctor, an astronaut, a spy — though he was really an on-and-off nursing student. With woman after woman, he would slip something in their drinks and then rape them, police say.

Jeffrey Marsalis, 33, of Philadelphia, is facing trial on nine rape counts involving eight women, while a 10th charge is pending in Sun Valley, Idaho. He met most of the victims here through a popular online dating site, authorities said.

In court this week during Marsalis' preliminary hearing, the women told strikingly similar stories of meeting the smooth-talking Marsalis between 2003 and 2005, then feeling unusually intoxicated after returning from the bathroom or letting him buy a round from the bar.

They said they woke up hours later, back at his apartment — groggy, sometimes undressed — after an apparent sexual encounter or even in the middle of intercourse.

"It was like waking up from surgery," one woman said. "My body was there, and I could see what was going on around me, but I couldn't move."

Marsalis' lawyer says the women simply regret being duped about his accomplishments and dumped after consensual sex.

"Some of this may be buyer's remorse," defense lawyer Kathleen Martin said Thursday.

None of the Philadelphia victims — most of them well-educated professionals — went to police or a hospital afterward, Martin pointed out. Instead, police sought the women out after they seized Marsalis' computer as part of an earlier case.

Marsalis was acquitted of three similar assaults at a trial in Philadelphia in January. Before he could leave the courtroom, however, he was handcuffed by police and accused of the new charges. A judge later denied bail.

One of the women who testified this week said Marsalis posed as a doctor. When he visited her at a hospital he had a stethoscope around his neck and checked her chart, she said.

"This guy is not shy. He's confident. He's plotting," said Capt. John Darby, head of the city's sex crimes unit. "He showed IDs to a lot of these women supporting the various roles, positions that he seemingly held. He really put on a hell of a show."

Prosecutors say it's difficult to prove the use of date-rape drugs, because they metabolize before victims are alert enough to get a drug screen. A jury could still find him guilty of rape if it decides the women were too impaired to consent to sex.

The woman in the Idaho case says she was raped in October 2005. She went to the hospital the next day. There is a gag order in the case, but Sun Valley police said in a news release that she experienced symptoms "consistent with having ingested a date-rape-type drug."

Marsalis met most of the women through Match.com. The company said Thursday that it cannot monitor what goes on once their clients move from online communication to the real world.

    Philly man charged as serial date rapist, UT, 3.11.2006, http://www.usatoday.com/news/nation/2006-11-03-philly-rapes_x.htm

Google Buys a Developer of Online Tools

November 1, 2006
By THE ASSOCIATED PRESS
The New York Times

Google moved yesterday to expand efforts to provide software that helps users create and post materials online by acquiring a start-up, JotSpot, which develops online collaboration tools.

Terms were not disclosed.

The collaboration tools, known as wikis and popularized by the online encyclopedia Wikipedia, let users create, modify and even delete information on items that others in a group have produced.

The chief executive of JotSpot, Joe Kraus, said the company would be able to grow by tapping into Google’s large user base and robust data centers.

In July, JotSpot released a new version of wikis that aims to make shared pages similar to spreadsheets, photo albums and other software that people already use.

As JotSpot makes the transition to Google’s systems, new registrations have been suspended. Existing users can continue using the service, and JotSpot (jot.com) will stop billing for paid accounts.

JotSpot currently has 30,000 paid users at about 2,000 companies for a service that is moderated by users. About 10 times that number of people use a free service, which restricts the number of pages and the size of the collaborating group.

    Google Buys a Developer of Online Tools, NYT, 1.11.2006, http://www.nytimes.com/2006/11/01/technology/01google.html