Cashing Out: Week of April 8th – 14th 2012 in Online Marketing News

Microsoft buys 800 AOL patents for $1.1B

Microsoft won’t be left behind in the arms race that is the tech industry’s patent rush.

April 9, the company announced the acquisition of 800 patents from AOL at the price of $1. 056 billion in cash. This leaves AOL flush with cash but holding onto just 300 of its patents and patent applications.

Mashable explains some of the deal’s details, saying “Microsoft also gets licenses for AOL’s remaining 300 patents. By the same token, AOL retains licenses for the patents Microsoft bought.”

Still, AOL may have got the better end of the deal. According to The Wall Street Journal (WSJ), not only is the price of the deal on the high end, it’s as much as 3 times higher than what analysts expected the once leading internet company to reap.

“That would mean AOL just pulled $7.63 per share out of thin air and is readying to hand it to investors. That correlates directly to today’s rise. Shares are up $8.12 each, or 44 percent, to $26.25 recently,” writes the WSJ.

So what, exactly, is in it for Microsoft, and was it worth $1 billion? That was the question posed by another WSJ article, that posited “just how useful its patents will be in today’s battles remains unclear.”

According to the article, most of the patents in question cover messaging, online communications, web browser interfaces, search results, and internet telephony, and so are extremely relevant to existing Microsoft products.

Though the article also cites a March 29 report from M-Cam that warns “that 71% of AOL’s portfolio have ‘potential commercial impairment,’ because of problems such as the fact that other companies have relevant patents that predate AOL’s.”

But Microsoft is nonetheless expressing its satisfaction with the deal. As cited by the WSJ, a prepared statement from the company’s General Counsel Brad Smith says Microsoft got exactly what it was aiming for:

“Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

Facebook’s $1B acquisition of Instagram

In the second $1 billion deal announced this week, fast-growing photo sharing app Instagram has just been acquired by Facebook, as the latter moves toward its highly-anticipated IPO.

The deal, announced April 9, surprised more than a few, including TechCrunch’s Alexia Tsotsis, who wrote “I’m as shocked as you are about this acquisition, namely because I was working on it as a funding story all morning. From what I’m hearing investors were shocked as well.”

Apparently, Instagram had just wrapped up a $50 million Series B round of funding, led by Sequoia, leaving its valuation at $500 million. The subsequent acquisition meant that lucky investors actually doubled their money.

And while accepting funding right before an acquisition also means that Systrom diluted its shares, as Tsotsis explains, “Instagram may have been using the A-list investment to drive up the company’s valuation during acquisition negotiations, and vice versa.”

Meanwhile, the benefits for Facebook, which already puts a big emphasis on photo sharing, are clear. In post on his Facebook Timeline, Mark Zuckerberg wrote of the deal:

“For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests,” adding “we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.”

Still, not everyone is thrilled with the news, least of all some Instagram users, who are worried that the app they love will radically change under Facebook’s control.

When the Wall Street Journal asked Instagram users what impact they thought the deal might have, “Nearly 100 users responded to our post directly on Instagram, reacting to the deal with immediate concern. While some congratulated the Instagram team, many gave the news a thumbs down.”

Affiliate tax dies in Maryland

An April 10 news brief from the Performance Marketing Association (PMA) reported that “The Maryland legislature passed the budget last night, and the legislative session closed – without passing the affiliate nexus tax bill.”

Had it been passed, that proposed piece of legislation would have required online retailers to charge sales tax on goods they sell in Maryland, even if they have no physical presence in the state.

The news is certainly a relief for Maryland’s affiliate marketers, as similar legislation has meant the death of entire affiliate programs in other states where it has been adopted.

The PMA counts this as a victory largely won by “AOL and their lobbyist Eric Bryant, who has been battling this issue, which has been repeatedly been introduced over the past 3 years.”

Google+ revamps its navigation, design, and more

April 11, Google announced a major overhaul coming soon to Google+, which includes updates to its look, improvements to its navigation, and the introduction of new features.

Among the latter is a new Explore icon, which makes it easy to find trending topics on the network, as well as a Hangouts page that helps users browse hangouts and view invitations.

TechCrunch explains: 

“The new interface drops the static icons at the top and moves all the navigation off to the side, allowing users to reorder the icons as they wish […] As you hover over each icon, related actions will appear. For example, hover over Photos for access to a big red button to ‘Add Photos’ from either your phone or your albums.”

Profiles have been updated too, with a format that allows for a Facebook Timeline-like banner image accompanied by a profile picture. Meanwhile, Google+’s news stream has been revamped to better organize separate posts, while keeping related content directly below each.

According to Mashable, the changes have been largely well-received, and Forbes is calling the redesigned Google+ “simply more gorgeous than Facebook.”

“Taken together, these powers make it easier to access your favorites, and to adjust your preferences over time,” reads an official Google blog post from Senior VP Vic Gundrota. “With today’s foundational changes we can move even faster—toward a simpler, more beautiful Google.”

DOJ sues Apple, ebook publishers over price fixing

Following reports that the Department of Justice (DOJ) had opened an investigation of Apple and a five ebook publishers concerning the possibility of price fixing, the DOJ officially launched its antitrust suit against the companies in question April 11, Econsultancy reports.

Apple, Simon & Schuster, Hachette and HarperCollins, Penguin and Macmillan are accused of colluding in order to raise prices on ebooks. And while Bloomberg reports that Hachette, HarperCollins and Simon & Schuster have agreed to a settlement, Penguin, Macmillan, and (most importantly) Apple have said they will fight the suit in court.

At the core of the suit is Apple’s agency model which the DOJ is worried might cause “unnecessary price increased” for the consumer, says TechCrunch, adding “This model lets the publisher – rather than the vendor – set prices, which is why the big five publishers jumped on board. Apple just asks for 30 percent of the end sale.”

And while, as Econsultancy explains, this particular suit “doesn’t seek to forbid the agency model,” but rather targets specifically the “alleged collusion around pricing between Apple and publishers,” it remains apparent that the government “prefers the wholesale model.”

Econsultancy argues “if the Justice Department gets its way, it could have a dramatic impact on the development of the ebook market.”

Cybersecurity bill CISPA worries tech community

There’s a degree of concern in the tech community concerning a new cybersecurity bill in the House of Representatives.

With its aim of enabling businesses and the government to share information believed to be related to cyberthreats, The Cyber Intelligence Sharing and Protection Act (CISPA) has been likened to SOPA in that it represents the next big “struggle between the tech community and Washington, D.C.,” says Mashable.

The authors of the bill say that the two bills are entirely different, and that, unlike SOPA, CISPA would not give the government any power to shut down websites.

It’s like ““comparing apples and oranges.” Mashable quoted CISPA sponsor Senator Mike Rogers as saying. “I think it’s extremely important we deal with the issue of SOPA. Clearly, there is no censorship or shutting any website down. The government doesn’t have any authority in this bill to do anything like this.”

Moreover, Rogers says, CISPA takes as its focus protecting American networks from cyber attacks “in the name of national security,” not copyright issues, reports Mashable.

However, another Mashable article by the same author outlines the arguments of the bill’s opponents:

“Organizations like the Electronic Frontier Foundation and other digital civil liberties groups have warned that the bill’s language is too broad. CISPA’s language could, they argue, be used as a blunt-force legal instrument in copyright protection or allow the government to snoop on your emails and text messages.”

Sony re-organizes, cuts 10,000 jobs

Following last week’s ReveNews report that Yahoo had cut 2,000 jobs comes news of an even more wide-spread layoff in the tech industry.

Mashable reports that, April 12, Sony confirmed reports that it would be cutting 10,000 jobs as part of a large-scale reorganization under the  banner of their ‘One Sony’ plan.

As outlined by an official press release, the ‘One Sony’ reorganization plan claims the following five major goals:

1. Strengthening core businesses (Digital Imaging, Game, Mobile)
2. Turning around the television business
3. Expanding business in emerging markets
4. Creating new businesses and accelerating innovation
5. Realigning the business portfolio and optimizing resources

As TechCrunch notes, while some of these aims are more attainable, such as that of further emphasizing its existing focus on gaming and mobile, “at least one of these initiatives — innovation and new business — will see Sony moving into new areas altogether like medical technology; another — emerging markets — will be a challenge because of how it will impact margins for Sony’s traditionally not-cheap products.”

The jobs cuts are expected to be made over the coming fiscal year, says TechCrunch, “and will also include some employees leaving the company through sale and transfer.”

This week in marketing studies and reports:

Consumers increasingly trust online ads, trust TV and print ads less

As reported by TechCrunch, Data from Nielsen’s Global Trust in Advertising Survey shows that, while consumers are increasingly placing their trust in online advertising, trust in more traditional ad formats, like print and TV, is dropping.

33 percent of those who answered the survey say they “believe the messages they see in online banner ads.” That’s an increase of 26 percent since 2007. On the other hand, the trust consumer have in TV and print ads has declined by over 20 percent since 2009, to less than half. Unsurprisingly, 92 percent of respondents  say they have confidence in word-of-mouth recommendations.

Smartphone sales predicted to reach 1B in 2014

According to predictions from Credit Suisse, reported by Mashable, the global sale of smartphones is expected to top 1billion individual devices by the year 2014.

Meanwhile, sale of the devices is predicted to reach 687.9 units by the end of this year, an increase of 46 percent.

Young people switch media 27 times an hour

A study conducted by Boston’s Innerscope Research and reported on by AdAge shows that, during one non-working hour, consumers in their 20s switch between media venues 27 times.

Though AdAge admits the study had only 30 participants and that, as such, it is “hardly definitive,” marketers should pay attention nonetheless.

Patti Wakeling,  global Director of Media Insights at Unilever said much the same thing to AdAge: “If you have consumers who are snacking on short amounts of time with different types of media channels, we have to think about how to communicate in short, ‘snack-like’ bits of messaging.”


About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
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