Remember Superbowl XXXIV? The year was 2000 and dot coms, flush with cash, spent millions of dollars advertising during the big game...a gambit that proved to be a big waste of money. Fast forward to Superbowl XLI (Go Bears): Instead of blowing their budgets on TV ads, tech startups are filming their own quirky spots and putting them up on YouTube.

Starting today, Plaxo, RockYou.com, Technorati and three other small companies are putting their versions of Superbowl-style ads on the Web. The companies have bundled their ads together in a YouTube channel called SuperDotComAdsXLI, and they hope to use their various social networks and corporate blogs to generate audiences for all the commericals.

John McCrea, vice president of marketing for online address book company Plaxo, says the various startups involved began kicking the idea around two weeks ago. Plaxo is home to some budding filmmakers (and apparently a few smart alecks) so McCrea let a small team of employees put something together. He was so impressed with the effort that he decided to use the spot to launch Plaxo's new logo and tagline. "Until this opportunity came along I never even thought about commericals," he says. Now, he says, he's considering doing even more video ads, but solely for the online medium.

None of these ads quite rises to the level of those delightful Monster.com television spots of a few years ago. ("When I grow up, I want to be forced into early retirement!") And a few are blatant knockoffs of famous campaigns of yore.

So what? These things took maybe a couple hundred bucks to produce, at most, and it only makes sense that these Web-based companies would use that platform to promote themselves.

If nothing else, their employees surely will enjoy seeing their co-workers embarrass themselves on film. (Note from Plaxo's McCrea: "That guy streaking" in the Plaxo spot "is not me.")

The Browser landed yesterday in artificial Palm Desert, CA for DEMO 2007, one of the few must-visit annual tech conferences. Over the next two days, 68 companies will each be given six minutes to unleash their revolutionary new technology upon the world - or at least upon industry heavies like the Wall Street Journal's Walt Mossberg. The parade began early this morning Pacific time, and thusfar we have two words for you: video email.

That's right, of the first 15 companies, Eyejot, a company which hopes to merge "the best of email with video chat" was the most sexy. Briefly, Eyejot is a web-based video email system. If you have a webcam, you an send a video email to anyone. True, you might be able to do this now by embedding video files in, say, your Outlook email, but it would require some serious cutting and pasting. On first glance, the free Eyejot web-driven app makes the whole process as simple as creating a text email. Very cool too is the fact that the video messages can be added to things like MySpace pages or viewed on Apple's (AAPL) video iPod.

Bottom line: When you see it, you can easily imagine the entire world of email moving from text to video. In fact, it's perhaps the enormous potential of the thing that could prove most problematic for the tiny company. At present, their app does not integrate with any of the existing email tools -- users have to create their own free Eyejot webmail accounts. And there's no reason to believe that heavyweights like Google (GOOG), Microsoft (MSFT), or Yahoo (YHOO) couldn't simply add video to their existing webmail systems. Then again, one of them could also simply acquire a small, enterprising video email outfit.....

Also, very impressive from the early lineup:

• Shipwire: A web-based service that promises to lift the burden of warehousing and shipping from small companies.
• Jaman: Think YouTube, but with almost high-def feature films sourced from all over the world. Jaman is built on two good ideas: First, the company is pushing the notion of "social cinema." The service lets viewers comment upon feature films and store favorites, just as they would with amateur YouTube shorts. Second, Jaman is going after the wider world of film that exists beyond the confines of highly negotiated Hollywood distribution contracts. Said Jaman CEO Gaurav Dhillon, "Less than 1% of all films in the world get distributed in the U.S." Dhillon aims to distribute, online, some big chunk of the other 99% - and for the low, low price of $1.99 to rent or $4.99 to buy. It's a cool product, and once you see the Jaman viewer/browser, you begin to think that a closed tool like iTunes is missing the Web 2.0 movement entirely.
• The big boys: In addition to the many small start-ups running around, there are some real adult companies here. This morning Adobe (ADBE) demonstrated its nifty Apollo tool, and Symantec (SYMC) presented its Identity Inititative, both the sort of complex but very promising efforts that it takes deep pockets to pursue.

Stay tuned for more on these companies, and all the rest, in the next 36 hours. And for further insights, check out Business 2.0 star Michael Copeland's Dawn Patrol blog.

Last week, the Browser alerted readers that Bill Gates would be on the Daily Show Monday night. It was a promising setup -- Gates meets Stewart -- but in the Browser's humble opinion, hilarity did not ensue. Sure, there were cracks from Stewart about the mysteries of the F12 key and some musings on whether beta software can make you sterile. But Stewart treated Gates more like a tech god who came down from his mountain in Redmond to tell the us what the future will be like (surprise! TV will be a lot like the Internet) than a guest to have fun with. And because Stewart's big joke was that he's a Luddite (is he really, though?), Gates didn't get to explain why anyone should rush out and buy Vista, for fear of getting too technical on the audience.

Oh well. Maybe they should book Ballmer for the next upgrade -- say 2012?

The news that Carl Icahn is seeking a seat on Motorola's (MOT) board is part of what might become one of the year's most important business stories. That is, the legendary corporate activist appears to be turning his attention for the first time toward the technology sector (a tip of the Browser hat to the good people at Stockpickr! for tracking Icahn's moves so closely).

Some time in the second quarter of last year, Icahn bought 6 million shares, or 0.6 percent, of Symantec (SYMC), the well-regarded security and storage software company, as well as 2.9 million shares of Take-Two Interactive Software (TTWO), the people behind the controversial "Grand Theft Auto" video games, who this month have been hit with a slice of the ongoing option backdating shenanigans.

Icahn made his reputation trying to take over and force management changes at much more traditional companies, like TWA and a host of casinos, as well as Time Warner (TWX), which owns this Web site. His foray into biotech yielded a nasty spat with Imclone (IMCL), which nonetheless earned him board control. What does his arrival into technology mean about the valuation of the sector?

We see three possible readings. The first is that it means nothing: that Icahn's heat-seeking missiles simply go after companies with certain financial characteristics, regardless of what the companies do. The second is that Icahn perceives a shakeout specific to the tech world: the overall market boom means that some firms are undervalued. And thus, Icahn's playing a tech bid-'em-up game: buy up the stock of these firms when they're cheap; dictate as much managerial change as he can while the stock goes up; and then cash out. That certainly seems to be the case with Take-Two Interactive; despite the mad popularity of its main product, it's a fairly small company (current market cap of $1.2 billion) that has lost money for several consecutive quarters. When Icahn was snapping up shares they were trading in the $9-$10 range, and they're now about $16 a share, so it wouldn't surprise us to see him pull out with a tidy profit. Motorola, too, has seen its share price dip by 30%, so Icahn is arguably doing some bargain-hunting (and the news this morning has the price up 5% in early trading).

It's a lot harder, though, to apply that formula to Symantec, whose stock price has been less volatile than Take-Two's; even if it was lower when Icahn began buying, it was still not exactly cheap, using historic yardsticks. On this one we smell a merger in the works, the third possible Icahn strategy. Symantec has an impressive and growing business--how many people believe that Internet security is going to become LESS important in the next five years? But it might well make sense to merge Symantec into a larger enterprise software firm like Oracle (ORCL), and unlock those ever-prized synergies.

Regardless of Icahn's ultimate motivations, his arrival as a tech player ought to send a signal both to management and shareholders. The days of relying on a cool product or a booming market are coming to an end. Public tech companies require the same "deliverables" as public companies did in the industrial age: growth, profits, and dividends. If your company can't deliver them, Icahn and his like may decide some day soon it's not your company anymore.

eBay, the virtual auction house, has decided to get out of the business of auctioning virtual things. "Massively multiplayer" online games have for some time spilled over into the real world as gamers have used eBay to buy and sell - using real money - virtual currencies, avatars, and various other artifacts of their universes. No more. Slashdot reports that eBay has decided that the intellectual property rights on virtual items are a bit too murky for its taste: "Given the nebulous nature of ownership in online games, eBay has decided the prudent decision is to remove the possibility for players to sell what might be the [intellectual property] of other parties via their service," writes Slashdot member Zonk.

Valleywag notes the irony of the decision given that eBay founder Pierre Omidyar is an investor in Second Life owner Linden Labs. Given that connection, however, and the fact that Second Life has some elaborate, Lawrence Lessig-inspired intellectual property rights policies in place, The Browser wouldn't be surprised if eBay (EBAY) made an exception permitting Second Life sales.

Still, for the rest of the "MMO" world, the eBay move could prove legally significant. As Zonk notes: "eBay is ipso facto declaring virtual goods to be the property of the game makers and not the players who 'earn' them."

MySpace said over the weekend it's poised to launch localized versions of its service in Canada and Mexico. This ups the total number of foreign versions of the service to 11, reports the Financial Times, with China on deck. The global ambitions of the News Corp.-owned social network are hardly newsworthy, though the strength of its overseas growth is impressive: The FT notes that MySpace "attracts an average of 320,000 new user profiles a day, with 25 per cent coming from outside the U.S." Says one Travis Katz, MySpace's senior vice-president for international operations: "Our international business is becoming an increasingly important driver of growth."

Not bad, and naturally everyone has especially high hopes for the Chinese operation. The subject of much online chatter since the middle of last year, MySpace China is a joint venture between News Corp. (NWS) and the venture group at International Data Group - and perhaps also China Netcom. Expect Mr. Murdoch to be well-informed on the company's progress: his wife Wendi Deng has been on the scene since August and reportedly joined the MySpace China board late last year.

Here's the hot news from Davos: video sharing site YouTube plans within the next few months to begin sharing something else: its revenues. Co-founder Chad Hurley told the Financial Times that the site will begin rewarding the creators of video with a cut of the advertising action on the site.

Ah, the loss of innocence. When The Browser met for lunch at Michael's with the YouTube boys long ago last August they were mightily unimpressed by the notion of traditional advertising, let alone Revver-style rev sharing. "A big piece of what we're doing is building a new advertising model," said Hurley with revolutionary fervor. But Hurley appears to have come around a bit on the subject, as he told the FT: "We didn't feel it was a great way to build a community. We wanted to keep it pure."

And now? "We are getting an audience large enough where we have an opportunity to support creativity, to foster creativity through sharing revenue with our users." Sharing the wealth will surely do wonders for creativity, but no doubt the pressure of justifying their $1.65 billion purchase price and Google's (GOOG) earnings picture helped ease the transition.

We're admittedly a few days behind the curve in noting that Bill Gates will appear on The Daily Show with Jon Stewart. (Though we take some solace in the fact that Valleywag just caught on, too.) The Vista charm offensive rolls on.

Gates has proven to be a game straight man, sharing the stage at the Consumer Electronics Show in past years with comedians Jay Leno and Conan O'Brien.

We love The Daily Show and Stewart, and we hope he treats the software mogul with the same irreverence and wit he applies to political figures. (As opposed to the fawning treatment starlets like Natalie Portman and Kirsten Dunst get.) Alas, business often just isn't that funny. Exhibit A: This hi-larious clip of the usually brilliant Stephen Colbert attempting to skewer consolidation in the telecom industry.

Over at Tech Trader Daily, Eric Savitz valiantly tries to dispel a rumor that AT&T's (T) Cingular wireless company is going to give away service to users of the new Apple (APPL) iPhone that comes out in June. (Cingular is the exclusive distributor of the iPhone.)

Besides being untrue, the rumor makes no sense: Why would Cingular, after scoring a big coup in winning exclusive iPhone distribution, then give airtime away for free? Airtime is the only thing Cingular can make money on. It doesn't make money selling phones - in fact, Cingular probably is subsidizing the iPhone so that it doesn't cost consumers even more than the eye-popping $499 or $599. And there's certainly no profit to be had in providing customer service to the random iPhone user who can't figure out how to turn the thing on, or needs help when the device inexplicably seems to lock up. (You scoff, but I can assure you some users will need hand holding, no matter how intuitive Apple believes its phone is.)

Now, we do expect Cingular and Apple to team up on some special pricing plans tied specifically to the iPhone, perhaps an all-you-can-eat data package that is priced especially low to entice customers to play with (read: get addicted to) all the data features on the phone. You might even see Cingular throw in an introductory "free" month of data service for the iPhone.

But one of the big reasons Cingular wooed Apple so aggressively is that the carrier would like to start attracting a better quality customer. In the fourth qarter of last year, the carrier added more than two million net new customers, but as Katie Feherenbacher at Gigaom notes, a lot of those new customers were lower-end subscribers. If Cingular is serious about attracting high-end users, it probably won't be giving service away any time soon.

There's Google and then there's... what, exactly? Like most of you, I do all my searching on Google. It's built into my browsers. It's a lot better than the last engine I used, Altavista circa 1996, so I've never considered trying a different one despite all the hype about MSN and Yahoo's forays into the game.

But today, FORTUNE got a visit from Jim Lanzone, CEO of Ask.com, the web's fourth-most-visited search engine (behind Google (GOOG), Yahoo (YHOO), and Microsoft's (MSFT) MSN, respectively). Overall, it's the web's seventh-most-popular site, attracting about 30 million unique visitors a month.

Here's what Lanzone had to say about being second-fiddle to Google: "I'd rather be the slice of watermelon than a whole grape." In other words, search is the web's most popular activity, so there's room for more than one successful business in that space, even if you're not the biggest.

"I want Ask to stand for a value-added way of getting things," Lanzone says, or as many have put it, "to be the Macintosh of search engines." To that end, Ask.com has hired marketing firm Crispin Porter + Boguski, known for the "Truth" anti-smoking campaign, Burger King's "The King", and those creepy Volkswagon crash commercials. The hope is to crack the notion that your search for search is over once you've found one that works. For many people, especially the less web-savvy, that's a portal like MSN or AOL that comes with their Internet access. For me, or probably like you, it's to say loudly that Google isn't the only game in town.

Lanzone wants to turn Ask into the premium search engine, so he's set his 500-member team to creating a friendlier search result page, with "structured" results from databases (like a TV show summary from Zap2It, or a Wikipedia entry in beta versions of Ask's next generation site) and "iterative" results that offer to rephrase your query or search for related terms. AskCity has several advantages over GoogleMaps, including a quick summary of restaurant or movie reviews (from Ask's corporate cousins at IAC/Interactive), refined by city neighborhood, and a generally more pleasing horizontal layout.

So far, Ask is succeeding; it's the only non-Google search to grow in market share. But while the average Google user does 15 searches a month (which is kind of astounding, actually), the average Ask user does 2.8 searches a month. The optimistic take on those figures: There's plenty of room to grow. IAC/Interactive (IACI) doesn't break out Ask.com's revenues, so it's hard to say whether providing high-quality, presumably more costly services at the same price as everyone else (free!) is really the way to go.

But, as Lanzone says, "People are evolving in their use of search." So who knows? Certainly The Browser is glad to have its eyes pried open a bit to the possibilties of a competitive search market. We'll let you know if we end up making a switch to Ask.

So Fox is demanding that YouTube spill the beans on a user uploading episodes of "24," according to The Hollywood Reporter. That kind of anti-piracy aggressiveness just makes the continued peaceful existence of Dailymotion even more bizarre.

Dailywho? Back in November, Forbes was the first to point out that the France-based, porn-hosting, multi-lingual clipsharing site had tons of copyrighted content. It's been growing recently, and now has more users in France than YouTube. As many Diggsters noted, that's got to be at least in part due to the fact that lots of shows (including Fox shows) are available fast, easy, and free.

In December, The Hollywood Reporter's Reel Pop blog reported that Dailymotion was taking down illegal stuff. But a quick check will show you that there's still plenty of copyrighted material. I won't tell you what I found, because I certainly don't want to encourage you to pirate. But trust me, it's there.

How has Dailymotion continued to fly under everyone's radar? It's one thing for pirated stuff to be available on BitTorrent, IRC channels, newsgroups, and so on -- they're hard to use, and there's not one host or distributor to blame. But a Google (GOOG) search will lead you right to Dailymotion stuff, or to the many sites that leech it. Surely the various networks being victimized by Dailymotion (at least two, from what I've seen) aren't powerless to stop this.

What's going on? And what would Jack Bauer do?

["24"'s Jack Bauer courtesy Fox.com]

This news is a couple days old, but I just noticed that Sony Ericsson and wireless operator DoCoMo will be debuting a "smellphone" (as you might surmise, a cellphone that comes with "scented sheets designed to relax the users while making calls", according to CNET) in Japan. If you've ever been to Japan, you may get why that sort of thing might succeed.

Novelty aside, what's interesting about the smellphone is that it's actually not a Sony, or even a Japanese, innovation. As I wrote last year in FORTUNE, Lenovo -- the Chinese PC-maker that bought IBM's ThinkPad division -- scored a major hit in China's huge cellphone market with its own Perfume Phone. (Hyundai [pictured here] followed in China; Samsung was rumored to be looking into it.) Are Japanese consumers, perhaps the world's most fickle and forward-thinking when it comes to mobile, now taking cues from the Chinese market? That would mark a nice success for China's electronics industry, long relegated to compete simply on price, not design or features. (Too bad for Lenovo they didn't export their idea themselves.) Will we start seeing more Chinese tastes crossover to Japan and Korea, or to the U.S.?

Evidently, someone at Sony must think so. Because Sony BMG and Warner are looking to create the music industry's first straight-to-cellphone download service in China, where they think the mobile market is a potential money spigot. They'll be fighting an uphill battle against piracy.

The head-turning numbers announced by eBay (EBAY) on Wednesday afternoon certainly gave a boost to the company's stock, and for good reason. The slowdown in growth that had spooked some investors in early- and mid-'06 appears to have been slain, and with $1.72 billion in revenues for the fourth quarter of '06, up a hefty 29% from the same period in '05, there's plenty of reason to cheer if you're long in this stock.

And yet The Browser can't help but feel that there are fundamental conflicts in eBay's business that a good quarter does not resolve. For starters, we're pretty sure that Skype, which eBay bought in 2005 for $2.6 billion, is still losing money. The Form 8-K that eBay filed on Wednesday is not the final word on the fourth quarter, and it doesn't break down the costs of revenue for Skype, so we need to wait for the 10-K that eBay is scheduled to file in a few weeks.

But for the first three quarters of '06, Skype lost about $26 million on about $129 million in revenues. It brought in an additional $66 million in revenues in the fourth quarter, which means it fell short of the over $200 million in '06 revenue that eBay touted at the time of purchase, AND it lost money. So if I were an eBay shareholder, I think I'd still be saying: "Sure, Skype is cool and useful, but did we really have to buy the company? Couldn't we just have partnered with them?" With no obvious path to profitability in sight for a product whose chief feature is that it's free, it remains impossible to see how the Skype acquisition is going to provide return on investment any time in the next decade.

By contrast, PayPal is profitable. But it's not super-profitable. The stubborn fact remains that eBay's "marketplace" business - that is, the buying and selling of stuff online, with which most people associate eBay - is carrying the rest of the company, and left on its own would have profit margins around 40%. Though healthy, the marketplace business keeps running up against roadblocks that threaten the kind of growth eBay's known for. One roadblock is international competition; as Fortune's Adam Lashinsky noted last fall, the South Koreans and the Chinese turn out to have their own ideas about online auctions, and have largely thwarted eBay's considerable attempts to establish primacy in Asia.

Moreover, there's a funny dynamic between eBay and its marketplace users that exists in very few companies. The more eBay needs to grow, the more it squeezes its habitual sellers and potentially drives them into the hands of competitors. One of the most feverish topics in the blogosphere is the fee increases eBay has been imposing on sellers. From the company's point of view, losing marginal sellers who are peddling stuff for $1 might actually be a plus, but alienate enough of them and you make the marketplace less robust and less enticing.

All of which is to say: I think the most overlooked business story of January has been eBay's purchase of StubHub. Meg Whitman et al are no dummies; they recognize that they need to diversify their business to include new profit centers. I'm not savvy enough to know whether the $310 million price tag for StubHub, an online auction site for event tickets, represents a good valuation from eBay's point of view. But I think it's a much smarter investment than Skype, and should help eBay have even better quarters down the line.

Not with the major labels, mind you, but with indie labels. Still, it's the first time MySpace will be selling the music of signed artists. Even more striking is the fact that the music will be in the form of unprotected mp3s. That's totally unfettered music that can work on any device and that can be copied ad infinitum. Scary stuff for the major music execs -- or could they be next?

There's some indication that the music studios could soon be ready to give in to the notion that content wants to be free. At the Midem music conference in Cannes going on this week, there's still more soul-searching being done about what to do with digital music, but according to the International Herald Tribune it sounds like the big labels are getting tired of fighting.

Executives of several technology companies meeting here at Midem, the annual global trade fair for the music industry, said this weekend that a move toward the sale of unrestricted digital files in the MP3 format from at least one of the four major record companies could come within months.
...
Should one of the big four take that route, however, it would be a capitulation to the power of the Internet, which has destroyed their monopoly over the worldwide distribution of music in the past decade and allowed file-sharing to take its place.

Why the change of heart? The industry's strategy thus far has been to push hard for DRM, or digital rights management -- the code that restricts music so that it can only be played on an Apple (AAPL) iPod, Microsoft (MSFT) Zune, etc., and can't be copied. But those digital locks have been picked over and over. So it's all but back to the drawing board -- unless the studios can learn a thing or two from the indie labels who are, as usual, experimenting way out in front.

The long-suffering American factory worker is getting a break from an unlikely source: Google (GOOG). There was news yesterday that the search company will be spending $600 million to build a data center in Lenoir, North Carolina, a town that's been hit by the steady loss of manufacturing and textile jobs, presumably to overseas factories.

Google's being lured by the promise of extreme tax breaks from North Carolina, and it promises to create 210 jobs. A measly number perhaps. But at least it's the best company to work for.

Doh! When your market cap is pushing $150 billion, and you're buying companies and adding new products on a daily basis, it's inevitable that a few administrative details will fall through the cracks - especially when your M.O. is to embrace chaos. For Google (GOOG), one of those details was Germany: TechCrunch reports -- and Google diva Marissa Mayer later confirmed -- that the Google.de homepage went down yesterday because the Google gang forgot to renew the domain.

Thus in the early hours of Tuesday morning, Google.de pointed to an ad for Internet host Goneo. In fact, The Register reports that somehow more than one opportunist swooped in to grab the domain, one of whom confessed he was simply illustrating to his girlfriend "how one of my domains had been taken over by somebody else with the Goneo ordering system." To prove he was a nice, Google-fearing geek, however, he gave the domain back without asking for compensation. (TechCrunch readers are shocked!)

To be fair to Marissa and crew, it seems the German domain name registration system is a bit complex, but The Browser is not sure which is less reassuring: Google being so disorganized or Germany failing at bureaucracy.

Ah, satire. Bemused by the web world's collective fascination with virtual reality site Second Life, digital wag Darren Barefoot has launched Get A First Life, a pitch-perfect mockery of the real thing. "GO OUTSIDE. Membership Free," announces the big orange button at the top of the page. "First Life is an analog world where server lag does not exist...."

The sweetest irony? Barefoot, who has dabbled in quick hit satire before, is running Google (GOOG) ads and selling t-shirts on his single page -- and thus making real money from his spoof of a virtual world.

Well, it didn't take long. Blogger Stephen Wahrhaftig reports that he managed to pick up a pirated copy of Microsoft's (MSFT) new Vista operating system on a recent visit to China: "It took me about twenty minutes to locate a 2-disc set that purports to be Vista Ultimate. This product lists for $399 retail. I purchased it for 20 RMB, or about $2.50." Naturally, the blogs are delighted. "Screw the limited edition signed collector's Vista plate set with matching flatware and signed Bill Gates lithograph," writes Engadget. "China's already rocking it black market style...."

Of course, nobody is vouching for the quality of the software. Wahrhaftig, who didn't actually try to install it, says he expects the software he bought "is probably what Microsoft is calling the 'Frankenbuild' version," which is cobbled together from source code released during the beta testing period. But The Browser's favorite comment on all this comes from a Digg reader: "Well at least the pirates managed to ship something ahead of schedule - unlike Microsoft with Vista itself."

Update: The International Herald Tribune confirms that the BBC is in talks with Google, but notes that Beeb flaks are describing Monday's Guardian report (below) as "premature." Well, what else are you going to say when news of your own deal has leaked?

The Brit press is full of rumors this morning that the BBC is in talks with Google to distribute its video programming on Google Video, and perhaps eventually, on YouTube. No shocker there, of course, given that plenty of popular Beeb content already shows up on the video sharing sites. Might as well get paid for the stuff, wot?

"BBC Worldwide is understood to be looking at commercial options for the agreement, such as a share on contextual advertising that will run alongside BBC content," reports MediaGuardian. The word is that Goog CEO Eric Schmidt will announce the deal from Davos later this week. It's just another small step for Google (GOOG), but further evidence of the aggressive, commercial attitude among the Beeb's new media lot.

Close readers will recall that the quasi-public government monopoly launched a competition to redesign its web site last fall, and that more recently it began running ads on its site, despite some complaints from subscribers that the site should be ad-free since they already pay the country's infamous TV license fee.

AT&T's plan to let customers make free, unlimited calls within its mobile and landline networks is getting some love from analysts, and even from usually reliable skeptics at Gigaom. This is AT&T's first big initative to capitalize on owning Cingular outright, purportedly the big raison d'etre behind AT&T's acquisition of BellSouth, its partner in the Cingular joint venture. (And indeed, AT&T (T) is in the process of "debranding" Cingular and adopting the AT&T moniker.)

Forgive me for being a little underwhelmed. Maybe I just had super high expectations for AT&T's opening salvo, but I view this as just another calling plan. It doesn't really integrate your wireless and wireline calling experiences - I'd love the telcos to give me a single mailbox for all my wireless, homephone and DSL account e-mails, or let me easily forward calls between networks - and it doesn't strike me as a huge cost savings unless your family spends all its time on the phone.

The Reuters story on the plan notes that to qualify for the new plan users must subscribe both to AT&T's $50-a-month unlimited local and long-distance plan at home or work, and an big bundle of wireless calling plan, which starts at $60 a month. I could just be dense, but if you have unlimited home calling, AND a huge number of wireless minutes, why would you ALSO need free unlimted calling among AT&T users? I suppose you might conserve some of your bundle of wireless minutes, but man, I don't use all those up at the end of the month anyway.

Web Worker Daily posted a fun tipsheet on managing kids in the home office. The piece targets the work-at-home high-tech telecommuter, but the advice just as readily applies to any of us who occasionally work - or blog - from home. (Like I'm doing now.) What I loved about the posting is that it gives working parents permission to let their kids into their work spaces, and even encourages us to let our bosses/clients/associates know what we're doing when appropriate.

Now, I suspect I'm veering dangerously close to territory well trod by Babble's Bad Parent column, but I will confess to resorting to some questionable tactics to keep my kids at bay while I'm trying to work. To be sure, I try only to work at home when my sitter is on duty or when the children are asleep, but sometimes work calls at inopportune times. I've put the kids, ages 3 and 1, in front of the TV - only educational programming and Jim Cramer's Mad Money ("Mommy, why is that man yelling?") - so that I could file a story. Once, when my youngest was about five months old, an elusive executive I had been trying to reach finally called on a day I was off work. I put her in that exer-saucer contraption, which she loathed, for 20 minutes while I took the call. I'm sure it wasn't my best moment -- as a professional or as a mother.

Readers: What do you do to distract your little ones if you must work while home alone?

If you followed the market Thursday, you watched Apple (AAPL) help tank the Nasdaq, despite posting great results, with the Mac, iPod, and income growing in the first quarter. The many anaylsts who contribute to CNNMoney's tech roundup are puzzled by the market's pessimism given the great numbers, the potential for the iPhone, and CEO Steve Jobs's apparent skating of the rap on options backdating.

But check this out. Buried in the middle of WSJ's morning story about Apple's results:

One of the biggest surprises in the quarter was the level of Apple's profitability. The company said its gross profit margin for the quarter was 31.2%, up from 27.2% a year earlier. Apple executives said the increase was a reflection in part of favorable pricing for key technical components that go into Apple products, such as LCD screens and flash memory that stores songs and other data on iPods.

That kind of pricing power spells trouble over the long haul. To what extent is Apple's net income just lightning in a bottle, coming at time when serious competitors to the iPod are just starting up, and they still have the pricing power to not pass any of those lower costs onto consumers?

We don't have exact numbers for these, but it would be great to see an enterprising analyst quiz Apple about this. Because all that income growth could be wiped out if component prices - often out of Apple's control - go up, or if Apple's forced to lower the price of the iPod as the Zune (or even the iPhone!) starts eating into the music-player market.

Also, this release by research firm Gartner shows that the Mac's 28% growth rate isn't head-and-shoulders above other players in the computer biz. HP (HP) PC sales were up 23.9% in its most recent quarter, Acer up 33.1%, and Toshiba (TOSBF) up 24.5% - that last one largely being driven by their well-reviewed tablet PCs.

[Update: Thanks to commenter Rob for pointing out that the Toughbook franchise is now made by Panasonic, not Toshiba, as I had originally stated.]

Is the RIAA pushing its luck trying to tamp down illegal distribution of music? With the recording industry trade association's latest move - getting an Atlanta DJ arrested for producing and giving away mixtapes of his and other artists' singles - it may be alienating some of its own members. From a New York Times piece on the bust:

It also seems clear that mixtapes can actually bolster an artist's sales. The most recent Lil Wayne solo album, "Tha Carter II" (Cash Money/Universal), sold more than a million copies, though none of its singles climbed any higher than No. 32 on Billboard's Hot 100 chart. That's an impressive feat, and it's hard to imagine how he would have done it without help from a friendly pirate.

The Village Voice's rap blog Status Ain't Hood speculates that the left hand of the RIAA may not know what the right hand of the record companies are doing:

I keep picturing Lyor Cohen [Warner Music Group CEO] and LA Reid [CEO of Hitco Music Producing] slapping their foreheads in dismay when they hear about the raid. Virtually every major new rap star of the past couple of years has come out of the mixtape world. Drama was personally instrumental in creating a couple of those stars, T.I. and Young Jeezy. T.I. had the only big-selling rap album of last year, and the tapes he did with Drama were a huge part of the reason it was able to sell. Rap labels are desperate to get Drama to do their artists' tapes.

Despite iTunes, eMusic, Rhapsody, etc., helping digital music sales rise each quarter, combined with the decline of simple sharing services like Kazaa, the recording industry is still very concerned about the decline of CD sales. According to an excellent piece in today's Times of London:

However, the rise failed to compensate for an overall decline in sales of CDs, with the total music market expected to record a 2 per cent to 3 per cent fall when figures are published next month. John Kennedy, IFPI's chairman, said: "We don't have the holy grail of digital offsetting the decline of CDs as yet." CD sales have slumped 23 per cent since 2000, with 14 per cent of regular web users saying that they still exchanged music files for free.

Which makes it seem odd that the RIAA would go after something that clearly has had a positive impact on disc sales, still the industry's most profitable avenue of distribution. And to top it off, The Times says that some in the business might start going after Yahoo. Surely not everyone could be on board with that decision. Expect some intra-recording-industry fallout in the near future.

[High Fidelity image copyright Touchstone Pictures, 2000.]

The cell phone camera. To most, an innocuous bit of technology that doesn't work well enough to be significant, in either a good or a bad way, to our lives. To some, however, it's a crime-stopper. According to the NY Post:

Get set for the YouTube version of 911. Mayor Bloomberg revealed yesterday that the city plans to equip 911 emergency-call centers to receive instant cell phone photos and videos from New Yorkers who record a crime as it's happening.

To others, it's a singular socio-cultural event, changing the way we perceive ourselves, our place in history, and the behavior of others -- mostly for the worse, which surely encouraging people to take pictures of crimes will only exacerbate. Says Slate's Michael Agger:

There have also been news reports of graphic videos showing beatings and accidents, such as an unfortunate boy in Birmingham, United Kingdom, who impaled himself on his bicycle. ... In glorious retrospect, it seems like a terrifically bad idea to give the world a spy camera that looks and functions like a cell phone.

Whoa. Seriously? Are we really talking about something unique to the mobile cam? To me, it seems like the most interesting innovation is the delivery, not the phone. YouTube and 3G networks, for example, deserve the credit here. After all, cameras and the Internet have been around for a while. Heck, so have oil paintings and carrier pigeons. It's the fact that there's a super-easy way to share images that's significant.

And by the way, would your cell phone cam actually take a legible picture of anything not right in front of it, in full sunlight? Mine wouldn't. These, however, might do the trick.

Let's hope Netflix (NFLX) executives weren't counting on its announcement about instant movies on your PC to win the hearts and servers of the blogosphere. Because the vaunted voices of the digital brain trust have seen your little idea, Reed Hastings, and they are not impressed. Our Business 2.0 colleague Owen Thomas, one of the Browser's founders, was blunt in his dismissal , saying: "This offering is so weak that Netflix might as well not have bothered." Similarly, the mighty Om Malik suggests that Netflix's movies-to-PC move will "soon be relegated to the dustbin of failed ideas."

The chief criticisms are: Netflix is offering streaming video, rather than downloads, and thus consumers can't copy movies or use them in more convenient ways; only 1,000 titles will be available when the service launches in June; and, in the age of home-surround-sound and mural-sized flat screen TVs, there is a limited market for watching movies on a computer.

Only a fool would pick a fight with people who know as much about the tech biz as Thomas and Malik. But it seems to me that they are calling the game in the second inning. First of all, the list of movies available for streaming will surely grow, and the limits on that growth are coming almost entirely from Hollywood studios, not Netflix. More importantly, these critics are analyzing Netflix as if it were some fledgling start-up that must get the technology exactly right in order to survive. Quite the contrary: Netflix is a nicely profitable company that continues to grow rapidly. In the third quarter of 2006, it added another half-million subscribers, and is now approaching six million customers who send Netflix an average of $16 a month. With that kind of cash flow, the company can easily afford the $40 million it's reportedly spending on the streaming.

Netflix's strategy should be viewed as a five- to ten-year game plan, in which it continues to sign up people for DVDs by mail, while simultaneously helping its customers make the transition to the inevitable digital download market.

And in that game, don't count Netflix out. Like Amazon (AMZN), they are absolutely brilliant at building and enhancing the customer experience. They have an unparalleled database of what kind of movies their customers like to rent, and that database will be just as useful in the digital download era as it is now.

Of course they don't have the technology worked out yet, because the marketplace hasn't decided what the precise path for digitally downloaded movies will be. Netflix's baby-step announcement is a way of saying that they will be a major player regardless of what the final tech setup is. I, for one, would not bet against that proposition.

The first HD DVD movie has showed up on BitTorrent's doorstep. Why is the Browser not shocked that the title in question is Joss Whedon's Serenity, the Firefly movie? Only thieves with massive external hard drives need apply: The movie is 19.6 GB. Here's some of the back story from Ars Technica:

This release follows the announcement, less than a month ago, that the copy protection on HD DVD had been bypassed by an anonymous programmer known only as Muslix64. The open-source program to implement this was called BackupHDDVD and was released in a manner designed to put the onus of cracking on the user, not the software. To extract an unencrypted copy of the HD DVD source material required obtaining that disc's volume or title key separately, which the software did not do. However, a key was later released on the Internet, and a method for extracting further keys is allegedly available as well.

Oops. So does this mean that Blu-Ray, which is supported by Apple (AAPL), Dell (DELL) and Panasonic (MC), is tougher to crack and will have a competitive edge over HD DVD, the standard backed by the likes of Toshiba, Microsoft (MSFT) and Intel (INTC)?

Or is there a pirated Blu-Ray flick coming soon to a PC near us?

Netflix (NFLX) announced today that it's letting subscribers download movies off its website (for free!). The only thing surprising is how long it's taken the DVD rental service to offer some kind of answer to critics who have said for years that the Netflix business model is just a giant sitting duck, dependent entirely on the popularity of DVD technology and with no contingency plan for the day that will inevitably come when discs go the way of Betamax.

With this new stroke, Netflix can certainly be called forward-thinking, but CEO Reed Hastings is still biding his time here. The road of movie downloads has been well-paved, and not just by Amazon.com (AMZN) and Apple (AAPL) with their services announced last year, but by other online rental businesses like Movielink and CinemaNow. Yet there's still a long way to go before mass adoption. Blame the movie studios for being so stingy with what movies they're allowing to be downloaded solely because the DVD business still remains way too lucrative to give up just now. Just look at Apple's paltry Disney and Paramount-only offerings.

By comparison, Netflix will offer about 1,000 downloadable movies, and it's to be lauded for the range of studios that have signed on. But the thing that's always been so appealing about Netflix (especially if one subscribes to the Chris Anderson theory of the LongTail) is that its catalog of 70,000 movies means that you can dream up any movie, no matter how obscure, and have it in your mailbox within 48 hours.

The studios may yet come around and offer that kind of comprehensive access in digital download form someday, but don't hold your breath. Netflix's grand experiment will cost the company $40 million this year, and if the company is serious about downloads, expect the licensing fees (those studios again!) to keep rising. Reed Hastings is up against a lot, but there's something sensible about letting subscribers try digital downloads on their own and free of charge for now. It just might whet their appetite for more.

Sometimes with Web 2.0 it's hard to tell the difference between the very, very cool and the utterly insane. If you're a New Yorker, or planning on visiting New York, you might get a kick out of this amazing map, courtesy of the good people at Urban Spoon. We're not sure it's ultimately all that useful to have a map of every single restaurant in the five boroughs. But it is fun to play with.

Padmasree Warrior, Motorola's (MOT) chief technology officer, knows a thing or two about cell phones. She offers her "morning after" insights on Apple's (AAPL) new iPhone (can we call it an iPhone without incurring the wrath of Cisco (CSCO)?) on her blog.

She makes some good points both geeky (why EDGE and not HSDPA?) and practical (how will people use a touchscreen to dial while driving?)

This morning's Gizmodo has the best roundup/analysis of iPhone features we've seen thus far. It's off the keyboard of the site's energetic editor, Brian Lam, who was covering Jobs' keynote by day and competing in Vegas nerd-off by night. If you don't have the patience for any more speeds 'n feeds, Lam summed up his feelings early on during yesterday's unveiling.

At 9:59 a.m., in two words, he captured his reaction as well as the mood of the Mac faithful stumbling around San Francisco's Moscone Center. Those two words? "I'm hard."

"Do you have a genocide map?", the man asked. "And what's your plan for profit-sharing?"

Welcome to the Q&A segment of last nights New York Tech Meetup. While the rest of the world was looking towards Macworld, The Browser snuck off to the once-a-month gathering of geeks and tech business types in lower Manhattan hosted by Meetup.com founder Scott Heiferman. (We make the rounds so you don't have to....)

The high points of last night's show:

• The question above, which was directed at Di-Ann Eisnor, CEO of Platial.com, a social mapping start-up backed by the likes of Kleiner, Perkins, Caufield and Byers as well as the Omidyar Network. Heiferman nicely summarized the business as the "people's atlas," a free service that allows anyone to make a map. Eisnor received a warm ovation, particularly as her answers to the above were more or less yes and yes. (See genocide map here.)
• The resolve of Citizen Image CEO Feargall Kenny in the face of a cool reception to his start-up, a company that intends to build a commercial market for amateur photos. It seems the Mac-toting, Web 2.0 faithful of the Meetup crowd are still suspicious of those that put business model first.
• The failure of the web connection during the breathless presentation of DayLife, the much-hyped next-generation automated news aggregator. Nevermind that the young, dressed-in-black presenter modestly described the site as the "single place for the world to converge and do news the way it should be done," most of the audience was left wondering "what the hell is it?" Most amusing was when someone in the audience mentioned that Michael Arrington, an investor in the project, had actually panned the tool. To this, a protective Heiferman, who works across the hall from DayLife, retorted: "Michael Arrington is an ass." (For those especially interested in incestuous sniping by Web-world mini-moguls, please to see Nick Denton's post about Daylife on Valleyway...and Jason Calacanis' comments thereto.)

All in all, a successful gathering of roughly 356 New York tech-types. Think First Tuesday with a healthier ratio of geeks to MBAs. We'll return next month and keep you fully posted....

Right now, somewhere off the coast of Taiwan in the South China Sea, a small fleet of ships is engaged in what may amount to the most tricky and expensive wiring job ever, and the tech world is tuning in.

For those that missed it, on December 26th a magnitude 6.7 earthquake rocked the ocean floor off the southern tip of Taiwan. Two people were reported killed and dozens injured on land, where the damage to property was otherwise relatively contained. On the floor of the ocean, however, the scene was unusually ugly. Dozens of undersea fiber cables snapped or buried under shifting ground. "Taiwan lost almost all of its telephone capacity to Japan and mainland China," notes Vanguard. "Service to the United States also was hard hit, with 60 percent of capacity lost."

The outages were eventually remedied as carriers shunted traffic through other networks. However, the workaround circuits involving satellites are "slow, expensive and unstable compared with cable-based connections," writes the Shanghai Daily.

Almost two weeks later, China Telecom announced today that repairs could take several more weeks to complete. Picture five giant fiber fix-it boats bobbing around on the high seas with grappling hooks. Lindsay Goldwert at Slate has put together a helpful item entitled "How Do You Fix an Undersea Cable?" Meanwhile, the BBC reports that the job is especially "difficult as some cables had become trapped under the seabed or were tangled up." Apparently the water is too deep for the repair crews to use their unmanned subs. "Instead, we must use a kind of grappling hook - a rope with chains and hooks attached - that can be dragged along the sea bed to try and find the cable," says Ian Douglas of UK-based Global Marine Systems to the Beeb.

The Browser says this is all just another strangely reassuring reminder (listen up all you Second Life addicts) of our essential terrestrial-ness.

Photo courtesy of STV, Inc.

One of the first big new products to come out of CES so far is LG's combo HD-DVD/Blu-Ray player, modestly called the SuperMultiBlue. Samsung is also in the game. If the players work well, they could short-circuit the next-gen DVD wars before they begin, just as the much-hyped dash versus plus (never heard of it, right?) wars never materialized due to dual-format players.

LG's been talking about this for a while, and finally the specs, and price point, are out. At best, the player represents a third way out of the tough choice consumers face today (if they're really really excited about high-def video) between HD and Blu -- it plays both, and it upconverts regular DVDs. At worst, it's yet another confusing device to keep consumers far away from the whole thing.

While it's a great product, and surely a plus for LG's emerging CE business, the price point is a good reason the SuperMultiBlue won't end any format wars quite yet -- it's $1,199, compared to Toshiba's HD-DVD player ($430 at Wal-Mart) or the Playstation 3, which has a Blu-Ray player (about $400). Most folks willing to take a flyer on either format would probably pick something cheaper, just to limit their up-front investment in a still-sketchy product, especially seeing as how movies for the two are still pretty similar and very limited.

Also at CES, an HD-DVD discussion moderated by presidential-cousin-cum-infotainment-guru Billy Bush (why him, we don't know) tells us that HD-DVD sales are doing at least as well as DVDs did in their first year. And one attendee, a blogger at the U.K.'s Techdigest, details HD-DVD's plans for file sharing. If the hardware question does eventually become moot, HD-DVD will seem pretty farsighted for focusing on improving their discs so early in the game.

With all the techworld's eyes turned on him, Bill Gates stepped to the podium yesterday to give what will likely be his second-to-last keynote at the iconic Consumer Electonics Show in Las Vegas. In the audience, tech bloggers were poised to transmit his every word in real time, even as Microsoft's PR machine queued up a streaming web feed. The lights dimmed, out came the world's richest man, and...on came the head nods. Rob Wright at TG Daily expected more of the keynote which he said, "turned out to be a mostly boring, uninspired and listless event. Gates talked much about the importance of digital connectivity, which isn't exactly a new development." And Wright was not alone. Asked one CNET reader: "Did anyone else have trouble staying awake for it?"

When it comes to public speaking, Gates is no Jobs. And perhaps we should be thankful the man has some limitations, though one worries the lack of charisma at the podium could prove to be problematic in his second career as a philanthropist and global health activist. Fortunately, money talks.

Jason Kottke points us to Metacritic, and, in particular, its well-designed summary of film critics' top ten picks in 2006. (RottenTomatoes, of course, has been doing this sort of thing for ages, though it's presentation of the summary data isn't quite as user friendly.)

Why be content knowing that Roger Ebert gives a film the thumbs up, when there are so many other thumbs out there? Who scored the most #1 picks? Seems there's a tie between Army of Shadows and United 93. Who knew?

While everyone is focused this morning on Bill Gates' keynote at CES, or the impending start of Macworld Expo in San Francisco, a bit of interesting news drifted eastward from China: Yahoo China will be reorganized as a business search engine.

Jack Ma, the founder of Alibaba, which owns Yahoo China (Yahoo in turn owns 40% of Alibaba) was characteristically blunt. He conceded that rivals Baidu and Sina.com were winning the market share game: "If Yahoo is going to win, it has to do so in a new way," he said to the AP. And how might that be? "We don't want those not interested in business or making money. They can go to Baidu. Our main focus is the high-end." That ought to appeal to the healthy mercantile spirit of the Chinese entrepreneurial classes, for whom Ma is a hero.

The blogs are quiet thusfar on the move, but one reader of Search Engine Watch asks a provocative question: "Could it be a test market for future global shifts?" And that's an intriguing point. Might Yahoo, in the face of competition from regional consumer-oriented search engines, consider focusing on business elsewhere? Given the strength of Yahoo Finance and the quality of the business-oriented ad audience, it's not so far-fetched, though certainly a wildly early speculation.

For those keeping score, however, this is the second time in as many weeks that we've seen pundit types suggesting a Yahoo retreat.

About a year ago, Guy Kawasaki, self-made champion of tech entrepreneurs, started his own blog. The man who gave us Rules for Revolutionaries in 1999, began posting a single essay each day under the title "How to Change the World." On Monday, Kawasaki posted a statistical recap of his first year on the job, revealing essentially that his blog has proven a non-event. 262 long posts later, Kawasaki averages 6,200 page views a day and has managed to eke out a meager $3,350 in Google ad revenues. So where to place the blame?

Chris Anderson of Wired magazine and The Long Tail fame sees in Kawasaki's poor showing not editorial failure but (surprise!) a validation of his own economic theories: "Just another reminder that the reason to be a Long Tail producer is not direct revenues. Instead, it's exactly what Guy uses it for: marketing for his books, VC firm, speeches and consulting. For which he's exceedingly well paid. Indirect revenues rule!"

No doubt indirect revenues do rule, but we suspect Anderson may be missing a larger point, i.e. something closer to Kawasaki's own analysis: "One interpretation of this self-judged lack of success," he writes gamely, "is that the blogosphere prefers news and gossip to essays although my buddy Seth Godin disproves this theory." Or, to put a finer point on it, perhaps Kawasaki's long form blog musings just aren't that compelling, nor do they fit in an ad-friendly niche. But does this condemn bloggers who lack indirect revenues to poverty as Anderson would have it?

We wonder what Wired's own Clay Shirky would make of the Kawasaki stinker. It's Shirky who pointed out in November the rise of "meganiches," those narrowly targeted sites that nonetheless attract hordes of loyalists: "the Net is chockablock with special-interest sites and services you've never heard of but whose user base exceeds the print circulation of the Washington Post."

Just to cram one more pop cliche in here: what, we'd like to ask the Wired boys, is the tipping point between being part of the "long tail" (primarily good for "indirect revenues") and being a "meganiche," presumably capable of supporting a small crew of full-timers?

Endgaget is reporting that Samsung is working on an RFID-enabled fridge. Back in the old days (the late 90s), it seemed whenever someone wanted to suggest how the Internet would change daily lives, a stock example was, "and your refrigerator will be hooked up to the 'Net..."

A few years later, the 'Net fridge looked like it was about to become reality. Cisco demonstrated a 'Net connected fridge in 2000, and said it was teaming up with Whirlpool to produce webified kitchen appliances. The companies never issued any subsequent press releases on the fate of their alliance, but a quick scan of Whirlpool's fridge offerings shows no Cisco-powered refrigerators for sale.

Now, it is quite possible that Web-connected kitchen gear is all the range in South Korea, where Samsung is headquartered. Broadband connections are practically ubiquitous in South Korea, and the country is a test bed for all things wireless and broadband. (South Korean rival LG already makes a 'net fridge, which it featured in the windows of a Harrod's department store in London, of all places.)

But the chance of Internet-connected appliances taking off in the U.S. remain slim. We stubbornly like our appliances to do one thing, and do it well. (Thus the failure of the combo TV/VCR) And though the Samsung fridge promises to send a message to your cell phone or the grocery store if you're running low on milk, unless the thing actually buys the milk for us, Americans are likely to stick with Refrigerator 1.0.

Quick, what's the most used, least discussed software application around? Answer: calendaring software. With the "PIM" wars ancient history, most of us have been living in a Microsoft Outlook world, and the press has focused its attention on the higher profile battle between mobile computing platforms, like the Palm and Blackberry. Largely overlooked has been the growth and potential of online calendars. But yesterday, thanks to a new report from HitWise, the tech world turned its attention abruptly to the subject, and we can almost hear the "uh ohs" in Redmond. According to the HitWise data, Google Calendar, still less than a year old, has overtaken MSN Calendar in market share, and is fast approaching market leader Yahoo Calendar. The data was quickly picked up by Michael Arrington, who double-checked the trend against Comscore numbers and found that for once the two data services agree. "I'm not surprised to see [Google Calendar] getting traction against Yahoo and Microsoft," writes Arrington. "Those guys haven't put much attention into their own products lately."

The Browser, which jettisoned Outlook some time ago, and then moved in quick succession from Yahoo Calendar to Google Calendar, is not surprised either.

The Browser stopped by the Palo Alto offices of Photobucket recently to see what's up with the biggest site that nobody's ever heard of. Co-founder and CEO Alex Welch emerged from the back room into what could easily pass for the waiting lounge at a doctor's office and beamed, "Today is our big day. We hit 30 million users."

Ranked 44th on Comscore's top 50 Web properties with more than 15 million unique visitors a month and adding 80,000 new users per day, Photobucket has become a force in the world of social networking. For those who have never heard of the company, its name pretty much tells the story. Users upload content (75% photos; 25% videos, graphics, icons, avatars, etc.) and embed links to that content on their blogs, newsgroups, and the like. "We pioneered the whole idea of taking codes and embedding to other websites," Welch says. "Now we have a 70% penetration on Myspace."

Because subscribers use Photobucket primarily as a means to publish content elsewhere, Welch has a unique window into how traffic is moving around the Web. With a peek into the logs, he weighs in on the "death of myspace debate" rather definitively: Myspace "traffic is going up and to the right. It hasn't flattened at all." But at the same time, he's seeing fractionalization. Specialty networks like the goth site VampireFreaks.com are booming. And as Photobucket moves into the mainstream, its demographics are moving beyond the glitter set. Welch says users are starting to tend toward the 35/40 age range. "A lot of them have kids. Scrapbooking is huge. Two Peas in a Bucket is seeing a lot of traffic."

As for the Photobucket business, Welch wouldn't talk revenue figures but says the company made money last year, with most of the cash coming from ad sales. It has raised a total of $14 million in venture financing and Welch is clearly keeping his eyes on the IPO market. He cites video compression software company DivX (DIVX), which went public in the fall, as evidence that Wall Street's appetite for tech IPOs may be growing. "We're continuing to build the company, accelerating growth and revenue. You have to because of Sarbanes-Oxley," he says. "Ultimately, we have the reach andeyeballsballs. In 2007, we expect to be in the top 25, and you can monetize that kind of traffic. If you look at the privately held, ad-supported sites in the top 50, there aren't many."

Mochila, a New York based start-up aiming to create a new online market for syndicated news content, has raised $8 million in a Series B round of funding led by Charles River Ventures. The cash is the latest sign that Mochila's business may get off the ground. Mochila (the name is apparently spanish for "knapsack,") envisions a world in which the existing AP-Reuters subscription wire service model will give way to an online spot market for content. The company's system -- which is strictly business-to-business for the moment -- allows member editors to browse news stories, as well as photos, audio, and video, and to buy, iTunes-like, whatever they want.

Since it emerged from "stealth mode" last April, the company claims to have signed up over 100 media companies that "own and operate more than 1,500 newspapers, magazines, wire services and websites combined." Among others: the Associated Press, Hearst Magazines, and Hachette Filipacchi Media.

In the purchasing process, the editor can, for varying prices, stipulate what degree of exclusivity he or she requires on the item. So, for example, a Hearst magazine editor might purchase the North American rights to a news feature in perpetuity. Naturally, for there to be buyers there must be sellers, and Mochila depends on its members also submitting content to the market.

The Browser met with Mochila last spring and got the pitch from CEO Keith McAllister, onetime Managing Editor of CNN's national news operations, and CTO/Chairman Benjamin Chen, formerly CIO of once high-flying iXL. Our take: McAllister and Chen are right that the Internet will - and has already to some extent - upend the conventional model for syndicated news, and they certainly have the management experience and, increasingly, the cash to make a run at the problem. On the other hand, their closed system -- with its attempt to model the many complex licensing rules that now govern content syndication -- runs somewhat counter to the open RSS ("Really Simple Syndication") ethic that has flourished thusfar online. Of course, according to a brand new Forrester report, only 2% of Internet users actually use RSS, so what do we know? Stay tuned.

Journalists have already done some important work exposing the trail of broken iPods -- and broken consumers (this Browser contributor is on Apple cash cow number three after two malfunctioned hard drives). So it's only natural that the next step is for the aggrieved to organize themselves. Say hello to iDud, where you can write a letter to Steve Jobs, find fellow activists to (what else) protest at next week's MacWorld Conference, and, in true Apple fashion, purchase your own iDump Pod Disposal for the can't-miss price of $39.99.

Over at Valleywag, where sanctimony can sometimes reign, a professor named Clay Shirky has been getting some attention for criticizing how Linden Lab reports the numbers for its fast-growing Second Life virtual world. But along with his acidic criticism of Linden Lab's numbers, he seems even more eager to direct vitriol at the business press, including myself. His contempt is aimed at articles in various publications and websites, including a column I wrote in November at Fortune.com.

Shirky is outraged that writers should report without comment the number of registrants Linden Lab has accumulated for Second Life, the figure the company calls "residents". He is especially offended by references like one I made November 10 to the "1.3 million members" of the service.

To give him the minimal due he deserves, he's correct in noting that my use of "members" was inaccurate. In fact, the "residents" number merely reports how many people have tried to sign up for an avatar they can use in the world of Second Life. As I said in my initial column, the system is very difficult to use. In fact the majority of registrants, it would seem, either give up immediately or else very infrequently return. While millions may have registered, only 15-20,000 are in the world at any given time. Linden Lab CEO Philip Rosedale said in November that three months after registration, about 10% of registrants still log in at least weekly, a figure that has remained consistent even as the service grows.

However, the growth of the resident figure remains astonishing. On January 1 it surpassed 2.3 million, an increase of one million - or 77% - since my piece less than two months ago. Shirky is entitled to think that is not noteworthy, but it is.

More significantly, actual use is rising at a comparably rapid rate, albeit at much lower levels. In fact Linden Lab publishes extensive data about its own growth. These charts show that user hours, number of paying members, land creation, and in-world economic activity are all growing exponentially. For instance, the number of paying residents has more than doubled since June to over 40,000. (You don't have to pay to use Second Life, and many who go there merely to sightsee do not.) User hours per month grew from about 3.5 million in June to 7.5 million in December.

Incidentally, the company publishes enough data there and elsewhere on its website to render Shirky's complaints completely illogical. Linden Lab now routinely reports more data than any other social networking or commercial community site I know of. His umbrage might be more usefully directed at companies like MySpace, which claims something like 135 million user accounts. How many of those are in use? Would MySpace reveal as much data as Linden Lab does?

There's no question that Linden Lab faces a near-crisis as interest in its product so obviously soars. The product is unusable by most casual users. If you aren't lucky enough to encounter a generous guide on your first visit, who helps you understand the basics of movement, navigation, and avatar etiquette, you probably won't come back.

Yet on the other hand, with usage already growing so rapidly, the company may not really want all those newly-interested hordes to get into its virtual world anyway. It already maintains about 5,000 servers, having added more than 800 in the last six weeks or so.

There is a limit to how quickly any system can grow, and Second Life is such a complex product that it may not be able to handle all the users who are interested. The product's source code exceeds 5 gigabytes today. What makes Second Life unique and important is the ability of its residents to create the content there. But a system in which 20,000 simultaneous users can all be moving around making things like houses, trees, hats and even flying penises takes a lot of computing horsepower.

Shirky and other complainants at Valleywag and elsewhere may not agree, but the reason so many business and other journalists throughout the world are writing about Second Life is because they recognize it as something fundamentally new. I will continue to take note of Second Life's novelty and significance.

Big news last week in the ongoing network neutrality debate. Over the holidays, AT&T (T) hashed out an agreement with the FCC for its merger with BellSouth in which AT&T agrees to abide by some of the principles of network neutrality (The primary document). This is a major development for an issue that's pitted Internet companies (Google (GOOG), Yahoo (YHOO), et al) against the telcos. And the Internet companies seem to have won this latest round.

First, a quick primer on network neutrality. Network neutrality is the idea that internet service providers can't discriminate between data packets based on their content. For instance, Google's data has to be treated the same as Yahoo's, and telco companies can't create tiers of service in which some sites can pay to have their content delivered faster and with greater reliability than others. (FORTUNE ran a 60 Second Briefing on this last year. And if that's still too reductive, see Wikipedia for more.)

There were bills floating around Washington in the last Congressional session that sought to put some of these principles in writing, but none got passed. This FCC agreement is in essence the first time the government will be trying to enforce net neutrality, and AT&T gets to be the guinea pig. The FCC agreement prevents AT&T from discriminating between where data comes from—but leaves room for AT&T to prioritize certain kinds of data (for instance, delivering video faster). This seems like a win for consumers.

But the Browser has a question: how will the FCC detect discrimination and enforce this policy? Edward Felten, head of the Center for Information Technology Policy at Princeton, raised just this point in a paper last year, following a scenario in which consumers discover they're having jitter problems with their VoIP services:

The most challenging possibility, from a policy standpoint, is that TelCo didn't take any obvious steps to cause the problem but is happy that it exists, and is subtly managing its network in a way that fosters jitter. Network management is complicated, and many management decisions could impact jitter one way or the other. A network provider who wants to cause high jitter can do so, and might have pretextual excuses for all of the steps it takes. Can regulators distinguish this kind of stratagem from the case of fair and justified engineering decisions that happen to cause a little temporary jitter?

Surely some discriminatory strategies are so obvious, and the offered engineering pretexts so weak, that we could block or punish them without worrying about being wrong. But there would be hard cases too. Net neutrality regulation, even if justified, will inevitably lead to some difficult line-drawing.

Maybe the Browser is missing the nitty gritty technicalities here, but it seems like decisions about how to priotize data—conscious or otherwise—have to be made all the time when managing a network. One might imagine a circumstance where one network provider has an infrastructure that favors data packets from one VoIP provider over others just by virtue of the engineering. Does AT&T have to rectify that on behalf of the other VoIP companies? How can we tell the difference between pernicious discrimination and the types of network failings that are just the price of doing business?