May 2009

Pentagon Plans New Arm to Wage Wars in Cyberspace

The Pentagon plans to create a new military command for cyberspace, stepping up preparations by the armed forces to conduct both offensive and defensive computer warfare. The military command would complement a civilian effort to be announced by President Obama today that would overhaul the way the United States safeguards its computer networks. President Obama will announce the creation of a White House office — reporting to both the National Security Council and the National Economic Council — that will coordinate a multibillion-dollar effort to restrict access to government computers and protect systems that run the stock exchanges, clear global banking transactions and manage the air traffic control system. White House officials say President Obama has not yet been formally presented with the Pentagon plan. They said he would not discuss it today when he announced the creation of a White House office responsible for coordinating private-sector and government defenses against the thousands of cyberattacks mounted against the United States — largely by hackers but sometimes by foreign governments — every day.

Time Warner Board Backs AOL Spinoff

Time Warner's announcement on Thursday that it will spin off AOL was the much-anticipated divorce filing for a multibillion-dollar corporate marriage that came to symbolize an entire era in American business but that had long been acknowledged as a failure. The split, which Time Warner executives have said for months was coming, gave a last echo of the dot-com bubble, which burst in the months after the merger was announced. That deal, one of the biggest in history, came at the height of a national infatuation with Internet and media stocks, a time whose reasoning is hard to recall after living through the ensuing bust and boom and in the depths of a severe recession. For three years, AOL has been steadily getting out of the business of paid Internet service, becoming more reliant on advertising sales, but that strategy has been hampered by the worst advertising slump in generations. AOL has about 6 million paying subscribers in the United States, down from 13 million at the end of 2006. Last year, for the first time, subscription revenue was smaller than ad revenue. Over all, AOL had $4.2 billion in revenue last year, down from $9.1 billion in 2002. Time Warner as a whole, including the cable unit that is now a separate company, had $47 billion in revenue last year.

SPJ, AHJC Want Obama Administration To Address Information Control

The Society of Professional Journalists and the Association of Health Care Journalists (AHCJ) have called on the Obama Administration to end the practice of prohibiting federal agency staffers from talking with reporters unless those conversations are "tracked and monitored" by the public relations office. That request came earlier this month in response to the Obama Administration's ongoing call for input on how to make government more open and accessible.

Statehouse Exodus

AJR's latest survey of the nation's state capitols finds a dramatic decrease in the number of newspaper reporters covering state government full time. The tally found only 355 full-time newspaper reporters at the nation's state capitols, a 32 percent decrease from just six years ago. It discovered that 44 statehouses have fewer full-time reporters than they did six years ago. The number of full-time reporters remained the same in four states and increased modestly in two. A handful of digital news outlets are springing up to fill the breach. When will these efforts be enough to compensate for the loss of the newspaper watchdogs?

How Twitter poses a threat to newspapers

[Commentary] Thanks to the Internet, most every journalist can reach independently an audience immeasurably greater than the star reporter on the biggest newspaper or top-rated newscast could a generation ago. Now the traditional news business is built, one way or another, on a promise of exclusivity: What we've got you won't get elsewhere. So the idea that a media company's biggest threat may come from its own newsroom is hard for news managers to swallow. To make them really gag, add Twitter. Twitter is a dazzling social networking technology that allows you to stay in touch, via brief updates known as tweets, with a vast number of friends, acquaintances and interested strangers as you go through your day. Related software enables you to interact with even broader arrays of people you seek out through particular words in their tweets that suggest they know something you're interested in. It's easy to see why journalists, who depend on just such networks of informants, find Twitter appealing. The danger is that Twitter will keep reporters off the streets and in front of their screens, that it will further skew journalism toward seeking out, listening to and serving the young, the hip, the technically sophisticated, the well-off - in short, the better-connected. The people who aren't being heard now aren't sending out tweets.

Group Calls For Overhaul Of Privacy Regs

The National Institute of Standards and Technology's Information Security and Privacy Advisory Board says the US's 35-year-old federal privacy law and related policies should be updated to reflect the realities of modern technologies and information systems, and account for more advanced threats to privacy and security. The Board calls for Congress to amend the 1974 Privacy Act and provisions of the 2002 E-Government Act to improve federal privacy notices; clearly cover commercial data sources; and update the definition of "system of records" to encompass relational and distributed systems based on government use of records, not just its possession of them. The panel included technology experts from industry and academia.

FCC Launches International Broadband Comparison

The FCC sent letters to various countries asking them for information about developments in their broadband Internet market. The Commission said it is interested in obtaining broadband data at more granular levels, for example, by city, county, state, province or prefecture, and is interested in demographic and socioeconomic data at comparable unit levels. Letters were sent to South Africa, Singapore, South Korea, Hong Kong, Japan, Nigeria, Canada, Australia, Austria, Belgium, Brazil, Chile, Croatia, Czech Republic, Finland, France, Germany, Hungary, Ireland, Israel, Italy, Lithuania, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Arab Emirates, and United Kingdom.

Senate Launches Investigation Into Deceptive Online "Mystery Charges"

Senate Commerce Committee Chairman Jay Rockefeller has launched an investigation into certain e-commerce marketing practices that generate thousands of mysterious monthly charges to consumer credit cards. The source of these puzzling monthly fees appears to be from a group of marketing companies that acquire consumers' billing information through agreements with popular online retail sites. On many well-known websites, including Fandango.com and Orbitz.com, after consumers make a purchase, a hyperlink or "pop up" window appears and offers consumers a cash back reward if they sign up for a company's online membership service. If consumers accept the offer by providing an e-mail address and clicking a "yes" button, their credit card or debit card account information is automatically forwarded to the company and they are automatically enrolled in the service. And unless the consumer cancels this online membership service, their credit card or debit card is indefinitely charged $9-$12 on a monthly basis.

Google -- market disruptor or destroyer

Is Google a source of creative destruction--or just plain destruction? Google is steadily implementing a strategy, across many markets, of building services that sit right in front of the user and that act as gateways between the user and other online services. Google makes money from traffic to these gateway sites, as well as, oftentimes, from the sites it directs traffic to. And Google ends up controlling the game. How do other companies make money and build loyalty among consumers when their services become commodities, access to which is doled out by Google? Their business models are getting destroyed--perhaps deservedly so, though not always. Some new companies are figuring out how to work in a world where they have limited direct access to the consumer and very little brand loyalty. But companies with older models to protect are having a hard time adjusting.

How Facebook Will Upend Advertising

The question isn't how advertising will work on Facebook but rather how Facebook and social networks like News Corp.'s MySpace are changing advertising. One of the biggest challenges facing advertisers is ad credibility. Consumers typically rate advertising as their least credible information channel. However, businesses have continued to invest in advertising because they could compensate for the lack of credibility through broad distribution and high-impact messaging. Today that trade-off is being turned on its head. Word of mouth—peer opinion—has consistently been rated the most credible source of information. But traditionally there's been a limit as to how widely you could distribute a friend's point of view. Credibility now has a channel for mass distribution. It's called the Web and it particularly thrives in social networks. Such distribution will have profound implications for advertising.

Benton

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