Microsoft, Yahoo Reconsider Merger
A year ago, Microsoft Corp. and Yahoo Inc. explored the idea of combining to form a greater competitor to Google Inc. The talks led nowhere leaving Microsoft and Yahoo to forge their own paths in pursuit of Google. How did they do? Well, they're talking again. In what appear to be early-stage discussions, executives at Microsoft and Yahoo are taking a fresh look at a merger of the two companies or some kind of match-up that would pair their companies' respective strengths, say people familiar with the situation. Although Microsoft dwarfs Yahoo overall, only a small portion of the software giant's business comes from the Internet. The renewed talks are a sign of the continued growth in Google's power and problems over the past year with in-house efforts at Yahoo and Microsoft to ride a boom in Internet advertising. Meanwhile, management changes at both companies could help pave the way for a pairing that a year ago couldn't happen. The talks were first reported in the New York Post. Both Microsoft and Yahoo declined to comment. "At this time, Microsoft has no comment," the software giant said in an emailed statement. A spokesman for Yahoo in London said, "We don't discuss market rumor or speculation." For Microsoft, a tie-up could help solve a critical challenge: attracting advertisers to its online businesses. The company over the past few years has built the technical foundation for brokering advertisements online. But the system, called adCenter has failed to attract a critical mass of advertisers. Still, Microsoft has technical expertise that might benefit Yahoo. Yahoo is one of the world's most popular Web sites, attracting millions of consumers a day to services such as Yahoo News, Finance and e-mail, which in turn attract advertisers. But Yahoo last year suffered a delay in converting to a new online ad system designed to close the gap with Google.

Yahoo Photos going dark as Flickr shines on
At Yahoo, Web 2.0 has won one battle with stodgy old Web 1.0. Yahoo is shutting down Yahoo Photos — for years, the No. 1 or No. 2 most-visited photo site on the Web. Its users will be directed to move their pictures to Yahoo's hot upstart, Flickr. Flickr, acquired by Yahoo in March 2005, has steadily gained traction. Visitors rose 22% between April 2006 and April 2007, according to measurement service Hitwise. At the same time, Yahoo Photos lost 60% of its audience. In its heyday, Yahoo Photos was such a go-to place for photo-sharing that more than 2 billion images are stored on its servers, to nearly 500 million for Flickr. Yahoo Photos will be shut down by the fall. Users will be directed over a three-month period to transfer their images to Flickr or other photo sites such as Shutterfly, Kodak Gallery, Snapfish or Photobucket. Yahoo says it will make the transition easy, with a one-click transfer process. Yahoo has said that it kept both services going after the acquisition because they appealed to different audiences. But Thursday, it said in a statement that Yahoo Photos was closing because of the changing nature of the Internet. Digital photography has evolved "into a social activity that allows people to communicate and connect," Yahoo said. "We have decided to shift our focus accordingly." Yahoo Photos is a static photo-sharing site, with links to offers to buy prints and accessories.

How the top photo sites stack up, in market share of hits:

Youtube Cutting You In
Google's YouTube has decided to cut some video makers in on the action, the company announced in its blog Thursday. The shared revenue will come from advertising money made from individual contributors' videos, YouTube said. The policy won't extend to everyone. Unlike video-sharing site Revver, which shares its advertising revenue with all of its contributors, YouTube's partnership deal is strictly for contributors YouTube feels are significant and draw a crowd--in other words, the popular kids. Among the chosen partners are Lonelygirl15, LisaNova, renetto, HappySlip, smosh, valsartdiary and others who have garnered YouTube celebrity status. YouTube was not immediately available for comment, but it wrote at length about the upcoming partnerships in its blog. "Because they have built and sustained large, persistent audiences through the creation of engaging videos, their content has become attractive for advertisers, which has helped them earn the opportunity to participate on YouTube as a partner," the company blog said. The shift is significant because it creates a stratification among YouTube users, a site that previously touted itself as a place of egalitarian opportunity.

Online advertisers turn to 'Super Banner' ads
The traditional online banner ad is dying, according to new research published today. The Online Publishers Association Europe (OPA Europe) and the European Interactive Advertising Association (EIAA) said that advertisers are increasingly demanding larger and more "interactive" ads. EIAA's data shows that the 468 x 60 traditional banner format has seen a slump in popularity from 21 per cent of the formats delivered in the first half of 2006 to 13 per cent in the second half. At the other end of the scale, the larger 728 x 90 Super Banner now represents 35 per cent of the formats delivered, while the 300 x 250 Medium Rectangle now accounts for a third of ad formats used. The OPA Europe figures demonstrate an even greater concentration on the bolder formats with the Super Banner and Medium Rectangle accounting for 86 per cent of the formats delivered. "The results of this study point out certain differences between portals and our members' news and information sites," said Koro Castellano, president of OPA Europe.

Mobile ads to generate $3 bln
The world market for mobile marketing and advertising is expected to be worth about $3 bln by the end of 2007, according to ABI Research. By 2011, the value of this market will reach $19 bln, including mobile search and video advertising. ABI Research also expects some of the highest levels of spending to come in the broadcast mobile video space. By 2011, it will surpass SMS as a source of mobile marketing spending, due in part to mobile broadcast networks’ presence in all major markets. In 2011, ABI Research expects spending for broadcast mobile video advertising alone to reach $9 bln.

Vista draining laptop batteries, patience
Some of Microsoft's most important customers aren't happy with the battery life offered by notebooks running Windows Vista. "It's a little scary," said John Wozniak, a distinguished technologist in Hewlett-Packard's notebook engineering department, referring to the work HP needed to do on making Windows Vista more suitable for notebooks. Vista, while touted as having improved power management capabilities that would make it easier for users to extend battery life, isn't to some living up to that promise. The main culprit appears to be the Aero Glass interface a spiffy new user interface that makes Vista more pleasing to the eye with transparent windows and animated transitions when moving from one application to another. When Aero is turned off, battery life is equal to or better than Windows XP systems. But with it turned on, battery life suffers compared with Windows XP. Microsoft made some important changes in Vista that do improve some aspects of battery life, such as smarter hibernation modes that override applications that want to keep running, and simpler options for choosing a power management setting. But laptop users who spent extra money on powerful laptops to handle the graphics requirements of Vista and the Aero interface are forced to run the aesthetic equivalent of Vista Basic, the low-cost version of Vista, if they care about battery life. HP decided it wasn't going to use the power management settings that shipped with Vista, Wozniak said.

Court denies Vonage request for retrial
A US appeals court has denied Vonage's request for a retrial of a patent case it lost against Verizon Communications earlier this year. The US Court of Appeals for the Federal Circuit refused to grant the motion. Vonage had asked the court in a motion filed on Tuesday to send the case back to a lower court for a new trial, based on a Supreme Court decision handed down on Monday that could make it easier to challenge allegedly obvious patents. In March, a jury found that Vonage had infringed three patents owned by Verizon, the second largest phone company in the US. Vonage's appeal of the verdict is scheduled for a hearing on 25 June. Vonage said it is still confident that it will win its appeal in the case. The company has repeatedly stated that it believes the verdict was based on an interpretation of the patents that was too broad. The company has also argued that the patents are invalid because there were plenty of other companies that had filed patents for similar technology. "Although we're disappointed that the appeals court denied our request for a retrial, this ruling has no impact on our appeal, which continues to move forward," said Brooke Schulz, a spokeswoman for the company. "We believe our appeal is strong, and are pleased the court has given us the option to use the expanded obviousness test for patent validity in our arguments before them." The Federal Circuit has already granted Vonage a permanent stay during the appeals process on an injunction ordered last month that would have prohibited the company from signing up new customers.

DRM group vows to fight bloggers
Bloggers "crossed the line" when they posted a software key that could break the encryption on some HD-DVDs, the AACS copy protection body has said. Thousands of websites published the key, which had been uncovered in a bid to circumvent digital rights management (DRM) technology on HD-DVD discs. Many said they had done this as an exercise in free speech. An AACS executive said it was looking at "legal and technical tools" to confront those who published the key. A row erupted on the internet after popular website Digg began taking down pages that its members had highlighted were carrying the key. The website said it was responding to legal "cease and desist" notices from the Advanced Access Content System. Digg's users responded by posting ever greater numbers of websites with the key, and the site eventually sided with its users. Michael Ayers, chair of the AACS business group, said it had received "good cooperation from most folk" in preventing the leak of the key.

RIAA Drops Yet Another Case
Given just how many cases the RIAA has had to drop after it was pointed out that it's sued the wrong person, why isn't anyone questioning why the RIAA is allowed to file thousands of cases in a single shot when it's clearly not very careful about the process? The latest is that the RIAA has dropped a case after it was pointed out to the RIAA that the person being sued wasn't actually a subscriber to the ISP in question at the time of the observed file sharing. Oops. At some point, you would think that someone would point out that the RIAA appears to be abusing the legal system as its personal plaything in suing whoever it wants whenever it wants on whatever flimsy evidence it can find.

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