TIME Earnings

This Is the Single Craziest Number in Facebook’s Earnings Report

Facebook Inc. Opens New Data Center In The Arctic Circle
A Facebook Inc. "Like" logo sits on display at the company's new data storage center near the Arctic Circle in Lulea, Sweden, on June 12, 2013. Bloomberg—Getty Images

There are a whole lot of Facebook addicts out there

Facebook put up a lot of impressive numbers in its third quarter earnings report Tuesday: 1.35 billion monthly active users, $3.2 billion in revenue, $800 million in profit. But the number that may be most surprising is one that rarely gets harped on in the media: 864 million daily active users.

This figure is the true metric driving the company’s runaway growth. To make money, Facebook needs to serve you ads—lots of ads—as you peruse its site. Obviously these daily users are soaking up a lot more ads than people who just check in once a month. Perhaps more importantly, the figure shows that Facebook is able to maintain its hold on users’ attention even as it stuffs more features (like auto-playing videos) and ads onto its site. In fact, the percentage of daily active users in the quarter, out of the total number of monthly active users, was 63%, up from about 59% in the previous quarter.

This impressive retention rate helps explain why Facebook has said it will take on additional expenses in the future to expand staff and pursue more acquisitions—the company believes it knows what is users want, and it seemingly has the stats to back up the claim.

TIME Companies

Facebook Creams Expectations While Twitter’s User Growth Stumbles

SWEDEN-FACEBOOK-DATA-CENTER-SERVERS
This picture taken with a fisheye lens shows a man walks past a big logo created from pictures of Facebook users worldwide in the company's Data Center, its first outside the US on November 7, 2013 in Lulea, in Swedish Lapland. JONATHAN NACKSTRAND—AFP/Getty Images

The social media titans are having very different weeks

Another quarter, another chance for Facebook to easily beat Wall Street’s expectations. The world’s largest social network now has 1.35 billion monthly active users, and it generated $3.2 billion in revenue and more than $800 million in profit from them in the third quarter. Facebook’s woes trying adapt its business to mobile now seem like a distant memory, as mobile now makes up two-thirds of the company’s ad revenue. (Despite this success, Facebook’s stock is down more than 10% in after-hours trading after the company said it expects expenses for the year to outpace initial forecasts, though it remains to be seen how the stock will behave after investors have had a night to process the news.)

Twitter, Facebook’s most direct competitor, is having a very different week. The company’s stock plunged 10% after it released its quarterly earnings report Monday, not because of the company’s paltry profits—investors don’t expect the social network to make much money in the near term—but rather because Twitter increasingly looks like it won’t be able to approach anything near Facebook’s scale. Twitter added 13 million monthly active users during the quarter, for a total of 284 million. Facebook added about 30 million, and it will probably continue to increase the gap for the foreseeable future.

There are several reasons Twitter’s user and financial growth is trailing Facebook’s. For one, Facebook’s users are much, much more engaged with their social network than Twitter’s. Less than half of Twitter’s users visit the site daily in its top 20 markets, compared to 63% for Facebook globally. The number of timeline views each Twitter user sees also decreased during the quarter, both year-over-year and compared to the second quarter. Twitter just has not proven itself to be a necessity in its users’ lives to the same extent Facebook has.

As a business, Twitter also lacks Facebook’s monetization opportunities. Twitter ads mostly hew to the typical 140-character format, though some have images. Facebook, meanwhile, successfully managed to make auto-playing video a staple in users’ News Feeds this year and is slowly experimenting with using the format for ads, which are sure to command a high price. More broadly, Facebook says its ads can be highly targeted because its users disclose their true identities and countless data points about their lifestyles and preferences. Twitter’s view of its mostly anonymous users is relatively opaque by comparison.

But perhaps the biggest thing separating the two companies is the way they’re run. Facebook will gleefully shove any changes down users’ throats and force them to adapt. The initial introduction (and constant revamping) of the News Feed, the ratcheting down of the organic reach of Page posts and the ongoing tweaks to its privacy policy are good examples. If any of these moves have bred resentment toward the company (Facebook has previously found a spot on lists of the most hated companies in America), it has not hurt business or even broad user engagement.

Twitter, meanwhile, has seen relatively few changes to its core interface since it launched. Sure, Twitter.com got a much-needed overhaul in 2011 and earlier this year profile pages were retooled to resemble Facebook’s Timeline pages, but the core Twitter experience has basically remained untouched. It’s a barrage of super-short messages presented in chronological order, sometimes organized by a set of commands so obtuse they require a glossary — though Twitter is experimenting with showing users tweets from accounts they don’t necessarily follow.

That simply may not be enough to entice the average Internet user. CEO Dick Costolo said Monday that the social network must increase “its overall pace of execution” in introducing new features that make the site more understandable to laymen. But unless they’re willing to rethink the service from the ground up, it’s not clear any amount of tinkering will allow Twitter to achieve his stated goal: building the “largest daily audience in the world.”

TIME Regulation

Feds Sue AT&T for Allegedly Slowing Unlimited Data Plans

AT&T Asks U.S. Judge to Throw Out Sprint's Antitrust Lawsuit
The AT&T Inc. logo is displayed at the company's new store in Chicago, Illinois, U.S., on Friday, Sept. 30, 2011. Bloomberg/Getty Images

"The issue here is simple: 'unlimited' means unlimited."

The Federal Trade Commission is suing AT&T for allegedly misleading customers by slowing data speeds for wireless customers who had unlimited data plans but went over a certain usage point, the agency announced Tuesday.

According to the FTC, AT&T did not properly inform customers who had unlimited plans that their speeds would still be lowered after they exceeded certain data thresholds in a given month. Speeds were reduced by as much as 90 percent in some cases, making basic phone functions such as web browsing and watching video almost impossible, the FTC said.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” FTC Chairwoman Edith Ramirez said in a statement. “The issue here is simple: ‘unlimited’ means unlimited.”

AT&T throttled speeds for 3.5 million customers at least 25 million times, the FTC alleges, while it also said that customers who canceled their contracts due to the lowered speeds still had to pay expensive termination fees, the FTC alleges.

In an emailed statement, AT&T senior executive vice president and general counsel Wayne Watts called the FTC’s suit “baffling.”

“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program,” Watts said. “We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented. In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.”

AT&T no longer sells unlimited data plans to new customers and has been trying to phase out the service for years, along with many other major carriers. The company announced in 2011 that it would begin throttling the data speeds of its heaviest users on a regular basis.

Wireless carriers’ practice of slowing speeds for their heaviest unlimited users has also caught the attention of the Federal Communications Commission. “Wireless customers across the country are complaining that their supposedly ‘unlimited’ data plans are not truly unlimited, because they are being throttled and they have not received appropriate notice,” said an FCC spokesperson Tuesday. “We continue to work on this important issue, including with our partners at the FTC, and we encourage customers to contact the FCC if they are being throttled by AT&T or other cellular providers.”

TIME Media

This Is Why Taylor Swift’s Album Isn’t on Spotify

"Charles James: Beyond Fashion" Costume Institute Gala - Candids
Musician Taylor Swift attends the "Charles James: Beyond Fashion" Costume Institute Gala at the Metropolitan Museum of Art on May 5, 2014 in New York City. Mike Coppola—Getty Images

Haters gonna hate, hate, hate that they can’t stream Swift’s latest

It feels like Taylor Swift has been everywhere lately—mentoring would-be stars on The Voice, performing “Welcome to New York” atop one of the city’s skyscrapers, joining New York City’s tourism department. One place she’s not, though, is Spotify, one of the world’s most popular streaming services.

Swift’s new pop album, 1989, debuted in stores and on iTunes on Monday, but it’s nowhere to be seen on Spotify or other streaming services like Pandora. The album is widely expected to be the best-selling release of the year, so its absence from the online services is notable.

But it shouldn’t come as a surprise to anyone that Swift maintains tight control over how fans access her music. The singer kept her last album, Red, off Spotify when it dropped in 2012. And in a Wall Street Journal op-ed earlier this year, Swift lumped streaming in with file sharing and piracy as reasons that album sales have shrunk dramatically over the last decade and a half.

“It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is,” Swift wrote. “I hope they don’t underestimate themselves or undervalue their art.”

Digital album sales, which were supposed to be the life raft that saved the flailing music industry after the Napster era, declined nearly 12% in the first half of 2014. Some people like Swift have blamed the decline on streaming services, which jumped 42% in usage during the same period. Artists make considerably less money when a fan listens to a track on Spotify rather than buying a track outright, but the streaming service says that as it achieves scale it will be able to pay artists even more than they’re able to earn selling discrete units.

Other big-name artists have recently followed Swift’s lead. Beyonce’s surprise December album still isn’t available on Spotify, while Coldplay’s 2014 release Ghost Stories arrived on the streaming service four months after the physical version debuted. The Black Keys, who have long opposed Spotify’s model, have also kept their latest LP off the service.

For its part, Spotify says it wants to bring 1989 to its users, and the company did eventually manage to get Red up and streaming. “There are over 40 million music fans on Spotify and Taylor Swift has nearly 2 million active followers on the service who will be disappointed by this decision,” Spotify spokesman Graham James said in an email. “We are working to bring this album to fans on Spotify as soon as possible.”

As consumer habits shift and streaming becomes more popular, artists will likely face more pressure to release their albums online immediately. But with 1989′s first-week sales estimated at 900,000 units, it’s hard to argue that Swift is behind the times. “Music is art, and art is important and rare,” she wrote in the Journal. “Important, rare things are valuable. Valuable things should be paid for.”

TIME Smartphones

4 Reasons Amazon’s Fire Phone Was a Flop

German Launch For Amazon's Fire Smartphone
A man holds the new Fire smartphone by Amazon.com Inc. during demonstration at a a news conference in Berlin, Germany, on Monday, Sept. 8, 2014. Bloomberg—Bloomberg via Getty Images

Amazon still has $83 million worth of unsold units

Amazon’s ongoing expansion into more and more product categories has finally hit a big speed bump. The Fire Phone, Amazon’s recently launched smartphone, was supposed to compete with high-end devices like Apple’s iPhone and the Samsung Galaxy. But consumers apparently didn’t bite—Amazon was forced to take a $170 million writedown charge on costs related to the device, it was revealed Thursday. Meanwhile, the company reportedly has $83 million worth of unsold Fire Phones still in its inventory.

While CEO Jeff Bezos is likely surprised that the Fire Phone hasn’t flown off Amazon’s virtual shelves, the device’s lack of appeal was obvious to many outside observers. Here are four reasons Amazon’s Fire Phone was doomed from the start:

Too Expensive

Amazon has a history of undercutting competitors on everything from tablets to balsamic vinegar. So it came as somewhat of a surprise when the Fire Phone launched at $199 with a two-year wireless contract, essentially the same price as the iPhone and Samsung Galaxy. The high price didn’t help incentivize iPhone and Galaxy owners to abandon their devices, which is what Amazon needed to happen for the Fire Phone to gain quick traction. The company saw the error of its ways relatively quickly and dropped the phone’s price to 99 cents in September, but that hasn’t been enough to turn things around.

Small App Store

Though Amazon’s devices run on Android, they use a proprietary app store tailor-made for the company’s phones and tablets. That means developers have to make different versions of their apps specifically for the Fire Phone and Kindle Fire, and many haven’t bothered. Amazon’s app store has about 240,000 apps, compared to more than 1 million in the Google Play store. Most notably, Amazon’s store lacks Google’s flagship apps, so Fire Phone owners have no easy access to Gmail, YouTube or Google Maps. Other popular services, like Dropbox, are also absent. Users can sideload Android apps onto the Fire Phone, but it’s a more cumbersome process that might be beyond the technical prowess of some Amazon fans who are used to the simplicity of devices like the Kindle e-reader.

Late to Market

The Fire Phone was a classic case of “too little, too late.” Apple is on its eighth generation of iPhones, and Android devices have been around nearly as long. Smartphones now account for 72 percent of the overall mobile market in the U.S., according to Comscore. Amazon would probably have the most luck convincing first-time smartphone buyers who have yet to develop a device preference to pick up a Fire Phone, but there simply aren’t many of those people left.

Features of Limited Interest

Many of the Fire Phone’s most innovative features, like the ability to scan 100 million real-world objects with the press of a button, are really aimed at getting customers to buy more things on Amazon. Making such features the main selling point of the device immediately means its appeal will be limited to only heavy Amazon users. Other new features, like the 3D display, were generally met with a collective yawn. The iPhone 6’s most prominent new feature, meanwhile — its big screen — is a more obvious upgrade, and its own commerce-focused perk, Apple Pay, works at plenty of places outside Apple’s ecosystem.

Overall, Amazon’s ambitious device simply doesn’t have a defining quality that would compel the average consumer to run out and buy it. We’ve all made it this far in life with perfectly suitable smartphones, and there already myriad ways to buy stuff on Amazon. The Fire Phone is solving problems that nobody had in the first place.

TIME Companies

Ad-Free Social Network Ello Gets $5.5 Million in Funding

US-IT-INTERNET-MEDIA-ELLO
The Ello website is seen on the monitor screen September 27, 2014 in Washington D.C. Paul J. Richards—AFP/Getty Images

Company promises it will never sell ads or user data

The burgeoning social network Ello has raised $5.5 million in a new round of venture funding, it was revealed Thursday. The buzzy startup gained widespread attention in September thanks to its manifesto decrying social media companies’ habit of gathering and monetizing user data.

“Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.” the manifesto reads. “We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce and manipulate — but a place to connect, create and celebrate life.”

Ello is putting some legal muscle behind its lofty rhetoric by reincorporating as a public benefit corporation in Delaware. The company will vow in its new legal charter that it will never sell user data or advertising, according to The New York Times. The company plans to make money by charging users for extra, as-yet-unspecified features.

Though Ello has been around since summer, the site exploded in popularity last month after Facebook began kicking drag queens off its site because they were not using their legal names, leading some of those users to relocate to Ello. The small social network leapt from 90 users in early August to more than 1 million today, according to the Times. Facebook has since apologized for how its real name policy affected the LGBT community and others.

The funding round was led by Foundry Group, based in Boulder, Colo.

[Re/code]

 

TIME Social Media

Twitter Wants to Dominate Apps By Winning Over Developers

Twitter Inc. Headquarters As Company Raises $1.8 Billion After Boosting First Debt Sale
The Twitter Inc. logo is seen on coffee mugs inside the company's headquarters in San Francisco, California, U.S., on Friday, Sept. 19, 2014. Bloomberg—Bloomberg via Getty Images

Social network wants to expand its reach beyond tweets

Twitter is trying to make itself an essential part of the app ecosystem with a new suite of tools aimed at mobile developers. Those tools, announced Wednesday and bundled together in a free service called Fabric, put Twitter in more direct competition with Google and Facebook for control of the mobile future.

Fabric is comprised of a suite of individual tools that together help developers deal with many of the issues they face getting their apps up and running. Crashlytics, a company Twitter bought in 2013, will help developers analyze crash rates for their apps and improve stability. MoPub, another recent Twitter acquisition, is an ad exchange that allows developers to easily serve ads in their apps that are bid on in real-time auctions. The third leg of Fabric, called Twitter Sign In, will let people sign into different apps using their Twitter login credentials rather than a username and password specifically for that app. Similarly, a new service called Digits will let people sign into apps using their cellphone number instead of a username and password.

Outside of Digits, Twitter had offered some form of these services before, but they hadn’t been wrapped up in one simple-to-use interface. Announced at the company’s first-ever mobile developer conference, Fabric is something of an olive branch Twitter is extending to the development community after the social network tightened access to its API a few years ago. Whether app makers will play nice with Twitter now remains to be seen.

TIME Reviews

Apple’s New iPads Are Great, But Not Essential

Apple Unveils New iPad Models
The new iPad Air 2 (R) and iPad Mini 3 are displayed during an Apple special event on October 16, 2014 in Cupertino, California. Apple unveiled the new iPad Air 2 and iPad Mini 3 tablets and the iMac with 5K retina display. The Asahi Shimbun—2014 The Asahi Shimbun

You may be better off seeking last year's cheaper models

Apple’s latest iPads, the iPad Air 2 and the iPad Mini 3, are being released to relatively muted fanfare compared to the excitement that surrounded the launch of the company’s latest iPhones. It makes sense—while the latest iPhones sported larger screens, much-improved cameras and the ability to be used as mobile wallets in stores, the improvements to the iPad line are subtle by comparison.

The new iPads are great, reviewers say, but they may not warrant running out for an immediate upgrade. Here’s a rundown:

Over at The Verge, Nilay Patel praises the iPad Air 2’s unprecedented thinness (6.1 millimeters), improved A8X processor, TouchID fingerprint scanner and battery life. However, at $499 for the cheapest model with 16 GB of storage, he says the product doesn’t differentiate itself enough from the slightly smaller iPhone 6 Plus or a full-fledged Macbook:

iOS 8 and OS X Yosemite are designed to make the transition from iPhone to Mac easier than ever with features like Handoff and Continuity; there’s hardly any reason to take a pitstop at the iPad along the way . . . For better or worse, Apple’s allowed the iPad to become the giant iPhone its critics have always insisted that it is, and in a world with giant iPhones that’s a tough spot to be in.


The iPad Air 2 is “pretty close to perfection,” according to CNET, but it also “doesn’t do anything startling or new.” As Scott Stein explains:

The iPad Air 2 is undoubtedly better than any other current iPad, but its advantages might matter less than last year’s dramatically-redesigned iPad Air: screen quality, size, and battery life are close enough, effectively, to feel the same. Processor power and camera quality — and Touch ID — are welcome additions, but not needle-movers for the typical iPad user. Year-old iPads have never seemed like better bets.

The original iPad Air is now retailing for $399 for its cheapest model. Critics say that may be a better choice for iPad newcomers or those with even older tablets looking for an upgrade.

Apple’s new pint-sized tablet, the iPad Mini 3, probably isn’t worth its price, according to the New York Times’ Farhad Manjoo. It doesn’t sport the super-fast processor in the iPad Air 2 and it has the same weight and dimensions as its predecessor, the iPad Mini 2. The newly-added Touch ID is the main differentiating factor, along with a new gold model, but Manjoo says that’s not enough. “Unless you’re going to be doing a lot of Apple Pay shopping or you’re gaga for gold, it’s best to save the $100 and go with the Mini 2,” he writes.

The final verdict: Apple’s latest products are well-designed and probably the most advanced in their respective markets, but they still don’t quite warrant their high price tags, especially if you’re looking for more storage than the basic models provide.

 

TIME Media

CNN and Other Turner Stations Pulled From Dish Network

It's the latest sign that the pay-TV business model is under strain

CNN, Cartoon Network and other stations owned by Turner Broadcasting were pulled from the Dish Network lineup late Monday after negotiations between the two companies stalled. The incident is the latest flare-up in the pay-TV industry as television distributors balk at paying increasingly high programming costs to networks.

“In the past year, DISH has successfully renewed agreements with many large content providers,” Warren Schlichting, DISH’s senior vice president of programming, said in a statement. “As a result, we are confident that we have offered a deal to Turner that reflects an appropriate value for our customers.”

Turner fired back by claiming that Dish was the one who had led to the blackout. “Turner has worked diligently for months to come to a fair agreement including multiple extensions and compromises, and it’s unfortunate that Dish is once again operating in a disruptive manner that takes away networks and programming from their customers,” the company, a subsidiary of Time Warner, said in a statement.

Dish Network has about 14 million pay-TV subscribers, making it one of the largest providers in the U.S.

Spats between pay-TV operators and network owners have gotten increasingly contentious as operators have begun to shed video subscribers in recent years. A blackout of CBS on Time Warner Cable last summer lasted about a month, and the cable operator Suddenlink dropped Viacom channels indefinitely at the start of October. In their statements, both Dish and Turner indicated that they are trying to come to an agreement soon.

With HBO and CBS having just announced that they will offer their channels directly to consumers who don’t have cable, negotiations over programming costs may grow even more heated in the future. The growing discord in the pay-TV industry indicates that massive, expensive bundle of one-hundred-plus channels that we’ve all grown accustomed to may not be long for this world.

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