TIME Technology & Media

Verizon to Acquire AOL for $4.4 Billion

Verizon Communications announced a $4.4 billion deal Tuesday to acquire dial-up pioneer turned media company AOL at $50 a share.

The telecoms giant framed the deal as an opportunity to expand streaming video services over its wireless networks. AOL combines a video-rich suite of news sites, which include The Huffington Post, TechCrunch, and Engadget, with streaming technology that delivers high quality video over the web.

“At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT [over-the-top video], that taps into the market shift to digital content and advertising,” Verizon CEO Lowell McAdam said in a statement. “AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”

AOL shares climbed by nearly 19% in pre-market trading Tuesday.

TIME Technology & Media

Music Streaming Website Grooveshark Shuts Down

The music stops for the pioneering website

The online streaming website Grooveshark lost its battle with the music industry on Thursday, shutting down immediately as part of a settlement agreement.

The company was been being sued by a slew of record companies, including a $15 billion suit from Universal Music Group.

According a notice posted on the company’s website, they must also wipe clean any records of copyrighted material, hand over their online and mobile platforms, and surrender their patents and intellectual property.

Grooveshark also issued an unequivocal apology.

“Despite our best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.”

A March 25 ruling by a U.S. Federal Judge granted EMI Music North America a motion for summary judgement on claims Grooveshark had violated its copyrights, a decision that could have found the web company liable to pay upwards of $420 million.

Grooveshark was founded in 2006 by three college students at the University of Florida and for years has been a thorn in the side of major record labels who claimed the website was illegal.

TIME Companies

Social Networking App Secret Is Closing Down

David Byttow (L) and Chrys Bader-Wechseler, founders of Secret, at the South By Southwest Interactive festival in Austin on March 9, 2014.
Barbara Ortutay—AP David Byttow (L) and Chrys Bader-Wechseler, founders of Secret, at the South By Southwest Interactive festival in Austin on March 9, 2014.

It's getting carried to the grave

Secret, the year-old social networking app that attracted 15 million users and aimed to bring anonymity to web interactions, is shuttering.

“After a lot of thought and consultation with our board, I’ve decided to shut down Secret,” founder and CEO David Byttow posted on the blogging platform Medium on Wednesday afternoon. “Unfortunately, Secret does not represent the vision I had when starting the company, so I believe it’s the right decision for myself, our investors and our team.”

Secret entered the tech scene with a lot of buzz early last year. In its short lifespan, the app let users gossip, kvetch, and post anonymous messages. Since identities remained, well, secret, complaints of cyber bullying and abusive behavior abounded.

Despite, Byttow’s attempts last year to quell such concerns, the app’s content moderation and filtering did not pass muster with Fortune when we tested it last summer. “Secret needs to do better. And fast,” senior editor Dan Primack wrote at the time. “Perhaps as fast as it’s growing.”

That growth curve apparently took a plummet recently. “The app has reportedly been hemorrhaging users as of late,” BuzzFeed News reporter Brendan Klinkenberg writes, despite the app undergoing a huge redesign at the end of last year.

The company had raised around $35 million in three rounds of VC funding, including a $25 million infusion in mid-2014 that reportedly included $6 million for company founders Byttow and Chrys Bader-Wechseler. Investors included Index Ventures and Redpoint Ventures (neither of which has yet commented). At the time, Secret was valued at around $100 million.

Byttow says that he will spend much of his time in the coming weeks helping to find other job opportunities for his core team. He plans to return the company’s remaining venture capital funding to its investors.

“I believe the right thing to do is to return the money rather than attempt to pivot,” he writes. “Innovation requires failure, and I believe in failing fast in order to go on and make only new and different mistakes.”

Fortune has also reached out to the company and its CEO. We await his reply.

This article originally appeared on Fortune.com.

TIME Technology & Media

Why Facebook Isn’t Ready to Roll Out Video Ads — Yet

Facebook logo shown on an iPhone 5s.
Lukas Schulze—AP Facebook logo shown on an iPhone 5s.

Investors are hungry for more details, yet Facebook doesn’t seem to be in a rush to share

A year ago, Facebook was not a destination for video content. Now, the social media company sees four billion video streams each day, as it noted in its first quarter earnings call today. Almost overnight, Facebook became a video juggernaut. And three quarters of those views occur on mobile.

Video on Facebook has the company’s shareholders excited. The category is seen by many as the holy grail of online advertising. Sight, sound, and motion is a more compelling sales opportunity than a flat banner ad, and advertisers are willing to pay more for it. But Facebook has said little about its efforts to monetize video ads. Pitch decks have leaked. Speculation has abounded. Facebook even held a secret video sales event today, meant to capture advertiser budgets ahead of the “NewFronts,” the digital version of the broadcast industry’s programming “Upfronts.”

In the question-and-answer portion of Facebook’s earnings call, investors repeatedly asked about its plans to make money from video ads. Will Facebook attract big TV advertisers to its platform? How much money will Facebook invest in that platform? What’s the breakdown of video ads versus regular ads? How many of those four billion video views are ads? Will Facebook engage in long-form video? Will it compensate professional video creators?

But CEO Mark Zuckerberg, COO Sheryl Sandberg, and CFO Dave Wehner dodged most of those questions. Listeners learned precious few details.

Sandberg tamped down expectations of video becoming a major source of new revenue. Video ads may not contribute much incremental growth, she noted, because they sometimes take the place of a regular Facebook ad. In other words, a brand a looking to buy video ads may simply purchase a sponsored video in place of purchasing a sponsored post. Both sponsored videos and sponsored posts appear in Facebook’s stream of content. These ads are purchased programmatically through an auction, so there is no price difference between a sponsored video post and a regular sponsored post.

Left to speculate, Josh Olson, a technology analyst with Edward Jones, said he estimates video ads will contribute 5% in incremental revenue in 2015. Facebook does not appear to be in a rush to monetize its explosive growth in video. “They’re taking their time getting there,” he says.

Update: This morning Facebook announced one new detail: Anthology, a program that pairs brands with media partners who will create video ad materials for them to promote on Facebook. Partners include Vice Media, Vox Media, Tastemade, Oh My Disney, The Onion, College Humor, and Funny or Die.


This article originally appeared on Fortune.com.

TIME Companies

This Is the Company Behind the Coolest New Star Wars Character

BB-8 Star Wars
Alberto E. Rodriguez—2015 Getty Images BB-8 onstage during Star Wars Celebration 2015 on April 16, 2015 in Anaheim, California.

Iger is credited with discovering the tech company responsible for the robot character’s movement

A little-known startup got a big shout-out at this week’s Star Wars Celebration in Anaheim, Calif., thanks to Walt Disney CEO Bob Iger.

Iger, whose media empire bought Star Wars creator Lucasfilm for $4.05 billion in 2012, kept a low profile at the bi-annual gathering of the space saga’s hard-core fans. But he was sitting right in the front row of the massive convention center auditorium where a star-studded panel took place on Thursday morning, the first day of the four-day-long event.

One by one, Lucasfilm president Kathleen Kennedy, director J.J. Abrams, actors Carrie Fisher and Mark Hamill and others took the stage to disclose more details on the next installment of Star Wars, much to the delight of the lightsaber-toting crowd. When an adorable free-rolling robot named BB-8—a new character in the upcoming installment of the series—joined them in the spotlight, it too received a fervent round of applause. The audience went even wilder when Kennedy, who took over for company founder George Lucas in 2012, mentioned that BB-8’s graceful (and real-life) maneuverings were at least partly enabled by a small company discovered by none other than Iger.

Kennedy didn’t mention the name of the startup on stage, but when asked in an interview with Fortune she revealed that the company is Boulder, Colo.-based Sphero, which bills itself as a “connected play company, fusing digital and physical play by creating toys and robots that you control with a smart device.”

It turns out that the startup, headed by CEO Paul Berberian, was selected for Disney’s accelerator program last year, along with nine other companies. According to Disney’s website, the three-month-long program picks tech startups who want to “make an impact on the world of media and entertainment,” giving them upwards of $120,000 in investment capital. It also matches each startup with a mentor from within Disney’s executive ranks. Sphero’s mentor? You guessed it: Iger. When the tech-savvy CEO saw Sphero’s technology in action, he realized the potential application for BB-8 and connected the startup with the masterminds of the Star Warscharacters.

Executives at Sphero couldn’t be reached for comment, but the company’s website describes its signature product as an app-controlled ball that does it all. The same underlying technology, which was licensed to create the version of BB-8 that graced the stage at the Star Wars Celebration (Kennedy calls it the “Red Carpet BB-8″), allows the little bot to glide around on a ball-like structure, literally running circles around R2-D2.

What’s interesting is that Sphero also appears to be working with Disney on a Star Wars-themed toy (who wouldn’t want their own, fully-functional BB-8 rolling around their home?) It’s also worth noting that while Iger’s involvement in the film franchise has often been behind the scenes, he is deeply involved in many ways. At the same time, he’s managed to assuage the fears of apprehensive fans—Iger has a good track record when it comes to acquiring companies and letting them be, and so far he has protected Star Wars from any overt “Disneyfication.” He also has an admirable history withmaking bold bets on up-and-coming technologies, across Disney’s diverse divisions.

Sphero, of course, is still a relative unknown, and it’s not clear what other applications its technology may have within Disney or elsewhere. But after this week, the little company behind the adorable new robot might get a little more attention—and the effusive, laser-focused adulation of the Star Wars masses.

This article originally appeared on Fortune.com.

TIME Technology & Media

An Ad-Free Paid Version of YouTube Is Definitely Coming

An employee at the Google Inc.'s YouTube Space studio in Tokyo, Japan.
Bloomberg via Getty Images An employee holding recording equipment walks past Google Inc.'s YouTube logo displayed at the company's YouTube Space studio in Tokyo, Japan, on Saturday, March 30, 2013. In Japan, YouTube's biggest regional success story in Asia, the company is recruiting online stars to bolster its local-language channels with more-targeted original programming and higher production values. Photographer: Kiyoshi Ota/Bloomberg via Getty Images

The service is expected to launch by the end of the year

YouTube said Wednesday it will soon launch a new subscription-based service that will let users watch videos on the website without annoying ads interrupting the clips.

The streaming video website, which is owned by Google, reportedly disclosed the planned paid service in an e-mail sent to producers of top video content and obtained by various media outlets. The e-mail did not say how much the subscription would cost or when it would become available. However, Bloomberg cited an anonymous source who said the paid service would be available before the end of this year.

YouTube also reportedly plans to update its terms of service for video partners, effective in June, to give them a 55% cut of subscription revenues, according to TechCrunch. Current YouTube content creators — including social media stars like Michelle Phan — already get a similar share of ad revenues.

Last fall, reports surfaced claiming YouTube was considering an ad-free, paid service as part of its effort to boost revenue (and, eventually, turn a profit), but the company had offered no confirmation until now.

The subscription will be Google and YouTube’s latest attempt to diversify beyond the ad-based business model for the more than a billion users who visit the streaming video site monthly. In November, YouTube introduced a test version of Music Key, the website’s ad-free, subscription music service that will cost $9.99 a month. YouTube already offers top-flight videos on certain paid channels and users can also rent or buy moves through the site.

Wednesday’s disclosure comes at a time when Google and YouTube are facing stiffer competition than ever from rival online streaming services, such as Netflix and Hulu. Netflix, in particular, has been adding original content including television series and movie deals with big names like Adam Sandler to better compete with more traditional media outlets. Amazon has followed suit, adding critically acclaimed original content to its own Prime Instant Video service.

Meanwhile, traditional media outlets like HBO and CBS are also building their own subscription-based services, while startups such as Vessel — a paid video site created by former Hulu CEO Jason Kilar — are taking aim directly at YouTube’s users.

This article originally appeared on Fortune.com.


TIME Technology & Media

11 Twitter Mistakes to Avoid at All Costs

The Twitter logo displayed on a mobile device.
Bethany Clarke—Getty Images The Twitter logo is displayed on a mobile device.


Question: What is one mistake small businesses and startups make on Twitter constantly that I should avoid?

Starting a Tweet With an ‘@’ Sign

“Twitter is best when it’s a conversation. Too often, startups will engage in that conversation by writing directly to another person or brand. Starting a tweet with a peoples’ names (i.e., “@magoosh, thank you!”) means only folks who are your fans and their fans will see the interaction. By putting a period before the “@,” your full audience will see the conversation.” — Aaron Schwartz, Modify Watches

Using a Different Hashtag Every Time

“It’s important to develop a consistent, branded hashtag so your following knows the best way to play along. By using a different hashtag every time, your brand is potentially missing out on an opportunity to have its message spread more effectively across Twitter.”

Sounding Off

“Too many businesses treat Twitter like a bull horn. Twitter is most effective as a listening tool and for providing followers with relevant communication. Leave status updates to sharing links and images or asking engaging questions.” — Adam Root, SocialCentiv

Tweeting Infrequently

“Next time you’re on Twitter, count how many tweets come through your feed within 10 minutes. Due to the volume on Twitter, your posts are unlikely to be seen if you’re only tweeting every so often. Instead, come up with three to five ways to talk about the same thing, schedule your tweets to go live multiple times a day and keep your stream topped up. That way, you’ll have a presence.”

Not Building Relationships With Brand Advocates

“Identify customers who are regularly interacting with you on Twitter, and go beyond retweeting their mentions. Specifically thank them, and start conversations about the industry or their work. By remembering key details about them and referencing them later (what products they own or certain projects they’re proud of), you’ll inspire brand loyalty.” — Tracy Foster, ONA

Treating Twitter and Other Social Networks the Same

“Twitter, Facebook, Instagram and other social media are not all created equal, and you should not be treating them as such. Quit tweeting the same thing you posted on Instagram and Facebook. Sure, there are outliers, and it makes sense, but you should be telling me a different part of your brand’s story on each platform.” — Blake Miller, Think Big Partners

Forgetting the ‘Social’ in Social Media

“Many companies forget the “social” part of social media and blast news about themselves and their products. Think about it in real world terms: You can’t walk into a party and start yelling about how cool your own party is. Take the time to get to know the people, join their conversations organically and figure out what about your business would interest them. Engagement goes both ways.” — Lauren Perkins, Perks Consulting

Constantly Retweeting

“Avoid constantly retweeting someone’s content. Yes, you might get followers, but no one will read your tweets because they are not original.” — Yuriy Boykiv, Gravity Media

Talking About Your Business All the Time

“With the possible exception of your family members, no one is following your business on Twitter because they want to be constantly advertised to. No more than 20 percent of your tweets should be promotional in nature. The other 80 percent should add value to your followers in some way.” — Brittany Hodak, ZinePak

Posting Controversial Tweets Just to Gain Attention

“Being controversial for the sake of gaining attention is not a good way to gain positive attention. Keep your tweets relevant, on point and conservative.” — Andrew Schrage, Money Crashers Personal Finance

Treating Twitter Like It’s a Promotional Channel

“Twitter is somewhere people go to interact with their friends and to be social. If you treat Twitter as a place to dump blog posts and press releases and never interact with your followers, you’ll never be successful on Twitter. Think about what kind of content your customers want to see, and provide it — even if not all of it’s immediately beneficial to you.” — Emerson Spartz, Spartz

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launchedStartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

This article was originally published on StartupCollective.

TIME Technology & Media

Tinder Hooks Up With New CEO After Roller-Coaster Year

Tinder App
Franziska Kraufmann—AP

Four months after CEO and co-founder Sean Rad said he would step down

After more than four months on the prowl for a new CEO, Tinder has finally found a match in former eBay executive Chris Payne.

Payne, who most recently lead eBay’s North America operations, is set to take over as CEO of the popular side-swiping dating app, Tinder confirmed Friday.

Payne joined eBay in 2009 when the online marketplace bought software startup Positronic, which he co-founded two years earlier. Prior to that, Payne had executive stints with Amazon and Microsoft. According to Payne’s LinkedIn account, he left eBay in December and currently sits on the board of in-flight broadband service Gogo.

The hire follows Tinder’s November announcement that CEO and co-founder Sean Rad would step down. Rad, who helped found the company three years ago, will remain with Tinder as a president and a member of the board of directors at the company, which is majority-owned by Barry Diller’s IAC. With Payne’s arrival, Rad will reportedly continue to take charge on product and marketing aspects while the new CEO will run all other operations.

In November, Rad told Forbes that Tinder would look for “an Eric Schmidt-like person” to replace him as CEO, referring to Google’s executive chairman. “Christopher brings invaluable experience running consumer technology businesses that operate at massive scale,” Rad said in a statement Friday.

Rad’s move into a less prominent role came after an up-and-down year for Tinder that saw rapid growth for the dating app along with controversy, including a sexual harassment lawsuit that paved the way for chief marketing officer Justin Mateen’s departure. Rad was also named in the lawsuit filed by Tinder co-founder Whitney Wolfe, which accused both Rad and Mateen of sexual harassment. The suit was settled last fall.

Payne joins Tinder as the company moves into a new phase of monetization, highlighted by its new premium service: Tinder Plus. Revealed earlier this month, the new service charges users anywhere from about $10 to nearly $20 per month (depending on their age) while offering premium features that include the ability to undo a swipe and to find potential matches in different parts of the world.

“Tinder’s incredible momentum and unique proposition leave it well positioned to be an increasingly ubiquitous part of the social fiber around the globe. I think this can be a very big business,” Payne said in a statement.

This article originally appeared on Fortune.com.

TIME Technology & Media

Millennials Are Abandoning Their TV Sets Faster Than Ever

Getty Images

The cord-cutting continues for America's youth

Young people are ditching their television sets even faster than in previous years, according to new data, with traditional TV usage falling among viewers age 18-34 falling at twice the normal rate in the recent September to January season.

A new Nielsen survey shows that traditional TV usage among millennial viewers tumbled 10.6% between September and January, the New York Post reports. Since 2012, traditional TV usage had only been falling at about 4% a year from season to season.

The sudden acceleration of young people dropping TV in favor of Netflix surprised many analysts. “The change in behavior is stunning. The use of streaming and smartphones just year-on-year is double-digit increases,” Alan Wurtzel, NBCUniversal’s audience research chief, told the Post. “I’ve never seen that kind of change in behavior.”

In 2011, 21.7 million young adults were tuning in to their TV sets, but that figure fell to 17.8 million last month, a drop of almost 20%. That trend is likely to continue as more millennials turn to online video streaming from Netflix, Amazon Prime, HBO GO and other sources.

[New York Post]

Read next: This Millennial Paid Off $23,375 in Student Loans in Just 10 Months

Listen to the most important stories of the day.


TIME Technology & Media

David Carr, Influential New York Times Columnist, Has Died at 58

He was a leading voice on media and its relationship with technology and culture

Correction appended, Feb. 13

David Carr, the veteran New York Times journalist and writer of the newspaper’s much loved Media Equation column, died on Thursday after collapsing in the newsroom.

The 58-year-old journalist joined the Times in 2002 as a business reporter covering the magazine industry, and had been writing extensively about the state of the media and its evolution since then. He also published a book titled The Night of the Gun in 2008, a memoir that documented his recovery from drug addiction.

He had previously worked as a contributing writer to the Atlantic Monthly and New York magazine, and was also a media writer for Inside.com.

Read More: TIME’s 2008 review of The Night of the Gun

Carr’s impact on the media industry and its people was evidenced by an outpouring of condolence and support on social media — not just from his own colleagues but from journalists around the world — following the announcement of his death.

Carr is survived by his wife Jill, a Shake Shack executive, and three daughters.

Hours before his sudden death, Carr interviewed whistleblower Edward Snowden via satellite link along with journalists Glenn Greenwald and Laura Poitras about their Oscar-nominated documentary Citizenfour. Watch Carr’s final interview below.

Correction: The original version of this story misstated the job held by David Carr’s wife. She is international operations manager for Shake Shack.

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