Bit.ly Builds Business on Libya Domain

Bit.ly logoThe URL shortening service Bit.ly just secured $2 million in financing from investors including O'Reilly's AlphaTech Ventures. Though URL shorteners have been around for years, Bit.ly believes there's money in offering Twitter-friendly short links along with web analytics to track how the links are used. The company reports that its links were clicked 20 million times last month.

So far, the news coverage I've read about Bit.ly has neglected an unusual aspect of the startup: It's one of the only prominent online ventures using a domain name in the .LY namespace, which is controlled by Libya.

There are two issues that arise from this relationship.

First, of course, is the appearance of an American company doing business with Libya, a country that the U.S. considered a state sponsor of terror from 1979 through 2006. On Dec. 21, 1988, Libyan intelligence agents planted a bomb on Pan Am Flight 103 that blew up 31,000 feet over Lockerbie, Scotland, killing all 259 people onboard.

Bit.ly's only doing a trivial amount of business with Libya -- the domains sell for $75 per year from the registrar Libyan Spider Network -- but its use of .LY domain is helping to popularize and legitimize the top-level domain for general use on the Internet. It's only a matter of time before a reporter decides to ask the families of Lockerbie victims what they think of the arrangement. I can't imagine that story going well for the company.

Even without that PR hit, there's another potential concern for Bit.ly and any other venture that builds its business on an .LY domain. These domains are governed by Libyan law, as it states on the Libyan Spider Network site:

Any .LY domain names may be registered, except domains containing obscene and indecent names/phrases, including words of a sexual nature; furthermore domain names may not contain words/phrases or abbreviations insulting religion or politics, or be related to gambling and lottery industry or be contrary to Libyan law or Islamic morality.

So the names must conform to Islamic morality, and it's possible that the use of the domains could fall under the same rules. What are the odds that some of those 20 million clicks on a Bit.ly-shortened URL end up at sites that would be considered blasphemous or otherwise offensive in an Islamic nation? Bit.ly conveniently provides search pages for such topics as Islam, sharia, gambling and sex, any of which contain links that could spark another controversy.

Bit.ly's building a business atop a domain that could be taken away at any time, and the company's only recourse would be to seek redress in the Libyan court system. Take a look at Section 11 of the regulations for .LY owners:

The Arabic language is the language of interpretation, correspondence and the construction of the Regulation or anything related to it. ... In case of conflict between the Arabic and the English versions the Arabic version shall prevail.

I hope Bit.ly's attorneys are brushing up on their Arabic.

ScottsMoneyBlog.Com's Get-Rich-Click Scheme

Screen grab of ScottsMoneyBlog.Com

The 11-day-old web site ScottsMoneyBlog.Com is selling an amazing money-making work-at-home business opportunity for only $1.98. "Would you like to make $5,000 a month posting a link on Google?" asks Scott Hunter in an ad I spotted today on the Drudge Report. "Get paid $5 to $30 for every website link that you post on Google. No one needs to buy anything from you or Google in order to get paid."

I'm not clear on what Scott means by posting links "on Google," but he's wearing a tuxedo, so he must be rolling in dough.

I was about to invest some money I was saving for Nigerian ex-government officials with cash-flow problems, but I noticed something weird about Scott's site. He says he's originally from Saint Augustine, Florida:

My name is Scott Hunter. I am originally from the Saint Augustine, FL area. Recently married. I lost my job as a boring account rep for a manufacturing company a few months back. But here is my story on how I make $5,000+ a month by just submitting small text and ads online on Google. Read my story to learn how I did it and how you can do the same.

He's my neighbor! But when you visit his site from other places, his hometown changes. Scott's using a script from MaxMind that repeats the name of the town you're currently in:

My name is Scott Hunter. I am originally from the <script·src="http://j.maxmind.com/app/geoip.js"></script><script type="text/javascript"></script>, <script·type="text/javascript"><!--
document.write(geoip_region());
// --></script> area.

If you're reading this in a web browser, there's something I have to get off my chest.

Clearly, Scott's making so much money that he's concerned about his privacy. He doesn't want money-grubbing relatives trying to get their mitts on the Google link fortune he has amassed over the past two weeks. Scott even had to change his name and become a bigamist just to keep these leeches off his trail.

Before investing in Scott/Corey/Jacob's business plan, please note the terms and conditions: "The initial shipping and handling charge of $1.98 S&H which includes fourteen (14) days worth of access to the online directories and training. After 14 days, you will be charged MONTHLY of $47.50 for the recurring monthly fee for the googleprofitsinsider.com membership. After the 30 day trial I will be charged $99 for the program."

You probably think that $1,118 in yearly subscription charges is a bit high, but think of it this way: If you're making $5,000 a month you can pay that charge and still clear more than $58,000 in yearly profit, minus whatever you spend on tuxedos, wives and bling.

Newspapers Have Been Dying Since the '50s

The Wire Baltimore City Sun newsroom

Debra J. Saunders has an impassioned rant in today's San Francisco Chronicle about how we'll all be sorry when newspapers are dead:

News stories do not sprout up like Jack's bean stalk on the Internet. To produce news, you need professionals who understand the standards needed to research, report and write on what happened. If newspapers die, reliable information dries up. ...

I wonder who will be around in five years to cover stories. Or what talk radio will talk about when hosts can't just siphon from carefully researched stories, because they never were written.

Saunders blames the web and ideologically motivated haters for the demise of newspapers, but she ignores the fact that major dailies have been dying for decades, long before the Internet came along. Back in the '50s when Saunders was a child, the legendary journalist A.J. Liebling devoted numerous New Yorker articles to the sad demise of major papers and the societal hole that each left behind when the presses rolled to a halt. The industry has been dying for as long as many of us have been alive. Multiple newspaper towns became two paper towns, morning and afternoon. Two-paper towns became single-paper towns, usually when one paper killed the other. I can still remember where I was on Dec. 8, 1991, when I heard the news that the Dallas Times-Herald had been bought for $55 million and immediately shut down by the rival Dallas Morning-News. When a paper dies, a sizeable chunk of its readership doesn't move to another paper. People just break the habit. Even though half the reporters in town were gone, I don't recall any stories in the News back then lamenting the stories that would never be written.

Now that even the last paper standing in many cities is at risk of closure, we're supposed to agonize over the loss in a way that those papers never mourned the death of their cross-town rivals. Does Saunders realize that every paper left in this country has been cutting costs by dropping experienced reporters and limiting beats as fast as it can? The reporting she thinks we'll miss -- enterprise stories, investigative reports and government watchdog news -- is already a shadow of its former self. Former reporter David Simon devoted the final season of his TV series The Wire to the decimation of his old employer, the Baltimore Sun. By the end his alter ego, a long-time city editor named Gus, had been relegated to the copy desk with his most knowledgeable reporters shown the door. Most of the experienced reporters and editors who do the kind of journalism Saunders celebrates aren't in the newsroom any more. They got fired, bought out or took early retirement.

Saunders also ignores the role that massive debt has played in the economic troubles of our remaining dailies. Newspaper chains and other big media corporations have been gobbling up papers for years by borrowing to the hilt, counting on future profits to stay fat. A July 2008 Bloomberg article shows that the newspaper chains were overleveraged even before the current economic bust. The blogosphere and talk radio did not make the Gordon Gekkos who own newspapers saddle their publications with crushing piles of debt that require constant cost-cutting to finance.

I love newspapers. I began reading the Times-Herald when I was eight years old, delivered papers as a teen, majored in journalism, married a journalist and got my first job out of college at the Fort Worth Star-Telegram. I will read them until the last one folds.

But if we really begin to see major cities left without a single daily newspaper, I believe that it will create opportunities for leaner, more focused, more Internet-savvy media operations. There also will be more altruistic efforts to cover the news, like what's happening in Southern California with the non-profit Voice of San Diego.

Voice of San Diego is a four-year-old, 11-member news outlet that's funded by charitable foundations and reader donations. It began with the mission to "consistently deliver ground-breaking investigative journalism for the San Diego region" and "increase civic participation by giving citizens the knowledge and in-depth analysis necessary to become advocates for good government and social progress."

I don't believe there will be no news without newspapers. If journalism meets an essential need for an informed citizenry, something else will arise in their place to meet that need.

TechCrunch Runs Bogus Last.fm Rumor

TechCrunchLate Friday, TechCrunch ran a single-sourced allegation that the CBS-owned music-recommendation service Last.fm had handed over user data to the RIAA for use in illegal file-sharing lawsuits:

... word is going around that the RIAA asked social music service Last.fm for data about its user's listening habits to find people with unreleased tracks on their computers. And Last.fm, which is owned by CBS, actually handed the data over to the RIAA. According to a tip we received:

I heard from an irate friend who works at CBS that last.fm recently provided the RIAA with a giant dump of user data to track down people who are scrobbling unreleased tracks. As word spread numerous employees at last.fm were up in arms because the data collected (a) can be used to identify individuals and (b) will likely be shared with 3rd parties that have relationships with the RIAA.

Reporter Erick Schonfeld's story had several red flags that it might be bogus, including the weasely phrase "word is going around" and the fact that he got it secondhand from a friend of a CBS employee, not directly from someone at CBS, Last.fm or the RIAA. But the allegation was so spectacularly damaging that it spread quickly across the web, scaring users into deleting their Last.fm accounts. They had good reason to be concerned. Users running Last.fm's AudioScrobbler software tell the service every song they play on their computers. If you're playing pirated songs from an album not yet released, and they RIAA finds this out, its lawyers could sue you so hard your grandmother gets served.

Last.fm founder Richard Jones says that TechCrunch is full of bleep:

On Friday night a technology blog called Techcrunch posted a vicious and completely false rumor about us: that Last.fm handed data to the RIAA so they could track who's been listening to the "leaked" U2 album.

I denied it vehemently on the Techcrunch article, as did several other Last.fm staffers. We denied it in the Last.fm forums, on twitter, via email -- basically we denied it to anyone that would listen, and now we're denying it on our blog.

Schonfeld has updated the story several times in response to angry pushback, digging a deeper hole each time:

From the very beginning, I've presented this story for what it is: a rumor. Despite my attempts to corroborate it and the subsequent detail I've been able to gather, I still don't have enough information to determine whether it is absolutely true. But I still don't have enough information to determine that it is absolutely false either.

Calling something a rumor doesn't give journalists a free pass -- spreading a bogus rumor can have the same consequences as passing along bogus information, and in either case the reporter owes readers an explanation of why the story was published. TechCrunch needs to explain why it trusted the friend of a CBS employee with a secondhand tip, whether anyone tried to contact the employee to corroborate the claim and whether it was wrong to run such a damaging story without at least one source who had direct knowledge of the alleged data transfer.

Time magazine recently declared TechCrunch one of the most overrated blogs, stating that the the site has become "irrelevant." That judgment isn't borne out by the traffic, but this story shows one reason why TechCrunch has lost some of its rep. Like other pro blogs constantly churning out new posts, TechCrunch is more concerned with being first than being right.

User-Generated Content Event Offers Super Speaker

There's a User-Generated Content Expo being held in San Jose, Calif., next month. Keynote speakers include Craigslist founder Craig Newmark and CafePress founder Fred Durham.

While browsing the list of speakers to see if they invited any actual content-generating users, I found one of the greatest speaker bios I've ever read. Meet Dawn Clark, founder of DawnClark.Net:

A pioneer in the field of Cyberenergetics, Dawn Clark is a sensitive who stands at the nexus of science and spirituality. Fields influenced by Cyberenergetics include game theory, psychology, biological systems, organizational structure, philosophy, systems theory, and architecture. Dawn's deep insights in energy dynamics at the sub-atomic level are relevant for developing strategic direction and alignment, understanding how products engage, engross and affect subtle fields, all the while factoring in the values of the individuals or audiences critical to making a solution path workable.

Dawn ClarkWhere most people see empty space, Dawn perceives wave form, frequency, and interaction. She sees depth in dimensions and from an early age began experiencing retro and pre-cognitions. A near death experience heightened her sensory abilities. Recognizing her natural gifts, a former elite American counter intelligence agent, whom she assisted in writing books, trained her in the art of spycraft and developed her skills in remote viewing, subtle energy perception and engagement. Rather than apply her skills in the government arena, Dawn chose instead to walk the path of creating solutions, services and learning programs to help people and organizations realize their potential.

Internationally published, Dawn has guided clients working with Fox Entertainment, ABC, PBS, Wall Street Journal Online, 2010 Olympics, and many others, including creative artists, entrepreneurs and researchers. By bringing to light that which is for most unseen, Dawn consults on business development, identifies deep drives of engagement, offers insight as a future historian and tools for empowerment that go beyond what traditional counsel has to offer. A faculty member at the Omega Institute, Dawn is also a member of the Association of Humanistic Psychology, the International Society for the Study of Subtle Energies and Energy Medicine, and the Foundation for Mind Being Research.

I have a theory that every person on earth has one superpower, but it's often such a trivial ability that it goes completely unnoticed. My superpower is the ability to enter any mall department store and know exactly which direction to go when seeking the mall entrance. My power, though occasionally of moderate utility, does not lend itself to a catchy superhero name.

If I could see energy at the sub-atomic level, I'd use that power for a hell of a lot more than helping big media companies reach their potential.

Streamline Your Consolidated Resources

20-sided dieI love the thick coat of BS that Wizards of the Coast President Greg Leeds laid down to justify the layoffs this week of around 20 employees, including longtime Dungeons & Dragons game designers Jonathan Tweet and Dave Noonan:

Consolidating internal resources coupled with improved outsourcing allows us to gain efficiencies in executing against our major digital initiatives Magic Online and D&D Insider. Wizards of the Coast is well positioned to maximize future opportunities, including further brand development on digital platforms. The result of this consolidation is a more streamlined approach to driving core brands.

If your player character has mastered the Comprehend Language ritual, which requires a successful Arcana check, he can understand corporate executive gibberish for 24 hours, according to page 302 of the Player's Handbook. On a check of 35 or higher, he can even speak it.

Web Hosting Provider Alpha Red Files for Bankruptcy

While looking through some records in a bankruptcy database, I found an item that hasn't hit the news yet: The web hosting provider Alpha Red Inc. filed for Chapter 11 bankruptcy on Wednesday in the Southern District of Texas, claiming more than $10 million in liabilities.

Alpha Red, a hosting provider with two datacenters in Houston that hosts numerous adult-content sites and other high-bandwidth customers, has been in legal trouble in recent months. On Sept. 23, Alpha Red chief executive officer James Reed McCreary IV and the company were sued by Washington state Attorney General Robert McKenna, who accused McCreary of selling "scareware," software that made Windows XP users falsely believe that their registry had become "damaged and corrupted." The suit claims that through another company he controlled, Branch Software Inc., McCreary sold Registry Cleaner XP software for $39.95 that was marketed by exploiting the Windows Messenger Service with Internet-transmitted messages that made misleading "Critical Error Message!" dialog boxes appear on user computers.

"Contrary to the representation implied by Defendants' message, the user's computer has not already been tested or examined to determine the presence of errors, damage or corruption," the suit states. "Through alarmist language seemingly delivered by a trusted source, Defendants misrepresent the extent to which installing the software is necessary for repair of the computer for proper operation."

The "Critical Error" messages were sent repeatedly to users. McKenna cites one user who allegedly received 214 such dialogs in a 24-hour period. Five causes of action were filed alleging violations of the Computer Spyware Act and unfair and deceptive trade practices.

"We won't tolerate the use of alarmist warnings or deceptive 'free scans' to trick consumers into buying software to fix a problem that doesn't even exist," McKenna said in a press release.

The top 20 debtors in the bankruptcy are owed more than $4.57 million, including $826,000 to the IRS. McCreary owns 82 percent of Alpha Red's common stock, according to the bankruptcy filing.

A Texas state court removed McCreary from management on Oct. 23 and appointed a receiver to run the company, responding to a court action by MegaUpload Ltd., a file-upload site based in Hong Kong that was an Alpha Red customer.

Although a Chapter 11 bankruptcy is designed for companies to reorganize and settle debts to continue operations, the filing includes this statement by receiver Douglas Brickley: "[T]he Receiver deems it to be in the best interests of the Company to file a bankruptcy petition ... for the purposes of winding up the Company's business affairs, liquidating the Company's assets and distributing payment to creditors."

Some Alpha Red customers have been discussing their difficulties with the company for several months on the Web Hosting Talk forum. Customers who sent servers to Alpha Red facilities in Houston posted that they have been unable to get them back. "The place is locked down and no one answering the phone/mails etc.," one customer complained in October. "Got 10 servers stucked inside and cant do anything."

Banking CEOs Deserve a Christmas Malus

I was scrounging through old bookmarks recently when I rediscovered World Wide Words, Michael Quinlan's online newsletter of unusual words. His current edition features "malus," a word that ought to be more common in American business given the disastrous mismanagement of many companies:

Though malus isn't in any general dictionary that I've consulted, it's also a fairly common term in the world of banking, insurance and contracts. A malus is the opposite of a bonus -- you might call it a forfeit or a clawback instead. It's receiving more attention as finance houses seek to rein in excessive payments to senior staff (it was in the news last week because the Swiss bank UBS has introduced malus provisions for its executives). It turns up in particular in the form bonus-malus system, for a contract that rewards success but penalises failure.

Sanders: Socialism for Rich, Free Enterprise for Poor

Bernie Sanders, the socialist senator from Vermont, makes a point I haven't heard anywhere else in his response to the bailout plan:

We must end the danger posed by companies that are "too big too fail," that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation's largest depository institution, has absorbed Countrywide, the nation's largest mortgage lender, and Merrill Lynch, the nation's largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.

Sanders strongly opposes the bailout, calling it "socialism for the rich and free enterprise for the poor." He's right that the phrase "too big to fail" -- which is practically accepted wisdom at this point among Republicans and Democrats alike -- is a compelling argument to break these ginormous companies up. That would be a massive intrusion into the free market by government, of course, but so is making taxpayers assume the debt for private companies that drove themselves to ruin.

No Temporary Checks, No Peace

I had a weird thing happen at my bank this week: I ran out of checks because I didn't reorder them in time, but when I needed temporary checks so I could pay some bills, my request was refused. The bank, which has locations across several Southern states, doesn't give its customers temporary checks.

My first impulse is to quit the bank over this hassle. There's a bank on every corner these days, and the services they offer are utterly interchangeable. To get my bills paid, I ended up buying the check-printing software VersaCheck. Printing your own checks costs more up front, but it feels like you are making an end-run around The Man.

Before I switch banks, I'd like to figure out the rationale for giving temporary checks to new account holders while denying them to long-time customers. A web search on the subject of wrongful temp check denial turned up bupkiss.

The Ghost of Michael Arrington Past

There's some fun stuff in TechCrunch publisher Michael Arrington's old personal blog, which he published for eight months in 2005 before becoming the Ron Popeil of Web 2.0.

A Nov. 12, 2005, entry in which he raises a little capital:

Selling my copy of The Search by John Battelle. $10 obo.

An Aug. 1, 2005, post declaring that he has deleted his PayPal account and would no longer be selling items on EBay:

I broke up with PayPal today, using their handy 12-step account termination procedure. I won't go into the details, but they abused me to the point where I simply could not do business with them any longer. The core issue wasn't that big of a deal, but their customer service at first ignored me for weeks, then re-defined "condescension" to a near Platonian perfection. Sadly, this means my ebay purchases and sales have ceased

An Oct. 8, 2005, item giddy over TechCrunch being named one of the top 100 tech blogs by CNET:

I found out last night when I got home from a conference and was totally excited and overwhelmed. I'm extremely happy about this.

Today, Arrington frequently rages against CNET, once writing that it represents "everything that we bloggers are trying to kill." (Speak for yourself, dude: The only thing I'm trying to kill is the designated hitter.)

Arrington tells interviewers his goal is to beat CNET, which even by his claim of $200,000 monthly revenue is a lofty goal. CNET's a publicly traded media corporation with a market cap of $1.1 billion and $387 million in revenue last year. By comparison, Arrington fielded an offer to buy TechCrunch for $8.5 million, according to Wired.

Jerome Armstrong Settles SEC Stock-Tout Suit

I filed a story this morning on Watching the Watchers about blogger Jerome Armstrong settling his stock-tout suit with the SEC:

Influential liberal blogger Jerome Armstrong, the founder of MyDD and an originator of the netroots movement, has agreed to pay $29,000 in fines and penalties to settle a 2003 SEC suit accusing him of touting a stock on Internet message boards without disclosing his financial interest in the company.

Some of my fellow liberals threw me under the bus for digging into the allegations last year, but it's the kind of ethical transgression we'd be all too happy to expose against someone with an "R" next to his name. Shilling stocks without disclosing your interest in the companies is a big deal.

The Twenty First Century Democrats, a group that gave Armstrong the Wellstone Award for Political Organizing in April, appear to agree. The group has removed all references to Armstrong from its web site, including his photo and the announcement of his award, which was cached by Google July 20.

Google Works in Mysterious Ways

When things are slow on Workbench, activity on this weblog falls to the five subjects of enduring interest to visitors who make comments:

On the first subject, people who support secrecy for lottery winners will enjoy a story from Canada this morning: A guy was caught planning to kidnap, rob and murder a couple who won $27 million Canadian dollars (around $25 million U.S.). His plot was foiled because he was a Chatty Cathy:

The TVA television network, citing police sources, said Lima first began telling friends and acquaintances about his plans in the days after the winnings were awarded. ...

The lottery corporation's website states that "Loto-Quebec reserves the right to publish, for advertising purposes, the names, addresses and photos of winners."

I don't know how I've become one of Google's most trusted authorities on these subjects, but it's a continuing source of entertainment. Eighteen months after one unpleasant experience at Target, I'm still getting reviews of my parenting from people like Proud Target Team Member:

I am so sick and tired of guests coming up to team members and using the age old defense.." But I spend 1000s of dollars here. Which am I supposed to reply like some servant a 1000 dollars oooo boy I'm sorry! Your story is so whiny, your just another spoiled middle ager...your kids are probably little brats, and sorry but sometimes we are tired after an 8 hour shift to pick up after you. Target employees are harassed and a lot of times we take it just because people decide to be mean. We depend a lot on LODs to help us with disgruntled guests, and just because you think you are better then the "lowly target worker" who you describe her next job to be in the fast food chain...you are mistaken about the target employee. Most of us are going to college and go on to other things. Just because you think you made it big doesn't give you the right to take it out on a worker there. Perhaps she was just doing her job. Yes there are mistakes but there are two sides to every story. I am so sick and tired of people thinking we are lower class citizens i have been with target for 4 years since being in school because I like helping people, good flexible hours,and I love the store...sorry I didn't want to work in a cubicle or in the mall. For one person saying they will never shop at target, I have 20 guests that give me a huge smile, or say that I have made their day. Shame on you for making fun of her shirt and making a remark to her size, I sure hope your kids don't learn their morals from you.

I'm surprised that Proud hasn't climbed the ranks higher than Team Member. Anyone who can work in big box retail for four years without developing a deep hatred of humankind is Leader on Duty material.

Marc Andreesen: 'Web 2.0' is an Empty Buzzword

Netscape founder Marc Andreesen, an investor in startups such as Meebo, thinks "Web 2.0" has become a meaningless term that makes dumb investors bankroll dumb companies:

As a result of the widespread adoption of language like "Web 2.0 companies" and the "Web 2.0 space" -- and startups referring to themselves as such, most of which will fail -- you get a predictably cynical backlash from people who then dismiss the whole category as trendy marketing hype full of me-too wannabes and in the process throw out the baby with the bathwater and dismiss all the legitimately new and exciting products and companies that are being created all around us.

As an entrepeneur, I am frankly torn as to whether or not to even post this piece.

It may be in my best interest to have more of my fellow entrepreneurs off chasing trends and pitching their "Web 2.0 startups" to the latest enterprise software VC who is now "doing Web 2.0 deals" instead of building real products that might compete with one of my companies.