Some weeks ago, I happened to drive by an evangelistic church whose outdoor marquis speaks about as well of the present times as any I've come across. "And there followed hail and fire mixed with blood," it read, "and they were cast upon the Earth. Like us on Facebook!"

The initial public offering of Facebook stock, now likely to come in May, is as much a test of faith as any corporation has ever given its prospective shareholders. To Facebook's credit, its prospectus, as given in its Form S-1 filing yesterday, makes its plea completely and carefully. Many companies provide a perfunctory paragraph to investors under the "Risk Factors" heading. Facebook's entry reads like a self-indictment.

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Most of its money is made from a source that is unreliable, with no guarantee of long-term viability. That's not my second-rate financial analysis of the matter; that's Facebook's own explanation. From Facebook's Form S-1:

The substantial majority of our revenue is currently generated from third parties advertising on Facebook. In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue. As is common in the industry, our advertisers typically do not have long-term advertising commitments with us. Many of our advertisers spend only a relatively small portion of their overall advertising budget with us. In addition, advertisers may view some of our products, such as sponsored stories and ads with social context, as experimental and unproven. Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads and other commercial content in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives.
READ ALSO: Facebook's Biggest Risks Explained by Dan Rowinski

Sure, it garners some 845 million active users per month. (That's no longer someone else's marketing estimate, or some figures from a marketing brochure, but a disclosure that would carry penalties if it were false.) But the reason they're there is to have fun with each other, which is an activity that unto itself does not generate revenue. What does generate revenue, and certainly more of it now than before, is advertising. But historically, the value of that advertising business was fleeting, only sending the company into the black with $229 million of net income in 2009.

Only in April 2010 - not even two years ago, when Facebook's user base reached a mere 431 million monthly users - did it actually engineer some way of galvanizing and potentially harvesting its traffic: the Like button. Whereas most consumer products manufacturers since the dawn of history have had only limited success with their own brand-centric, customer outreach programs, along comes a unified, one-button approach to associating one's identity with a product that consumers would actually want to use. Potential future shareholders who already felt Facebook's value proposition was overdue, got their answer in spades. "Like" is perhaps one of the most successful customer outreach initiatives in all of global corporate history, as important a creation to the evolution of technology as the iPhone.

"Like" is perhaps one of the most successful customer outreach initiatives in all of global corporate history, as important a creation to the evolution of technology as the iPhone.But its milestone is not nearly as well founded in terra firma. Sure, "Like" has created the mother lode of all consumer intelligence, a nerve center for the personal interests of more people than live in most countries. How to monetize that creation remains a topic with a question mark at the end. Advertising is the most obvious route. Yet as Facebook's own S-1 points out in the most unambiguous language one would ever hope to see from a public corporation, it's stuck. Most of its users are moving to a mobile platform, one whose usage model is not conducive to advertising. We had more than 425 million MAUs [monthly active users] who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected."

The only quality this explanation lacks is succinctness; it drips with sincerity. Let's put it like this: The source of 85% of this company's wealth is in danger of virtual extinction in the next few years: personal computer-based browsing. Sure, you may own a PC in 2014, but there's a good chance it'll run Windows 8. And assuming there's a Facebook "Metro-style" app for Win8 (a safe bet), who will want to use Internet Explorer or Firefox? Users will prefer one usage model for all platforms, and will probably demand the mobile-style model because it's the easiest to learn, and because it's portable from device to device.

While gaming makes up most of the other 15% of the company's revenue, an incredible four-fifths of that chunk comes from one source alone: Zynga, whose Farmville game has addicted tens of millions of virtual farmers in the pursuit of non-existent vegetables and livestock.

So a lot of what sustains this company is image. Again, I'm only mildly rephrasing what the S-1 literally says. The belief that Facebook is a beneficial and productive platform is largely in the public mind. And what stays in the public mind depends, to a surprisingly large extent, upon me. No, not you, me. As in, the person writing articles about Facebook for dozens of you to read.

We have in the past experienced, and we expect that in the future we will continue to experience, media, legislative, or regulatory scrutiny of our decisions regarding user privacy or other issues, which may adversely affect our reputation and brand... Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to successfully promote and maintain the Facebook brand or if we incur excessive expenses in this effort, our business and financial results may be adversely affected.

So do invest in us, if you would, please. We thank you for your attention. This is how the prospectus might have ended, if it weren't for one obvious fact: This is Facebook we're talking about. While it could have filed for an IPO three or four years ago, back when its business model was not so much cloudy as non-existent, it prudently waited. What Facebook has now are the ingredients for something huge. It has the talent, it has the technology, and it certainly has the audience.

But, to borrow a term from football, it must convert. The scale of this conversion must be enormous, otherwise the tower of cards, as Facebook describes itself, will fall. What form could this conversion take? Imagine a mobile platform where not only is one's entire social activity portable, in the cloud, moving from device to device - from smartphone to tablet to PC to TV - but one's functionality as well. Think of Facebook encapsulating everything that people do with computing or, as Salesforce's CEO puts it, Facebook eating the Web. It is not outside the realm of feasibility.

It is indeed possible to believe. All you need are about $5 billion in fresh investor capital, and a miracle straight out of Revelations.

Photo credit: Shutterstock Images

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The Internet may have grown up first in the United States, but it's a global phenomenon now. The same can be said for the fast-growing body of educational content on the web. YouTube announced a new batch of partners that were added to its Education Channel today and noted that nearly 80% of the viewership of educational content on the site came from outside the United States. Less than 70% of the site's total traffic is International, so the educational content is disproportionately viewed by global audiences.

Both YouTube and iTunes U are serving up huge quantities of educational content to a world already in the throes of a 50 year revolution in global education. In some ways they represent exactly the kind of education that a new world needs, too: learning that augments existing education and fosters life-long development of non-routine analytical and interactive skills. That's a recipe for good times.

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YouTube now hosts more than 500,000 educational videos, on a wide variety of topics. The new mobile-friendly iTunes U also offers 500,000 educational resources and says that 60% of its viewership comes from outside the United States. This global consuption of US-created online educational content may be the newest chapter in a radical transformation of global education over the past 50 years. Life in this world is not like it used to be just a few decades ago, and the availability of world-class education on-demand, at almost no cost, is likely to help things change all the more as this century unfolds.

Global Transformation

"During the past 50 years, the expansion of education has contributed to a fundamental transformation of societies in OECD countries," wrote the authors of this year's lengthy report Education at a Glance 2011: OECD Indicators. (500 page PDF, Organisation for Economic Co-operation and Development)

"In 1961, higher education was the privilege of the few, and even upper secondary education was denied to the majority of young people in many countries. Today, the great majority of the population completes secondary education, one in three young adults has a tertiary degree [Colleges, universities and polytechnics] and, in some countries, half of the population could soon hold a tertiary degree."

In other words, it's not an uneducated world gaining its first access to the information available in these free online education repositories. What's happening is augmentation of already historic global education levels.

Below: The United States used to be the most educated society in the world. That's no longer true. Click to view full size. From the OECD.

"Half a century ago, employers in the United States and Canada recruited their workforce from a pool of young adults, most of whom had high school diplomas and one in four of whom had degrees - far more than in most European and Asian countries," reports the OECD. "Today, while North American graduation rates have increased, those of some other countries have done so much faster, to the extent that the United States now shows just over the average proportion of tertiary-level graduates at age 25-34."

"It has become increasingly evident that to realise human potential in today's societies and economies, lifelong learning is required, not just an initial period of formal schooling." - OECDThe OECD recognizes that formal education has a meaningful connection to economic development, but that the two are not equivelant. "The level of education that an adult has completed may be a proxy for the competencies that contribute to economic success, but it is a highly imperfect measure," the report says. "First, each country has its own different processes and standards for accrediting completion of secondary or tertiary education. Second, the knowledge and skills acquired in education are by no means identical to those that enhance economic potential. And third, it has become increasingly evident that to realise human potential in today's societies and economies, lifelong learning is required, not just an initial period of formal schooling." (emphasis added)

That lifelong learning no doubt contributes to the global audience that amasses around this educational content online. For a high school teacher to be able to give their lectures not to 30 students at a time, but to 100,000 viewers around the world on YouTube has got to be a powerful opportunity. If many of those viewers are adults, so be it.

What's hot? Non-routine analytic and non-routine interactive skills. Those are things that a good YouTube or iTunes U video about world history or global ecology can help improve.Learning new information that helps inform our understanding of the world is, in fact, growing more important for economic well-being than the development of routine skills.

According to a presentation (10 page PDF) by Francesc Pedró, Senior Policy Analyst at the Center for Research and Information, OECD, the last 50 years have seen a dramatic change in the types of skills in demand in the workforce. A trend began, at least in the United states, as far back as 1985: demand for "routine manual skills" has held relatively steady, demand for non-routine manual skills has plummeted. Demand for routine cognitive skills climbed through 1970, then fell. What's hot? Non-routine analytic and non-routine interactive skills.

Those are things that a good YouTube or iTunes U video about world history or global ecology can help improve, your non-routine analytic and interactive skills. More than for just economic well-being, those are skills that positively impact quality of life in many ways.

Disruption

"A new phase of education change awaits the world, for those who embrace it," writes radical Canadian educator Joe Bower in a summary of last month's 2012 International Congress for School Effectiveness and Improvement (ICSEI) in Malmö, Sweden.
A central message of the 25th ICSEI conference was that change brings challenge but also opportunity, with the need to find new means of collaboration, participation and networking to reshape education for the shifting demands ahead. A whole range of papers and presentations from 450 delegates from over 50 countries set an optimistic tone, with strong commonality in themes of respect, trust, new power relations and moving to evaluation as joint enterprise. In presentations from Iceland to Malaysia there were common threads of renewing teacher professionalism, establishing change via collaborative networks, and emphasizing systems perspectives through linkage and understanding, rather than prescription and grading...

"The central message of ICSEI 2012 was of strong common issues facing schools and their communities in far separated contexts, with global similarities in connecting responses. A few countries stood out in stark contrast, chastising schools and denigrating teachers, seeing change not as opportunity for partners in prospect, refashioning and renewing learning, but as a threat to be sanctioned in audit prescription. But whilst those systems are shrill and close at hand, a more pervasive and positive way forward was signposted in Malmö to a new responsible professionalism, embracing complexity and change, more loosely configured in uncertainty yet promise."

Good luck, teachers of the world, keeping up with the Internet. It's great to hear that so many are embracing change, surely caused by technology, as an opportunity and not a threat.

That's the kind of life-long learning that professional development has always required but that will go on in a global context for perpetual learning with increasing access to high-quality educational content online.

That's a recipe for a very different world than the one we lived in last century.

Discuss

Akamai has released the results of its latest "State of the Internet" report covering the third quarter of 2011. What is interesting is how nasty the Internet has become, with increasing attack incidents recorded and changing strategies for hackers looking to exploit systems. Our last post on the first quarter results can be found here.

"Akamai has seen a 2000% increase in the number of attack incidents recorded on our platform over the last three years, including several recent high-profile Web-based DDoS attacks conducted by both hacktivist groups and more traditional online criminal elements," says the report.

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Indonesia replaced Myanmar for the quarter's top attack source, generating 14% of observed attack traffic. Myanmar dropped off the top ten list entirely, suggesting that either hackers have moved their operations or else shut down there.

More attackers are using telnet port 23 than previously, and fewer of them are using Web ports. Akamai posits that the increase is due to attacks based in Egypt and South Korea.

Not surprisingly, Brazil, Italy, and China all experiencing growth of 25% or more in Internet usage. As before, you can assemble your own charts on their website that compare various statistics. Here is the average connection speed among the top Internet-rich countries such as US, Korea, Sweden and Japan:

And you can see increases even among the Internet-poor countries such as Algeria, Armenia and Azerbijan:

The global average connection speed continued to increase in the third quarter of 2011, climbing 4.5% to 2.7 Mbps. Denmark pushed Ireland out of the top 10 countries in terms of broadband connections.

Discuss

In 1959 (as I recall), my mother, an acclaimed professional artist, had entered a handful of her oil paintings into an annual art show. Someone attending the show noted that one particular work, the face of a peasant boy, strongly resembled a photograph that had appeared in Life magazine. Well, there was no coincidence about it: Mom had studied precisely that face, and her work was based on that photograph. (The card tacked to the wall actually said so, if anyone had bothered to read it.)

So it was that the local newspaper "exposed" my mother as a fraud, a counterfeiter. It ran a story with the painting next to the Life magazine photograph itself. Thus began a lifelong dialog that became one of the threads of my life: a case study in fair use that fueled endless debates in the Socratic method between Mom and her art students for the next four decades. It began with the delicious irony of the newspaper having reprinted the Life photograph without Time-Life's permission, and embraced the lovely fact Mom eventually sold the painting for many times the original price.

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Granted, I think of Mom at least as much today as when she was alive. But I thought of those long, late-night debates about the extent of fair use yesterday upon coming across the curious case of one Federico Döring Casar. If you follow the news in Mexico, you know Senator Döring is the fellow who proposed legislation that would create a new "notification system" for Internet users suspected of trafficking in pirated content. It would act as a warning that they're liable to have their wages garnished for up to ten years, depending on the extent of the offense; and it would most likely directly involve ISPs who would provide a new government authority with the identities of potential suspects.

Whose polar bear is this?

Döring is not one of these Luddites afraid of any typewriter that has a TV screen attached; he's relatively active with social media, including regular posts to Twitter (@senadoring). It's there where one of his readers, a lady named Ophelia Pastrana (@mpastrana), whose profile describes her as "anti-print," noticed something familiar about Döring's background wallpaper. It's a beautiful shot of a polar bear stretched out on a rocky, snowy terrain enjoying the sunset, with a face not unlike the Senator's own. It's something my mother would likely have considered painting sometime. But indeed, it would appear to be a screen grab directly from the Mangelsen stock photo agency, whose Web page clearly licenses the photo for royalties.

And so it was that Sen. Döring was called out as a fraud, a counterfeiter. Never mind for a moment the delicious irony that the act of demonstrating Döring's most grievous fault effectively copies the exact same photograph. Supposedly such demonstrations in the act of journalism constitute "fair use."

In other words, it's all right for a journalist to do it, but not for a senator. Evidently fairness may differ depending on whom you're being fair to.

Who needs one big brother when a billion little ones will do?

This is the very type of topic my mother relished. In her ingenious, professorial style, which often resembled Justice John Marshall as rendered by Buffy Sainte-Marie, she'd compel her students to adopt one position ("Every photograph qualifies as art, so copying it without permission is forgery") and then throw a live grenade at them that challenged their newfound position. At such a moment, like Perry Mason closing an argument, she'd extract from behind a cabinet some hidden photo of a painting by Andy Warhol (whom she loathed, by the way), one produced by way of the manipulation of copyrighted photos, and watch her students backtrack ("Oh, that's different, Andy Warhol's famous").

Sen. Döring has suggested that the act of policing each other, of ensuring that we don't step on each other's intellectual property rights, can be crowdsourced. Since the Internet is essentially a cooperative, a kind of digital society, then infringement is something we can all make efforts to help each other avoid. Never mind for a moment the eerie resemblance to Chinese families helping each other to refrain from bearing siblings. The suggestion Döring makes is that we all know infringement when we see it.

Do we? A Spain-based blog post (English-language Google translation here) called Döring out for being two-faced, for having the gall to promote a system of registering intellectual property violations, and for having spoken out against the SOPA bill in the U.S., while at the same time using a copyrighted polar bear as his wallpaper. Evidently the mark of a career politician.

In an adjacent paragraph, the blogger suggests that a polar bear belongs to everyone. Exactly what right did the photographer have to claim the bear's repose as his own? Shouldn't the bear have a say in this? And elsewhere, the same post states (translating from Spanish), "copying is the most common process in the digital environment," something which folks do every day, perhaps inadvertently. Or put another way, it's fair for a blogger to do it, and maybe for a bear, but not a senator.

Theft Is Theft (void where prohibited)

At one level, the SOPA debate brought thousands, and perhaps millions, of people together to collectively agree on something, perhaps "Censorship Bad," perhaps something greater. But the true problem we face as a people and as a society, as we continue to take what truly are the first steps in the age of digital communication, is that we don't know what we're talking about. It's impossible to legislate a principle that we have not yet defined in the public mind. To a member of the MPAA, it may seem clear-cut enough: You steal a movie, that's piracy. But a principle is deeper than a campaign slogan; it's something definitive that applies to the future as much as to the present.

"Fair use" is a concept we believe to be well-defined in U.S. law. There are reasons we need to copy things, for example, in research, in journalism, in exercising our own freedom of expression by borrowing an idea, in art. Fair use would say it's okay to slap a picture of a polar bear on your notebook. It would be wrong to broadcast that picture without proper attribution to the photographer.

But Twitter turns that distinction entirely upside down. Every little thing you do is a broadcast; every polar bear you slap on your cover is a little act of infringement. While it seems altruistic enough that we should help each other to not step on one another's toes, where do we stop? Most of the tweets that will be generated as a result of this article are copies of each other. The Internet is, by its very nature, a giant replication factory. While it may have been easy for each of us to take a side for or against SOPA, Viacom CEO Phillipe Dauman was right in telling AllThingsD's Peter Kafka yesterday that the polarization created through the debate may be blinding us to the underlying issue of what kind of copying is fair and what kind wrong.

Here, you can read about what Dauman told Kafka on stage in this blog post. It's been conveniently copied, in its entirety, without permission, from something first published by Mashable.

Scott M. Fulton, III is the author of this document and is fully responsible for his content. If you copy it without permission, you deserve to have the minimum wage deducted from your earnings. Unless you're a blogger, in which case, you might not be making that much from your blog anyway. Discuss

Twitter and LinkedIn will continue to see strong advertising growth, with Twitter's revenue expected to nearly double between 2012 and 2014, according to a report by eMarketer Digital Intelligence.

The report comes against the backdrop of Facebook's pending, initial public offering and illustrates that advertising models for social networks seem to be working. Twitter gets 90% of its revenue from U.S. advertisers, while LinkedIn depends more on foreign advertisers, with just 68% of its 2012 ad revenue expected to come from the U.S.

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The report did note, however, that both companies can expect growth rates to slow from their current levels. eMarketer is projecting 83% revenue growth for Twitter this year, down from 233% in 2011, and 46.1% revenue growth for LinkedIn, down from 95% in 2011.

Still, if eMarketer's analysis of data from dozens of research firms, company information and industry trends is correct, Twitter will have revenue of $540 million by 2014. LinkedIn would have revenue of $405.6 million by 2014, fueled in part by an increase in U.S.-based advertising.

Speaking at the AllThingsD media conference on Monday, Twitter CEO Dick Costolo said the company has no plans to develop new revenue streams.

"We think we're good where we're at," Costolo said, according to Wired. "We don't feel like we need to add another component to the business in order to create the lasting company."

LinkedIn has recently come under fire for its advertising practices. Its privacy policy allows the company to use users' personal information in ads for the site. While the policy has been in effect for quite some time, it recently gained attention as messages highlighting it started spreading among users of the jobs and careers social network.

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While the basic risks of social media are well known to most enterprise security managers, there are many dark corners of social media that can be just as dangerous or even more so. Here are three ways that social media can sneak malware and exploits across your corporate firewalls, and ways that you can pay attention and hopefully prevent their misuse. The biggest issue is that many corporate executives don't really know what is going on across their networks, and don't have any visibility into the traffic patterns and potential exploits.

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HTTPS isn't necessarily as secure as you think. SSL/TLS encryption is overwhelmingly the most common encryption protocol used in modern Web applications - from social media sites (like Twitter or Facebook), webmail (like Gmail) or cloud sync services (like Dropbox). And while for the most part, this protocol does a good job of protecting user privacy.

However, if you're already on a company network or connected via a VPN, then these encrypted connections may also be putting you (and your company) at increased risk. The main reason for this is that the encrypted tunnel between you and the server hides the network traffic, but doesn't protect you from threats on the site that you are already connected to. So even if hackers can't view the web traffic that you are sending to a social network's servers, they are still able to attack you with clickjacking and other exploits commonly employed in social network attacks on the site itself.

For IT, the bottom line is that if you can't see encrypted traffic, you can't fully protect your users online. Fortunately, network security companies know this and I predict that in the future there will be two kinds of security companies: those that can decrypt SSL traffic and those that will be adding this crucial feature.

Mobile Devices May Be the Weakest Link A few years ago, even a rumored piece of mobile malware in the wild could grab global headlines. But 2011 was the year that mobile malware went from "proof of concept" to "real threat" - and 2012 will likely only be worse, with malvertising and botnets on mobile devices predicted to increase. René Bonvanie is the Chief Marketing Officer at Palo Alto Networks, the network security company.But the biggest threat may come from mobile applications themselves, few of which protect login credentials adequately. From a security perspective, a compromised mobile application is not "less bad" than a compromised desktop client or a compromised network. If your username and password for a Web application is compromised on your mobile device, perpetrators can use your accounts for illicit purposes. This includes the accounts you use at work. Also, remember that if your mobile device is logged on to the company Wi-Fi network, then all the applications on that device are also operating on the enterprise network. Even without a formal bring-your-own-device (BYOD) policy, anyone in the company with a copy of a network Wi-Fi password can potentially put their personal device on your network. Suspicious Browser Extensions and Third-Party Apps Everything that was said about mobile applications applies doubly to third-party applications, browser plug-ins and scripts for sites such as Facebook, Google+ and other platforms that integrate with trusted Web applications. Everything that we said before about how to secure yourself from Web application threats - gaining more visibility into your network traffic, making sure your security can identify malicious activity even when it's encrypted, and establishing best practices for end users to follow - also applies to browser extensions and third-party applications. The Best Defense? As we've seen, there are many different and varied threats that put both the enterprise and individual employees at risk. While there is not a single silver bullet that can eliminate all threats to the enterprise, educating users and implementing IT best practices can greatly mitigate them. It's also important to note that allowing these social web applications on the network is still beneficial for the enterprise as a whole, providing benefits from increased productivity and improved collaboration to higher overall employee morale. IT should engage with users so that they can keep up with the pace of change and security needs of their employees who are on the social web. Discuss

SaaS backup provider Backupify has recently examined its own customer sample to do some demographic profiling of Google Apps users. The results are somewhat intriguing, as you can see in the infographic below. If you remove .edu domains, Google Apps still has nearly 40% of all of its seats used by businesses with more than 10,000 employees. The company surveyed their customers who have at least 30 users.

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How did Backupify obtain this information on the size of each domain that is part of the Google Docs ecosystem? "When someone signs up for a trial, one of the pieces of information Google sends us over [in] the API is the total number of seats on the domain." This makes for some fascinating information:

Backupify recommends that "Whether you sell a per-domain product in the Google Apps marketplace, or a per-seat product, you should customize that product for both: Very few solutions work for mom-and-pop businesses and also work for large universities and software consultancies. However, Google Apps is relatively young and Google has increased staffing in their partnership department this past year, signaling that they take their partners seriously and want to build a strong ecosystem that includes add-on developers."

More information and their original blog post on this analysis can be found here.

Discuss

It's easy to slam Hollywood for not understanding how technology works, or for putting its legacy business models ahead of user experience. Especially when big media companies do things like restrict digital access to movies and then cry about piracy.

But Hollywood isn't always acting alone. Sometimes, the savviest Web companies around - Netflix, for instance - are playing along, with their own agendas.

The latest example: Not only must Netflix customers wait 56 days before renting Warner Bros. new release discs, but they can't even add them to their rental queues until 28 days after they've been released. Sounds a little nuts, no?

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Hollywood's goal with this wacky idea is to get you to buy those movies on DVD instead of renting them. Studios stand to make a lot more money by selling a DVD to each household instead of selling one copy to Netflix for a bunch of rentals. So now they're in the business of messing with movie rentals using things like release delays and this new no-new-movies-in-your-queue policy.

Whether this plan sells more DVDs or not, it's hard to escape the fact that Netflix's user experience is suffering a bit because of it, and that seems like something Netflix should fight. But Netflix is actually on board!

Instead of telling Hollywood to get lost with silly ideas like this, Netflix is cooperating. It doesn't have to buy DVDs directly from studios and play along with 28- or 56-day windows: Netflix can legally go out and buy DVDs anywhere - Walmart, Amazon, you name it - and rent them out as much as it wants. But it isn't doing that. It's playing along.

Why? A couple of reasons. To some extent, because it's easier and more reliable for Netflix to buy discs directly from Warner Bros. instead of relying on third-party vendors. Netflix admits as much (PDF). But more importantly, because Netflix actually has the same goal that the studios do: To try to discourage you from renting DVDs.

The future of Netflix is 100% based on its ability to grow into the best streaming video entertainment service. Renting discs is very profitable for Netflix, but it's the past. That's why it went as far as to try separating its DVD business last year as "Qwikster," and that's why it's letting studios make DVD rentals less attractive with windows and queue restrictions.

The sooner you get disgusted and cancel your DVD rental subscription, the stronger Netflix's case to the studios becomes that they need streaming, or else.

So far, that isn't really happening. An analysis by Tristan Louis shows that all of the top 100 movies from 2010 are available on DVD, but the vast majority aren't available as streaming rentals. Netflix actually had the best streaming rental selection vs. iTunes, Amazon, or Vudu, according to Louis's analysis, but it's still only a small fraction of the top movies. Not yet good enough.

Netflix has been successful in its efforts to reduce its number of DVD subscribers, however, albeit with significant damage to its reputation.

At the end of 2011, Netflix had just 11 million DVD subscribers, down significantly from last year and well below its 22 million streaming subscribers. "We expect DVD subscribers to decline steadily every quarter forever," Netflix CEO Reed Hastings said on the company's Q4 earnings call last week (PDF transcript).

Assuming this trend continues, Netflix will be in a position to say to the studios: Look, the vast majority of our subscribers won't be able to watch this movie unless you stream it. So stream it.

That might not work, anyway. There's plenty of competition on the way for Netflix, ranging from Amazon, Apple and Google to the cable companies. And it will need to keep its edge using other techniques, too, such as obtaining exclusive and/or original programming. But this is the future Netflix is choosing, so it needs to try.

The takeaway: If you're renting discs from Netflix now, expect more weirdness ahead.

Discuss

Pentaho Corporation today announced that it has made freely available under open source all the big data capabilities in its Kettle v4.3 release, and has moved the entire Pentaho Kettle project to the Apache License Version 2.0. This is the same open source license that Hadoop and others use. We have covered Pentaho before here.

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Pentaho now can manipulate data stored in Apache Cassandra, Hadoop HDFS, Hadoop MapReduce, Apache Hive, Apache HBase and MongoDB. In addition, Pentaho Kettle's Hadoop capabilities work with all major Hadoop distributions: Apache Hadoop, Cloudera's Distribution including Apache Hadoop (CDH), Cloudera Enterprise, Greenplum HD, Hadapt Adaptive Analytic Platform, HortonWorks Data Platform powered by Apache Hadoop, and MapR's M3 Free and M5 Edition.

You can download a free 30-day trial, how-to docs, videos and more at their site.

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In June of 2009, leading up to the 20th anniversary of the Tiananmen Square uprising, the Chinese government blocked access by its citizens to Twitter, Flickr and a number of other US-based websites. Social media being already widespread throughout the country, perhaps the Chinese government feared the possibility of events like unfolded elsewhere 18 months later, in what became known as the Arab Spring.

Two and a half years later, Twitter remains blocked in China, though many people find ways to make use of it none the less. China isn't the only country that's related to Twitter's announcement last week that the social network will now selectively censor messages country-by-country when it receives "a valid and properly scoped request from an authorized entity." Debate went on throughout the last week about the policy, but I think there are at least three big questions that remain unanswered.

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Some have said that this is an unacceptable compromise by Twitter. World-renowned Chinese artist and activist Ai Weiwei says, on Twitter, "If Twitter censors, I'll stop tweeting."

"If Twitter censors, I'll stop tweeting." -Ai WeiweiBut many free speech advocates begrudgingly say that the company is doing everything it can to stay engaged in repressive countries where non-compliance with local censorship is not an option.

"I understand why people are angry, but this does not, in my view, represent a sea change in Twitter's policies," blogs Jillian C. York, Director of International Freedom of Expression at the Electronic Frontier Foundation. "Twitter has previously taken down content-for DMCA requests, at least-and will no doubt continue to face requests in the future. I believe that the company is doing its best in a tough situation...and I'll be the first to raise hell if they screw up."

It's interesting to see York say she'll raise hell if the policy is misapplied and Ai Weiwei to say he'll go silent on the network if the policy is applied at all.

Three questions in particular remain in my mind.

How Will This Censorship Be Used?

What kinds of content will be censored with this new capability? What will governments around the world demand be removed from the site? Will it be things like the identities of people involved in court cases, as the UK's controversial Super Injunctions looked to ban on Twitter this Spring? That's information that has long been banned from newspapers. Would Twitter have co-operated with that kind of legal move if it was instructed to today?

"I believe that the company is doing its best in a tough situation...and I'll be the first to raise hell if they screw up." -Jillian C. York, EFFAs London-based Matt Brian pointed out at the time, enforcement of such legal prohibitions could be complicated by the abscence of Twitter business operations on British soil. Will that be a relevant matter in the future?

Or will Tweet-zapping be called for in places like Syria, where users rallied under the hashtag #RamadanMassacre in August, to bring global awareness to the brutality of the Syrian government they protested? If told to do so by a government massacring its citizens in the streets, will Twitter render all people in that country unable to see messages of protest on its network? Will shouting into such an eerie silence change the way such Tweeting campaigns also engage with the outside world? I would think so.

At what point would such demands no longer be interpreted by Twitter as being "a valid and properly scoped request from an authorized entity?" When the US State Department ruled a foreign government invalid, perhaps?

How Will Twitter Censorship Impact People Arrested for Their Tweets?

It is not unheard of for people around the world to be arrested for their Tweets. As Curt Hopkins reported on ReadWriteWeb in November, 2010:
Cheng Jianping has wound up in a Chinese 're-education camp' with a record-breaking five words on Twitter. Mocking nationalistic vandalism that flared up around a Chinese-Japanese dispute over the ownership of uninhabited islands, she retweeted another's message and added the ironic admonition, 'Charge, angry youth!'

Middle Eastern Tweeters have been arrested for quips mocking their ruling royal families.

Will the governments in question issue a take-down order to Twitter on their way to knock down the doors of the Tweeters in question? Or will they not bother?

Will people be arrested for messages that no one else in their country can even see anymore? How Orwellian.

Will This Reduce Conspiracy Theories About Twitter Censorship? Should It?

What's unique about Twitter's position, some people say, is not the censorship but the transparency about it. One might hope that if every instance of censorship is openly and loudly announced by Twitter, that critics who have long suspected Twitter was censoring conversation about topics of great importance to them might be less inclined to be suspicious.

In recent months some have worried that Twitter was systematically de-emphasizing discussion about the Occupy protests. In 2010, some of the first wide-spread concerns about Twitter censorship arose when the Israeli army clashed with a flotilla seeking to deliver aid to Palestinians despite an embargo.

Charles Arthur of the Guardian told the story as follows:
The attack by Israel on a flotilla of ships approaching Gaza has, as you'd expect, generated a huge response on social media - and of course Twitter, with its real-time content, was quick to react.

Many users began the morning by tagging their comments about it with "#flotilla" - a "hashtag" which gives a structure to a discussion or emerging event, as you can filter searches in applications such as Tweetdeck so that you only see those with that tag.

But at around 11am, as #flotilla began "trending" - rising to the topmost-used hashtags on the service - it seemed to vanish.

Was this censorship by Twitter?

Twitter Headquarters investigated why that happened and found that there was another event, elsewhere in the world, that was using the hashtag #flotilla as well, at the same time. Twitter's automated spam fighting software saw unrelated uses of the hashtag and zapped it from the Trending Topics list. Conspiracy resolved.

In all likelihood, critics will still suspect in many cases that Twitter is engaged in censorship even if the company doesn't take the steps for transparency that they have pledged to take. No one but perhaps some of the very deep pockets who have invested in Twitter is really evil, though, (not the employees) and so now under the new policy, the simplest explanation of why some communication is less visible on the network than expected will likely never be covert censorship.

It's a complicated situation, though. Much remains to be seen with regard to how the new "feature" will be used and what it will mean for people facing repression around the world. Twitter will no doubt face ongoing scrutiny for its practices, as all communication network infrastructure companies deserve.

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