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Ad Age has a great rundown of a talk that Ted McConnell, general manager-interactive marketing and innovation at Procter & Gamble Co., gave this week at a conference.

His reasoning for why making money on social networks and consumer generated content sites is difficult to reason with. People aren't creating media, he argues. They're holding conversations with each other.

"I think when we call it 'consumer-generated media,' we're being predatory," he said. "Who said this is media? Media is something you can buy and sell. Media contains inventory. Media contains blank spaces. Consumers weren't trying to generate media. They were trying to talk to somebody. So it just seems a bit arrogant. ... We hijack their own conversations, their own thoughts and feelings, and try to monetize it."

He synthesizes everything that people trying to make money on social networks probably already know but don't want to admit. Afterall, there's so much time spent and bits of space created through these conversations. Can't that be media? Not so much. Or not as much as to lead to the valuations people seem to aspire to for these services.

Billionaire Mark Cuban likes the spotlight, but not this kind of attention. The SEC filed insider trading charges against the normally talkative blogger, owner of the Dallas Mavericks and chairman of HDNet, the high definition cable channel.

According to the SEC, Cuban dumped 600,000 shares, or all of his 6.3% stake, in the search engine Mamma.com Inc., in June 2004 after learning about private financing that the company was proposing. By selling, he avoided losing $750,000, the SEC alleges.

The SEC is asking that the 50-year old Cuban, who made his fortune by selling media service Broadcast.com to Yahoo in 1999, be forced to give up the money plus interest and pay a penalty. Depending on how a court decides, those costs could add up to as much as $3 million, according to the SEC.

Cuban's blog, which was quiet all morning, has a response now. He says that he plans to fight the case, which he says has been pending before the SEC for two years and is "a product of gross abuse of prosecutorial discretion."

The strength of the case depends on whether the SEC can prove that Cuban knew that the information about the sale was private and confidential and yet traded on it, according to lawyers who have been involved with similar cases.

The SEC must also feel pretty strongly about their case, says Phillip Stern, a lawyer at the firm Neal, Gerber & Eisenberg. “They knew that it would come under scrutiny and a lot of publicity and would have wanted to be satisfied amongst themselves that they had a good case.”

Yet, at the same time, Cuban may believe that he has a chance of showing he didn't intentionally think he was doing insider trading, says Stern. Most of these cases get settled before they are filed, let alone before they go to trial, he added.

Cuban’s lawyers could argue that because this isn’t a typical insider case (Cuban wasn’t an officer or a director), he didn’t think he had a fiduciary duty to the company or that he could have heard the information outside of the company. Cuban could also argue that it’s a he said/she said case and that company's CEO was pressured by the SEC or might have mischaracterized what Cuban heard or said. Cuban’s lawyer didn’t return a call for comment.

Most insider trading cases don’t include the types of criminal charges that landed ImClone’s Sam Waksal in jail, say lawyers I spoke with. But it’s also the type of case, where one person alleges one thing and another disputes it, that probably meant that the DOJ didn’t file criminal charges, says John Hueston, a lawyer at Irell & Manella. “Mr. Cuban must be breathing a real sigh of relief,” says Hueston. “He learned it’s just the SEC and not the US Attorney's office that’s prosecuting this. The important thing for him is it’s a civil about monetary penalties, not about liberty.”

So, it looks like we’re in for a classic showdown. And the first salvo was the complaint that the SEC filed.

According to it, Mamma.com decided in the spring of 2004 to raise money through a PIPE offering, or private investment in public equity. According to the complaint, the CEO of the company reached out on June 28 to Cuban with an email entitled "Call me pls" that asked Cuban to call ASAP.

Mr. Cuban called four minutes later from the American Airlines Center in Dallas where the Mavericks play and the two spoke for eight minutes and thirty-five seconds. The CEO told Cuban that he had something to tell him in confidentiality, which the CEO says Cuban agreed to. The CEO then explained that the company was raising money through a PIPE and wanted to invite Cuban, as the single largest shareholder, to take part. According to the complaint, Cuban got angry and said that he didn't like PIPEs because they were dilutive to existing shareholders' stakes. "At the end of the call, Cuban told the CEO 'Well, now I'm screwed. I can't sell,'" the complaint alleges.

According to the SEC, the CEO then reported back to the chairman who emailed the board about other issues about the PIPE saying and Cuban, writing:

As anticipated he initially 'flew off the handle' and said he would sell his shares (recognizing that he was not able to do anything until we announce the equity) but then asked to see the terms and conditions which we have arranged for him to receive from one of the participating investor groups with which he has dealt in the past

According to the complaint, the CEO sent Cuban an email giving him a contact number for a sales rep. Cuban called the salesperson, who explained that the PIPE was being sold below the market price.

The SEC alleges that Cuban then called his broker in Dallas and told him to sell all his Mamma.com shares, which happened in after hour trading on June 28 for $13.4990 a share and the next day, June 29, for $13.2937. Mamma.com announced its PIPE offering at 6 pm on June 29. On June 30, Mamma opened at $11.89, down 9.3% from the June 29 closing price.

Cuban talked in March 2005 about the sale on his blog, explaining (as TechCrunch points out:)

I had purchased stock in Mamma.com in hope that it could be an up and coming search engine. I thought I had done some level of due diligence. Talked to the company management. Talked to some employees who worked in sales. Read the SEC Filings. I knew that they had a checkered past and had been linked to stock promoter Irving Kott, and that their law firm still handled some of Kotts business, but the CEO, Chairman, lawyers all said that things were reformed and the company was focused on its business.

Then the company did a PIPE financing. Im not going to discuss the good or bad of PIPE financing other than to say that to me its a huge red flag and I dont want to own stock in companies that use this method of financing . Why? Because I dont like the idea of selling in a private placement, stock for less than the market price, and then to make matters worse, pushing the price lower with the issuance of warrants.So I sold the stock.

In the release on his blog, Cuban also adds:

“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”

According to the SEC, about 8% of all the SEC cases are insider trading. Last year, the SEC filed around 660 or 670 cases, of which around 50 or so were insider trading.

This summer, I wrote about how the Internet was key in turning the Twilight series of books into a massive hit.

Now, it's the movie's turn to get help from fan sites, including Twilight Lexicon, Hisgoldeneyes, and Twilight Moms. Not that they haven't done a lot, writing constantly about the movie since casting was first announced.

But the fans are looking ahead and want to see the other books in the series made into movies. They've heard the director mention $150 million as the magic number more or less that would mean a green light. And they're doing what they can at online sites to plan how they can convince friends, families, and boy and girlfriends to see the movie when it opens this Friday.

As Lola explains in this comment on a recent BW story about the movie:

Every fan site I've been on since then has fans grouping about how to make that happen. Many are talking about not just enlisting family and friends---they are planning to get groups together from work and other social connections("playdate" moms) to get others to go in big groups. The men are not going to be excited about this film---but I bet you anything they will get dragged along as one of the mandatory "outings" Never underestimate the power of PTA moms and teen girls and their organizing skills to make this sequel happen!

The people at Six Apart asked me for a list of my 10 favorite blogs. I'm often suspicious of these lists, because people naturally include their friends' blogs--and once you include one friend, you might get in trouble if you don't include another.

So I eliminated everyone I know from this list. See what you think.

Kevin Hillstrom, author of MineThatData, describes how Google benefits from different types of advertising. He divides customers into five segments: Organic (ie. Starbucks, Apple), Social (recommendations), Algorithm (Goog), Advertising, and Begging (discounts, coupons).

He offers insights about the dynamics between these groups. For example:

Advertising and Algorithms interact in a bad way. The cataloger knows this all-too-well, right? The cataloger sends a million catalogs out into the ether, only to drive the customer to Google, where the customer has fifteen choices for nearly identical product at comparable prices.

and

Advertising and Begging interact in a bad way, unless you are an inventory manager. The marketing executive creates demand by begging via advertising vehicles. Customer loyalty is now shot, as the customer is being paid to buy something --- worse, Advertising and Begging can drive the customer to an Algorithm. Google loves Advertising stuffed with Begging!

There are at least two things that are fundamentally changing how we do our journalism jobs.

1) The Google effect. Among many other things, it pulls advertising from traditional (paper) pubs like ours. One result: A thin magazine that doesn't have room for lots and lots of stories. This means that stories wait and news changes, which brings us to...

2) The recession (or depression). When you have a story that began its gestation before the fall of Lehman Bros., you have to scramble to adjust it to the new, grim economic picture.

Both of these elements came into play in this Reid Hoffman profile I wrote last week. I did the original reporting on the West Coast in August. It was going to be a longer feature profile. But other things intervened, the book excerpt, the book tour, and next thing you know, we have a profile that's out of sync with the times.

We rearranged it, putting in lots of talk about the recession and its effects on Web 2.0 companies, including LinkedIn. And just when we thought we had responded adequately to life's curveball, LinkedIn threw us another one: They announced a layoff shortly after our article went to press. We hurried again and updated the Web version.

What's remarkable about BitTorrent is how transformative it has been. And yet how it, a lot like Napster, has been unable to make the leap from innovative disrupter to commercial success.

About three years ago, the service started on its search for a new business model--with little success and an ensuing series of different strategies. Now the NYTimes Bits blog is reporting that BitTorrent is firing 18 people or half of its staff, hard on the heels of an earlier round of layoffs in August.

Not that other movie services have had blockbuster success so far in pushing rental, subscription, or download services. But it simply could be that BitTorrent could never make the jump, that people who use BitTorrent couldn't be convinced to get on the pay for it bandwagon. And that failing to gain traction there, turning other strategies might have come too late or been too niche.

Colleague Steve Hamm has fascinating new book out, The Race for Perfect: Inside the Quest to Design the Ultimate Portable Computer. The book tells the stories, over four decades, of the development of mobile computing. It travels from early efforts, such as Alan Kay's Dynabook, through the ThinkPad, the PowerBook, and (in the part I haven't gotten to yet) it focuses on the development of Lenovo's X300.

In a first, the book excerpt runs in BusinessWeek as a cartoon strip (or, online, a slideshow)

Well, when it comes to blogs over press releases, looks like press releases win today, in terms of telling the truth and the whole truth. On its blog, Google explained that it was ending the much scrutinized Yahoo search agreement because:

after four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement.

Err, according to the DOJ press release and Yahoo's press release, there weren't just concerns. The DOJ was going to sue. According to the DOJ it

informed the companies that it would file an antitrust lawsuit to block the implementation of the agreement.

Yahoo also says straightout in its press release that the DOJ was going to block the deal.

Now, you could argue that Google did talk about the "prospect" of a legal battle. And that, of course, they could have put out a press release that was just as squishily worded. But what's ironic about blogs is that they represent the opportunity to cut through squish. And that certainly wasn't how Google used theirs today.

I got some results from Platform A for the behavioral advertising campaign we're running for my book, The Numerati.

The study, involving some 12 million ad impressions, looks at three different audiences--business strategists, book-lovers, and general public--and measures their responses to three different types of ads, one focused on economic impact of the Numerati, the second on how their work will affect our lives, and the third on how scary this all is. (sample text: "Meet the Numerati... They've already met you.")

I'll paste the entire text below, for those who are interested. Most of the results fit into what you'd expect. Each audience responded more favorably the ads designed for it. One interesting note: Business strategists are very parsimonious with their clicks. So while in real terms they clicked less than other groups, they responded strongly to certain ads when measured against their own index.

The key piece of data--how likely these ads are to make them buy the book--should be coming later this month.

Insights from the Campaign Clicks

The campaign ran three sets of creatives, one with a business focused message, one designed for a general audience and one which attempted to scare the viewer with what the Numerati knew about them. These three ads were each shown to three different audiences - people interested in literature, business strategists and the general public. Finally a control campaign was run with a public service announcement ad to each of the three audiences as well.

The Numerati ads generated higher click-rates than the public service ad - People clicked on these ads at an index of 165 compared to the PSA.

Targeted audiences generated the lift - The targeted Numerati ads generated a much higher response with the right audiences, while showing the ads to uninterested audiences had little effect.
* General audience who saw the Numerati ad - index 106
* Book lover audience who saw the Numerati ad - index 199
* Business strategist audience who saw the Numerati ad - index 325

The ad creative designed for the general population generated the highest click rates - The indexed click rates for all respondents were:
* General ad - index 269
* Scary ad - index 244
* Business ad - index 100

When the right ad is shown to the right audience, the response rate increases - If we use the general ad click rates as a baseline we can determine the effect of serving targeted ads to different audiences. For example when the business audience sees the ads the click rates index quite differently for each creative.
* Business creative - index 161
* Scary creative - index 66
* General creative - index 60
*Note - Why use indexes? We know that different audiences click on ads differently. People who enter lots of online sweepstakes and have the time to play online games often click on ads at a higher rate than the general population. People such as business strategists are often some of the lowest clicking audience online. Instead of comparing peoples absolute click rates, which would only show that general audiences which contain many "sweepstakers" click at a higher rate, we want to look at how audiences click compared to their own norms. This tells us if an audience is more drawn to a particular ad than any other and normalizes the historic differences in click proclivity different shown by different people.

My co-worker Reena Jana has an interesting story about how Dell is tackling design, trying to transform its once-stodgy PCs. Behind the new approach is Ed Boyd, a successful designer for Nike.

Dell plans to roll out the first three laptops with these colorful designs on Nov. 11, in time for the holiday season. Customers will pay an extra $75 for the designs, on top of the basic $699 price tag for the company's budget-line portables. The designs are from Nigerian painter Joseph Amédokpo, South African graphic artist Siobhan Gunning, and Canadian designer Bruce Mau.

For Boyd, this is just a start, though. Next year, Dell will let buyers customize laptops in a dizzying number of ways, mixing scores of colors, patterns, and textures. The options will go far beyond the handful of choices available from most of its rivals. In essence, Boyd is taking the Nike approach of letting people design their own sneakers, and trying to apply it to the world of computers. "We're pushing the idea of [made-to-order computers] to the next level," says Boyd.

The announcement from TiVo that it will stream movies from Netflix is a smart move. It's a good offensive move for Netflix and for Tivo, as companies continue to push to figure out how to deliver movies downloads and streams digitally to the TV, rather than the PC.

As Scott Devitt of Stifel Nicolaus points out, the offering is only available for TiVo Series 3, TiVo HD, and TiVo HD XL subscribers. But most of TiVo's customers (me included) have the Series 2 box or below. So most folks will have to trade up to get the new service.

I think that even in a down economy people might decide its work splurging a little to save money down the line. I mean, why not set up a home movie entertainment center on the cheap and forget going out to the movies (ok, except for the BIG movies). Afterall, the Netflix acces is free for Netflix subscribers who pay at least the $8.99 monthly plan.

A press release this morning caught my eye. Apparently, using videoconferencing can hinder people's judgments. That's according to a 12-week study of people at 19 seminars that were used videoconferencing. It's being published in the journal of the Institute for Operations Research and the Management Sciences, or Informs.

Apparently, it's harder to interpret information that's presented over a distance rather than presented face to face.

And here's the kicker for me, which reminds me of TV. People watching a presentation by videoconference are more swayed by the likeability of the person speaking, rather than by the person's arguments. The opposite is true for the folks in the room.

One of the conclusions of the article is that "Videoconferencing may not be appropriate for decision making when some stakeholders are present face-to-face and others attend via video, because these two groups are likely to process information differently."

I can't find a link to the article and am asking them to send it to me.

What's intriguing about so many startups these days is how they're veering away from the ad based model, or freemium model, to come up with ways of selling things or subscriptions. I think they're betting rightly that the ad model doesn't work for everyone and that when it comes to online advertising cutbacks, startups are vulnerable because they're seen as experimental buys.

But then the question is, what will consumers buy in a downturn? They certainly won't buy as much as they did during good times. And the notion that online commerce is protected went down the drain with eBay and Amazon's earnings over the past couple of weeks.

One thing people think might work are virtual goods. But I bet that those are also vulnerable to belt tightening. And according to Silicon Alley Insider, Second Life's market in virtual land is looking fragile. They're increasing land prices. Against a backdrop of a decline in the number of paying customers and weak aftermarket for land, this move looks like a way to squeeze more money out of existing customers, as SAI says.

So, for companies trying to branch out into new models in this model, it's almost cursed if you do, cursed if you don't.