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Back in March I thought that Google pulling out of China would hurt Google’s Chinese employees and shareholders more than anyone. The search engine was a distant number two in the market to Baidu, and many of the people already using Google in China, I assumed, were doing so through VPNs anyway, meaning the government blocking it wouldn’t immediately change much in terms of users’ experience. Beyond that, I figured startups in China’s thriving Web scene would rush in to fill any void.

But I underestimated one big thing: The impact that the lack of Google would have on China’s Web businesses. By essentially handing Baidu a short-term monopoly on keywords, user acquisition costs have gone through the roof, infuriating many of the people who were originally sympathetic to Google’s case just a few months ago. “They should have just not come into the market to begin with if this is how they were going to act”: if I heard that statement once in the last two weeks I spent in China, I heard it a dozen times.

This wasn’t all Google’s fault. Frankly put, the company didn’t have enough market share to wreck things on its own. But it was icing on the cake of an increasingly unsustainable situation. Market forces—ie, so much venture capital backing so many new Chinese Web ventures—were already making the cost of acquiring traffic through popular online channels in China expensive. (For instance, there are said to be literally hundreds of Groupon-clones in China vying for traffic all of the sudden.) Now, sources say prices are almost totally out of reach for anyone but the most well-funded companies.

Marc van der Chijs co-founder of Tudou and CEO SpilGamesAsia told me a year ago buying traffic via keywords and listings in directory sites like Baidu-owned Hao123.com was a no-brainer. But he says within the last year, the prices have gone up as much as 10-fold. So high, van der Chijs finally walked away, glad he grabbed some users while they were affordable.

He’s not alone. I talked to about a dozen startups who said they are spending the bunk of their money these days on user acquisition. It’s creating some concern that newer, scrappier ventures are locked out of a market increasingly dominated by Web giants like Sina and Tencent.

The desktop directories at a Chinese Internet cafe show a similar picture. They are hopelessly crowded with hundreds of games and entertainment sites. (See the screenshot I took at a cafe in Xi’an to the right. It’s a small sample of the offerings jumping out at you as soon as you log on.) One of the newer online gaming success stories of China, Giant Interactive, caught everyone off-guard back in 2006 by using a veritable army of thousands of hip kids to travel around to Internet cafes like this one and talk up its game, offering specials and teaching people to play, side-by-side. Giant went public on the New York Stock Exchange in late-2007 largely off the success of that one game, ZT Online.

But even such extreme measures are a challenge now, since increasingly the Chinese Web is spreading beyond Internet cafes. “That’s why so many companies are trying to have a social media element, so people will invite their friends and we can get more users for free,” says Song Li, the founder of a few online ventures including online dating site Zhenai and location-based microblog Digu. Indeed, that’s a big reason Giant invested heavily in social network 51.com, said Giant’s CFO Eric He in Shanghai last week. (Valley-based Redpoint Venture is also an investor in 51.com.)

This is the first we’re seeing of Chinese sites having this much trouble finding eyeballs, and it’s a sign of maturity in the development of the Chinese Web. These days there are enough good services, content sites, games and social networks that a lot of people’s basic Web needs are being met. As a result, the audience is becoming sophisticated and harder to lure.

The problem is scale. When the US went through this problem, it was around the early 2000s. We had a lull in new sites being created thanks to the dot com crash and around 150 million people were online. In China, there are dozens of new sites being created per day and the Web audience is surging past 400 million users. (At least that’s the number being bandied around these days. The claims for the number of people online in China seems as ever-inflating as the price of a Baidu keyword) It’s a chaotic landscape of constantly shifting sands—even when you don’t consider concerns about changing government regulations.

Some entrepreneurs are getting creative. For Zhenai, Li is starting to experiment with television for the first time, both traditional ads and what he refers to as “product placement.” TV dating shows are all the rage in China these days, and they follow a specific script. A stage full of girls question and critique a would-be suitor saying things like “If you don’t drive a BMW, don’t even think about.” As I understand it, the girls take themselves out of the running, round-after-round by turning off their lights. At the end, the poor guy finally gets to a make a choice out of the ones still illuminated.

Shows like these have concerned a lot of older Chinese citizens about the lack of morals among the youth who seem obsessed with money, sex and things, but Li sees something more subtle at work here. Shows like these are an outlet for a wave of women who came into the work force as China was opening up its economy. Even at young ages they are educated and economically self-sufficient, so they’ve decided not to settle for a man for the sake of security. This group had been teased in society and called “The Left Behinds.” These game shows are a way of reclaiming their independence, their choice not to marry. And other women like them are living vicariously. There are about a dozen iterations of these shows showing throughout China’s fragmented TV networks.

Dating sites like Zhenai see opportunity here. Increasingly, these sites are helping with the casting and when girls from a given site gets picked, the site is listed under her name, like a product placement ad. Hopefully, if she’s alluring enough, that drives more would-be daters to the site. But setting up casting calls and culling through millions of members is a lot of work to find a telegenic few.

Is it worth all that work for the traffic? Even Li isn’t sure. But give him credit for trying. The Chinese Web became lucrative because of entrepreneurs who excelled in distribution and monetization. These guys can do better than continuing to buy inflated keywords. They have to– all inflated markets pop at some point. The companies that have found a more lasting way to build their audiences will likely be the ones who build the second generation of Chinese Web giants.

Microsoft has been busy over the last year. It was during E3 2009 that Microsoft blew everyone away with what was then dubbed Project Natal. It promised to bring full body motion control to the 360. We’re getting our first real look at the system at E3 today after last night’s theatrical reveal and, well, it’s keeping that promise.

That’s not what’s surprising, though. Project Natal, now called Kinect, was demoed extensively over the last year and most of the media had a chance to play with the early demos. The real surprise today is that Kinect isn’t a Wii clone like it previously seemed. It’s something entirely different that doesn’t target just families or casual gamers. This thing is for real.

Update: Now with a pic of our hotel’s bathroom! You have to see this.

As one of the most popular social sites on the planet, Flickr is also undoubtedly one of the most popular misspelled domains. Pronounced “Flicker,” Flickr decided to be all Web 2.0-cutesy with its name back in the day. That’s fine, except when someone else owns the Flicker.com domain. Yahoo, which bought Flickr in 2005, has finally done something about that — obtaining Flicker.com.

As we noted a year ago, Flicker.com put itself on sale in a very visible way. Anyone who visited the page was greeted by a logo and statistics about how much traffic the site receives. So how much traffic was Flicker.com getting? 3.6 million unique visitors a year, according to them. Almost all of those hits were direct (95%) undoubtedly because people would misspell Flickr.com as Flicker.com.

The Domains first reported that the WHOIS record has changed, and we’ve since confirmed with Yahoo that they did take control of the domain. “The FLICKER.COM domain has been transferred to Yahoo!,” a spokesperson told us but declined to say anything further. Earlier today, Domain Name Wire reported that a lawsuit settlement gave Yahoo the domain. Back in 2007, Yahoo supposedly offered the owners of Flicker.com $600,000 for the domain, which they supposedly turned down.

For now, Flicker.com is still pointing to the old landing page, but you can probably expect that to change soon.

Update: Flickr co-founder Caterina Fake (no longer with the service — but working on a new startup, Hunch) left the following comment below to with some of the history behind the name:

We tried to buy the domain from the prior owner who made a beer called Flicker Beer. He wasn’t interested in selling. He then, I believe, sold it to the current/former owner. We liked the name “Flicker” so much we dropped the E. It wasn’t very popular on the team, I had to do a lot of persuasion. Then the dropped “E” thing became something of a cliché…

So there you go, Flicker Beer led to the service dropping the “e” and starting a trend (including, at one point, Twitter).

Since late last year, Twitter has included location as a key part of its API. Earlier this year, it was rolled out to twitter.com as well. But those locations have been abstract cities or areas. Starting now, Twitter is adding actual venues into the mix as well.

On both Twitter.com and mobile.twitter.com, you’ll now be able to tag tweets to specific places (such as venues), Twitter notes on its blog today. And clicking on those location names will bring up recent tweets from those places. Twitter says this is perfect for the World Cup matches currently going on in South Africa.

Notably, this also will work right off the bat with Foursquare and Gowalla — two of the most popular check-in services. When you click on a venue that has Foursquare or Gowalla information attached to it, you’ll also see check-ins at those venues on twitter.com. This is a big win for both of those services.

This new place information works with the Twitter API as well. Over the next week, it will be rolling out in 65 countries around the world thanks to data partnerships with TomTom and Localeze.

And alongside this launch, Twitter notes that the location functionality is working in more browsers, such as Internet Explorer and Safari (in addition to Chrome and Firefox, where it has worked for a while). And soon, Twitter Places will come to the native mobile applications for the iPhone, Android, and BlackBerry.

All of this means huge things for location on Twitter. And the fact that this place data ties in with both Foursquare and Gowalla is excellent. But there still eventually needs to be some sort of unified place database. Maybe Twitter Places will help produce that. At least until Facebook’s location solution comes out and is inevitably incompatible — I kid, I kid. Or do I?

And don’t forget Google Places.

Earlier today, a story started going around the blogosphere about Facebook CEO Mark Zuckerberg trying out an iPhone for the first time. At the time, the assumption was that this was an iPhone 3GS, since the iPhone 4 isn’t out yet. But sources told VentureBeat that it was the iPhone 4 that Zuckerberg was using. Sadly, that’s not the case. How do I know? Well, one reason is that Zuckerberg said so himself.

As the original screenshot on Valleywag shows, Zuckerberg posted a message on his Facebook Wall about trying out the iPhone. He doesn’t specifically say which one it is at first, a comment below his posts asks “Right before iPhone 4?“, to which he responds, “My thumbs were hurting from my BlackBerry so I switched. I’ll probably get iPhone 4 if I don’t switch to Android.” Why would he talk about getting an iPhone 4 if he already had one? Because he didn’t.

Instead, Zuckerberg had an iPhone 3GS. The only reason why this matters in the slightest bit is because he ripped the device, suggesting his iPhone had horrible battery life and couldn’t make a call. Considering the iPhone 4 will still be locked to AT&T, the not being able to make a call part is certainly feasible. But the battery life on the iPhone 4 is supposed tobe up to 40% better than the iPhone 3GS in certain situations. Yes, that’s at least partially a marketing ploy, but Apple has recently had a lot of battery improvement success with both the iPad and newer MacBooks. And from what I hear, the battery life claims are legitimate.

And while Apple was kind to Facebook during the iPad launch event earlier this year as VentureBeat suggests, you’ll note that they were notably absent from the iPhone 4 unveiling despite some rumors to the contrary. In fact, the word “Facebook” wasn’t uttered once during the entire event.

So everyone can calm down, Zuckerberg is making claims that the rest of us have known for years: AT&T sucks and the iPhone (3GS) needs a stronger battery. The iPhone 4 may be able to alleviate his second complaint, but the first may push him over to Android.

Yesterday, I wrote a column contrasting the attitude towards ‘content’ displayed by old and new media. My conclusion was that, in the Internet world, quality, originality and exclusivity are fast becoming irrelevant. Instead, online publications increasingly treat content as low-paid, illiterate swill, commissioned by the ton to provide SEO ad inventory.

To show that the phenomenon wasn’t limited to online-only brands, I gave the example of Forbes.com – with its mish-mash of celebrity slideshows and tacky lists of ‘Americas best paying blue-collar jobs’ and ‘hottest summer convertibles’. Since the column was posted, I’ve spoken to a number of former and current Forbes employees who (off the record, naturally) have expressed agreement with my criticisms. Forbes’ obsession with page views at all costs (or, rather, no cost) is just plain embarrassing.

But clearly the company have taken my criticism to heart: earlier today Paul Maidment, chief editor of Forbes.com, tendered his resignation, while new ‘chief product officer’ Lewis Dvorkin called an on-the-record meeting to announce a bold new online strategy for the company. Prior to joining Forbes, Dvorkin was founder and CEO of crowdsourced news site, True/Slant, which was acquired by Forbes back in May. And, what’s his bold plan to improve the journalistic standards of one of the world’s most respected business publications?

That Forbes.com will soon be opening its doors to 1000s of unpaid contributors and that [rather than commissioning quality in-house journalism] “Forbes editors will increasingly become curators of talent”.

Gggggaaaaaaahhhhh.

There are almost not enough words to describe how wrong-headed this move is: Forbes’ online editorial standards are already in the toilet and Dvorkin has just yanked on the flush. Not only will this new breed of hacks add thousands of pages of self-promotional, unedited (Forbes simply doesn’t have the resources to monitor thousands of contributors) drivel to Forbes.com but, by lowering the barrier to entry to anyone with a keyboard, the publication will also scare away those top tier contributors – captains of industry, statesmen and the like – who are prepared to pen a free article for Forbes just for the kudos that comes from being asked.

I vented my frustrations on Twitter to Forbes editor David M. Ewalt, who live-tweeted the meeting (and gave the “curators of talent” quote above). Loyal company man to the last, Ewalt defended his boss’ lunacy and pointed out that he “never said [the contributors] would be unpaid.”

Sure. Forbes, which is already so desperate for ad revenue that it has to run slideshows of supermodels who have started their own businesses, are going to pay the “thousands” of news contributors that Dvorkin announced, and Ewalt retweeted? No – they’ll do what the Huffington Post does: pay a meager stipend to a tiny percentage top traffic drivers to save face, and then expect the rest to work “for the exposure”. As the old saying goes, people die from exposure – but in this case, it might just be the whole publication that’s not long for this world.

Ewalt’s response: “In theory, the idea of a large body of writers rewarded for good work is a great thing. I’m not against decentralizing journalism… but I think we can both agree the execution of that theory is a very tricky business.”

Tricky, like turning horseshit into gold is tricky.

RIP Forbes.

Today, Google Earth released a new edition of its desktop app which hikers, runners and cyclists are going to love. They call it Google Earth 5.2. I call it the Hiker;s Edition. One of the new features allows you to recreate the path of a hike or bike ride by ingesting geo-data from one of your GPS devices. The visualizations show you the speed, elevation, and other stats from your hike, which you can see as an animation inside Google Earth.

If you collect other data about your trip, such as your heart rate or other body monitoring stats, those can be overlayed as a graph below at the bottom of the screen. I’d love to see an iPhone or Android fitness app that takes advantage of these new capabilities.

Another new feature in Google Earth is the ability to launch a regular Web browser from within the desktop app. Hopefully, that is the first step towards bringing Google Earth completely from the desktop to the Web. Otherwise, it might end up like Second Life.

Below is a video Google Earth product manager Peter Birch made of his bike ride to work.

Yahoo has just released some statistics for what they’re seeing from people doing searches with Yahoo on the iPad. The results are a little humorous.

According to this post, “the top searches over the last few weeks tended toward the thrifty and economical.” That seems a bit odd considering that the iPad is a $500 to $800+ device that, while possibly the future of computing, is hardly a must-have right now in tough economic times. eBay and Craigslist were at the top of shopping-related iPad searches followed by big discount retailers Walmart and Target, according to Yahoo’s data.

Other popular searches on Yahoo from the iPad include queries for the Netflix app, and one for Flickr (even though there is no native Yahoo-built Flickr iPad app yet). People are also searching for ABC, NBC, Hulu, Pandora, Farmville, and even Chatroutlette.

The data is also interesting because Yahoo isn’t the default search engine on the iPad — Google is. So these people are clearly going to Yahoo.com (or setting the search box to be Yahoo) specifically to search for something. Yahoo also reports a 327% increase in mobile searches for the term “iPad reviews” and 138% for “iPad cost.”

Back at the end of April, we noted that the iPad was already accounting for 1.18% of the traffic to TechCrunch for the past 30 days. In the past 30 days, that number has jumped to 2.42%.

With a massive membership of more than 230 million gamers, one of the biggest challenges that social game company Zynga faces is keeping up its growth. One of the secrets to its success is the ability to use its existing hits (Farmville, Texas HoldEm Poker, Mafia Wars, etc.) to cross-promote new games and help launch those games. Its other advantage is that so many people now play its games that new games now get free a ton of press and blog coverage.

Last week, Zynga introduced its latest game, FrontierVille. Speaking at the Wired Business Conference today, Zynga CEO Mark Pincus reports, “FrontierVille is the most successful launch we’ve ever had.” More than 100,000 people tried the game the first day, with roughly half of those coming from blogs and news sites. Pincus says the second-day retention rate (people who came back to play again on Day 2) was 70 percent. Less than a week later, the game has more than one million daily active users.

Zynga spent more money developing FrontierVille than any other game so far. It lets players interact with their friends’ game boards, increasing the social aspect of the game beyond simply buying someone a virtual gift. Players of FrontierVille get a plot of land out West and have to help each other to develop their farms. Pincus believes there is a huge opportunity in pumping up the social aspects across all of his games. In Farmville, for instance, Zynga recently turned on a new farmer’s market feature where players can sell their produce. Up next will be craft fairs, which will allow different players to specialize in different skills such as wine making or energy production.

In other words, Farmville and other Zynga games will behave more like virtual economies, with trade centered around specialization. And where there is trade and markets there are more social interactions, just like in the real world.

The other big opportunity is to link the virtual goods in the games with real-world goods or e-commerce goods via affiliate marketing. “There is a lot of opportunity for you to take game mechanics and incentives and intersperse it around all sorts of things we do,” says Pincus. Zynga’s first big partner in this regard is 7-Eleven, which now offers Farmville-branded Big Gulps, Slurpees and other items. But Zynga needs to be careful with exactly how many virtual goods it gives away, because they have a real cost and players have a huge appetite for them as the company recently learned with Mafia Wars.

Photo credit: Larry Busacca/Getty Images, courtesy Wired

Back in January, I wrote about a new Q&A service called Formspring.me that allowed users to have their friends “ask them anything”: sign up for a profile, and anyone can submit a question that you can choose to answer at your discretion. At the time the service had around one million users. Fast forward six months: the service now has over 12 million accounts and users have asked each other 700 million questions.  According to Quantcast, it’s the 61st most visited site in the United States. Formspring has also just launched a preview of its API in private beta, which you can request an invite to here.

As it has taken off, Formspring has started to draw the attention of some major brands — last month, Fiat used it to help launch the Uno in Brazil, and Marvel Executive Editor Tom Brevoort regularly takes to the site to answer fan questions (he’s responded to over 3,000 of them). Red Bull has just launched a new page. As with Facebook Pages, Formspring gives brands a relatively easy way to engage directly with their fans — this could well be the start of a new trend.

The history of Formspring is interesting — it actually started off over four years ago as a service that makes it easy to generate web forms of all sorts. Last summer, the company noticed that a significant number of users were using the service to build out Q&A forms, which was driving a lot of traffic but was also hurting their conversion metrics (none of these users were looking for a premium product). So the company decided to launch a little side project at Formspring.me in November 2009 that would cater specifically to these individuals. A month and a half later, the service had a million users. Now that it’s taking off, the ‘old’ Formspring has been renamed Formstack, and Formspring.me now has an office of 14 based in San Francisco.

The appeal of Formspring.me is obvious: it lets you talk about yourself at great length without coming off as a total narcissist (of course, the success of the service relies on your vanity). Better yet, you can optionally allow users ask their questions anonymously. This anonymity has led to some issues though, spurring reports of teenagers harassing each other through the service. The Formspring team is well aware of these problems, and plans to launch a suite of new features to address them in the near future.

Microsoft has been touting its Kinect interface for the 360 all morning, and it’s clearly being marketed as a family-oriented device. They demoed quite a few games, covering a lot of territory; gaming rags are already whispering that this is where much of the MS development muscle is going to be applied for the foreseeable future. Not everything is going to be a hit, but among the dozen or so launch titles, there are definitely a few worth checking out, though a lot depends on your gaming tendencies — and age.

Here are our picks for which games will and will not impress buyers when November 4th comes around.

Continue reading…

The tales surrounding the launch of the EVO 4G have been intriguing, to say the least. On June 4th, the device launched. By June 7th, Sprint was touting the phone’s sales as mammoth, claiming that it had broken their previous one-day sales records (as held by the Samsung Instinct and Palm Pre) by as much as 3 times. Just two days later, they recanted that story, declaring that they had “erred” in their original estimations, and that the sales numbers were inline with those of their previous top sellers.

There was, however, a bit of the story which we didn’t see: the part where a Sprint employee used the inventory system to figure out exactly how many EVO 4Gs were sold and posted that number online, resulting in a speedy investigation by Sprint HQ and the employee’s immediate termination.

Read the rest at MobileCrunch>>

Although there was plenty of news coming out of Microsoft today, the most interesting move is their decision to begin shipping the brand new XBox – it’s basically the old XBox with 802.11n Wi-Fi, a 250GB hard drive, and Kinect support – the same week they announced it. It’s not quite same day, but it’s close.

However, another treat came when they announced all the media at their press event will be getting XBox 360s immediately and that they would be showing up at their domiciles and places of business posthaste. Ethical issues aside, this is an interesting marketing effort.

These sort of giveaways are common at developer events (well, actually just Google IO) and I suspect they’ll become more popular in the coming months. Gear is so cheap to build and ship that it almost makes sense to blanket the evangelists with it. Whereas the old model of “selective releases” works for some products – Apple, in particular excels at this – the XBox team is dealing with an entrenched base of hardware users who will be loathe to swap out their old XBox, provided they’re not RRODed.

Read more…

In the last few days, a pair of stories have emerged illustrating the issues with Apple’s App Store and its potential to censor content. The latest was Apple’s blocking of an iPad graphic novel adaptation of Oscar Wilde’s The Importance of Being Earnest. According to a report in The Big Money, the application was barred from the App Store until its author added ugly black blocks to censor the illustrations of men kissing (which included depictions of mens’ buttocks, but no frontal nudity). We’ve just gotten word from Apple that they’ve reversed the decision (they say it was a mistake) and that the application’s developers can resubmit the graphic novel in its original form.

The news comes on the heels of a very similar situation involving a comic adaptation of the classic epic Ulysses called Ulysses Seen, which was blocked from the App Store until its authors removed some illustrated nudity featured in the comic. Apple reversed that block this morning.

Apple representative Trudy Muller explained:

“We made a mistake. When the art panel edits of the Ulysses Seen app and the graphic novel adaptation of Oscar Wilde’s Importance of Being Earnest app were brought to our attention, we offered the developers the opportunity to resubmit their original drawings and update their apps.”

This isn’t the first time Apple has run into similar issues — in April it was in hot water for blocking a satirical application created by a Pulitzer Prize winner (it quickly reversed the block as soon as the press caught wind of it).  Apple may not be censoring this content as a matter of official policy, but it’s clear that some of its reviewers are doing it anyway, or are at least unsure about what the rules are. And it isn’t comforting that it took the media spotlight to get these cases reversed.

Image via The Big Money.

Everyone is busy talking about Microsoft Kinect (the project formerly known as Natal), but to me, some much bigger news just dropped at E3 from Microsoft: ESPN live sports access. Simply put: this was the only thing holding me back from completely canceling my cable subscription. As soon as this goes live, I’m done with cable forever.

No, this live sporting access won’t be entirely free, but it’s one hell of a deal. You simply have be an Xbox Live Gold member (about $50 a year), and you’ll get access to over 3,500 live events a year. In HD. Did I mention it was $50 a year? My cable bill is currently double that — a month.

According to BusinessofVideo.com:

Content includes college basketball, college football, soccer, MLB and NBA amongst others.

It’s hard to overstate just how big this news is for people fed up for cable. A little over a year ago I tried to cancel my cable after being fed up with Comcast’s sub-par (a nice way of saying it) service and absurd prices. I was fine using only my Xbox 360, Apple TV, and computer for all my content for several months. One thing I severely missed though was live sports. As crazy as it sounds, there’s only so many times you can drag yourself to a bar on a weeknight to watch every game you want to see.

So when I moved a few months ago, I signed up for cable again (this time without Comcast, thankfully). Once again, I find the only thing I regularly watch on cable is live sports — so I’m effectively paying $100 a month for that privilege since the cable companies still refuse to do a-la-carte packages where you can choose only the channels you want. With this new Xbox Live ESPN service, I can officially cancel cable — and never look back.

One thing not mentioned in the announcement was the biggest sports league in the U.S.: the NFL. Still, if I only have to drag myself to bars to watch those games, I’ll be a happy camper.

Back in December, when it looked like Apple was on the verge of talking some of the television networks into doing subscription-based TV packages through iTunes, I wrote that Apple may be on the verge of kneecapping the cable industry. Those deals have yet to come to fruition. And so their rival Microsoft beat them to the knee bashing. As long as I can throw that crappy cable box and its piece of garbage remote out the window, I don’t care who destroys big cable’s monopoly, I just care that it’s done.