Such letters, which the government uses to obtain phone and internet data about foreign nationals, are currently subject to an automatic gag order that forbids companies from disclosing their very existence.

On Tuesday, Google said it is filing a petition to the secret court, known as the Foreign Intelligence Surveillance Court. The petition, embedded below, notes that the search giant has already received information from the FBI to publish the number of so-called National Security Letters it receives — these are similar to FISA letters but cover US citizens.

The Google petition comes as a brouhaha continues to rage over the revelation of secret government programs, such as PRISM, that collect meta-data on phone and internet users.

The controversy has not only let to questions about the expansion of government surveillance under the Patriot Act, but has also led the various tech companies ensnared in the dragnet to claim vociferously that they are standing up for their users. The nature of this advocacy has led to tension between some of the companies — Google and Twitter, for example, have suggested that alleged victories claimed by Microsoft and Facebook against the government are misleading.

In its filing, Google also repeated its criticism of the Guardian and Washington Post for misleading reporting — and says that the disclosure of the FISA requests are necessary to help it refute false accusation leveled by the media.

“Google reputation and business has been harmed by the false or misleading requests in the media, and Google’s users are concerned by the allegations,” the company wrote, several times singling out the Guardian and the Post.

If Google’s petition is successful, the company’s semi-annual Transparency Report will include two new categories that reveal: the number of FISA requests received; the number of accounts each request covers.

Here’s the filing:

Google 1st Amendment FISA

According to the research, released Tuesday morning, news publishers are running three times more ads than a year ago while also relying increasingly on automated real-time exchanges to sell the ads. Here’s some other highlights from the figures (which are drawn from DoubleClick, not YouTube or other networks):

• 40 percent of the video ads that ran between January and March this year were from first-time video advertisers.

• 68 percent of all the ads came from four categories: automotive, tech, retail and consumer packaged goods.

• Entertainment sites are attracting more than two thirds of the ads, but categories like sites devoted to news, sports and electronics are quickly increasing their share

• Video ads that let viewers skip ahead after 5 seconds are more popular (d’uh!) but these type of ads also yield a much higher return for publishers

The survey did not, unfortunately, offer any insight into how video CPM’s (which are much higher than those for display) will hold up as more and more publishers try to get into the video game. The findings come at a time when media companies like AOL and Yahoo are creating original series and video ad network Tremor Video has filed for an $86 million IPO.

Finally, despite the enthusiasm of Google (and many others) for online ads, take note that the bigger picture suggets that the vast majority of video ad money is going to stay tied up in TV for a good many years to come.

DoubleClick also set out its survey in an infographic if that’s your cup of tea:

Doubleclick Slide on Online Video Ads

If you prefer your good news with a grain of salt, you can take note that Triggit makes its living by helping marketers buy ads on Facebook’s exchange — the bidding platform where brands can buy ads in real time. The exchange, known as FBX, was supposed to jumpstart the social network’s advertising efforts.

According to Triggit, which is one several ad tech companies that Facebook permits to broker the ads, the cost for a large international retailer to obtain a customer on the news feed exchange is one-third the price of a traditional “right-hand rail” ad and 1/16th that of a traditional Google display ad. The company says the ads are especially taking off in international markets like Latin America.

“The big takeaway is that this is a game changer for advertising. It changes the economics for publishers too,” Triggit CEO Zach Coelius said by telephone, claiming that every other company that has a news feed will soon look to create an automated exchange too.

For believers, news feed-style ads are “native” and less likely to be ignored by consumers, while the use of real-time bidding permits masses of them to sold to the right people (based on retargeting data) with minimal effort.

If Triggit’s claims are even mostly true, that will be welcome news for investors who fret that Facebook’s advertising results haven’t lived up to their original promise.

Ad industry watchers, meanwhile, agree that the newstream ads more effective than other forms of Facebook ads. But they also caution that too many of them, including forthcoming video ads, could be off-putting to users of the social network.

Transitioning from free to pay

So why shouldn’t this work? After all, the move into internet television – or streaming broadcast – seems to have worked out for Hulu and Netflix just fine. I’d say the problem is that those companies aren’t the right comparison. YouTube should instead be studying the example of print publishers, who have to-date struggled and largely failed to transition from longstanding free models to hybrid paid subscription/advertising models. It’s a potentially massive roadblock for YouTube’s plan. How do you get audiences to start paying for the same product that you’ve always given them for free? The decision to allow free access not only went a long way toward effectively killing newspaper subscriptions for the hard copy product, but more than that, also gave newspaper and magazine readers an attitude of entitlement when it came to online content. The entire industry trained readers to expect their product to be free, and so attempting to reverse course is understandably proving difficult. Newspapers have since tried every permutation of bundling free apps and print subscriptions with their online subscriptions, and those efforts have met with largely lukewarm levels of success. So the big question is whether it will be simply too late for YouTube as well.

Little advantage for existing brands

Also dogging YouTube’s paid offering so far is the lack of much in the way of big-name paid-programming. For example, Comcast – the owner of NBC Universal – has yet to sign on for YouTube’s latest venture at all. And while YouTube is wildly popular, content providers are generally not happy with the cut Google takes of revenue, which can be as much as 45 percent. Those same providers are also not thrilled with the obstacles to branding that YouTube imposes, such as claiming rights to its content. And even if you’re one of the lucky few that maintains a popular and established channel, it’s questionable whether YouTube offers the best platform for controlling your content, audience or brand. After all, as the middleman Google has complete control over the relationship with the viewer. As an instructive example of the ineffectiveness of branding on YouTube, just look at the number of  videos that try to explain and teach smaller content creators and advertisers how to use YouTube itself. Even these how-to-brand-on-YouTube videos get lost among themselves in a kind of meta-vortex, their only distinguishing factor being view counts. In short, even videos about branding on YouTube have a problem branding themselves! When it comes to video, YouTube faces much of the same problem that Facebook does for everything else: Just because you are fabulously popular with the public as a free site doesn’t mean you’ll be a slam-dunk source of lead generation, content monetization, or other potential revenue for brands.

Stiff competition for web entertainment dollars

YouTube – heck, even the whole of the internet itself – has thrived in an era where cheap, easy and disposable content has ruled: In the land of Jenna Marbles and MysteryGuitarMan, the free and transient are king. Now that the collective web has unearthed some of these oddities, YouTube is hoping that you’ll actually start paying to watch them. As more serious content creators get more serious about the web as the prime medium of engagement, these stars will have to survive in a new market of truly premium competition for the “web entertainment dollar.” To put it bluntly, the same video that may have once seemed like a great way to waste a minute is not necessarily the same one a viewer would pay a few dollars for. If you’re a company that wants to tightly control your brand, its assets, and the revenue you generate, can you really afford to be YouTube’s Dramatic Guinea Pig? Sean Barger is CEO of Equilibrium, a developer of automated media productions.  Have an idea for a post you’d like to contribute to GigaOm? Click here for our guidelines and contact info.

This story is moving so quickly that it is hard to keep a handle on all of the developments, not to mention trying to follow the denials and non-denials from those who are allegedly involved, and the threads that tie this particular story to the long and sordid history of the U.S. government’s surveillance of its own citizens. So we thought it would be useful to try and collect what we know so far in a single post, which will be updated as often as possible with new information.

The Guardian leak

Guardian blogger and former lawyer Glenn Greenwald reports that the NSA has gotten a secret order from the Foreign Intelligence Surveillance Court that allows it to collect data about phone calls made by “millions of customers” on the Verizon network: location data, time and other identifying info about the call — everything except the actual content of the calls themselves (the Guardian has a background piece about what kind of metadata is available with such an order).

“The National Security Agency is currently collecting the telephone records of millions of US customers of Verizon, one of America’s largest telecoms providers, under a top secret court order issued in April. The order… requires Verizon on an ‘ongoing, daily basis’ to give the NSA information on all telephone calls in its systems, both within the US and between the US and other countries.”

The leak widens

Other stories that follow the Guardian report quote anonymous sources saying the Verizon court order is a renewal of an order that has been in place for some time, and add that other telecom companies such as AT&T are also involved in similar programs. Greenwald notes in his story that the NSA started a program of bulk collection of telephone, internet and email records in 2001 under President Bush and this later caused controversy when it was reported in 2006 that the NSA had been saving all of this information and was analyzing it to try and detect terrorism.

Information-security experts and other industry watchers note after Greenwald’s story is published that the NSA and other government agencies have had these kinds of abilities for years thanks to laws such as the Protect America Act and the FISA Amendments Act. ProPublica has a roundup of what the government can find out about you and your behavior without a search warrant, and security expert Bruce Schneier says that what we don’t know about the government’s surveillance programs is even more frightening than what we do know.

Meanwhile, our Stacey Higginbotham wonders whether the NSA story will be a wakeup call about the power of big data, while Derrick Harris looks at how the security agency and other government entities analyze the vast amounts of information that come from such programs.

Freelance journalist Joshua Foust argues that the NSA revelations won’t cause most people to change their behavior — including their habit of voting for politicians who enact the kind of legislation that permits such surveillance — because they simply don’t care enough about the issue. Some experts said the kind of data the NSA is getting can be very powerful when it comes to finding patterns of behavior, but research from the Cato Institute says that even mining large amounts of data can turn out to be not that helpful when it comes to catching terrorists.

The Wall Street Journal, meanwhile, said that the NSA’s surveillance program was “legal and necessary” and the furor over the disclosure of this program was misplaced:

“Nobody’s civil liberties are violated by tech companies or banks that constantly run the same kinds of data analysis. We bow to no one in our desire to limit government power, but data-mining is less intrusive on individuals than routine airport security. The data sweep is worth it if it prevents terror attacks that would lead politicians to endorse far greater harm to civil liberties.”

The Washington Post leak

Within hours of the Guardian story appearing, the Washington Post reports that it has been leaked an internal slide presentation from the NSA that describes a program it calls PRISM — which involves the collection of email and other personal data from internet companies including Google, Microsoft, Facebook, Apple and Yahoo. According to the Post report (and a subsequent Guardian report based on a similar leak), this program has been underway since at least 2007, and involves what one NSA slide refers to as “data collected directly from the servers” of the companies named.

All of the companies who are reportedly involved in PRISM (which refers to them as “partners”) deny any knowledge of such a program, and say they only provide data when forced to do so by court order, and that they have no “back door” systems that would allow the NSA to do what it claims to be doing. These denials are met by widespread skepticism, and many observers — including TechCrunch founder turned VC Michael Arrington — wonder why insiders working at the tech giants allegedly involved in the program wouldn’t have leaked the information earlier.

The ongoing fallout

Some tech-industry observers say the denials from internet companies may be true, because they aren’t convinced the companies in question would even have to know about the NSA’s collection practices in order for them to work. The original Washington Post story is updated early Friday to note that it’s not clear whether “direct access” to the servers of those companies would be required, and quotes from another leaked document that says the program allows NSA officers to send “content tasking instructions directly to equipment installed at company-controlled locations,” which could mean boxes installed at ISP switches.

Several sources note that former AT&T employee Mark Klein revealed in 2007 that he had come across documents that showed the telecom company installed equipment — using glass prisms as “splitters” — that allowed the NSA to make a copy of the data stream coming from the AT&T network and send it to data-storage centers operated by the security agency. This was alleged to be part of a larger program that stored telephone calls, emails and other internet activity for the government and had been underway for years.

Some network analysts speculate that the NSA may be making use of equipment installed at CDNs (content delivery networks), which handle much of the data traffic for companies like Google and Yahoo. Laws passed in the U.S. require equipment makers such as Cisco to build into their products a way for law enforcement officials to tap into the streams they carry, and the NSA could be searching those streams directly instead of copying or storing all the data itself (since the cost of the program is a relatively cheap-sounding $20 million, according to the Post leak).

In a statement about the leaks, the Office of the Director of National Intelligence said that it does its best to work “within the constraints of the law” to collect information related to national security, and that unauthorized leaks such as those to the Guardian and Post “threatens potentially long-lasting and irreversible harm to our ability to identify and respond to the many threats facing our nation.”

Trying to track down PRISM

A search for entities that might be involved in the NSA program turns up software from a relatively secretive startup called Palantir — which has been funded by the CIA through its investment arm — that happens to be named PRISM. According to descriptions of the software, it allows clients of Palantir to sift through massive amounts of data and find patterns quickly.

Others are skeptical, however, that the software described could be used to do what the NSA appears to be doing, and security-industry sources say the NSA usually builds its own products and doesn’t like to use those from third parties. On Friday afternoon, Palantir told The Verge: “Palantir’s Prism platform is completely unrelated to any US government program of the same name.”

Former Reuters social-media editor Matthew Keys said on Twitter that he had found several references to the PRISM program in classified job listings dating back to 2007:

Not wanting to be left out, the secretive activist group Anonymous released some classified documents that refer to Defense Department information technology — but they appear to be mostly jargon-filled descriptions of the department’s IT infrastructure, with little or no connection to PRISM or any NSA-related data collection practices.

The ripples spread outside the U.S.

As our man in Europe — David Meyer — noted in a couple of posts Friday morning, the repercussions from the PRISM and NSA revelations are being felt in Europe as well, with some critics calling for changes to the so-called “Safe Harbor” program, which allows data about EU citizens to be stored by non-EU companies. And the Guardian has reported that the U.K. government appears to have been getting information via the PRISM program, which was designed to focus on the communication activity of non-U.S. residents (since U.S. law still technically prevents the government from spying on its own citizens without a warrant).

Meanwhile, President Obama — whom many critics have accused of carrying on with surveillance programs started by his Republican predecessor, despite his disavowal of such methods while campaigning — said through a spokesman that he “welcomes the discussion” about privacy and security:

“The president welcomes the discussion of the trade-off between security and civil liberties. The close examination of some of these complicated issues could cause people to arrive at differing opinions… The president welcomes that debate.”

Late Friday, the Guardian posted another security-related scoop, publishing what it called a “secret presidential directive” that orders the U.S. government’s top national security and intelligence officials to draw up a list of potential overseas targets that the U.S. could hit with cyber-attacks. The story goes on to say this operation:

“can offer unique and unconventional capabilities to advance US national objectives around the world with little or no warning to the adversary or target and with potential effects ranging from subtle to severely damaging”

Google denial and Sir Tim Berners-Lee

The creator of the world wide web, Sir Tim Berners-Lee, posted a statement at the Web Foundation blog saying:

“Today’s revelations are deeply concerning. Unwarranted government surveillance is an intrusion on basic human rights that threatens the very foundations of a democratic society. I call on all Web users to demand better legal protection and due process safeguards for the privacy of their online communications, including their right to be informed when someone requests or stores their data.”

And Google co-founder Larry Page posted a response Friday afternoon to the accusations in the Guardian and Post stories, written with Chief Legal Officer David Drummond, saying the company does not provide the government with “back door” access to its servers, and had never heard of the PRISM program until Thursday:

“Press reports that suggest that Google is providing open-ended access to our users’ data are false, period… Any suggestion that Google is disclosing information about our users’ Internet activity on such a scale is completely false.”

Zuckerberg denial

Facebook co-founder and CEO Mark Zuckerberg posted a statement about PRISM on his Facebook page late Friday, saying he wanted to respond personally to the “outrageous press reports” about his company’s involvement in the surveillance scheme. In language very similar to the Google denial, Zuckerberg said the network has not been part of any program to give the U.S. government “direct access” to its servers.

“Facebook is not and has never been part of any program to give the US or any other government direct access to our servers. We have never received a blanket request or court order from any government agency asking for information or metadata in bulk, like the one Verizon reportedly received. And if we did, we would fight it aggressively. We hadn’t even heard of PRISM before yesterday.”

Does the NSA even need a back door?

Christopher Mims at the Atlantic business site Quartz quotes NSA veteran and whistle-blower William Binney — who was part of a group that asked the Defense Department to investigate the NSA in 2002 — saying the security agency could probably get its hands on about 80 percent of the web traffic that passes through the U.S. without even having direct access to the servers of companies like Google. That’s because the NSA has access to at least one of the largest communications hubs on the continent, as described by the Electronic Frontier Foundation.

The Wall Street Journal posted a story that quoted unnamed security experts who said the tech companies mentioned in the PRISM presentation could be telling the truth about not providing “direct access” to their servers, but still have their data collected by the NSA. The Journal said U.S. officials told the paper that the NSA “receives copies of the data through a system they set up with a court order.”

“One industry executive familiar with the handling of data requests from U.S. intelligence agencies said companies have set up ways to cope with the volume of data by automating parts of the process. This method would allow data to be funneled to intelligence agencies without the need for manual steps by company employees.”

At The Daily Beast, writer Megan McArdle looked at the issue of whether tech company denials should be believed or not, and quoted privacy expert Julian Sanchez from the Cato Institute saying there are a number of ways that the NSA could get the data it wants without requiring direct access, including the “secret room” with splitter equipment that Mark Klein described at AT&T (mentioned above):

“Most likely… is that they’ve got something akin to the “Secret Room” that Mark Klein disclosed in AT&T hubs where traffic is being cloned (the companies would need to provide the relevant SSL encryption keys) split off into NSA’s own machines. It would be literally true, in that case, that the NSA does not have direct access to Google’s servers.”

How PRISM might work in practice

Late Friday, the New York Times posted a story that said some tech companies resisted the NSA’s demands to provide easier ways to get access to user data — including Twitter — but that some consented, opened up discussions with the security agency about developing methods to share that data, and even “changed their computer systems to do so.”

“In at least two cases, at Google and Facebook, one of the plans discussed was to build separate, secure portals, like a digital version of the secure physical rooms that have long existed for classified information, in some instances on company servers. Through these online rooms, the government would request data, companies would deposit it and the government would retrieve it.”

In other words, “companies were essentially asked to erect a locked mailbox and give the government the key” and Facebook actually built such a system, the NYT story said. Declan McCullagh at CNET explained in a post that according to his sources, all that the PRISM process does is automate something that is required under FISA (the Foreign Intelligence Surveillance Act) — so court orders are given to the tech companies and they have simply made the process of handing over that information easier.

Marc Ambinder, a security expert who writes for The Week, also described his understanding of how PRISM functions — in a nutshell, PRISM is just a piece of software that allows the NSA to collect and interpret data that is handed over under FISA. The actual software itself isn’t classified, which is why mentions of it show up online and in job postings. In McCullagh’s piece, a former NSA lawyer says that the slide presentation the Washington Post published is “suffused with a kind of hype that makes it sound more like a marketing pitch than a briefing.”

Meanwhile, for those trying to keep track at home, the Electronic Frontier Foundation has put together a comprehensive timeline of events related to NSA surveillance activity over the past decade:

It was for your own good

First tech companies claimed they didn’t know anything about PRISM and weren’t supplying data (or at least not direct access), and now the story some sources close to those companies are telling is that they set up portals or some other method of complying with FISA requests in order to “protect the innocent,” according to a post at TechCrunch.

“The NSA may have wanted full firehoses of data from Google, Facebook and other tech giants, but the companies attempted to protect innocent users from monitoring via compliance systems that created segregated data before securely handing it over as required by law.”

The Guardian has responded to criticisms of its original description of PRISM and the whole notion of “direct access” — as well as the repeated denials from Google executives and others that this has been taking place — by posting another slide from the leaked NSA presentation. While some have speculated (as mentioned above) that PRISM could mean simply sucking data from ISP equipment, the NSA slide contrasts this method of getting data with PRISM’s, which it describes again as “collection directly from the servers” of the companies mentioned.

The Director of National Intelligence released another statement on Saturday, calling the disclosures by the Guardian and Washington Post about NSA data collection “reckless” and filled with “significant misimpressions.” So DNI James Clapper said he had declassified some details about the program, published in a fact sheet (PDF link). Among other things, it says:

“PRISM is not an undisclosed collection or data mining program. It is an internal government computer system used to facilitate the government’s statutorily authorized collection of foreign intelligence information from electronic communication service providers under court supervision, as authorized by Section 702 of the Foreign Intelligence Surveillance Act.”

The Washington Post published a follow-up story on Saturday that described the PRISM process in much the same way as earlier stories from the Guardian and the New York Times: as a system or software that allowed the NSA to process FISA requests for information more quickly — and the paper reiterated earlier statements that because the program was top secret, only a few individuals within those companies would even know about it, let alone be able to discuss it. According to the Post:

“Executives at some of the participating companies, who spoke on the condition of anonymity, acknowledged the system’s existence and said it was used to share information about foreign customers with the NSA and other parts of the nation’s intelligence community.”

Much of the criticism about the original Post story and the Guardian story has focused on the description of PRISM as allowing “direct access” to the servers of companies like Google, Facebook and Yahoo — something the leaders of those companies have strenuously denied providing. The most recent Post story suggests that at least some of the debate over this term is semantic, and that its sources say PRISM did allow the NSA to get data from those companies directly:

“Intelligence community sources said that this description, although inaccurate from a technical perspective, matches the experience of analysts at the NSA. From their workstations anywhere in the world, government employees cleared for PRISM access may ‘task’ the system and receive results from an Internet company without further interaction with the company’s staff.”

NSA whistle-blower reveals his identity

In another bombshell, the Guardian revealed the identity of the whistle-blower who sent them the leaked documents about PRISM and the NSA surveillance program: he is Edward Snowden, a 29-year-old former technical assistant at the Central Intelligence Agency, and he is now living in Hong Kong and expects he will “never see home again.” He said his family doesn’t know about his activities, and that he fully expects to be charged and potentially face jail time for his actions.

In an interview with the Guardian, Snowden says that he gradually became frustrated with what the NSA was doing and believed it was wrong — but originally held off on leaking anything because he thought Barack Obama would change those policies when he was elected president. But Snowden says the president continued with “the policies of his predecessor” and so he decided to come forward and let the American public know what was happening behind closed doors:

“I don’t want to live in a society that does these sort of things … I do not want to live in a world where everything I do and say is recorded. That is not something I am willing to support or live under.”

Snowden also said the documents he leaked clearly show that “the NSA routinely lies in response to Congressional inquiries about the scope of surveillance in America” and that the abilities that he had as a contractor with the CIA were beyond what most people can even imagine:

“You are not even aware of what is possible. The extent of their capabilities is horrifying. We can plant bugs in machines. Once you go on the network, I can identify your machine. You will never be safe whatever protections you put in place.”

The reaction

In a post written for The Atlantic magazine, James Fallows said that the most frightening and important part about PRISM and the rest of the NSA surveillance activity revealed by Snowden is that it is all legal under the Foreign Intelligence Surveillance Act and other legislation.

“That these programs are legal — unlike the Nixon “Plumbers” operation, unlike various CIA assassination programs, unlike other objects of whistle-blower revelations over the years — is the most important fact about them. They’re being carried out in “our” name, ours as Americans, even though most of us have had no idea of what they entailed.”

Fallows — and others such as Talking Points Memo founder Josh Marshall — raised some question marks about the wisdom of Snowden’s choice of Hong Kong, which is still part of China and therefore not particularly open to harboring whistle-blowers. However, according to some experts in the law, Hong Kong might be a good place to seek asylum because of a loophole that could allow Snowden to remain there indefinitely.

Icelandic MP Birgitta Jonsdottir, an early supporter of WikiLeaks and of freedom-of-information laws in general, told Forbes magazine that she plans to try and get her country to offer Snowden political asylum. But observers of the political scene in Iceland say this might be more difficult than it would have been in the past, since the new Conservative government is seen as more friendly to the Obama administration.

Daniel Ellsberg — the man who leaked the famous “Pentagon Papers” in 1971 and revealed that the government had been lying about the Vietnam War — said in a piece written for the Guardian that Snowden’s leaks give the United States a chance to “roll back what is tantamount to an executive coup against the U.S. constitution.” Ellsberg said that Snowden’s revelations were the most important leak in the history of the United States, including his own.

“Since 9/11, there has been, at first secretly but increasingly openly, a revocation of the bill of rights for which this country fought over 200 years ago. In particular, the fourth and fifth amendments of the US constitution, which safeguard citizens from unwarranted intrusion by the government into their private lives, have been virtually suspended.”

Meanwhile, David Kirkpatrick — author of the book “The Facebook Effect” — asked whether the secrecy and privacy invasions involved in the PRISM program might impair the growth of social networks and cloud services like Facebook.

“Do we really want to impair such powerful tools for spreading dialogue, political discourse, and U.S. values? Is it worthwhile to impair the extraordinary financial and commercial success of these great flagships for the American economy? Does Obama want Facebook et al just to be seen as tools of American power?”

Politico took a look at some of the things that we still don’t know about PRISM and the activity involved in the NSA’s surveillance program — including how much data the spy agency has been collecting from phone companies as well as tech companies like Google, whether this data collection has actually thwarted any specific terrorist attempts or not (something that is the subject of much debate) and how exactly the PRISM program works in practice.

Meanwhile, the Daily Beast has a piece that looks at the group within the U.S. intelligence apparatus that hunt down leakers like Snowden, a kind of internal police force called the Associate Directorate for Security and Counterintelligence — or the Q Group for short. And Salon magazine has a feature and interview with Laura Poitras, the documentary film-maker who was contacted by Snowden and later helped both the Post and the Guardian write their stories about the leak.

Got anything I am missing? Let me know at mathew@gigaom.com

Post and thumbnail images courtesy of Shutterstock / Lightspring and the Washington Post

Kindling on the fire

First up on Thursday was VP of Kindle Content Russ Grandinetti, whose testimony continued from the previous day and who was questioned by Apple attorney Howard Heiss. Heiss sought to demonstrate that Amazon needed participation from all of the Big 6 publishers in order to launch the Kindle Store in 2007,; to make it clear that Amazon was aware of publishers’ dislike of the $9.99 price point long before Apple came on the scene; and to show that Amazon had reasons of its own to switch to agency pricing, beyond the notion that Apple’s launch of the iBookstore forced it to.

Grandinetti insisted that he didn’t know what Amazon’s market share was for ebooks in 2009. “Would you agree that Amazon was the dominant ebook retailer?” Heiss asked. Grandinetti said he was “not sure.” “Can we agree on your definition of ‘dominant’?” Heiss asked more testily, citing the definition from the New Oxford American Dictionary, “which I believe Amazon uses” (it’s built into the Kindle).

Heiss then cited a 2010 CNET interview with an Amazon Kindle VP, Ian Freed, which was headlined “Amazon: We have 70-80 percent of ebook market.” “Do you know. Where Mr. Freed got the metrics. The data. The information,” Heiss said. Grandinetti responded that Freed was “probably relying on publisher reports.” (Judge Cote later noted that the CNET interview was from 2010, while Heiss had been asking Grandinetti about 2009.)

Heiss asked if Grandinetti was aware of publishers’ dislike of the $9.99 price for New York Times bestselling Kindle books. It “wasn’t secret,” he suggested. Grandinetti agreed, “It was not.” And Heiss referenced an October 2009 email from Kindle VP David Naggar to Grandinetti, which read in part, “The debate is RAGING and the next 6-9 months is when all the battles are going to be fought.”

What did Amazon know?

Heiss sought to show that Amazon was not unfamiliar with agency pricing before Apple launched the iBookstore. For instance, he noted that Amazon already used the agency model for newspapers, periodicals and some music. In addition, he noted that in 2009, the Wall Street Journal and New York Times both reported that Big 6 publishers were considering withholding new ebooks from retailers, releasing them a few months after new hardcovers — a practice known as windowing, which was intended to protect print sales from being cannibalized by ebook sales, and which publishers were considering because Amazon’s ebook prices were so low. In other words, Heiss wanted to remind the court that Amazon needed to consider forces beyond Apple when it was deciding whether to offer publishers an alternative to wholesale pricing.

In the most fraught section of Grandinetti’s testimony, Heiss referred to a section of Grandinetti’s deposition in which Grandinetti said that, following the introduction of agency pricing, ebook prices went up “across the board.” This was an “impression,” Grandinetti said. “You weren’t looking at any data?” Heiss asked. “This was anecdotal review by you?” Heiss then went on to cite “Amazon data” that showed that statistics showing that four publishers actually lowered prices on many NYT bestsellers after the introduction of agency pricing.

“In the aggregate, prices went up,” Grandinetti said cautiously. At this point, Heiss yelled at Grandinetti for turning to Amazon’s lawyer, who was sitting a few feet away from the witness stand: “WHY ARE YOU LOOKING AT MR. KIPLING?” “Mr. Heiss, please,” Judge Cote admonished.

Heiss wanted Grandinetti to admit that Amazon didn’t put much thought or data-driven analysis into its $9.99 pricing strategy — to suggest that the company simply chose $9.99 because it was cheap. Grandinetti countered that publishers lacked Amazon’s “specific knowledge” on pricing. “I take it that coming up with the $9.99 price didn’t offer any specific algorithm,” Heiss said, to which Grandinetti responded, “Simplicity can be sophisticated.”

Grandinetti was followed by Kindle VP David Naggar, whom Heiss questioned about contract negotiations with publishers. In particular, Heiss wondered whether it was reasonable to expect that publishers would not compare amongst themselves the contract terms that Amazon offered them. ”We would let them know that we weren’t asking anything different from them than we were asking from others,” Naggar answered.

“When you told publishers that, did you simply expect them to take it on faith that you were being truthful with them?” Heiss asked. Naggar responded, “Yes.”

The day’s last witness from Amazon was Laura Porco, who was formerly a director of Kindle books and now works for Amazon’s MyHabit.com. Most of Heiss’s questions for Porco centered around her email exchanges with Madeline McIntosh, who was at Amazon from 2008 to 2009 (she worked for Porco) and is now the COO of Random House.

In particular, Heiss referenced one email exchange in which McIntosh referred to Porco’s belief that the Big 6 would never sign agency contracts unless they were offered 90-10 terms (in which the retailer would take only a 10 percent share; ultimately, the agency contracts that the publishers signed with Apple and Amazon offered a 70-30 split). ”What we never figured was that five publishers would band together and insist on worse terms,” McIntosh wrote in one of the emails, and Porco wrote back, “Hysterical, isn’t it? Jedi mind tricks here in Seattle.”

According to Apple, the meaning of this email exchange was that McIntosh was being ironic publishers had actually agreed to 70-30 agency terms — a worse deal for them. Heiss also noted that a “Jedi mind trick” is a Star Wars reference, referring to the ability to get someone to do something they don’t want to do. Porco claimed, however, that McIntosh was being entirely straightforward and that by “worse” terms, she meant “worse than wholesale,” not worse than a 90-10 revenue split. As for the “Jedi mind tricks” reference, Porco told Heiss, “I was being very sarcastic in this email and it was quite the opposite.” McIntosh would understand this, Porco said, because she had worked at Amazon.

Google’s turn in the hot seat

Thursday ended with testimony from Tom Turvey, director of strategic partnerships at Google. Turvey was questioned by Apple attorney Orin Snyder, who concentrated his questioning on Turvey’s deposition — which Turvey was asked to provide by the government, and which Turvey prepared in partnership with government counsel.

In particular, Snyder slammed Turvey repeatedly for a sentence in the testimony in which Turvey said he was “directly advised” by publishers that their agency contracts with Apple would not allow them to enter wholesale contracts with other retailers, like Google — when, in fact, other Google emails showed that this wasn’t true. (Macmillan, for instance, had told Google that it could do either a wholesale or agency contract).

“I don’t recall whether I wrote these words directly or with counsel,” Turvey admitted. Snyder, who swigged from miniature bottles of water throughout the questioning and was clearly enjoying himself, persisted: “You cannot attach a name or a face…you can’t recall a single phone call…” Turvey responded, “My recollection is that these events happened. I can’t tell you with whom.” At five, Judge Cote cut Snyder off: “We’ll let Mr. Turvey escape so he can begin to enjoy his Thursday.”

Snyder also couldn’t help getting in a few digs at Google’s media business. “Would you agree Google is a powerful company in the media and entertainment space?” he asked. Turvey responded, “No, I would not.” (At another point, Snyder began talking about Apple succeeding in the ebook market where Google failed. Judge Cote interrupted: “No, no, no, Mr. Snyder. Bring it home.”)

“Do you own an iPad?” Snyder asked. Turvey said, “I do not.”

Meebo was founded in 2005 a a web messaging client, and was acquired by Google about a year ago in June 2012 for something in the ballpark of $100 million, people reported at the time.

In a sense, it’s not terribly surprising that the Meebo bar is heading out to pasture. When the company was acquired by Google, both sides wrote that they were looking forward to teaming up with Google+ and building social publishing tools. Meebo wrote Thursday that the team would be focusing full-time on Google+ sign-in and Google+ plug-ins.

Meebo explained the changes in a blog post on its site:

“Five years ago, we launched the Meebo Bar to bring community, engagement, and revenue to publisher sites.

As part of the Google team, this continues to be our focus, but we want to best serve mobile and desktop publishers moving forward.  Therefore, we have decided to focus our resources on initiatives like the recently launched Google+ Sign-In (which includes interactive posts andover-the-air app installs) and the Google+ plug-ins.

This means we will retire the Meebo Bar, effective June 6, 2013.”

For publishers who were still using the Meebo Bar, a full explanation of how to discontinue the feature can be found here.

• Grandinetti argued that the publishers’ switch to the agency model was intended to “slow down the success of the Kindle,” Reuters reports, but as is well known by now, the company ultimately agreed to switch to agency in order to keep the ebooks in its store, signing three-year deals in which Amazon would take a 30 percent cut of each sale.
• One of the main points of the DOJ’s case is that Apple was a “facilitator and go-between” in encouraging publishers to require agency contracts with other retailers (namely, Amazon). Publishers Marketplace reports, “[Simon & Schuster CEO Carolyn] Reidy argued that Apple did not require the publisher to move Amazon and other accounts to the agency model. ‘We had the option of not doing that,’ Reidy said. ‘We wanted to do that,’ she indicated, because under the MFN clause, in not doing so they would ‘make even less money.’ At another point, Reidy said, ‘we wouldn’t have signed a contract that said let Apple tell us what we had to do with other retailers.’ A related, charged point raised by the government was an internal mail to the S&S team on January 4, in which Reidy writes in part about how to respond to Eddy Cue’s proposed Apple terms, noting that ‘we are in total agreement that…agency model should hold for all retailers.’”
• Amazon’s new publisher contracts (as well as Barnes & Noble’s new contracts) also contained most-favored-nation (MFN) clauses. As the Wall Street Journal notes: ”Mr. Grandinetti’s testimony underscored one of the quirks of the government’s case against Apple: Once Amazon moved to the so-called agency model, it negotiated the same terms that the Justice Department has pronounced unenforceable in the Apple contracts, including a provision that said if another retailer were selling a book at a lower price, the publisher would have to match the lower price in Amazon’s digital bookstore.”
• The New York Times reports that “Ms. Reidy called an executive at Paramount Pictures to verify Apple’s claim that a 30 percent commission on sales in their iTunes store — which she considered too high — was standard.”

On Thursday, Grandinetti is expected to finish his testimony. After that, two more Amazon executives — VP of Kindle content David Naggar and general merchandise manager Laura Porco (who was previously director of Kindle books) — are scheduled to take the stand, followed by Google director of strategic partnerships Thomas Turvey. We’ll be in court.

The world of adtech has become increasingly complex and hard to navigate. The parts of the value chain rendered by the (in)famous Lumascape have been increasingly atomized: There’s ad serving, data/DMP, SSPs, exchanges and then a host of ancillary technologies such as ad formats and viewability. And that’s just for display! Add in media types such as mobile and video and it’s enough to have publishers crying out for help in the form of integrated adtech stacks – one-stop shops that they can do business with. The good news is that such a convenient system exists. The bad, in the eyes of many publishers I’ve dealt with at least, is that there’s only one player in town. And that player, Google, also happens to be a competitor.

Adtech finally merits high-level attention

One development that has been a pleasant surprise is that the topic of adtech strategy has begun to merit board-level discussion at major media companies. While it was often dealt with at the operational, ad ops and revenue ops levels in the past, it has been elevated in importance to the point where major adtech players are invited now to present to boards and discuss partnerships at that level.

But it shouldn’t have surprised me: Digital revenues are now material for most traditional media companies.

The prospect of streamlined adtech stack

Google has systematically assembled an integrated tech stack in digital advertising on both the buy and sell sides, offering publishers the tantalizing prospect of working with just one partner. Google’s army of account managers will then try to cross-sell and up-sell all kinds of solutions as well as bundle in content distribution and monetization on YouTube and their other properties. Yet, perhaps ironically, Google’s early success in building out an integrated stack is driving the industry’s transition.

Agencies and publishers alike rightfully view Google with trepidation thanks to the suspicion that they’re being strategically exposed by having the lifeblood of their media business (and all of the associated data) flow through Google – which also happens to compete with them. After all, imagine the power Google would have over one’s business: from driving traffic via Google Search, news, Android and YouTube to knowing one’s data via Analytics and advertising information via the various DoubeClick and AdX products. (I know, I know: They do no evil. Right.)

One major European publisher told me, in a moment of hyberbole: “We see [Google] as a Death Star and want to have our own weapons against them.” Alas, while there are a plethora of weapons, there aren’t the end-to-end ones that this publisher would like to see to counter the Big G.

Options

The good news for publishers is the market will go their way in terms of having greater convergence of tech stacks and more consolidation, ultimately offering more choice when it comes to adtech solutions. While Microsoft tried this but has pulled back of late, there are others that have been active developing solutions of their own.

For instance, WPP has been very active in putting its own digital marketing stack together via acquisitions that are focused more on the buy side for marketers and publishers. Adobe has also been active in a converged approach, but admittedly with seemingly limited success thus far. There are independent companies waiting in the wings as well, but their current lack of liquidity has been preventing them from doing all but acqi-hire–scale consolidation in recent years.

This will change as some of them go public in the next 12-18 months and get the currency with which they can make their own acquisitions (or grow organically to round out their offering). At that point there will be a frenzied game of  musical chairs, where companies compete for the most prized assets – the prospect of which is already setting the hearts of tech bankers racing.

Back to the person that worried about Google’s Deathstar-like capabilities: He went on to say that they actually have two Deathstars that they need to arm up against – the second one being the Agencies (but we’ll save that for another post).

Rags Gupta is chief commercial officer at Videoplaza, a sell-side video ad management platform based in London; he is also on the board of Rollup Media. Prior to that, he was an early executive at Brightcove and started his career in digital media at Live365.

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Even before the news was confirmed on Monday, critics with long memories were reminding anyone who would listen about Yahoo’s track record with acquisitions, which has some rather notorious bumps in it, including two major ones known as GeoCities and Flickr. Those two deals alone have made many question whether Yahoo will be able to do the right thing with Tumblr — and while it may be unfair to lay the blame for these at Marissa Mayer’s feet, there are plenty of reasons to be skeptical about the future of this latest acquisition.

How long will it take yahoo to ruin tumblr?—
Blake Hounshell (@blakehounshell) May 19, 2013

GeoCities + Flickr: billions in missed opportunities

In 1999, Yahoo bought GeoCities for about $3.5 billion, which even at the time was an eye-popping amount. Although it was over a decade ago, which is eons in internet time, there are some broad similarities between what GeoCities was then and what Tumblr is now: both were distinctive and somewhat chaotic communities, focused on allowing individuals to create their own space. Yahoo did a number of things that arguably accelerated the demise of its high-priced acquisition, including trying to monetize it through hosting fees and cheesy banner ads.

The other stick that many anti-Yahoo types use when they want to beat the company up about its acquisition strategy is Flickr, the pioneering photo community that languished under Yahoo’s ownership until relatively recently. As many of its hard-core fans (including me) have argued in the past, Flickr was — or at least could have been — Instagram before Instagram.

There have been a number of post-mortems on what happened with Flickr, but in a nutshell Yahoo did almost everything wrong: the larger company took away or smothered much of the photo-sharing community’s most important features, prevented its employees from innovating or growing, and forced all kinds of integration between the two platforms that did nothing to benefit users — in fact, precisely the opposite. It was like the trifecta of failure, and a perfect example of why most large-scale acquisitions don’t work.

“All Yahoo cared about was the database its users had built and tagged. It didn’t care about the community that had created it or (more importantly) continuing to grow that community by introducing new features.”

Successful mergers are exceedingly rare

It’s certainly reasonable to argue — as many of her fans in Silicon Valley have since the Tumblr deal was announced — that Marissa Mayer shouldn’t be held to account for these lapses, since she had nothing to do with them and the internet has changed a lot since then. Yahoo is also substantially more desperate than it used to be (if that’s possible), and that has arguably made Mayer more cautious about potential screw-ups.

But the bottom line is that just because Mayer is a new CEO doesn’t mean she or the company won’t screw Tumblr up somehow anyway — either deliberately or by accident. That’s because large companies like Yahoo have a way of destroying the value of the things they acquire even if they don’t mean to do so, especially when the thing they have acquired is a somewhat unique community with special characteristics, which Tumblr arguably is.

This is why successful large acquisitions of web communities or services are so rare — rare enough that almost everyone can only point to a single example: namely, Google buying YouTube (although Facebook’s acquisition of Instagram is looking like it may be another one). The question for Yahoo and Mayer is whether Tumblr can be kept as a distinct entity and yet still monetized, as YouTube has been, or whether the process of monetization will inevitably turn Tumblr into the latest example of a MySpace-style failure.

Can Yahoo do what Google did with YouTube?

Former YouTube exec Hunter Walk took a look at what Google did right in the case of YouTube, and boiled it down to five factors, including keeping the product from getting too intertwined with the parent company and maintaining a separate physical identity. But to me the most important ones were:

Protect Tumblr from “helpful” Yahoos: This is where the accidental destruction of acquisitions often comes from — people who just want to help, but whose requests for features and other attempts at integration wound up almost “hugging us to death,” as Walk puts it. There is a powerful desire to get efficiencies out of acquisitions, but many of those attempts fail badly and ruin the thing they were trying to monetize or grow in the first place.

Stop short-term monetization that won’t scale: Walk talks about how YouTube managed to avoid the natural desire to build all sorts of easy-win monetization methods into the platform, and focused instead on longer-term approaches that were harder to sell in the early going but built more value. If Yahoo sees Tumblr as a way to bulk up its banner ad or other programs, it could wind up making the exact same mistake that YouTube was able to avoid.

In the end, much of the answer to the question about Yahoo screwing up Tumblr rests on Marissa Mayer, and her ability to stave off the desires of both the board of directors and the other senior managers who see Tumblr as either a distraction or a digital cow to be milked and then sent to the abattoir.

Post and thumbnail photos courtesy of Flickr / Stephen Brace and Getty Images / Chris Jackson and Pamuk Sekerli Tardis