The social gaming company behind FarmVille is seeking the spotlight. Some analysts sense an IPO.

Mark Pincus, founder and CEO of Zynga

If ever a company had a moment, this is Zynga’s.  The small, privately held company that makes games for Facebook and other social networks is getting publicity and attention companies many times its size would love to have.

The force behind the FarmVille sensation has appeared on the front page of the New York Times, and been featured in Time, a BusinessWeek cover story, The Economist, and this website's magazine. During a recent trip to New York, Zynga’s spunky CEO Mark Pincus was scheduling meetings with reporters until he reportedly lost his voice.

Then there are the billboards on Highway 101 in Silicon Valley. Both showcase animated characters from Zynga’s games and attempt to lure employees. Earlier versions showed a black silhouette of a bulldog against a red backdrop (Zynga is named after Pincus’s deceased American Bulldog, Zinga).

The promos – and the flood of (mostly) positive press – have gotten more than a few tongues wagging: Is Zynga priming the public for a stock offering?

One of Zynga's new billboards in the San Francisco Bay Area

“Zynga is on the forefront on the business, the clear number one leader,” says ThinkEquity LLC analyst Atul Bagga. “They’re a cash flow positive company, with potential for high leverage in the business model, and are generating revenue at a rate that would allow them to go public.”  Zynga, which declines to comment on such speculation, is on track to surpass $100 million in revenue this year, and the company is profitable.

Go public, sell out, or raise more capital

But Ben Bajarin, director of consumer technology at analysis and strategic planning firm Creative Strategies, thinks it’s too early for Zynga to take its business model to the public market. “There’s still a lot of economics to be worked out,” he says. “IPOs that have done well lately have been companies that have been in business for a while and have a proven revenue track record.”

Wags suggest Zynga's charm offensive in the press might also be a way of reminding rivals of its prowess and potential.  The big game publishers haven’t kept pace with the industry shift to the so-called "social games" that Zynga and others develop. In early November, gaming giant Electronic Arts (ERTS) acquired Playfish, a major Zynga competitor, for as much as $400 million.

Or Zynga could be looking to add to its coffers. The company recently received a $15 million infusion from undisclosed investors, on top of an earlier $39 million. Another social gaming contender, Playdom, announced $43 million in venture funding in early November, valuing it at $260 million. Should the battle turn on which company can snatch the best games first, having cash in the coffers could be crucial. (Playdom acquired Green Patch and Trippert Labs after announcing its financing, while Zynga has snatched YoVille, MyMiniLife, and GoPets.)

At the very least, Zynga has a bit of defensive marketing to do. In early November, the startup was at the center of controversy when players discovered that in the process of attempting to earn in-game currency, they had signed up and were being billed for unwanted mobile services.

Scam offers embedded in games

Zynga has since discontinued the scammy offers in its games, allowing that it may reinstate some of the more qualified partners. Although it could be written off as a blunder typical of any young company, Yankee Group analyst Carl Howe recommends caution. “They need to clean up their act because a tarnished brand will hurt both of their exit strategies.”

Whatever path Zynga chooses, the clock is ticking. Today there may be 68 million would-be farmers tending their crops, but tomorrow, who knows?

“Five years from now, I can safely say a lot of us will still be using Facebook, but I can’t say that a lot of us will still be playing FarmVille,” says Gartner analyst Ray Valdes. “The longer term challenge is how they can create follow-on titles that are good replacements from a business perspective when the current novelty has worn off.”

Then there is the omnipresent specter of new platforms and technology like Twitter, which Valdes points out, the social gaming developers have yet to figure out.

Zynga, to be sure, is more than a one-trick pony: including FarmVille, it boasts four of the top 10 social games. But in this hits-driven business, it will have to keep churning them out. “These consumer attachments don’t go on forever,” says Yankee Group’s Howe. “You either capitalize on them or say, ‘We should have sold.’”

To battle back against Facebook, MySpace tunes into more online music

MySpace, the once and would-be king of social media, is increasingly turning

Van Natta's MySpace is doubling down on music. Photo: MySpace

toward music to combat a dominant Facebook, and keep its 125 million users coming back.

On Wednesday in San Francisco at the Web 2.0 Summit, MySpace CEO Owen Van Natta announced the launch of two new music products for the online site – one for the fans, the other for the bands.

Through its partnership with all the major record labels (and many of the indies), MySpace, a division of News Corp. (NWS), is putting entire music video catalogues online via a new digital hub within MySpace Music. You can think of the new service  — unimaginatively dubbed "MySpace Music Videos" — as a sort of Hulu for all those Lady Gaga and Daft Punk videos you watch at work all day long.

The hub’s slick interface allows users to search videos alphabetically (artist or song), or by what friends are watching. Yes, you can watch day's-worth of music videos on YouTube right now, but it isn’t quite as pretty as what MySpace is offering up.

Of course, there is commerce involved. It occurs via what MySpace is calling “dynamically targeted” buy buttons, which probably means nothing more than you will be able to purchase the tunes from Amazon or iTunes as you watch them.

Is the new service a time suck? You bet, but that is exactly what music videos are for. You can check it out as of today. (Whether Google is about to ruin MySpace’s party with a music service of its own, as has been rumored online, ought to play out in the next week or so.)

Big in Japan

The other service Van Natta detailed is a sort of Google (GOOG) Analytics for your band.  While something called the MySpace Music Artist Dashboard, doesn’t sound like something any self-respecting, hotel-room trashing band might admit to using, they should –or at least get some tech-savvy roadie to do it.

With the dashboard artists can get a quick glimpse of who has been listening to their songs or just checking out the band in the past week and past month. They can see which 15 songs are getting the most play, as well as the most popular track. The “heat map” provides of view of where a band’s fan base is by city, state or country. Perfect when you are plotting that next big tour.

“As we worked with major musicians and management companies we realized their was huge demand for it,” Van Natta says. But that kind of detailed view of what amounts to customers ultimately, isn’t limited to just bands and solo artists.

“It’s a model for how we can empower all the content producers on our site, whether it’s musicians or other entertainment categories,” Van Natta says.” You can see how we can extend that model and offer it to the people who create a lot of the content on MySpace.” Sounds like into everyone’s creative lives, a dashboard is coming.

The day the Brainstorm Tech world tour kicks off (a day that is only in my imagination at the moment) you can bet I’ll be checking the dashboard from the jet.

Less than six months into his new role as head of News Corp. (NWSA), digital chief Jon Miller has no acquisitions planned. Instead, he said Thursday, he’s going to seed innovation from inside the company and spoke of “putting the house in order” first.

While he didn’t comment on News Corp.’s rumored plans to release a kindle-like digital device (News Corp. has denied that it will) he also talked at length about coming platform shifts and how industries will be experimenting with business models into the fall and figuring out how to adapt them.

Miller expressed faith in the potential for “third screens” like e-readers, to monetize content. He admitted to paying for content on his Kindle that he would be reluctant to pay for online.

But, he said, content producers have to act quickly to leverage their assets. “While you have that market position you need to move,” he said.

Miller believes that media conglomerates like News Corp. and Viacom (VIA.B)  have an advantage because of their ability to both produce and distribute content.

“You have to look at how you get different pieces of the pie,” he said, offering online video site Hulu as an example. The site is a joint venture between News Corp., NBC and Disney.

Miller is becoming “more convinced fundamental changes are taking place” in the advertising industry. As digital media makes marketing more efficient, thanks to behavioral targeting and exploding supply, he said those budgets will shrink. Advertising spending online is lagging behind the time consumers spend with media online.

“You don’t have as much room for everyone to take cuts,” he explained.

Miller sees that pool of digital ad dollars splitting into two categories: premium experiences and commoditized inventory. This second tier can become more valuable, however, through behavioral targeting, which Miller says will provide “a lift out of what otherwise is a big undifferentiated environment.”

Premium content meanwhile will benefit as more brand advertising migrates online, Miller predicts. While 9% of advertising has moved online, brand advertising accounts for only a third. News Corp. is preparing its “processes and environments” for that coming shift.

Another focus for Miller is revitalizing MySpace. In May, the social networking site News Corp. acquired in 2005 for $580 million was eclipsed by rival Facebook in the number of U.S. visitors. Last month the company laid off 30% of its staff after installing new leadership in April.

Profits have fallen short of expectations and in the most recent quarter, News Corp. reported a significant drop in revenue at the unit that includes MySpace. The company reports fourth-quarter earnings on August 5.

Miller has compared his strategy to what Tim Armstrong, his successor as chief of AOL, also faces. It’s about going back to the core of the brand, he said, “and focusing on how to make it relevant today.” That also means concentrating on a few things, he said. “You can’t do everything even though you want to.”

To accomplish this, Miller is committed to building small teams that work on specific product areas. “We have to develop specialized areas and let them win,” he said. “Only then can you broaden out.”

Figuring out which specialized areas to target involves going after new behaviors, rather than trying to play catch-up, he said, mentioning video and games. Awed by the time users spend online playing games, Miller claimed, “Myspace will be an even better gaming platform in the future.”

A brief history of social technology, and what it means to you

By Gina Bianchini, CEO and co-founder, Ning

Ning's Bianchini says social networks are evolving

At the outset of online social networking, around, say, 2002, early users had to wedge their personalities into static, cookie-cutter profile pages — it was the price we all paid for the convenience of this new and powerful social tool.  How times have changed: Instead of altering yourself to fit the social network, the social network is evolving to cater to you. Here's a quick look at how companies and technologies have evolved to more closely mirror the human experience.

Social Networking Infancy – The Early Days

Social technology ties people together in new ways. It makes it easy to meet or reconnect with people, discover and share ideas and content, and consume news and events across the Internet. Friendship takes on an entirely new dimension online, and media consumption and sharing –photos, music, and most of all video –are changing and rates never before seen on the Internet. It is a revolution that spawns companies like MySpace, YouTube, Photobucket, and even Facebook.

But the earliest sites forced people to contort and squeeze their personalities into what's available. The best example of this was Friendster, which forced people into a single profile page and kicked out anyone  expressing their creativity with anything other than his or her “real” identity.

Next, MySpace created a service that let people express their unadulterated creativity and socialize around music, events as well as the single profile they created to represent their life. It was a social technology that served as an extension of one’s personality with a lot more room for creative expression than anything before it. Both Friendster and MySpace provided an easy way to manage a single profile. They have been fantastic at bringing new people into social networking, in the same way AOL was a critical step in getting people online in the first place.

Now, as we edge into the teenage years of social networking, people have come to expect and need more options to express themselves as unique individuals, much like they do in the real world. It’s just human nature if you consider the different aspects of your personality that shine through, for example, when with your family, your college friends, your work friends, your sports team, or your book club. When you are in different contexts, different facets of you shine through – this is what makes each person around the globe the rich and interesting people they are.

Social Networking – The Teen Years
Six years into the phenomenon, successful social technologies are adding more features, customizable options, and most importantly, more ways to seamlessly integrate with other social technologies. This growth stage shows how different social technologies are rapidly emerging and gaining adoption when they do one thing extraordinarily well.
In the case of Facebook, they connect you to people you already know. Waves of college friends, followed by waves of high school friends, work colleagues, elementary school alumni, and your parents have joined Facebook in large part because it connects people who already know it other better than any other social technology.
In the case of Twitter, people are using it to share and discover a real-time stream of news and real-time events. People have always consumed new information and the brilliance of Twitter is that it is enabling a dynamic, rapidly changing mosaic of news and information that you can fluidly follow depending on your current perspective on the world.

Ning, a social platform with more than 1.3 million social networks, gives you the opportunity to present yourself not just in one of the context above, but also express yourself by all of your unique interests and passions. We offer a way to create and join social networks to connect with people around any topic, as well as a way to organize and manage the different aspects of your online persona to mirror who you are – and what you care about – today.

We are finally seeing social technologies moving beyond providing one application, one template, one profile into which you have to squeeze all the different aspects that make you unique. What we are learning from the teen years of social networking is that, just like any fifteen-year-old boy or girl, this is the stage where diversity, choice, and defining the many facets of oneself is paramount. In this new social technology landscape, it’s not about choosing one service, but piecing together multiple services, as you need them, to fulfill different aspects of who you are.

Social Networking – All Grown Up
Ultimately, as social technology matures, it will continue to evolve to fully reflect fundamental human behavior.
Social technologies will grow by specializing in certain areas of human need and working in concert with each other to fully reflect how people live their lives in the real world. Only, in this online world it’s richer, more vibrant, global, and a bigger, more deeply connected version of life.

So far, social technologies have meant taking the diverse person that you are and trying to contort yourself to fit into the technologies provided. They don’t always reflect who you are in the real world: an individual with close friendships, professional relationships, and specific interests and passions that make you unique.

In fact, for most people there is a less than 50% overlap between their passions and interests and their personal and professional friends. That means half of your identity isn’t shared, stimulated or nurtured by the people in your life.

Social technologies will give people the freedom to express themselves as the individuals that they are, and the ability to gather around subjects that they care about such as movies, books, sports, legislation, or even private aspects such as connecting with fellow veterans, adoptive parents, or patient support groups. People want to be multi-dimensional humans, not one-dimensional life-size photos, and they want to find others like them.

As online networking continues to evolve, you will see more social technologies working together to allow you to be the multi-faceted person you truly are and to nurture and fulfill of all your interests and desires for more information and new people with whom you can connect. Social technology will continue to adapt to our needs. There will be more freedom and more ways to fully realize online the best, most fulfilling version of you.

Bianchini is CEO and co-founder (with Netscape co-founder Marc Andreessen) of Ning, a Palo Alto-based company that lets people join and create new social networks for their interests in passions.

On the San Francisco Bay Area's local NBC station, Jon Fortt and Sarah Lacy talk to Craigslist CEO Jim Buckmaster about controversies surrounding the company. This episode of Press:Here airs on Sunday, 3/22. Part 1 of 4. (EBAY) (YHOO) (GOOG) (MNI) (GCI) (NWS) (MSFT) (AAPL)

How do these rumors get started? Or, more to the point, how do they get perpetuated?

Late Thursday, a site called tinycomb ("Hand-Picked Tech News") reported that Facebook had been banned "for life" from every Apple (AAPL) store in the United States — some 207 retail outlets in all, by my count.

This must have been one of those facts that was too good to check, because I'm pretty sure none of the half-dozen newspapers and blogs that repeated and embellished the story bothered to do any legwork to confirm it.

It certainly seems that most of the readers who applauded the reported ban — a couple dozen at tinycomb, nearly 40 at Digg, more than 120 at MacRumors — took it as fact.

"Why has this been kept under the radar?" asked SherwinNero at tinycomb.

"Has it really been kept under the radar," answered Max, "or was it considered 'not significant enough' to put it on the front pages everywhere?"

Or is, just possibly, not true?

I know from experience that some Apple stores put limits on where on the Web you can take their demo machines — sometimes restricting Safari to Apple's promotional pages.

And it's certainly possible that individual stores have blocked Facebook — as MySpace has been blocked since May 2007 — because some of its members were hogging the machines.

Indeed, Ars Technica quotes an unnamed Apple employee who says his store has been blocking Facebook for about a month.

"It's just trying to find a balance between letting people try out the computers, but not tying them up so others can try them as well," he told Ars. (link)

But a person at Apple headquarters  in a position to know assures me that there is no nationwide ban on Facebook in effect — permanent or otherwise.

I'm headed to the nearest Apple store to check it out. If you're in one now, let us know in the comment stream where you are and whether the demo machine you're using will let you get to your Facebook page.

UPDATE: CNET's Caroline McCarthy beat me to it, did the legwork, and confirmed that Facebook is accessible at all three Manhattan Apple Stores, although as suspected there are individual machines in those stores that will redirect you to an Apple Store page. See here.

News Corp. is in talks with Yahoo about a possible combination. But is the deal real, or just a game?

Does News Corp. really want a piece of Yahoo?

Word leaked out Wednesday that Rupert Murdoch’s News Corp. (NWS) is looking at taking a stake of 20 percent or more in Yahoo in exchange for MySpace, some cash and other online properties. An infusion from News Corp., the reasoning goes, could boost Yahoo’s stock price high enough to outstrip Microsoft’s (MSFT) hostile takeover attempt.

This is probably as close as Yahoo (YHOO) will get to a white knight scenario where someone saves the company from the clutches of Microsoft. But a News Corp. deal probably won’t happen.

Why?

First, because Yahoo and News Corp. would have to convince Yahoo shareholders that the abstract deal is worth more than the cold hard cash Microsoft is offering. Second, because it’s not clear who would run the MyHoo combination. Third, because there’s a good chance that News Corp. is more interested in peeking at Yahoo’s secrets at the bargaining table than in actually stealing Microsoft’s prize.

Let’s start with the value question. Convincing Yahoo shareholders to embrace a MySpace deal would be difficult enough, because it would assume that MySpace is worth billions of dollars. According to The Wall Street Journal, News Corp. would likely push for a valuation between $6 billion and $10 billion. Based on what? Not much, actually.

Much of MySpace’s revenue comes from its $900 million advertising deal with Google (GOOG), in which the online giant has agreed to pay about $20 million per month until mid-2010. So far, that deal doesn’t seem to be working out so well for Google. In its most recent conference call with analysts, Google blamed its disappointing performance in part on its inability to make the MySpace deal pay off as quickly as it would like. That makes it doubtful that MySpace is really worth billions today. And if investors don’t believe in the value of MySpace, they won’t believe that this deal makes Yahoo more valuable than the more than $40 billion in cash and stock Microsoft is offering.

Then there’s the management issue. Even if Yahoo shareholders agreed that MySpace is worth billions, who would they trust to run the company? Not Yahoo CEO Jerry Yang. As recently as October, investors had bid up Yahoo’s stock as high as $34 per share — well above Microsoft’s current offer — hoping that Yang would deliver on his promise to clean house at Yahoo and set clear priorities at the dithering company. When he didn’t, the stock fell to earth, and Microsoft pounced on the opportunity.

If shareholders didn’t trust Yang to clean up Yahoo, would they trust him to both do that and integrate MySpace at the same time? Of course not. Sure, News Corp. could always suggest new management from its own ranks, but that would be awkward. Since Google handles online ads for MySpace and Microsoft handles ads for The Wall Street Journal Online, News Corp. would essentially have to go to war with a business partner.

Finally there’s the strong possibility that News Corp. doesn’t really want to do a Yahoo deal at all, and is only dangling the MySpace idea as a way to gain information.

After all, as a media baron who has struck big deals with both Google and Microsoft, Rupert Murdoch stands to be affected quite a bit if there’s a power shift in online advertising. There’s arguably no better way to prepare for the changes than to get an up-close look at what Microsoft would get by purchasing Yahoo — and that’s perspective Murdoch would be likely to get if he at least pretends to be interested in taking a stake in Yahoo.

A source with knowledge of News Corp.’s strategic thinking told Fortune this week that News Corp. executives aren’t sure whether a Yahoo-Microsoft combination would be good or bad for its own business. You can bet Murdoch & Co. are itching to find out.

Despite the easy availability of pirated music, most U.S. kids in the 9-to-14-year-old "tween" bracket are now paying for at least some of their music downloads.

That's the key finding of "Kids & Digital Content," a survey issued Wednesday by the NPD Group. According to NPD, 70% of U.S. tweens download digital music in an average month. Among them, nearly half (49%) used Apple's (AAPL) iTunes to get their songs and 16% used MySpace (NWS).

However, the second most popular source of digital music, used by more than a quarter (26%) of the group, was the peer-to-peer file-sharing service Limewire.

"The recording industry has focused on high-profile litigation programs as a deterrent, and education initiatives to communicate alternatives to illegal music file sharing," said NPD vice president Russ Crupnick. "Findings in this report suggest that the industry can still do more to promote specific ways children can obtain digital music legally, through pre-paid accounts and gift cards."

Of course, all this assumes that the 3,376 kids who sent in completed surveys told the NPD the truth, not what they thought the survey group wanted to hear.

Facebook's unique audience grew by 1.5 million people in October, according to a report released this week by Nielsen Online. That's five times the rate of larger rival MySpace, which grew by about 300,000.

If the numbers are accurate, it means Facebook, the second-largest social network, continued its surge. MySpace logged 58.8 million unique visitors in October, up 19 percent from a year before; Facebook logged 19.5 million, up 125 percent.

Though the numbers seem to suggest that Facebook is growing at a far faster clip than MySpace (NWS), third-party numbers can be deceiving. Because of the methods companies like Nielsen use to estimate traffic, the official numbers from the sites themselves can differ somewhat. It's also not clear whether the trend will continue as both companies link up with powerful online allies. Facebook last month took a $240 million investment from Microsoft (MSFT), and MySpace announced that it will participate in Google's (GOOG) OpenSocial initiative to build social software on the Web.

Nielsen also released stats that show WordPress.com for the first time edging out TypePad to become the number-two blogging platform behind Blogger. The numbers are below:

 Table 1: Top 10 Social Networking Sites for October 2007 (U.S., Home and Work)

 +-----------------------+----------+----------+----------------+

 | Site                  |   Oct-06 |   Oct-07 | Percent Change |

 |                       | UA (000) | UA (000) |                |

 +-----------------------+----------+----------+----------------+

 | Myspace.com           |   49,516 |   58,843 |            19% |

 | Facebook              |    8,682 |   19,519 |           125% |

 | Classmates Online     |   13,564 |   13,278 |            -2% |

 | Windows Live Spaces   |    7,795 |   10,261 |            32% |

 | AOL Hometown (TWX)    |    9,298 |    7,923 |           -15% |

 | LinkedIn              |    1,705 |    4,919 |           189% |

 | AOL People Connection |    5,849 |    4,084 |           -30% |

 | Reunion.com           |    4,723 |    4,082 |           -14% |

 | Club Penguin          |    1,512 |    3,880 |           157% |

 | Buzznet.com           |    1,104 |    2,397 |           117% |

 +-----------------------+----------+----------+----------------+

 Source: Nielsen Online



 Table 2: Top 10 Blogs for October 2007 (U.S., Home and Work)

 +-------------------+----------+----------+-----------------+

 | Site              |   Oct-06 |   Oct-07 |  Percent Change |

 |                   | UA (000) | UA (000) |                 |

 +-------------------+----------+----------+-----------------+

 | Blogger           |   21,572 |   34,104 |             58% |

 | WordPress.com     |    2,104 |   11,440 |            444% |

 | Six Apart TypePad |    8,813 |   10,601 |             20% |

 | tmz.com           |    7,107 |    7,805 |             10% |

 | LiveJournal       |    3,366 |    4,260 |             27% |

 | Xanga.com         |    4,760 |    2,741 |            -42% |

 | Thatsfit          |     534* |    2,613 |            389% |

 | Gizmodo           |     941* |    2,135 |            127% |

 | Autoblog          |      920 |    1,949 |            112% |

 | StyleDash         |    1,319 |    1,947 |             48% |

 +-------------------+----------+----------+-----------------+

 Source: Nielsen Online



 * This Web site did not meet minimum sample size standards in October 2006. Projected

 and average measures for this site may exhibit large changes month-to-month as

 a result.

Are you confused by Google's (GOOG) OpenSocial strategy to take on Facebook?

It's OK. OpenSocial is a bit abstract, which makes it difficult to grasp. Yes, it's clear that important tech players like Oracle (ORCL) and Salesforce.com (CRM) have lined up behind the Google plan, but lots of people are asking themselves, how will it work? What will it allow people to do that they couldn't do before? Will it be a blow to Facebook, the hot Silicon Valley startup that just scored a $240 million cash infusion from Microsoft (MSFT)?

Below is a video from social networking startup Ning, another participant in Google's plan. The video explains OpenSocial in the clearest terms I've seen.