Nexus Two rumors emerge — Technology website Neowin reported today that Google is working on the sequel to its Nexus One smartphone. It’s unclear how valid these rumblings are considering CEO Eric Schmidt’s earlier remarks that no follow-up device was forthcoming.
Gmail tips its hand — An image surfaced today suggesting that several new features are coming to Gmail. Most of the changes are to the interface’s appearance. Geek.com has screenshots.
Facebook letting fbFund fizzle — The social network says that it’s not going to resuscitate its internal incubator after two years of funding companies building on its developer platform. Inside Facebook has the details.
Shawn Foust is head of the video game industry team at law firm Sheppard Mullin Richter & Hampton LLP.
Facebook Credits are here, and they’re sparking quite a bit of debate. Credits are the virtual currency that Facebook hopes third-party game makers will use so that there’s a single, consistent currency across all the games in the Facebook community. But if you’re going to use Credits, you not only have to pay Facebook a 30 percent cut of any transaction you make with the currency, you also have to keep to some pretty stringent terms dictated by Facebook.
The terms are simultaneously very broad and very narrow. They’re broad in the sense that they establish a comprehensive set of regulations governing the implementation of Facebook Credits but narrow in the sense that those regulations only apply to Facebook Credits. The terms do not provide a comprehensive framework for all forms of in-game currency.
That’s an important distinction.
The terms only have power so long as Facebook Credits are in play. If you take the Credits out of the equation by exchanging them for your own currency, many of the rules and restrictions are no longer applicable. So the solution for game developers is to accept Facebook Credits but not abandon your own currency.
Specifically, here are a few select things the terms explicitly prohibit you from doing with Facebook Credits:
You will not (and you will not enable or allow any third party to) sell Credits to, or trade or otherwise exchange Credits with, any third party.
You may not accept Credits as payment for tangible goods, except in the Facebook Gift Shop.
You may not accept Credits as payment for a currency or other stored value item that can be used outside of the application.
Further, you as the game developer are not the Facebook Credits mint. That means you lose a lot of practical control:
You do not control the supply of Credits. That means you cannot offer a sale or giveaway of Facebook Credits (the Terms prohibit you from transferring or trading Credits to a third party). You cannot summarily issue 1000 Facebook Credits to your users to spark interest in your game. You cannot distribute Facebook Credits to the masses and live in a post-currency narco-syndicalist commune. Facebook controls the generation and distribution of Facebook Credits, not you.
You cannot lock in value. Facebook Credits are a fungible good that can be used in any application that accepts credits. If a person purchases $100 in Facebook Credits with the intention of purchasing things in your application, if they only spend $80, the remaining $20 is free to go elsewhere.
Credits can abandon you. Facebook retains the right to “revoke your eligibility to accept Credits at any time in [its] sole discretion.” That means your economy can get up and walk away in an instant.
So why not walk away from Facebook Credits? Well, it’s a payment option that resides natively on your lifeline platform. I’m not going out on a limb in guessing that Facebook Credits will quickly develop into a robust and flexible payment services option that will play an important role in the social game ecosystem. You probably don’t want to walk away from that.
So why your own currency? As mentioned previously, the current terms don’t extend beyond Facebook Credits. So creating your own in-game currency frees the game developer from constraints while still permitting them access to an important option for payment services.
Since your currency is not subject to the terms, you have full control over its use (subject to Facebook’s Developer Policies and Statement of Rights of course). For example, you can permit trading of your currency between players within an application, which is prohibited for Credits. That means Little Jill Jellybean can send Disaster Dollars to her friend so the friend can buy spent fuel rods in Uranium Enrichment City. Perhaps that inspires the friend to play more and convert into a paid user later on.
More importantly, you have control over your in-game economy. If you want to give away Disaster Dollars to a loyal user, you can. If you want to run a contest with an award of Disaster Dollars, there’s no problem. None of this is possible if you implement Facebook Credits directly into your game since the only source for Facebook Credits is Facebook.
You also can build in a safeguard from having the plug pulled. If you implement your own in-game currency you can offer your users a variety of options for the purchase of that currency other than Facebook (such as Paypal or Offerpal). Thus, if Facebook decides you are unworthy of Facebook Credits your game still has a viable means for monetization. If you rely solely on Facebook Credits you’re at the mercy of the eligibility clause.
Further, offering multiple options creates a greater possibility that a particular user will find one that appeals to him or her. Users with a preference for Facebook Credits may use that option. Alternatively, if a user has a pre-existing relationship with another payment services provider and would prefer to use that provider, they can. Help them help you make money. It’s not asking too much.
How do I set up my own currency?
You permit the user to purchase only one thing with Facebook Credits: your currency. Once the users have exchanged Facebook Credits for your currency, they can participate in the broader game economy. There should be no direct purchase of any items or anything other than your currency with Facebook Credits.
Once the exchange is made, you’ve locked up the value of those Credits in your own currency, ensuring it won’t move off to another application. You also introduced the user to an economy where you control the rules. And, as most game developers will tell you, few things are more important to a game than a well structured economy. The economy can dictate the tempo of the game and can have dramatic effects on a user’s interaction with the content. Normally it wouldn’t be something a developer would consider ceding control over.
So there’s the case for your own currency. There are arguments against, of course. Some argue that creating a separate currency is confusing and creates additional friction. Others argue that implementing Facebook Credits directly is good for the reputation of the game. I’m sympathetic to these arguments, but I find them unpersuasive in light of the root issue: direct implementation of Facebook Credits without a buffer currency effectively shifts control of a critical aspect of your game (which is often the main source of monetization) to a third party with potentially different incentives. Not good.
A buffer currency allows you to leverage a powerful new player in the payment services space while retaining control and flexibility.
Shawn Foust is an attorney with Sheppard Mullin Richter & Hampton’s Silicon Valley and Century City offices and head of the firm’s video game industry team. He focuses on tackling the cutting edge legal issues facing businesses in the entertainment, new media, and technology industries. He handles a blend of intellectual property licensing/litigation and emerging growth finance work.
Bloomberg is reporting that social network Facebook will postpone an IPO until 2012. Investors have been speculating that the world’s largest social network — valued at $24.9 billion — would go public sometime in 2011. Bloomberg writes, “Waiting lets Zuckerberg, 26, hone the skills needed to steer a company that issues quarterly results while facing criticism on such matters as user privacy.” Facebook declined to comment, and Zuckerberg himself said his company would offer an IPO, “when it makes sense.” People familiar with the company estimate that the social network would bring in as much as $1.4 billion in sales in 2010 alone. Would any of you jump on the Facebook IPO if given the opportunity?
One thing you can say about the Flickr team – there’s some fight in ‘em. They apparently were not super pleased with our coverage of their annual (and unofficial) Grant-Pattishall Award given each year to the Yahoo engineer who “who breaks Flickr in the most spectacular way.” I’m not sure why, I think the award is fun.
So now they have a new award, called the Bogan-Martin Award: “The Bogan-Martin Award is given yearly to the Flickr staff member who inadvertently generates the most spectacular media overreaction to a personal comment or inside joke.”
So who won? Daniel Bogan this year, who was also this year’s winner of the other award. And last year was Chris Martin. Both winners names link to previous posts we’ve done. Suggesting that we’re the media that is engaging in the spectacular overreaction.
Working in the mobile advertising business, New York City-based Xtify has been building its platform for brands and other app developers, allowing for geo-targeted notifications — most often, ads — that are pushed to consumers when they are within a predefined area, say a one-mile radius from a department store. The company has announced it has raised $2.8 million in a first round of institutional funding, which it is using to beef up its product development and team, currently ten-people strong.
Xtify picked up the funding from Acadia Woods Partners, SeventySix Capital and an undisclosed, significant New York-based angel investor. CEO Josh Rochlin says Xtify is looking to raise another sum of money in the fall, due to major announcements and partnerships that are rolling out soon, although he declined to disclose those just yet.
Xtify’s platform allows for brands, businesses and anyone building apps for iPhone, Android and Blackberry devices to create and manage push notification campaigns. When users who have downloaded an app – for instance, an app for a clothes brand – are within a certain distance from a retailer, they will get a notification of a sale or special offer, or a prompt for whatever action the app developer desires, on their cell phone, much like the ones users get now when there are software updates available. The trick is that the app doesn’t have to be running in the foreground: Users will be notified even if the app is not currently in active use.
“This only applies to the users who have downloaded the app that notifies them, nobody gets spammed,” Rochlin explained. Xtify also keeps things anonymous, as no phone numbers or email addresses are collected. Instead, users in Xtify’s database are identified with random user keys, which are then paired with information about the device, such as the make and model of it, and its location.
Xtify faces competition from other location-based ad companies, such as San Francisco, Calif.-based Placecast, which runs geo-targeted ad campaigns, for instance pinging users with text messages when they are near a shop. Xtify says that the very fact that they have a background-running notification system is what differentiates them from the competition. In addition, the service is not reliant on getting a phone’s location from a carrier, nor is it using SMS, which makes the service cost-efficient, Xtify says.
Founded in 2009, Xtify launched at the Mobile World Congress in Barcelona last February, and the team is currently keeping its head down, building out the product. The major announcements that the company has in the pipeline in the following weeks will make for a big increase in traction for the platform, Rochlin says.
Yay, open source! Anyone interested in the DROID X source code? If you are, the files are posted on Motorola’s developer site. The code weighs in at a hefty 280 MB and was actually released several days ago on July 28th. If you’re ready to get down and dirty with lines and lines of code, let the custom ROM creation begin!
With more than 200 deals since 2005, Y Combinator’sPaul Graham knows how to size up a young team of entrepreneurs. However, he didn’t get it right from day one.
On Friday, we got a chance to talk to Graham after his morning panel with SV Angel’s Ron Conway. He discussed how his strategy has evolved over the past five years and why the balance of power is shifting in Silicon Valley. See videos ahead.
Social engineering is the (morally vague) art of tricking someone out of their company’s technical secrets just by talking to them. It often involves deceit and relies on the fact that the weakest link in any computer security system is a human.
At the annual Defcon event, held in Las Vegas this week, attendees, mostly professionals in the computer-security business, engage in several contests. A new this one year involves launching social engineering “attacks,” where contestants must obtain the answers to questions about a company’s security defenses. People working at big companies such as Google and Apple failed to realize they were being social engineered by con artists.
This year, about 20 Defcon attendees in Las Vegas participated in the contest, which stirred a lot of controversy. The organizers of the conference were three security experts who know how to do social engineering: Chris Hadnagy, (pictured top right) operations manager for Offensive Security; Mati Aharoni (pictured middle), trainer of Offensive Security, and Jim O’Gorman (pictured left) of Continuum Worldwide. They created the site www.social-engineer.org for the contest, which occurred for the first time this year at Defcon and runs through Saturday.
The contest has proved so alarming to the targeted corporations that some called on the help of the FBI, which quizzed the organizers on why they were doing the contest.
“We wanted to start a social engineering program because we believe in security through education,” Hadnagy said at a press conference at Defcon.
The participants were instructing to engage in passive information gathering to find out some sensitive information, such as where its dumpsters are located. (Dumpster diving is a common practice by hackers who want to find documents with company secrets on them). By looking things up on the Web, the participants tried to track down company details, such as what kind of Web browser the employees used and what version of Adobe PDFs they were using. (The answers to these questions can be used to launch cyberattacks against the companies.)
Tipped off by the announcement of the contest, the FBI met with the organizers ahead of time, and the organizers enlisted the help of the Electronic Frontier Foundation, a nonprofit civil-liberties advocacy group, to represent them. In that meeting the Justice Department voiced its concerns about whether any laws would be broken in the contest. The EFF offered legal advice about how to structure the contest; for instance, participants were not allowed to impersonate law enforcement officers during phone calls, as that is a crime.
In almost every case, company representatives gave up secrets they should not have. The companies targeted included Microsoft, Cisco, Apple, BP, Shell,Google, Procter & Gamble, Pepsi, Coca-Cola, and Ford. The contestants were given “flag points” as rewards for each answer they pulled from employees.
Contestants cold-called employees to get the information. In three cases, company employees did not give any details over the phone. But the contestants, posing as journalists or customers, still got data from every company. One contestant managed to get an answer out of his target company in just 22 minutes. The contestant used tricks, such as preying upon emotions, by saying that they had to finish the project and get answers that day.
Because of publicity around the case, a number of contestants dropped out. Some said their bosses would fire them if they participated in the Defcon event.
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Grammy award winning artist Chamillionaire (a.k.a Hakeem Seriki) has become a regular at tech conferences, perhaps because the hustle and flow culture of the rap business and the hustle and flow culture of the tech business are surprisingly similar. His stories of struggles between artists and music labels are resonant to anyone who’s experienced the relationship intricacies of startups and VCs.
Chamillionare got his first taste of the magic of the Internet in 2004, with the launch of his first website Chamillionaire.com. The community around the site’s message boards exploded unexpectedly, “at the time it was really creative and really cool,” he told Mike Arrington at today’s Social Currency CrunchUp.
Other highlights from the interview include Mike Arrington calling the hip hop artist’s entourage “goofy,” asking, “What kind of rims are cool now?” and ending with the memorable,”You guys know how to manipulate the tech industry to get what you want, but you have the lamest phones …”
In retort, Chamillionaire insisted that he carries around his 3 phones, a Blackberry Curve 8700, an iPhone 3Gs, and a Sidekick XL, for “simplicity” and joked that he checks in as “Mike Arrington” when he stays at hotels. On why he attends tech conferences, “I just want to get a business card from each of you.”
Curious, we caught up with the artist after the panel and asked him what exactly he thought the tech community had to offer?
“Everything. Access to people through social networks. We don’t build these social networks, we don’t blog on TechCrunch. People here are like what would a rapper care about TechCrunch for? It’s crazy, it’s about distribution of information. It’s just getting information to people, that’s just what major labels are. They’ve got companies that distribute for us now so it’s like cutting the record labels out – I’m doing you a favor, you’re doing me a favor and I’m getting to where I need to get to. “
On his future plans? “I just want to innovate.” He said, insisting that he couldn’t reveal any more information.
Wi-Fi coming to NYC subway — Plans to provide wireless access to subway riders in New York City have been resumed, with $200 million being allocated for company Transit Wireless to equip the tunnels with substations.
One thing you can say about the Flickr team – there’s some fight in ‘em. They apparently were not super pleased with 
Grammy award winning artist 
