How can revenue rise to $5.7 million from $4.83 billion a year ago, WSJ?

YouTube, the video sharing site owned by Google will soon give media companies an opportunity to earn revenues from videos.  This means media companies will be able to sell advertising for videos on YouTube.  CBS currently does this for the clips that appear on their YouTube channel.  The media companies can choose to sell advertising uploaded by specific users too.

This initiative benefits both YouTube and traditional media companies.  It will give Google another revenue source in terms of monetizing YouTube.  It would also potentially diminish further conflict beteen media companies as the video sharing site.  As you may remember Viacom filed a $1 billion lawsuit against YouTube shortly after being acquired by Google.  Content from media companies on YouTube make up about 4% of the total, but that is where a majority of their advertising revenue comes from.

YouTube received about 100 million viewers in October 2008 according to ComScore.

[via TC]

Wikipedia may dominate the Internet for references and encyclopedic knowledge, but Encyclopedia Britannica dominates the classroom and is hungry to take it online.  Encyclopedia Britannica is creating a new online version of their service to include user-generated content.  Anyone will be invited to contribute, edit, and enhance their Encyclopedia Britannica experience.  The new website will be rolled out in the next 24 hours according to Encyclopedia Britannica President Jorge Cauz.

Not only did Jorge say that his company is taking on Wikipedia, he also dissed Google in the process.

“If I were to be the CEO of Google or the founders of Google I would be very [displeased] that the best search engine in the world continues to provide as a first link, Wikipedia,” stated Jorge in an interview with The Sydney Morning Herald.  Oh, snap! “Is this the best they can do? Is this the best that [their] algorithm can do?”

Encyclopedia Britannica has been around for about 241 years.  Any changes that are made online will be reviewed by staff and freelance editors before the changes are reflected on to the actual site.  Jorge aims to have a 20 minute turn around time to update the site with user-generated changes.  Some of the changes will be added to the print version of the encyclopedia–which occurs after year two years.

“What we are trying to do is shifting … to a much more proactive role for the user and reader where the reader is not only going to learn from reading the article but by modifying the article and – importantly – by maybe creating his own content or her own content,” added Jorge.

On the Google-Wikipedia relationship

“I think it would be impossible not to look at Wikipedia when one goes to Google. It’s the most symbiotic relationship happening out there,” stated Jorge.  “It’s very much used by many people because it covers many topics and it’s the No.1 search result on Google. It’s not necessarily that people go to Wikipedia.”

[via SMH]

Microsoft Corporation (NASDAQ:MSFT) is truly feeling the affects of the economy.  Microsoft was known as one of the most secure places to work for a job, but now they have having their first-ever significant round of layoffs.  The company reported an 11% drop in their fiscal second-quarter earnings.  The news about Microsoft caused their stock price to drop today.  As I am writing this article it is down about 10%.

As the software giant has been hit by hard times, below is the entire letter that Microsoft CEO Steve Ballmer wrote regarding Realigning Resources and Reducing Costs:

From: Steve Ballmer
To: All Microsoft FTE
Subject: Realigning Resources and Reducing Costs

In response to the realities of a deteriorating economy, we’re taking important steps to realign Microsoft’s business. I want to tell you about what we’re doing and why.

Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.

The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.

But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.

During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.

Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.

As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We’ll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.

Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we’ll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don’t, we will also offer severance pay and other benefits.

The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth.

I encourage you to attend tomorrow’s Town Hall at 9am PST in Café 34 or watch the webcast.

While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.

With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.

With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.

Thank you for your continued commitment and hard work.

Steve

[via AllThingsD]

Apple reported today that they finished 2008 strong with a profit of $1.61 billion.  This was mainly due to iPods reporting an all-time high despite economic conditions being their worst in the last 4 decades.  Revenue was $10.17 billion in the three months ending on December 27, 2008.

Satish Dharmaraj, co-founder of Zimbra will be leaving Yahoo!  Zimbra is the open source e-mail startup company that Yahoo! acquired for $350 million.  The good news is that Dharmaraj is leaving with Zimbra doing very well.  Zimbra has about 20 million paid users.  Many of these paid customers were provided by Zimbra’s partnership with Comcast.

Through the acquisition, Yahoo! created serveral new e-mail services based on Zimbra technology.  Zimbra has desktop software that has message tags, aggregated accounts from other e-mail services, contact management, and calendar software.  In other words, it is just like Microsoft Outlook.  The advantage that Zimbra has over Outlook is that it uses AJAX so that it is able to navigate through e-mail without slowing down.  Outlook has a tendency to slow down when there are thousands of messages and large attachments.

It is not yet known what Dharmaraj plans to do next.  My guess is that he’ll go for another startup idea or look into retirement.

[via AllThingsD]

[Brian Dunn]

Brian Dunn, the current President and COO of Best Buy Co., Inc. (NYSE:BBY) will be promoted to CEO this summer.  This is because the current CEO, Brad Anderson will be set to retire this summer.  Anderson has been CEO of Best Buy for about seven years.  Even though Anderson will be retiring from the CEO position, he will be retaining his position as Vice Chairman of the Board of Directors in order to help with the transition.

Yahoo! is taking a big step towards ensuring their Mail users receive less spam.  The search engine company with a new CEO has hired a couple of companies to enhance their mailing technology in order to detect spam and notify marketing companies about e-mail user habits.

Yahoo! recently hired Abaca, a company that makes e-mail security technology to detect phishing and spam messages.  Yahoo! will be using Abaca to detect spam messages and filter them out of Yahoo! Mail inboxes and into a spam folder.  Abaca’s technology partners include VMWare, First Class Application Partner, and Coyote Point Systems Inc.

Return Path was also hired by Yahoo! Return Path monitors e-mails that were reported as spam and notifies e-mail marketers.  This way it will train e-mail marketers how to brand their e-mails to prevent looking too much like spam.

Lastly Yahoo!’s anti-spam team will be utilizing a “supercomputer” made of thousands of PCs as part of the open source Hadoop project to detect spammers even further.  Yahoo! partnered with several universities for this project.

Mark Risher, Anti-Spam Czar for Yahoo! reminds Mail users that “if Yahoo! Mail does let something slip through into the wrong folder — either allowing spam into your inbox or mistakenly putting a good message in your Spam folder — please use the ‘Spam’ and ‘Not Spam’ buttons to let us know. Clicking those buttons sends an immediate and powerful signal to our systems (and to me so that we can quickly try to correct the problem. It’s the best way for us to get better, and to continue keeping your e-mail experience great!”