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With all the commotion over the rise of social networking sites, parental groups and government bodies have been asking for someone to think of the children. In response to rising concerns that Facebook and MySpace have become beacons for sexual predators and bullies, these two leading sites have agreed to add over 40 new safeguards aimed at protecting young users.

Announced today by Connecticut Attorney General Richard Blumenthal, the agreement “marks another watershed step toward social networking safety, protecting kids from online predators and inappropriate content.” Officials from Washington, D.C. and 49 states have signed on to the agreement, which took months of negotiations.

Texas is the only state that passed on signing the agreement, stating that it wants even “quicker action” when verifying users’ ages and identities than the current agreement provides for.

The actual safeguards Facebook and MySpace have agreed to implement cover a wide range of protection, not just from sexual predators and bullies, but also from companies and their products. One change that will be made, for example, will require these sites to “keep tobacco and alcohol ads from users too young to purchase those products.” Other changes include: “Remove groups whose comments or images suggest they involve incest, pedophilia, bullying or other inappropriate content,” “Send warning messages when a child is in danger of giving personal information to an adult,” and “Review users’ profiles when they ask to change their age, ensuring the update is legitimate and not intended to let adults masquerade as children.”

Naturally, these rules and the new protection technology they are intended to inspire are by no means limited to Facebook and MySpace. The parties involved hope that all other social networking sites will follow suit. Facebook and MySpace were simply included in this initial round of negotiations due to the fact that they are the two most popular sites worldwide.

How well these agreements and new rules hold up once they run into the real world will likely determine whether further negotiations ensue. As they stand, they aren’t much more than a set of good-faith handshakes between the social networking sites and government bodies. There’s no word of a time table for implementing the new tools or repercussions if the sites decide they have better things to do. That said, it’s in the companies’ best interests to try, as living up to commitments like these will help keep lawmakers and regulators off of their backs.

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Google has been boosting its Google Apps product suite as fit for corporate use for months, with new security and deployment features arriving on a regular basis. The company’s latest endeavor, Google Web Security for Enterprise, is now available, and promises to provide a consistent level of system security whether an end-user is surfing from the office or working at home halfway across town.

The new service is branded under Google’s “Powered by Postini” product line and, according to the company, “provides real-time malware protection and URL filtering with policy enforcement and reporting. An additional feature extends the same protections to users working remotely on laptops in hotels, cafes, and even guest networks.” The service is presumably activated by signing in directly to a Google service, as Google explicitly states that workers do not need access to a corporate network.

Unlike other Google-purchased companies languished for a long time after being acquired, the Postini brand and related products have been the foundation of many of Google’s corporate-oriented initiatives this year. It’s a marked contrast to the company’s behavior in recent years, during which several companies were purchased and apparently left to rot with no clear sense of how their own products and services would be integrated into the Google product portfolio.

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Sumner Redstone, who controls the twin media giants Viacom and CBS, is leaning on Internet service providers and online media outlets to do his heavy lifting. Speaking at the Seoul Digital Forum 2008, the 84-year-old media mogul came down particularly hard on YouTube, equating the video platform with piracy and demanding that ISPs and web sites do more to police content.

“Solutions turn on enlisting the aggregators—ISPs, device manufacturers, hosting companies, and site operators—this effort,” Redstone said, according to the Associated Press. “We ask that companies that become aware of piracy using their facilities do something about it.”

Redstone’s statements make sense in the light of his long-running legal campaign against piracy in general and YouTube in particular (Viacom is suing YouTube for $1 billion at the moment). It’s also far from a unique stance among studio bigwigs. But is it really fair to ask the service providers to beat piracy on behalf of the content producers, when the networks and studios already have much better tools at their disposal?

Game theory

Matt Mason, in his book The Pirate’s Dilemma (look for our review next week), shows how a culture of piracy tends to grow up whenever and wherever a human need meets draconian restrictions—economic, legal, what have you. The establishment that gave birth to hip-hop, Wikipedia, disco, and YouTube must change in the end or risk losing out as new players monetize the new market staked out by the pirates. Rap and graffiti started out as rebel yells, then became accepted as art forms, and they have now been integrated into the multibillion-dollar pop culture machinery that once was the enemy. It happened to Dr. Dre because the record companies couldn’t silence him and his fans with cookie-cutter pop, so hip-hop quickly became a business model instead.

What Sumner is missing with his comments is the fact that pirates can be beaten—it happens all the time—but not primarily by means of legal threats and lawsuits. No, you subjugate these rebels with the tools of free enterprise. Piracy is just another business model, and the pirates will lose and go away when you come up with a better model (or they will become legitimate players themselves).

Stripped down to the bare essentials, consumers will choose the service with the most attractive balance of price, convenience, and quality. Piracy will always win on price, because you can’t really beat free. The other two components are up for grabs, but the media companies are only now starting to seize the opportunity.
Quality

Take YouTube as competition for the Comedy Central cable network, for example. Redstone’s Viacom has asked Google to remove clips of Colbert and Jon Stewart, time and again. But a YouTube search on “Colbert” today still returns more than 6,200 results. And if Viacom managed to shut YouTube down entirely, you’d see those clips moving to MySpace Video. Or perhaps Yahoo, MSN, or some platform that doesn’t exist yet. The pirates will always keep a steady supply of free clips on hand, if you’re willing to chase down the sources and deal with bad quality, clip length limits, and other flaws.

So Comedy Central eventually fought back hard, hosting the complete Daily Show archives online, and tagged the clips to make them searchable. NBC and Fox formed Hulu to distribute their shows with minimal commercials, and ABC and CBS are doing their own experiments with online distribution (ABC offers Lost in HD, for instance).

Make sure the videos are of high quality, preferably in high-def and surround sound. Don’t skimp on the extras: if anything, there should be exclusive content online only, not the other way around. Remember, you’re creating a new distribution channel, and need to promote it. There’s the quality play.
Convenience

If Redstone really wants YouTube to stop “stealing” his viewers, it’s easy to do. In fact, his companies are already doing it. Start up a one-stop shop for all the Comedy Central content you want or, even better, everything you’d ever want to watch on any Viacom or CBS property. Some shows are produced by other companies—just tell them to put up with this, or they’re off your airwaves. An industry-wide content portal would be even better, but it will take years to sort out the branding, control, and revenue sharing issues there.

Then promote this site. Relentlessly. If you watch just one episode of South Park or Tila Tequila, it should be impossible to walk away without the awareness of a convenient service that will fill you in on missed episodes, shows you never heard of, and all the classics, too. They start on demand and play stutter-free from any PC, Mac, or Linux box, anywhere in the US, any time. There’s the convenience play.

So Viacom can concede the price point to piracy, having won the other two battles. Throwing in the towel entirely and charging retail DVD prices for a season of Family Guy may still be a mistake, but with any reasonable scheme, this should become a profitable venture very quickly. Figure out an ad-supported model if you can, or charge less than a dollar per episode. Let people burn it to DVD or play the file on iPhones for a buck.
Endgame

In the end, piracy will force all the big-time content producers to move in this kind of direction. Capitalism, properly applied, will beat the rebels every time, and the odd thing is that the content companies are finally moving full-speed ahead with these new initiatives even as the bosses sometimes seem fixated on the “stick” half of the “carrot and stick” approach. Even Sumner Redstone is starting to understand this.

“Media companies need to make it easy for consumers to obtain our content in a legal manner,” said Redstone. “We cannot let the lack of perfect antipiracy tools keep us from forging ahead in providing the best, most innovative, creative content to the consumer over whatever medium they prefer, whenever and wherever they prefer it.”

Media companies think they’re moving as fast as possible, but consumers are impatient creatures, and have moved even faster.

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hawn Fanning, best known for founding Napster, has a new job. He will be working at Electronic Arts, which is about to buy his social-network-gaming startup Rupture for $30 million, according to sources with knowledge of the deal. His co-founder Jon Baudanza will also join Electronic Arts. We first heard of a possible deal back in February, but did not know who was the buyer. Rupture’s first product was a social network for players of the online video game World of Warcraft, but it only came out with a beta version and kept delaying its public launch.

Electronic Arts is buying the company for its technology, since it doesn’t have a lot of users (it was only ever in beta) and never launched the second version of its service. Presumably, creating social networks around massively multiplayer video games is a key component of its online strategy. The company has not yet officially announced the acquisition, but it is expected to do so soon. [Update: The closing of the deal is imminent, but there are still some papers to sign].

Rupture had previously raised only $2.5 to $3 million in an angel round last summer from investors including Ron Conway, Joi Ito, Reid Hoffman, and Baseline Ventures. Although this is not Fanning’s first startup, it is his first real payday. Napster helped change the music industry, but it went bankrupt doing so. And although he just sold his second startup SnoCap to Imeem, that was more of a mercy acquisition. It is doubtful that he made more than a few pennies on that sale. You know what they say. Third time’s the charm.

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Will you do a search advertising deal with Yahoo? How will you do it in a way that avoids antitrust objections? Are you relieved that Microsoft withdrew its offer for Yahoo?

The questions were asked again and again by a group of reporters meeting with Google’s top three executives Thursday. Eric Schmidt, the chief executive, and Larry Page and Sergey Brin, the company’s co-founders, answered roughly: We’d like to; we can’t tell you; and yes.

Beyond that, the three men shed little light on their role in the Microsoft-Yahoo merger talks, which ended Saturday when Microsoft withdrew its $47.5 billion offer to buy Yahoo, or on the status of their own negotiations with Yahoo.

“We’re very excited to work with them,” Mr. Brin said of Yahoo.

If conversations were to lead to a deal, Mr. Schmidt said, “We would anticipate structuring a deal to address antitrust concerns.”

“We had a brilliant test,” he added, referring to a limited two-week trial that the two companies conducted and that ended about 10 days ago.

The questions kept coming in different forms; the answers stuck to the same line.

Mr. Schmidt, who had raised concerns that a Microsoft-Yahoo combination could reduce competition on the Internet, said he was relieved that Google would not have to face that prospect, at least for now.

“Obviously we are happy that that is not going to happen,” Mr. Schmidt said.

Mr. Brin also said Google’s offer of a search advertising partnership with Yahoo was not an effort to scuttle the Microsoft-Yahoo deal, but rather an attempt to give some options to Yahoo, which faced a hostile bid from Microsoft.

“We really believe in companies having choices about their destiny,” he said.

So is the Microsoft-Yahoo saga over?

“You never say never in this business,” Mr. Schmidt said, adding that he was not privy to any information suggesting that merger negotiations might resume.

The meeting, at Google’s Mountain View, Calif., headquarters, adjourned as Mr. Schmidt, Mr. Page and Mr. Brin headed to another building for Google’s annual meeting with shareholders.

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The device has some pretty nice interface tech that they’re calling TouchFLO 3D that heavily emphasizes one-touch browsing and single-finger dialing. They emphasized web accessibility, zoom-in navigation with “just one hand” and not too many fingers. As expected, the device is loaded with Windows Mobile 6.1, a VGA screen and HSDPA 7.2, among other nice specs.

As expected, the Diamond is loaded with prettiness and specs, including:

• Windows Mobile 6.1
• VGA Screen
• Quad-band HSDPA 7.2
• One-touch navigation, including single-finger dialing
• An accelerometer that rotates pictures as you rotate the phone
• One-touch music playback with an animated music browser
• A heavily-animated weather forecast app
• Full-featured desktop-like web browser (Opera) with zoom-in tech that actually reformats to fit the screen upon zoom, although Microsoft promises IE 6 coming soon for it
• Youtube app and content playback
• Available in June in Europe via Orange and the “rest of the world” sometime later
• Orange music store, games, wallpapers, and ringtone downloads
• Orange mobile TV with up to 61 channels
• No normal headphone jack - gotta use HTC’s proprietary USB dongle
• “Better battery life” than their other devices will offer a bigger battery at a later time for those who are experiencing battery life issues

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Grand Theft Auto IV, the latest iteration of the hit video game franchise, racked up first-week sales of $500 million, Take-Two Interactive, the game’s publisher, plans to announce on Wednesday. The report exceeded the sales expectations of analysts.

The company is expected to report it sold six million copies of the graphically violent game, 3.6 million of them on the first day.

The sales exceed projections of industry analysts who were estimating that some five million consumers would purchase the game in the first two weeks.

The significance of the sales extends beyond buoying Take-Two, a company that has had its share of legal, financial and management struggles in the last few years. The company is the subject of a $2 billion hostile takeover effort by Electronic Arts, which is offering Take Two shareholders $25.74 a share for control of the company. If Take-Two can exceed sales expectations on Grand Theft Auto IV, it has the potential to drive up the share price and force Electronic Arts to raise its offer.

On Tuesday, Take Two’s shares closed at $26.35, up 29 cents.

Electronic Arts’ takeover bid turned hostile after Take-Two management said that it would not negotiate an acquisition agreement with Electronic Arts — or any suitor — until after the release of Grand Theft Auto IV. Now that the game is out, Take-Two may well have entered discussions with Electronic Arts and possibly other suitors who covet the Grand Theft Auto franchise, but Take-Two has declined to comment on whether such discussions are taking place.

If Take-Two and Electronic Arts wind up doing a deal, there is pressure on Electronic Arts and also on some Take-Two shareholders to get one done quickly. Electronic Arts has said that it needs to get a deal in time to subsume Take-Two’s assets before the holiday selling season.

Take-Two’s management has said that the success of Grand Theft Auto IV is awakening shareholders to the long-term value of the company’s stock and that if investors can be patient it can command a higher price in the long term.

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