……is the cash cow for Chinese company Shanda Literature Ltd, a
subsidiary of Shanda Interactive Entertainment.

The company’s business model is simple: read the first half
of a book online for free, and if you want to know the rest
(which usually is the case if you have read that far) you need
to pay for it. Revenues are split with the stories’ authors.

In China, this proves to be successful. According to Shanda
Literature CEO Hou Xiaoqing, the company now has cash reserves
of $1.8 billion, with 800,000 authors creating up to 80,000 new
pages of content per day, he said at the Frankfurt Book Fair.

On web portals such as www.qidian.com and www.hongxiu.com,
customers can chose from a huge variety of stories, and the best
even make it into print.

Xiaoqing said the company has also teamed up with China
Mobile to distribute literature via mobile phones, a
business model that he said was “very promising”.

He added it was now for Shanda to explore whether those
business ideas also work in other parts of the world, including
Europe.

Could this be a business model for other publishing companies as well?

What do you think?

-Joe White is chief operating officer at Gandi, an Internet domain name registration firm. The opinions expressed are his own.-

Despite the importance of domain names for companies and the extraordinary amount of money many have paid for them, the vast majority of businesses are unprepared for imminent changes to the Internet.

The Internet Corporation for Assigned Names and Numbers (ICANN), the international body that oversees the structure of the internet, is liberalising the market for domain name extensions – the .com or .net part of a web address – from the beginning of 2010. This means that anyone, in theory, can apply to operate an extension. So alongside .com, .net, and .org, we will see .whateveryoulike.

Historically, companies have considered their domain to be a critical part of their brand identity. Some domains have been sold for millions of dollars – sex.com was reportedly sold for $14 million – and multinational companies often register up to 20,000 different variations of their brand to try and stop opportunists exploiting it.  However, despite this historic investment and interest, the vast majority (two thirds) of businesses are unprepared for imminent changes, according to some research we did a little while ago in conjunction with the Future Laboratory.

This is interesting given that there are real opportunities for companies. It will mean companies can readdress the way they communicate with customers, partners, or investors. We’ve already seen a shift in consumer behaviour where the high-street and virtual world have blended. The growth in blogging and social networking means people have also shifted their identity online. The liberalisation of top level domain names will help to blend the activities of both businesses and consumers with the potential to create a personalised brand experience.

Toyota, for example, could create the .toyota domain and register europe.toyota and usa.toyota, and set up sites for individual brands (highlander.toyota) and use targeted domains for different markets such as customers and suppliers (suppliers.toyota, dealers.toyota, buying.toyota). Or, Nike could create a personalised brand experience using yourname.nike, with training programmes, suggested products, networking pages which could link with sponsored athletes and so on. In addition, some companies could do one-off marketing campaigns or initiatives to support individual product launches. For example, Tastyhamburgersandhealthysalads.mcdonalds or Doveforrealwomen.unilever.

Indicators suggest that consumers will embrace this change. As part of the same research, we interviewed 1,000 consumers and one in five (19 per cent) said an extension such as .nike or .microsoft would be memorable. Considering only 24 per cent think .com is memorable, this shows the future potential for branded top-level domains.

However, while liberalisation of domain names is exciting, there are concerns over regulation. Some companies, such as Microsoft, have called for a staged roll-out, rather than full liberalisation, to ensure potential problems can be dealt with.

For example, should .apple be given to Apple the company, or to an apple growing co-operative in Wisconsin? What about top level domain names which play on morality or religion? The Vatican has already registered its concern with ICANN that making .god available could lead to serious, and potentially violent, dispute.

At the moment, ICANN is still developing the processes for dealing with issues such as this. It created an Implementation Recommendation Team (IRT) to look at concerns expressed about trademark protection. The team’s proposals are currently out for public comment before being incorporated into the process for liberalisation. ICANN is expected to start taking applications for new top-level domains between January and March 2010, and it anticipates between 300-500 to begin with.

For us, this is an exciting change. But if liberalisation is to bring the benefits it promises, it needs to be handled carefully. The opportunities are diverse for different types of businesses, and so long as concerns are carefully managed, we think this is a major shift in the internet that companies cannot ignore.

- Nic Newman is Controller Future Media and Technology in BBC Journalism, and former Journalist Fellow at the Reuters Institute for the Study of Journalism. On September 30, he will speak on the Rise of Social Media and its Impact on Mainstream Media. The opinions expressed are his own. -

The news last week that the Prime Minister’s wife, Sarah Brown, has more Twitter devotees than Stephen Fry, is a further reminder of the onward march of social media

Politicians, entertainers, marketers and captains of industry are just some of those waking up to the potential of social media in transforming the way they relate to voters, fans and consumers.

But where does all this leave the traditional media organisation? Disintermediated? Bypassed? Stripped of all power and influence?

I’ve just spent three months at the Reuters Institute for the Study of Journalism, trying to work out the answers. Here are five key thoughts for your consideration.

Ignore the sceptics. Social media is real and it is here to stay. There has been an explosion of participation over the past two years (2007-9), driven by user-friendly internet tools, better connectivity and new mobile devices. Social Networking and user-generated-content have become mainstream activities, accounting for almost 20 percent of internet time in the UK.

Time for traditional news organisations to take note.

Social media is relevant to journalism. The death of Michael Jackson and the street protests in Iran earlier this year demonstrate how it is changing the nature of breaking news. It is contributing to the compression of the "news cycle", putting more pressure on editors over what to report and when.

News organisations are already abandoning attempts to be first for breaking news, focusing instead on being the best at verifying and curating it.

Journalists are getting the hang of social media tools like Twitter, Blogs and Facebook, but very much on their own terms. "Same values, new tools" sums up the approach in most mainstream organisations as they try to marry the culture of the web with their own organisational norms. Will they succeed?

Social media, blogs and UGC are not replacing journalism, but they are creating an important extra layer of information and diverse opinion. Most people are still happy to rely on mainstream news organisations to sort fact from fiction and serve up a filtered view, but they are increasingly engaged by this information, particularly when it comes from a friend or another trusted source.

Social recommendation is playing an increasingly significant role in driving traffic to traditional news content. Most mainstream news organisations are devoting extra resources to exploit social networks like Facebook, You Tube and Twitter. Over time, social media sites could become as important as search engines as a driver of traffic and revenue.

These are powerful trends, and not all traditional news organisations in the UK have yet caught on. Taking social media seriously doesn’t mean you have to leave your core values behind, but organisations that fail embrace the power of the network will struggle to survive.

If you want to take a bite out of Apple’s piece of the staggeringly huge (but difficult to quantify in $$$ terms) smartphone market pie, you’d better either have the magical new “thing” or be willing to spend to buy it.

As Anupreeta Das reports, Palm – one of the stalwart originals in the mobile handset space -- has remade itself into a terrific target with the success of its Pre. Palm’s stock got a jolt this week on talk that Nokia could be considering a bid. But as she explains, Palm may prove to be too pricey a purchase, even for those with deep pockets.

Since introducing the Pre, Dell, Microsoft, Nokia and Motorola have been mentioned as possible suitors. If one of these cash-rich companies was to bid for Palm today, it would be targeting a stock that has quadrupled this year. Complicating matters, “details on how many units it has sold are skimpy, making it difficult to value the success of Palm's turnaround story,” she reports.

Palm's market capitalization is $2.4 billion. Based on the average 34 percent premium that technology, media and telecommunications companies have been sold for this year, according to Thomson Reuters data, this means a price tag of about $3.2 billion.

Dell is already in the early stages of buying up Perot Systems, but will still have nearly $7 billion in cash on hand should it choose to go on a spree. Microsoft, while a cagey customer, as shown in its dealings with Yahoo, has buckets more. For big tech players, the price itself is not the problem.

“To them, Palm is a thousand-dollar used model locomotive. Now you have to buy the other cars, and the tracks, and fake trees, etc. You have enough to pay for it, but you don’t even know if it works properly,” said a guy here at Reuters when the subject was being kicked around.

What if the Internet is not really a utopian democratic catalyst of change?

The Web is often seen as a positive means of instilling democratic freedoms in countries under authoritarian rule, but many regimes are now using it to subvert democracy, Evgeny Morozov, a contributing editor at "Foreign  Policy", proposes.

The Internet can actually inhibit rather than empower civil society, Morozov, argued in a lecture on Tuesday at London's Royal Society for the encouragement of Arts, Manufactures and Commerce.

Social media platforms are being used by certain governments to create a "spinternet" to influence public opinion. They are also being used as part of a process of "authoritarian deliberation" to try and increase the legitimacy of authoritarian rule, he said.

Morozov spoke with Reuters after the lecture.

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

The fate of Yahoo Inc has become intertwined in the public's imagination with the success or failure of its dealings with Microsoft Corp in recent years.

That's despite the fact that as much as 70 percent of the value investors put on Yahoo's depressed shares are tied up in its international assets or cash holdings -- factors that have nothing to do with Microsoft.

Yahoo's operations trade for just $5 to $6 per share out of its current $15 share price, once you exclude its Asian investments and the value of its cash. Its hidden assets in Japan and Chinese affiliates -- Yahoo Japan Corp and China's Alibaba Group -- alone are worth around $6 to $7 per share.

The trouble is that Yahoo needs to find a way to cash out of its increasingly rocky relationship with Alibaba Group, in which it holds a 39 percent stake after it pulled back from operating its own business in China in 2005.

Yahoo's best chance here may come next year if Alibaba succeeds with a second IPO of its Taobao.com consumer ecommerce site, building on the success of the 2007 IPO of Alibaba.com, now valued at more than US$13 billion on the Hong Kong exchange.

Truth be told, Yahoo's huge success in building the biggest U.S. Internet media destination never translated very well overseas, despite the early foray into Asia that left it with lucrative assets in Japan and China. These passive investments came to substitute for a global operating strategy.

But that's changing now, as Yahoo once again has begun investing in international operations it can fully control.

In its latest such push, Yahoo said on Tuesday that it would buy Maktoob.com, the largest Internet media site for the Arab world, with an estimated 16.5 million users. Terms were not disclosed.

Yahoo's international stronghold is Asia, where it had 172 million unique users in the month of June, according to industry estimates. It is the top player in Japan through its stake in Softbank-controlled Yahoo Japan, and is dominant in Taiwan and Hong Kong as well.

In India, Yahoo has the most visited home page and is the most popular provider of e-mail, instant messaging and online news to consumers. In a country mad on the sport, Yahoo operates the most popular site for cricket fans. Yahoo had 23 million unique monthly users in India in June, according to market researcher comScore.

But Yahoo stock gets little to no stock market credit for these international operations. Converting market share into meaningful financial results will take years. First, Yahoo must develop its patchwork of leading properties in places like the Philippines and Vietnam and Latin America into a global franchise. And it's hard to see how Yahoo can regain lost ground in Europe's more developed Internet markets.

Until now, the trap for Yahoo has been that much of its international value remains latent, locked up in investments in Japan and China rather than in operating businesses it controls. That is changing, slowly.

This leaves Yahoo at the mercy of an eventual rebound in U.S. advertising markets. For the foreseeable future, any significant rebound in Yahoo's share price depends on conjecture over the still unknown potential of getting into bed with Microsoft.

-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article, with the exception of a token Yahoo share. He may be an owner indirectly as an investor in a fund. --

It’s been a while since German business software maker SAP has stated exactly how much of a market share it has.  And no matter how much journalists prod and badger SAP CEO Leo Apotheker he will not divulge that figure. Even when analysts say they believe that SAP’s main rival Oracle has been taking market share from the German company, Apotheker will not be moved to shed some light on the issue.  In several TV interviews on Wednesday, the day SAP presented its second-quarter results, and in a call with analysts, Apotheker not only declined to provide even a range, in fact he could not bring himself to call his company’s fiercest rival by name. “We have about twice as much market share as Number 2,” he said.  In the Harry Potter series the hero is the only one who calls his nemesis by name - Lord Voldemort - instead of ”he who must not be named”.  C’mon Leo, if Harry Potter can do it, so can you.

Here are some of the day’s stories about the media industry:

Amazon Patents Detail Kindle Advertising Model (Mediapost)
Laurie Sullivan writes: “The patents clearly note that Amazon would insert advertisements throughout the ebooks, from the beginning to the end, between chapters or following every 10 pages, as well as in the margins.”

> In-Book Ads Coming to the Amazon Kindle? (Fast Company)
> 6 Reasons Why Ads On The Kindle Don’t Work (Business Insider)

Deadline for Globe bids postponed (Boston Globe)
“The New York Times Co. has postponed tomorrow’s deadline for prospective buyers of The Boston Globe to submit preliminary bids for the newspaper, people briefed on the sales process said. No new date has been set for the bids,” writes Robert Weisman.

ESPN to relaunch UK channel in August (Reuters)
“The Walt Disney-owned (DIS.N) sports network ESPN said on Tuesday it would launch a new channel in Britain in August to show its 46 Premier League soccer matches and other international sports programming.”

NYC announces initiatives aimed at strengthening media industry (Romenesko)
“One of Mayor Bloomberg’s eight initiatives: Establishing a Media and Tech Fellowship to be awarded to approximately 20 “rising star” media and technology entrepreneurs on an annual basis.”

Google’s Gmail says bye-bye beta (Reuters)
Alexei Oreskovic writes: “The change is part of a broader move that Google announced on Tuesday involving Google Apps, the company’s suite of online software products that includes Google Docs and Google Calendar, among others.”

In other news:

• Pittsburgh Clears Way For FiOS TV (Multichannel News)
• Michael Jackson Funeral: 500,000+ Facebook Updates Posted (Mashable)
• Music Labels Reach Royalty Deal With Online Stations (NYT)

News about the media industry:

Google Makes a Case That It Isn’t So Big (NYT)
“Google has begun this public-relations offensive because it is in the midst of a treacherous rite of passage for powerful technology companies — regulators are intensely scrutinizing its every move, as they once did with AT&T, I.B.M., Intel and Microsoft,” writes Miguel Helft.
> Graphic about Google share of all ads and online ads (Lost Remote)

Media and cable now the riskiest sector (Reuters)
“Default risk for the media and cable sector has risen from its already high levels a year ago, CreditSights said. Rising leverage, along with a protracted decline in advertising revenues that was accelerated by the U.S. recession, are behind the higher risk,” writes Dena Aubin.

Sun-Times seeks more time to reorganize (Crain’s)
“Lawyers for Sun-Times Media are asking for three more months to come up with an exit strategy, a request they considered “neither surprising nor remarkable.” The publisher currently has until July 29 to submit a reorganization plan,” writes Lorene Yue.

Vibe magazine shutting down (Daily Finance)
Jeff Bercovici writes: “Vibe enjoyed significant success in the late ’90s and early part of this decade as hip hop and R&B became the nation’s predominant forms of pop music. But in recent years the title has fallen on hard times under its new owner, the Wicks Group, which bought it in 2006.”

MSNBC Beat CNN on Weeknights in Second Quarter, Fox Still on Top (NYT)
Bill Carter writes: “The trend of cable news viewers moving away from CNN continued in the second quarter of 2009 with MSNBC beating CNN in weeknights for the first time ever for a full quarter of a year.”

In other news:

• Gannett Said to Prep Massive Layoffs (Gannett Blog)
• Times’ retirement plan hit by $154M loss (Boston Business Journal)
• Cable Hits a Big Winner With DVRs (WSJ)

Steep declines in business technology investment during the first quarter have prompted Forrester Research to issue a more pessimistic outlook for 2009 IT spending.

The research house now expects a 10.6 percent decline in global tech purchases by businesses and governments (as measured in U.S. dollars), compared with the 3 percent drop it forecast at the beginning of the year. In the U.S., Forrester now expects a 5.1 decline, versus its previous forecast for a 3.1 percent drop.

Forrester analyst Andrew Bartels said in a statement the first quarter saw a “scary” drop in purchases in the U.S. tech sector. However, he noted “the big drops are not precursors to further declines; rather, we think they are evidence of a temporary pause in U.S. tech purchases, which we expect to start recovering in Q4 as businesses realize that they overreacted in the first quarter.”

Forrester still expects growth in U.S. IT investment to return in the fourth quarter, and predicts tech markets in Europe and Asia will start to recover in the first half of 2010.

On a global basis, the group foreacast computer equipment purchases to fall 13.5 percent in 2009, communications equipment to drop by 12.4 percent, software to sink 8.2 percent, and IT consulting and outsourcing services to fall 8.6 percent.