Ever since the Justice Department opened the door to the legalization of online gambling, the leading creators of social games are feeling increasingly lucky. PopCap Games just launched Lucky Gem Casino with a collection of seven slot machines themed after its brands such as Bejeweled and Zuma. It marks the entry of the Electronic Arts subsidiary into the increasingly active casino game market.

Leading Facebook game publisher Zynga is adding Bingo and Slingo to its Zynga Casino family, which already features the most successful Facebook Poker game with more than 30 million active monthly users. Traditional gambling companies are quickly moving into the market as well. In January, slot machine maker International Game Technology acquired Facebook casino game publisher Double Down for $500 million.

The current crop of luck-based Facebook games are legal in the US because there is no way to cash out the virtual earnings. In Lucky Gem Casino players can purchase additional coins for real money, using the Facebook Credits system. But even if they hit the jackpot, payouts occur only in virtual currency and can’t be converted back into cash.

The big prize for social game makers could arrive when more states follow Nevada’s example and legalize online gambling, a move made possible after a Justice Department ruling in December that allows online betting as long as it does not involve sports. Companies who have already gathered large player communities could see revenue boosts if social game platforms allow money payouts.

Though the initial release version is limited to slot machines, PopCap pledged “to evolve Lucky Gem Casino to enhance the experience, add more games [and] community features” — which sounds a lot like the ideas behind Zynga Casino. PopCap VP Dennis Ryan also promises they will be “enlivening traditional casino games with our franchises,” as seen in the Bejeweled Spin slot machine. All of a sudden, a Plants vs. Zombies poker table doesn’t seem quite such a far-fetched idea.

Turning social media influence into gold is one thing, but measuring how you did it is quite another, according to social commerce startup Moontoast.

Moontoast provides musicians, celebrities, and brands with a way to generate money from the often large followings they have on social media platforms like Facebook and Twitter. The startup  does this primarily by letting its clients embed a “distributed store” into a social network status update or third-party website (Walmart, Target or an affiliate blog). Users can make purchases from those embedded stores seamlessly without having to navigate away from the site — thus enhancing impulse purchases and/or removing hassle that would prevent an online sale of things like merchandise, special deal coupons, digital music files, and more.

Today the company launched its Social Analytics Suite, which collects data from each time a client uses a “distributed store” as well as the corresponding social media activity. So for instance, if a client tweets three exclusive t-shirt offers and shares one exclusive signed poster offer on Facebook, the dashboard would show data for four separate “stores.”

“We found that most of our clients behave more like an agency than a brand, so we built the analytics dashboard to accommodate that,” said Moontoast VP of Marketing and Client Services Tim Putnam in an interview with VentureBeat.

Each client sees a one-page analytics dashboard consisting of four unique rows, which adds a touch of simplicity for people who aren’t super familiar with making sense of digital impact data (see screenshots below). The first row allows clients to customize the data by date range, brand, campaign type, and distributed store type. Below that is a row dedicated to social influence reach and revenue. Basically, the second row is an easy way for people to gauge their return on investment, but it doesn’t provide you with enough information to understand how to duplicate successes and avoid failures.

The third row consists of a comprehensive graph that combines all the different sales and social reach data with their social media activity. Looking at this should give people an accurate measure of how well they’re doing, as well as how they can improve. Each time someone initiates social activity (such as a tweet), a dot is placed on the graph, which clients can click for additional information. Clients can then see how the activity impacted sales, social engagement, etc. It’s a pretty cool tool most digital marketing managers are likely to fall in love with.

A collection of purely social media engagement and participation is displayed on the dashboard’s fourth row. It’s very similar to what you’d find in Facebook’s advertising dashboard, but far more useful since it tracks multiple social networks.

Moontoast currently offers all clients a free version of the analytics tool that doesn’t show the entire scope of social data collected from each campaign. The full Social Analytic Suite is, however, a paid service. We’ve embedded a video demo of the new tool below.

Founded in 2008, Moontoast originally began as a social knowledge base that allowed “experts” within specialized fields to turn a profit by performing various services. The company, which has offices in Nashville, Tenn. and Boston, Mass., pivoted in 2010 and brought on interim CEO Stephen Collins, formerly of DoubleClick. Its early investors include country music artists such as co-founder Bucky Baxter, Wynona Judd, Vince Gill, Amy Grant and Kip Winger. Moontoast closed a $6 million round of funding in January 2012 from The Martin Companies, with participation from prior investors. The startup has raised a total of just over $9 million in funding to date.

With one fell swoop, Twitter has confronted privacy concerns, returned missed features to its mobile audience, and opened its information network up to even more tablet-toting folks.

Twitter for iPhone and Android received updates Tuesday. The fixes address previously identified shortcomings, and optimize Twitter to run on Android tablets.

Twitter released a version of its application for the Kindle Fire on the Amazon Appstore today. The company also promised that the Barnes & Noble Nook Store will get a Twitter app on Thursday.

Both iPhone and Android applications now alert the mobile Twitterer before accessing her address book to find friends. Should the Twitter user navigate to the “Find Friends” feature in the Discover portion of the app, she will find a message that reads, “We will securely upload your contacts to help you find friends and suggest users to follow on Twitter.” The user must then click “OK” before proceeding.

The addition of the alert comes just a week after VentureBeat uncovered evidence showing that a slew of iPhone applications, Twitter included, access the user’s mobile address book without first requesting permission.

Twitter’s mobile apps also now include a much-loved shortcut feature of yore that allows a person to swipe a tweet to interact with it. The swiping action brings up a shortcut screen that includes reply, retweet, favorite, share, and user profile-viewing options. The feature should (again) appeal to the power Twitterer.

iPhone application users may appreciate the returned abilities to copy and paste the text of tweets and mark all direct messages as read.

A facelift for Flickr

Yahoo-owner Flickr has undergone reconstructive surgery and will emerge, in a week, with a new-and-improved face and a mission to recapture the glory of its youth. But even the best plastic surgery will do little to help the aging photo service compete with a new crop of vibrant photo-sharing applications.

Flickr’s makeover, as first detailed by BetaBeat, will feature a more colorful photo view that eliminates most of the whitespace members are currently accustomed to, and will soon include a new photo upload page that looks and functions radically different from today’s upload page.

“The product is going to change significantly, and the user experience is going to change significantly over the course of the year,” Flickr senior product manager Markus Spiering told VentureBeat.

Just don’t expect these significant changes to happen overnight. The first improvements, as explained by Spiering, will first start appearing next week. Flickr will introduce the new Contacts page, pictured above, on Feb. 28 and will roll out the upload page to users some time in March. Additional changes, not yet divulged, are slated for later release in 2012.

“Suddenly the photos look more than four times their current size and lie neatly justified on the page, somehow jigsawing together without cropping or changing the order in which they appear,” BetaBeat’s Adrianne Jeffries said of the new photo view.

If the screenshots are any indication, the fresh-faced Flickr will delight those with a penchant for a vivid photographic experience. The facelift, however, will do little to cajole today’s mobile photo-sharer to give the aging service a second look.

In 2005, Yahoo acquired the beloved photo-sharing community. And while Flickr has continued to operate with a personality distinct from its owners, it has languished as photo-sharing, especially by way of mobile devices, has thrived.

Instagram, an iPhone-only application with photo-enhancing features and filters, has captured the imagination of the iPhoneography community, which includes professional and amateur photographers alike. The service is tailored around expeditious sharing via mobile device and has successfully encroached on Flickr’s domain while Flickr sluggishly embraced the mobile movement.

Professional photographers, the audience most likely to pay for Flickr Pro accounts, also seem to be happily exploring their options. 500px has emerged as a vibrant community tailored around the professional, and even Google+’s photo features have gained photographer-appeal.

But Facebook is still Flickr’s most agile competitor. The social network has a mainstream audience that posts 250 million photos per day and is happily doing so without paying annual fees for the privilege. Flickr continues to see a substantial quantity of photos posted to its site each day — 3.5 million photos, Spiering said — but it is dwarfed by Facebook.

Without a time machine on hand, Flickr’s best chance for a return to glory will be under Spiering’s leadership. Spiering took over as head of product roughly one year ago and has talked openly about 2012 being an important year for Flickr.

Influential photographer Thomas Hawk, a big proponent of Google+, is impressed with the pending Flickr changes and believes that Spiering is the right man to spearhead a Flickr turnaround.

“It’s super positive to see innovation coming out of Flickr,” Hawk told VentureBeat. “I think Markus Spiering is turning out to be a pretty positive thing for Flickr.”

Flickr, as Hawk sees it, has needed a redesign for years, and Hawk thinks that a page focused on better photos will go a long way to encourage more activity.

“Hopefully, though, Flickr uses this redesign as a first step in a bigger overhaul that actually addresses site functionality in even bigger and more meaningful ways,” Hawk added.

This post was updated with statements and photos from Yahoo.

Popular Russian search engine Yandex has something Google doesn’t: The approbation of Twitter and access to the entire stream of public tweets.

Yandex has signed an agreement with Twitter to license the full feed of public tweets, otherwise know as the Twitter “firehose,” and will begin including tweets in search engine results. The search engine, which dominates in Russia with 64 percent market share, announced the deal in a press release early Tuesday morning.

“With more than 250 million tweets a day, Twitter is a valuable information source and the fastest way to find out what’s happening in your world,” Twitter’s director of business development April Underwood said in a statement. “Through this partnership, Yandex and Twitter will work together to make it easier for Yandex users in Russia and elsewhere to find real-time content about the people and things they care about most.”

Twitter-infused search results will be incorporated into Yandex’s “Blog Search” tool. Alternatively, searchers can visit twitter.yandex.ru to specifically query for tweets.

“Tweets of over two million users are available for search on Yandex,” the Russian search company said. “Twitter posts of those users who tweet in Russian, Ukrainian, Belarusian or Kazakh, as well as top feeds in any other language, will be included in Yandex’s Blog Search results.”

The deal comes more than seven months after Google and Twitter failed to renegotiate an agreement that would keep tweets in Google’s realtime search product. Without Twitter data, Google was forced to dissolve Google Realtime Search. The search giant later turned to its fledging social network Google+ to develop a crafty workaround for incorporating realtime results.

In January, Google introduced Search Plus Your World, a controversial addition to the core search product that favors Google+ profiles and content over content from other social sites. Twitter CEO Dick Costolo said the update was not in the best interests of the searcher.

Terms of the Twitter-Yandex deal are unknown, but Yandex is likely paying a substantial fee for its access to the Twitter firehose. Previous reports estimated that Google and Microsoft (which licenses the firehose for search engine Bing) paid north of $20 million for their original deals with Twitter.

Russia, according to third-party analysis, has under 5 million Twitter accounts and ranks twentieth in terms of Twitter accounts when compared to other countries.

Photo credit: The Daring Librarian/Flickr

Kiip is announcing today that it has hired Zynga’s ad boss Manny Anekal as chief operating officer.

San Francisco-based Kiip is a fast-growing startup that offers real-world prizes as rewards in mobile games. Hiring Anekal from recently-public Zynga will add some cachet and some executive firepower for the company, which is headed by 20-year-old entrepreneur Brian Wong.

I can imagine that a lot of business people might not take a company with a 20-year-old CEO seriously. But Wong has built a track record for his company, launched numerous products, created several key partnerships, and has raised money. If the company needs some extra cred because Wong isn’t old enough or lacks experience, then Anekal can bring that to the company as its global chief operating officer.

“Kiip is undeniably one of the world’s most innovative companies with a great story to tell — they’re also sitting at the epicenter of three burgeoning markets: mobile, gaming, and advertising,” Anekal (pictured) said. “They’ve taken an angle that I’ve never seen any company tackle with such prowess, and the growth opportunity they sit on is absolutely massive. I’m excited to help them take this to the next level.”

San Francisco-based Kiip was founded in September 2010 by Wong, Courtney Guertin, and Amadeus Demarzi.

Kiip offers rewards at the moment when you achieve something in a mobile game, such as getting past a level or a boss. Wong calls this “moments based” advertising, or catching a consumer when he or she is having a great time with a game. It recently also started offering Swarms, or mobile game tournaments with big-ticket rewards.

Anekal will be responsible for managing the growth and operations of the rewards network. Anekal led the brand integration and ad efforts with top-tier consumer brands in titles such as FarmVille and CityVille. Anekal has a decade of experience with the development of games and online advertising products. He was global director of brand advertising at Zynga, the social game giant, and he led global ad operations at Electronic Arts. He also had a similar position at in-game ad startup Massive, which was acquired by Microsoft.

Regarding the age question, Wong said in an email to VentureBeat, “I’ve been very fortunate and I’m able to have conversations with the right people who I can respect and they reciprocate. I think the amount of progress we’ve made and the partnerships and brands we’ve struck deals with are indicative of that. I think brands and agencies are looking for the younger generation to propel them to areas they would have never considered. Manny will certainly help, but he’s joked that he’s always felt like the young one too. This industry is also very young.”

Kiip is backed by Hummer Winblad Venture Partners, True Ventures, Verizon Ventures, and Crosslink Capital.

[Photo credit: Kiip]

By way of the “pin,” accidental thieves have exchanged copyrighted content on digital pin-board site Pinterest. To thwart any lawsuits in the making, the much talked-about startup is giving disgruntled site-owners a way to stop piracy before it starts by blocking their images from showing up on Pinterest.

Pinterest is the up-and-coming social site that encourages members to “pin,” via bookmarklet, items they love to collections called boards. In about a year’s time, the site has grown into one of the most-trafficked social networks.

The acts of “pinning” and “repinning” (re-sharing a pin created by another user) have come under fire, especially in photographer circles, as tools for copyright infringement. Members can easily grab copyrighted works from photo-sharing or media sites and clip them to their boards. Pinned images often include attribution, but sources later get lost in the shuffle, and some members go on to use images on their blogs or websites. Plus, considering that Google is the second most popular source of pins, a sizable percentage images are likely misattributed.

Now, Pinterest is providing website owners a simple snippet of code, located in the updated help section of the site, to help them nip unwanted sharing in the bud.

“We care about respecting the rights of copyright holders. We work hard to follow the DMCA procedure for acting quickly when we receive notices of claimed copyright infringement,” co-founder Ben Silbermann wrote in a blog post Wednesday. “We understand and respect that sometimes site owners do not want any of their material pinned.”

The new code, when added to the header of any page, will prevent a person of Pinterest from sharing content from that page. If someone attempts to pin something from a site with that code in place, she will see a message that reads: “This site doesn’t allow pinning to Pinterest. Please contact the owner with any questions. Thanks for visiting!”

The code should help the anti-Pinterest photographers and publishers of the world keep some of their copyrighted works off of the site, though it certainly won’t prevent the motivated sharer from downloading and re-uploading materials to Pinterest themselves.

Perhaps more importantly, though, the proactive measure could help Pinterest defend itself from copyright litigation. At the very least, the young company can now argue that it does not actively enable or encourage infringement.

Image via Order of the Stick

It was big news when a Kickstarter project broke the $1 million dollar mark for the first time on February 9th. More amazingly, two projects shattered that record in the same day. Now another project, The Order of the Stick Reprint Drive, has passed $1 million in pledges. This all begs the question: is this just a coincidence, or has Kickstarter hit an inflection point in its growth, with a lot more seven-figure projects coming in the near future.

Graph via Kickstarter

To understand the site’s recent success, it helps to look at its growth over the last two years. Kickstarter’s Fred Benson made this graph, which shows the acceleration in new backers who are funding Kickstarter projects. It’s the kind of chart venture capitalists drool over, because while it might not be the hockey stick growth of a site like Pinterest, each one of these new backers represents someone who was willing to give cold hard cash through Kickstarter, which collects five percent on every successful funding.

While only around 44 percent of projects on Kickstarter succeed, 89 percent of backers have funded a successful project. That’s the kind of positive reinforcement that turns many people into serial backers. As I wrote after my fiancée completed a successful Kickstarter project, a full third of the people who donated were complete strangers, but looking closer, many of those contributors seemed to have backed a dozen or more different projects.

There is another factor at work here, which is that more established artists are turning to Kickstarter. Both Order of The Stick and Double Fine Adventures, which has now passed the $2 million mark on Kickstarter, are projects from creators who spent years building up their fanbases. It has led to internal debate at the company. “There is some level of conflict here — we used to have a no-businesses approach,” said co-founder Yancey Strickler. “But, really, this was just a guy with an idea, and design is art. We limit Kickstarter to projects. Startups come to us when they don’t want to go to venture capitalists, and we say no, it has to be a project. It’s complicated.”

Benjamin Button via Pinterest (of course)

One of the special powers that comes with being the hottest startup in the blogosphere is an anti-aging ability that makes your company younger each day. Now that Pinterest is the tech community’s new darling, the company now falls into this category.

According to data from CrunchBase, Pinterest was founded in 2008. If you go by founder Ben Silbermann’s LinkedIn profile, the site was founded in 2009. The normally very precise Bloomberg pegs the site’s founding as 2010. And according to the most recent press from this weekend, Pinterest is one of the fastest growing sites in history. Launched just six months ago, it now has almost 10 million users. Incredible!

There is an explanation for why Pinterest flew below the radar for so long. According to The Daily Dot, the site began as a private project in 2008, when Silbermann left Google. In a speech to design bloggers, he talked about the difficulty of creating something new at a time when the economy seemed to be falling apart.

The site became an official company in 2009, but didn’t launch to the public right away. When it did launch in March of 2010, it was a closed, invite-only beta. And even today the site remains invite only, although it has eased the process significantly as it grows the size of its user base.

If Pinterest continues to age in reverse at its current rate, the site will be back to an idea on a napkin in less than three months, so we recommend you try and join as soon as possible before the service is swallowed up in a wormhole of hype that disrupts the space-time continuum.

Glenn Mangham

Twenty-six year-old British software development student Glenn Mangham has been sentenced to eight months of jail time for hacking into Facebook servers several times last year.

The sentence marks an astonishing conclusion to a costly joint investigation by Facebook, the FBI, and Scotland Yard.

Between April 27 and May 9 of 2011, Mangham repeatedly hacked into various Facebook servers. Mangham was arrested in June 2011 and officially charged in August with five counts of computer hacking. The youngster from York later admitted his guilt, but said his actions were intended to help Facebook improve security.

The social network has maintained that members’ personal data was not comprised during the breaches. Ruling Judge Alistair McCreath determined, however, that Mangham’s actions could have been “utterly disastrous” for Facebook.

“You and others who are tempted to act as you did really must understand how serious this is,” McCreath told Mangham, Reuters reported.

When reached for comment, Facebook said that it is pleased with the outcome of the trial.

“We applaud the efforts of the Metropolitan Police and the Crown Prosecution Service in this case, which did not involve any compromise of personal user data,” a Facebook spokesperson told VentureBeat. “We take any attempt to gain unauthorized access to our network very seriously, and we work closely with law enforcement authorities to ensure that offenders are brought to justice.”

The case was said to be one of the first of its kind in Britain.

Photo credit: Nicholas Razzell/Telegraph

The Hyperpublic team

In what could be the deal of the year, Groupon has snatched up a little-known startup to help it do the dirty work of targeting deals to subscribers.

The newly public deals behemoth has bought two-year-old, New York-based Hyperpublic for an undisclosed sum, the companies announced Friday. Hyperpublic aggregates place and deal data and provides developers with a way to monetize their applications. More attractive to Groupon, however, is the company’s growing pool of data that connects people to places.

“We set out to change the way people interacted with the local environment, and are pumped to continue that mission as a part of one of the fastest growing and most disruptive companies in the world,” Hyperpublic said in a note posted to its website Friday.

Hyperpublic amasses publicly available local data, gathered from a variety of sources such as social networks, and spits that data back out to developers who want specialized local data. The startup’s Data on Demand product, for instance, purports to give developers access to whatever local data they desire.

“We have everything. Need Twitter handles of vegans in the East Village? Done. Millions of display ads referencing places in Chicago? Done,” the product description explains.

Hyperpublic co-founder Jordan Cooper insinuated in an interview with the New York Times Bits blog that this type of data is of especial interest to Groupon. While Cooper was unable to go into great detail about HyperPublic’s future, he did say that Groupon, like most companies these days, is trying to mine publicly available social data and relate that data to real-world commercial decisions.

“The better Groupon understands the people and local environment that they are trying to drive traffic to, the better they will do,” Cooper said.

Hyperpublic previously raised $1.15 million in seed funding.

From posting status updates to consuming news, the collective time Americans spend on Facebook amounts to more than 100,000 years each month.

The eye-popping figure comes by way of statistics portal Statista. The company pulled data from comScore, Compete, and Google Ad Planner on social network usage in the United States. The infographic included below, made exclusively for VentureBeat, vividly depicts how Facebook is by far the most dominant social network stateside.

Facebook attracts 167 million unique U.S. visitors per month. These users spend an average of 6 hours and 33 minutes on the social network each month. Twitter, Tumblr, and the up-and-coming digital pin-board site Pinterest, may all be growing in popularity, but they clearly can’t compete with Facebook in terms of attention and engagement.

Ignoring Facebook for a second, Pinterest and Tumblr are standouts when it comes to average time spent on site. Tumblr is the second-most engaging social site; its members spend an average of 1 hour and 38 minutes using the community-centric blogging tool each moth. And Pinterest isn’t far behind; users average 1 hour and 17 minutes of Pinterest activity per month. No other social network — Twitter and LinkedIn included — comes close to approaching these striking engagement figures.

A look at the graphic also shows that nascent Google+ already commands a commendable 18 million unique U.S. visitors per month. The traffic figure seems impressive until you notice that the average American visitor spends a total of 6 minutes on the social network each month. In fact, in terms of engagement, Google+ trails all the social networks depicted, including the forlorn (but possibly recovering?) MySpace.

For some additional perspective, consider the time Americans spend on Facebook each month is more than 600 times the time they spend on Google+, according to Statista’s calculations.

Photo credit: Michell Zappa/Flickr

Tomorrow’s news organization will be the one that reaches the more than 845 million monthly active users on Facebook, or at least that’s the prediction 11 different media companies are making today.

MTV News, the Today Show, The Daily Show, CMT, MSNBC, Buzzfeed, Mashable, and CBS local affiliates in Los Angeles and New York are among the slew of new and old media organizations releasing news-themed Facebook applications Thursday.

The social news applications are similar in function to the Washington Post Social Reader and the Yahoo News Social Bar, and will give Facebook members the ability to automatically share their media reading and watching activities with friends and subscribers on the social network. The Timeline-friendly apps will also showcase recently consumed content in a box on the member’s Facebook Timeline.

If the success of the first crop of Open Graph applications tells us anything it’s that some of these media companies are in for a wild ride. Several may even awake tomorrow to find an entirely new readership devouring and sharing their content at rapid pace.

“These apps create new ways for readers to discover content, while giving publishers the opportunity to reach new audiences,” Facebook’s director of media partnerships Justin Osofsky said in a blog post on the news apps. “They’re built around news and content people care about and identify with and provide easy ways to control the social experience.”

Yahoo, as Osofsky detailed, has been a beneficiary of Facebook distribution. Yahoo recently released Social Bar, an Open Graph application integrated with Timeline and Ticker. The bar sits above stories on Yahoo News sites and shows readers the Yahoo content their Facebook friends are enjoying. The content application readers consume is also automatically shared on Facebook, drawing new readers into the Yahoo experience.

Social Bar attracted 25.6 million users in its first 75 days, Yahoo chief product officer Blake Irving shared with VentureBeat last week. Yahoo, as a result, sees more than 2 million shares happening every day. More importantly, the lion’s share of application users, Irving said, are between the ages of 14 and 35, with 45 percent of users 24 and under and 60 percent 34 and under. Yahoo users, by comparison, skew a lot older and tend be 35 and older.

“We’re seeing a different demographic coming to the site that we weren’t getting … and, it turns out, they like the content,” Irving said.

Photo credit: Photo Maany/Flickr

“Social is now the ‘newswire,’ the go-to place for important information and edgy discussion,” an MSN spokesperson told VentureBeat. “We created msnNOW so people can cut through the clutter and quickly filter through the overwhelming amount of information streaming on the Web to find out what’s hot, and why.”

By taking out the human editing element and using a program to choose topics based entirely on their popularity with the general public, msnNOW runs into an interesting problem: It turns out the general public is interested in total crap.

The site, now.msn.com, rotates through four stories on top, with well-written headlines such as “Creepy site links rich guys, co-eds” and “Halle Berry’s new movie stars sharks but still seems boring.” To the right of that carousel is a list of top trending keywords, called Biggest Movers, that’s updated every five minutes. The bottom half of the page is a grid of other trending stories that can be filtered by five topics: Fame, Cash, Sweat, Soul, and Wire. The categories seem to be loosely defined, with Bar Refaeli jumping on a trampoline filed under Sweat.

The technology behind the site is a custom tool called Demand Dashboard that MSN’s developers spent a year creating.

“It does all the work to bring together what’s emerging online in real-time and identifies acceleration of trends that are becoming more viral. Specifically, it identifies the topic’s strength based on total volume or acceleration,” explained the spokesperson. The Demand Dashboard then takes the information it collects on a trend and pushes it down the production line to an editorial team for publication.

What’s especially brilliant on the part of MSN is that each story doesn’t link back to the original site, but to another msnNOW page with an image and a 100-word summary of the trend written by one of MSN’s 20 editors. Videos are embedded above the summary, and there are in-text links back to tweets, local news coverage, or Facebook posts. Once you gulp down the bite-sized nugget of information you came for, you’ll be tempted by delicious-looking links to related stories that cover the page. You might be sucked into a never-ending loop of viral news.

Currently, there are no ads on the site, but that will change in a few months when the plan is to make revenue off of advertising and sponsorships. “Once we are very clear of how people are interacting and experiencing with msnNOW, we will offer advertising experiences that are both useful and beneficial for consumers and advertisers.”

The new site already acts as fascinating view into our collective Id. We are all horrible people wasting time at work, and I totally clicked on the headline “Adele song helps a bulldog through some dark times.” The public’s insatiable appetite for dessert content is a problem online journalists are intimately familiar with. You can spend a week on a serious and deeply reported story, but a slideshow about cats bonding with antelopes will rake in the traffic.

I am confident msnNOW will be a hit, since it’s a nicely designed aggregator of other hits. That doesn’t mean it can’t make me sad for humanity. And that sadness does mean I can’t bookmark it and visit a few times a day.

The apple of Apple’s eye, Twitter, will soon be the default social graph and social network for all iOS and Mac devices, as Facebook once again gets the shaft.

Apple has integrated Twitter into OS X Mountain Lion, the next-generation operating system for Macs announced Thursday and slated for summer release. The decision has profound implications for Twitter and will, should recent history repeat itself, help it dramatically increase signups and tweet volume across the world.

Twitter will be baked into the new Mac operating system in much the same way that is weaved into the iPhone, iPod touch, and iPad experience today.

After signing into Twitter once, members can tweet links, photos, and content from the share button built into Apple’s Safari, Notes, Reminders, Photo Booth, and iPhone apps, and from third-party apps that update to support the integration. Twitterers will also receive notifications for Twitter mentions and direct messages on the desktop, and notifications will appear in the new Mountain Lion Notification Center.

If this all sounds trivial, consider that Twitter is attributing an enormous amount of its recent new user and tweet volume growth to iOS integration.

“iOS 5 makes Tweeting easier than ever,” a Twitter spokesperson told VenterBeat Thursday. “Since the launch we’ve seen signups more than double and the number of Tweets sent increase over 90 percent.”

Apple released iOS 5 with Twitter integration in October 2011. Four months in, Twitter is clearly reaping the benefits of being the favored social network. As I said at the time, “It’s as if Apple reached down in a God-like fashion, grabbed Twitter with its almighty hand, and lifted it up to the social networking heavens.”

Flickr and Vimeo may also soon experience the advantages of having a friend in a high places. The photo and video sites are also integrated into the Mac OS X Mountain Lion sharing experience.

Noticeably absent, however, is Facebook. Apple and Facebook, we hear, are actively attempting to mend their complicated relationship, but neither is talking openly about Mountain Lion integration.

“iOS is an important platform for Facebook and we have a good relationship with Apple, working closely with their developer relations team on our Facebook and Messenger apps,” a Facebook spokesperson told VentureBeat. “As you know, we don’t comment on what we might or might not do in the future.”

This post was updated at 5:03 p.m. Pacific with a comment from Facebook.

Photo credits: Mara earthlight/Flickr and Apple

In addition to the announcements about Apple’s next operating system Mac OS X Mountain Lion, the company rolled out a beta edition of its iMessages chat app today.

Apple previously launched its iMessages for the iPhone and iPad as an answer to RIM’s popular BlackBerry Messenger Service. The app lets you send text, pictures, contacts, and video over 3G and Wi-Fi connections to anyone with an Apple ID or one of the other third-party messaging services. One big perk to using Messages is that it doesn’t charge you for each individual message, similar to the way wireless carriers do with SMS. Now, Apple wants to bring this functionality to the desktop in an effort to bridge the gap between conversations on mobile devices.

The new Messages beta replaces Apple’s native OS X instant message client iChat, which aggregates the IM functionality from several third-party services (Google Chat, AIM, Yahoo Messenger, Jabber accounts) into a sole location. Personally, I prefer using other IM applications (such as the open-source Adium) so I never paid much attention to iChat anyway, which I’m guessing the majority of other Mac users did as well. That said, I might actually use the new Messages app in addition to my preferred IM desktop client.

Unlike iChat, the Messages app doesn’t just focus on communicating with people who appear online at the same time that you do. Both the new desktop app as well as the iMessages iPhone/iPad counterpart emphasize short back-and-forth responses similar to SMS conversations. The app still has a buddy list of contacts, but the chat window looks nearly identical to the iMessages iOS apps.

People who never use instant messenger but frequently send texts will probably end up using this app. It’s also likely that far fewer SMS messages will get sent over the course of time, especially if you consider the rising cost of texting plans. That’s a good thing for Apple and a very bad thing for wireless carriers, who draw a large amount of revenue through texting services.

The Messages beta app is available now via Apple’s official site, with the full release due out with the launch of OS X Mountain Lion.

Image courtesy of senai aksoy, Shutterstock

Facebook will soon begin rolling out verified accounts for high-profile members with large numbers of subscribers, and it will give verified users the option of a pseudonym for their name.

Verified accounts were first introduced on Twitter in 2009 and recently on Google+, with the purpose of letting users know they are following the real deal. Facebook copied Twitter before with its prominent News Feed feature for status updates, so this will be another moment where Facebook is implementing a feature from a rival. Facebook also recently added a new photo viewer that looks suspiciously similar to Google+’s viewer.

The new verified accounts, which were first reported on by TechCrunch, will not show any kind of badge like they do on Twitter and Google+. Instead, the service will let verified users change their names to pseudonyms or nick names, which is perfect for celebrities like Lady Gaga, Eminem, and Prince, but useless for regular folks.

“We are rolling out a minor update to our Subscribe feature,” a Facebook spokesperson told VentureBeat. “Starting today, we’ll begin testing a verification process for people with a large number of subscribers. Once verified, they’ll also have the option to more prominently display an alternate name (nickname, maiden name, byline, etc.) on their timelines in addition to their real name. This update makes it even easier for subscribers to find and keep up with journalists, celebrities and other public figures they want to connect to.”

Verified accounts will get better placement in Facebook’s “People To Subscribe To” suggestions. Facebook will send out notifications like what you see below to users who it wants to be verified. There is no manual way to ask for verification.

To become verified, people who are chosen will have to submit an image of a government-issued photo ID. Facebook claims it will delete the IDs right after verifying them.

Mark Zuckerberg photo: Dylan Tweney/VentureBeat

Peanut Labs is launching its Crowdvibe site today to allow anyone to create quick polls or market research surveys with large numbers of respondents in a variety of targeted markets.

Crowdvibe (at the site Crowdvi.be) taps Peanut Labs’ network of more than 50 million consumers on 200 social networks to get users to fill out online surveys that you create. The cost comes out to a dollar per user or less, which is much cheaper and less hassle than setting up an online research campaign. And you can watch results arrive in real-time, with an average of 40 seconds for the first response.

You simply purchase virtual currency that lets you create a survey with one or two questions. The more respondents you want, the more virtual currency you need to purchase. One credit costs 10 cents. 100 untargeted responses cost $125. To get 1,000 untargeted respondents, the cost is about $900. For targeted responses, the price is higher. The web site is in beta testing now.

“As speed becomes more of a necessity, we understand the value of time-sensitive research,” said Noman Ali (pictured below), chief executive of Peanut Labs.

That’s a fraction of the usual cost for scientifically valid consumer market research, and the results you get are far less distorted than online polls, which can be thrown off if a biased party shares a link for the poll among his or her friends, Ali said in an exclusive interview.

“We saw a gap where small and medium business could not get consumer insight the way that the big companies could,” Ali said. “Nothing else can get you data so quickly and cheaply.”

Once you create your questions, you can refine the audience to focus on certain vertical markets, such as retail, electronic and mobile commerce, media and entertainment, consumer packaged goods, consumer electronics, travel and hospitality, or banking and financial services verticals. You can pick the age group of respondents, the income bracket, ethnicity, geography, gender, or other lifestyle characteristics.

“It’s a very simple process, as you just fill out the web form,” Ali said.

Once you release the survey, Peanut Labs populates it into its network of users. It offers incentives to users on a variety of platforms. If they answer the survey, they get some kind of virtual good in return. That enables Peanut Labs to get a good response rate and to ensure that the polling is scientifically accurate, since the links for the surveys are controlled by Peanut Labs and are not publicly accessible.

Users respond by voting for any one of two to seven pre-written answers for the poll.

One cool feature is that you can watch the results for your survey arrive in real-time.

“You can get access to 150 or 200 people in 15 minutes, or 1,000 people in 30 minutes to 45 minutes,” Ali said.

The service is targeted at analysts, creatives, and marketers who want to bridge the gap between social media and market research by accessing a huge network of people, without spending a lot of money. They can get product opinions, brand perceptions, and a bunch of feedback on marketing campaigns, promotional offers, concept tests, and consumer satisfaction. Companies such as Endemol US, Landor, Takasago, Kaptur, and 360i have been using the product in the closed beta test.

The idea for the service started around June last year and the full team started working on it in the fall. The team has 30 people now and will likely grow to 40 this year. Peanut Labs is owned by online research firm E-Rewards.

The social networks include sites such as Facebook and Foursquare. Right now, the product is a generic one. Over time, however, Peanut Labs might be able to modify it so that it could be particularly useful to fashion or game companies.

“That might happen, but it’s down the road,” Ali said.

Image courtesy of winnond, Shutterstock

Kabam made its mark in social games on Facebook, but the company is rapidly diversifying away from the social network as it pursues fans of hardcore social games.

Kevin Chou, chief executive of the Redwood City, Calif.-based company, said in an exclusive interview that the company has now moved its games onto a total of six platforms and it has made some big strategic shifts.

Today, the company is announcing that it will make its games available on Kongregate, the independent game portal owned by GameStop. In doing so, the company is taking its destiny into its own hands, in contrast to Zynga, the social gaming giant which depends on Facebook for more than 90 percent of its revenue.

“Of the new users coming into our games now, the vast majority are coming from outside of Facebook,” Chou (pictured above) said. “In January, we hit a new record for user and revenue numbers, by far.”

While other companies targeted casual gamers on Facebook, Kabam had the unique insight of targeting hardcore gamers, who are also present on the social network. Those gamers are loyal. About 90 percent of them play six days a week. And they spend a lot more money, on average, than your typical user when it comes to buying virtual goods in games. For some of these players, paying just $60 for a console game would be a bargain compared to what they spend in Kabam’s games.

In two years, Kabam’s Kingdoms of Camelot generated $85 million from 15 million players, which makes it one of the top eight strategy franchises of all time. Kabam’s own study showed that social games have taken users away from console games.

Kabam will be launch three of its free-to-play games on Kongregate, including Dragon’s of Atlantis (pictured right). Kongregate has more than 16 million monthly unique visitors, many of them dedicated gamers who are looking for something different to play. Additional Kabam titles The Godfather: Five Families and Thirst of Night are also planned for Kongregate.

The other networks where Kabam is getting users include Google+, Pokki on the Windows PC, and its Kabam.com web site. By moving onto the other platforms, Kabam is searching for both better economics and more core gamers. It is also building its infrastructure so that it can support players in one game universe, so that its games will be playable across platforms and will eventually have simultaneous updates. Chou said this until-now secret game universe has absorbed a lot of Kabam’s investment resources. Chou calls this is “pyramid strategy,” where the game universe supports multiple platforms, simultaneous play, live service, and a single game engine.

Facebook takes 30 percent of the transactions for virtual goods, and game companies typically have to spend a lot of money on Facebook ads to get new users. But other game platforms don’t take as big a chunk of every virtual good transaction. Google+, for instance, takes only 5 percent of the transaction and offers to heavily promote games to its users. Google+ now has 38 titles, including Kabam’s The Godfather: Five Families game.

“Some of these platforms also actively push your game to new users,” Chou said. “That changes the economics.”

It makes sense for Kabam to move beyond Facebook because it targets hardcore gamers, who are a minority of the game players on Facebook. Kabam could spend a lot of money on ads on Facebook, but the universe of possible players was small. So Kabam is seeking out the hardcore gamers on other platforms where they are present.

That has led to a decline in Facebook users. In August, Kabam had more than 12.9 million monthly active users on Facebook, but that number has shrunk to 2.0 million, according to AppData. Meanwhile, the cost of advertising on Facebook is rising.

“We tried to work with Facebook to make the economics work better,” Chou said.

Kabam had a small layoff (restructuring) as it realigned its business units to position itself for a multiplatform  business. But Chou says that rumors that the company is going downhill are incorrect. The team still has more than 450 employees and it just acquired a new headquarters in San Francisco. Chou is using a far different playbook for his business compared to Zynga. While Zynga has 56 million daily active users, Kabam has about 1 million DAUs.

“We don’t design our games to spam your friends,” Chou said. “I’m excited because we are the only company that is seeing the business this way and is executing on lots of platforms.”

Quarterly bookings are up ten-fold since early 2010. The key isn’t about how many users you have, Chou said. It’s about how much money you are making.

“The business is healthy,” Chou said. “Our pyramid strategy is operational now and we feel good about how the technology is scaling across multiple platforms. We have spent 12 months building some unique technology.”

Chou promises big things in 2012. He said the company has been making big investments in console-like 3D games and he believes these games will make a big mark on social networks and web sites in 2012.

“3D will come to the market in a big way,” he said, based on progress that other companies have made with technologies such as Unity 3D, Adobe Flash 12, and Google’s Native Client for Chrome. “The biggest knock against social games so far is that the graphics are nowhere near what can be done on the consoles. They forget that the technology is changing at the pace of the internet. We can deliver a quality experience.”

The new social games will have “next-generation quality” levels, with more synchronous play, where players act in real-time as they compete against each other. The company will also announce more major partnerships this year.

“We’ll announce deals with brands that will put Kabam in a whole different category as a game company,” Chou said.

And Chou said the company is also investing in mobile games, which is exciting because it is growing so fast.

“We don’t  have a product we are ready to talk about but we will have something innovative in that space,” he said.

Kabam was founded in 2006 as Watercooler and funded by Betfair and Canaan Partners. It had around 20 employees for quite a while as it experimented on Facebook, making sports fan pages and sports games. It had a big hit with its first major role-playing game, Kingdoms of Camelot, which quickly pulled in millions of users. Kabam also acquired WonderHill, a San Francisco game company that developed Dragons of Atlantis, which has become Kabam’s most successful game to date. Kabam also recently bought Fearless Studios, which was run by ex-Star Wars game developers. Kabam raised $125 million to date.

Kongregate’s users play more than 28 million hours a month and the company has more than 53,700 games on its portal. Jim and Emily Greer started the company in 2006 and sold it to GameStop in July 2010.

[Photo and image credits: Kabam]

To pin or not to pin: That is not the question on Pinterest.

In fact, according to data gathered by e-commerce analytics platform RJMetrics, Pinterest retains a remarkably high percentage of new users who go on to use the site at high rates and stay active on the site long after they’ve joined.

Pinterest is the digital pin-board site that has attracted droves of arts-and-crafts enthusiasts (many of them women, but some of them rich British men) who frequently “pin” products, recipes, and fashion finds to their personalized boards. The startup has kept quiet on its fast-track to Internet fame, but, thanks to third-party analysts, we’re learning more about the reasons behind its rapid rise.

In a report published Wednesday, shared exclusively with VentureBeat, RJMetrics founder and CEO Robert Moore looks at the behaviors and activities of the startup’s members. The data show that Pinterest retains and engages users two to three times more efficiently than Twitter did at the same time in its history. What’s more, the pins represent a ide diversity of content spread across a smattering of sites. Arguably most intriguing, however, is that 80 percent of all pins are re-pins, meaning that an overwhelming majority of content shared on site is recycled between users.

“Pinterest is conducive to sharing,” Moore said in an interview with VentureBeat. “There’s a very low barrier to sharing [pins] with everyone who is following you,” Moore said of the re-pinning phenomenon.

The site, he added, is structured so that members become creators themselves by “liking” the pins of the people they follow. The end result is a powerful network effect that eclipses the retweeting activities of Twitter users. For comparison, just 1.4 percent of tweets were retweets at a similar time in Twitter’s history, according to another study.

Moore and RJMetrics also looked at the content behind pins, and the data tell a story that might be the opposite what you would expect. Instead of pins pointing predominantly to a single source, such as Etsy or Amazon, as has been theorized, pins feature a diversity of content from more than 100,000 different sources. Etsy is indeed the most popular domain and powers just over 3 percent of all pins, but the low percentage came as a shock to Moore.

“There is a high correlation between Pinterest usage and Etsy usage, but I was expecting a much higher percentage,” Moore said. “There is an extremely long-tail effect at work here … and Pinterest is not dependent on any one platform.”

Google ranks second, accounting for around 3 percent of pins, but most Google links point to Google Image Search results, which, as the report points out, should really be attributed to third-party domains where those images originate. Flickr is the source behind 2.5 percent of pins, Tumblr represents 1.1 percent, and image gallery site weheartit.com accounts for 1 percent of pins. Amazon cracks the top 20 list, but ekes out less than half a percent.

The data also highlights how pinning activities remain consistent over time, making Pinterest unique among social networking sites, which usually see much higher natural attrition rates. The net attrition rate on Pinterest is close to 0 percent, RJMetrics found.

“This either means that no one who starts using Pinterest ever stops or — more likely — that users who continue to use Pinterest become so much more engaged over time that their activities fully make up for those of any users who leave,” Moore concludes in the report.

Altogether, the findings tell the tale of a startup that is anything but a flash in a pan. “This is evidence that Pinterest can do some pretty amazing things and grow really large in size,” Moore said. “This is not a Chatroulette … once people start using it, they don’t stop.”

Pinterest, Moore added, has the potential to grow to hundreds of millions of members, and fast.

Moore speculates that the young company will implement a more lucrative system than affiliate link-swapping for cashing in on the pinning activities of its highly engaged members. He believes it could easily enable members to purchase products featured in pins directly on the Pinterest site. This, he argued, would make Pinterest a more commercially viable application than Twitter, which is much older and larger. Twitter, however, may be forced to monetize in a way that could negatively affect the user experience, such as by adding ads to the stream of tweets viewed by its users.

RJMetrics collected and analyzed nearly 1 million pins from a random sampling of Pinterest users to arrive at its conclusions. The company is confident that its sample group is representative of the larger Pinterest population.

Digital Chocolate is launching its new social game Gangs of Boomtown as an exclusive title for Google+. The title is the third that Digital Chocolate, the game company headed by Trip Hawkins, has made for Google’s social network. But it is the first that will be exclusive to Google+ for 30 days.

Google needs to get exclusives like this one to compete with Facebook, which has huge numbers of unique social games on its platform. To get more exclusives, Google is helping to promote exclusive games on its network. It is also charging a smaller commission — 5 percent vs. 30 percent — on virtual goods transactions on Google+ compared to Facebook.

Punit Soni, games lead for Google+, said, “Gangs of Boomtown marks the first exclusive game from Digital Chocolate to launch on Google+. We’re happy to see more of their engaging, high-quality games debuting on Google+. We think our users will really enjoy playing Boomtown.”

Google now has 38 games on Google+, including three exclusives (The Godfather: Five Families, Pirates: Tides of Fortune, and now Gangs of Boomtown). Facebook, by comparison, has thousands of games.

In the game, you start out at Boomtown, a mining town that has fallen prey to the ruthless Assassins Gang. They burnt the town to the ground and murdered your family. You have to save the sheriff by punching out some gang members and taking their loot. You grab a gun and shoot the rest and start repairing the town. The game has reasonably good sound effects, but the animations are pretty ordinary. Players can share their achievements with certain game-oriented circles, but notifications are kept to a minimum.

It’s not a huge coup, as the exclusive is just for a month. But once someone starts playing a game, they’re likely to keep playing it on the same platform. This is the sort of game that grabs the attention of players on social networks. And it’s nice to see a Western social game, since we’re overloaded with Mafia games. It should help Google score even more exclusives in the future.

Mark Dooley, a spokesman for Digital Chocolate, said the company has been working on the title for a while. The game’s Western genre is a wide open opportunity on Facebook. Digital Chocolate’s Helsinki studio, which also made Zombie Lane and Army Attack, developed Gangs of Boomtown.

In the wake of Facebook’s implementation of Actions, a new way for third-party applications to get their data into your Timeline, many apps are seeing staggering new growth stats.

Already-popular traffic hounds such as Pinterest, Fab.com, Foodspotting, Pose, and several others are reporting increases in new visitors, new signups, and the time each user spends on the site, all in direct relation to their Facebook Actions.

As a brief refresher, Actions allow apps to publish more detailed information to your Facebook Timeline. Instead of showing that you “Liked” a page or commented on activity, your Timeline might show that you listened to a song, tried a new restaurant dish, or bought an article of clothing. These actions give your friends (and big brands and advertisers) a much more accurate picture of your interests, the things you have, the things you want, and the decisions you’re likely to make in the future.

And since the actions are a lot more interesting and colorful than a simple “Like,” they’re driving curious new eyeballs to the lifestyle apps in question.

For example, Pinterest launched its Actions-packed Timeline tools around a month ago. Since then, the number of Facebook users navigating over to Pinterest has grown by more than 60 percent each day.

Team members from fashion app Pose said they’ve seen daily Internet and mobile signups increase five-times over since they launched Timeline Actions. And design-focused e-commerce site Fab.com has experienced a 50 percent increase in traffic from Facebook since its own Timeline Actions integration.

On the arts and entertainment side of things, art-discovery site Artfinder has experienced a 60 percent jump in time spent on the site by new visitors coming from Facebook.

Food apps Foodspotting and Foodily are also seeing growth directly related to Facebook Actions. Foodspotting, which lets users share the dishes they tried and loved in sweet summaries in the Timeline, saw a threefold increase in visits and activities shared on Facebook. Food and recipe site Foodily saw a fourfold increase in new users.

“These apps have a few things in common,” wrote a Facebook spokesperson in a statement to VentureBeat.

“They’re built around something people care about and identify with, they enable people to share things they want their friends to see, and they provide easy ways to control the social experience.”

The questionable practices of little-known iPhone application Path led to the unearthing of evidence that many other iPhone apps also take consumers’ address book data. The ensuing public outcry prompted U.S. government officials today to question the one company that might actually be to blame: Apple.

“This incident raises questions about whether Apple’s iOS app developer policies and practices may fall short when it comes to protecting the information of iPhone users and their contacts,” congress members G.K. Butterfield and Henry Waxman wrote Wednesday in a letter addressed to Apple CEO Tim Cook. The letter marks the beginning of an investigation into whether Apple adequately protects application users’ privacy and data.

The “incident” is the recent discovery by iOS application developer Arun Thampi that mobile-journaling app Path was, without permission, uploading and storing the contents of users’ iPhone address books on its servers. Path has since apologized and deleted this data, but its actions spawned a heated discussion on how iOS application makers access the official iOS address book, and placed the spotlight on Apple for granting app makers too much access and not protecting its mobile users.

Congressmen Butterfield and Waxman, ranking members of a congressional subcommittee dedicated to consumer protection, specifically questioned Apple on how it could approve the Path application, “despite [it] taking the contents of users’ address books without their permission.”

The duo put nine tough questions in front of Cook and is giving the CEO and his company just 14 days to respond.

“You have built into your devices the ability to turn off in one place the transmission of location information entirely or on an app-by-app basis. Please explain why you have not done the same for address book information,” one of the directive reads.

This echoes the sentiments of many iOS developers, including Instapaper creator Marco Arment, who recently argued that Apple should change its API to require permission for access to the user’s address book.

Arment will soon get his way. Apple, for its part, has said nothing on the matter until today, despite the cacophonous volume of the discussion. The company, currently sitting comfortably atop a $90 billion pile of cash, was compelled to publicly acknowledge the situation Wednesday and will be making changes in response to the backlash.

“Apps that collect or transmit a user’s contact data without their prior permission are in violation of our guidelines,” Apple spokesman Tom Neumayr told AllThingsD. “We’re working to make this even better for our customers, and as we have done with location services, any app wishing to access contact data will require explicit user approval in a future software release.”

Whether the permissions change will satisfy the congressmen remains to be seen.

“We look froward to hearing from Apple and will withhold judgment until we hear directly from them,” a committee spokesperson told VentureBeat. As of noon Pacific Wednesday, the committee had not received a response from Apple.

The letter comes just one day after VentureBeat uncovered evidence showing many iPhone applications upload real names, email addresses, and phone numbers from users’ iOS address books to their servers without first asking permission.

Photo credit: Trevino/Flickr

Engagio founder William Mougayar

Engagio, a Toronto startup founded by William Mougayar that helps people keep track of the conversations they are having in comment threads across the web, has raised $540,000 in a seed round led by Rho Canada and New York investor Fred Wilson.

The unique thing about Engagio is that it was conceived in the comment section of Fred Wilson’s blog, A VC. And a number of the long time participants from the comment section pitched in to help Engagio with everything from securing a domain name to crafting their interface design. Even Fake Grimlock, everyone’s favorite giant robot startup dinosaur, lent a hand!

Wilson, through his investments with Union Square Ventures, has articulated a thesis about the power of highly networked online communities. But keeping up conversations across portfolio companies like Twitter, foursquare, and Tumblr meant that Wilson was missing a lot of what people were saying to him.

The first time Mougayar pitched Wilson a startup, a content curation platform called Eqentia, he was turned down. So he took a page out of Paul Graham’s play book and found a a problem that needed solving. It was Wilson’s problem of course, not his, but there was still a target market.

Engagio is a clean, inbox modeled after Gmail that allows all that discussion to happen in one place. With one click it can connect to Facebook or Disqus accounts and important the interactions. You can respond from inside Engagio and it will be posted to the appropriate site.

Mougayar told VentureBeat by phone that he is opening a satellite office in New York at General Assembly.

The Internet has opened up new doors for ambitious networkers. In the slang of A VC, Wilson is the “bartender” and Mougayar is an “instigator”, meaning he gets the conversation going in the comments. It’s a habit that seems to have paid dividends.

Facebook, Twitter, Instagram, Foursquare, Foodspotting, Yelp, and Gowalla are among a smattering of iOS applications that have been sending the actual names, email addresses and/or phone numbers from your device’s internal address book to their servers, VentureBeat has learned. Several do so without first asking permission, and Instagram and Foursquare only added permissions prompts after the Path flare-up.

Some of these companies deny storing the personal data, as Path was doing, but the transmission alone makes the private data susceptible to would-be intercepters.

Perhaps most concerning, however, is that these app makers could mask the real names, phone numbers, and email addresses during the transmission process, protecting your privacy in the process, but choose not to.

VentureBeat, employing a traffic-monitoring utility called mitmproxy to observe the data flowing between apps and the internet, discovered that many iOS applications upload personally-identifiable information to their servers.

Path steps on a privacy landmine

Last week, Path iPhone app users were surprised (and quite disgruntled) to learn that the innards of their address books — contacts’ email addresses and phone numbers — had been uploaded to and stored on Path’s servers. After a public outcry, Path immediately amended its practice to request user permission, and deleted its records.

But the larger issue of how iOS application makers access, transmit, and store address book data from iOS devices is one that refuses to be swept under the rug. And rightfully so. This is your address book we’re talking about, arguably the most private of all entities. It’s the digital repository of the personal and professional relationships you’ve amassed in your lifetime, and a simple click of a button could expose those relationships to strangers with malicious intents. Also, as many have pointed out, much of the data in your address book belongs to other people (their cell phone numbers, for instance), and has been entrusted to you with the understanding that you will keep it private.

These same relationships are the building blocks for any successful social application. For years, developers have understood that if they give you an easy way to find your friends already using their applications, then you won’t have such a lonely experience and you might continue to use their apps. So, many of the applications you know, love, and use on a daily basis have a “find friends” feature that scans your address book to find your contacts already using their services.

That act in and of itself is a boon to your overall experience, but many developers are employing a shortcut that puts your private contact data at risk.

In order to find connections, app makers are going into your address book, gathering up either phone numbers or email addresses (or both) and uploading that data in its original state. In the best cases, they use an encrypted HTTPS connection to upload the data to their servers, but that’s not a given. Their servers then use the address book data to determine contact matches. In many cases, the data is discarded immediately thereafter.

Facebook, Twitter, Foursquare, Instagram Foodspotting, Yelp, and Gowalla all upload either your contacts’ phone numbers or email addresses to their servers for matching purposes. Some of these applications perform this action without first requesting permission or informing you how they long they plan to store this data. Foodspotting is the worst of the bunch, as it appears to transmit your data over an unencrypted HTTP connection (in plain text), making it even easier for mischievous parties to intercept.

A Foodspotting spokesperson said the company does not store the data it collects. “With the many concerns we’ve read about in recent press blogs, we’ve added additional security measures that will be out with our next update,” the rep said.

Unencrypted address book data. Data blurred out at the bottom is a list of email addresses in plain text.

Facebook does upload your address book and stores your contacts, but it is also forthcoming about its process. The company has always employed a permissions flow for the “Find Friends” feature that prompts the application user with this message: “Facebook will store imported contacts on your behalf and may use them to generate friend suggestions for you and others.”

Twitter’s position is a bit more ambiguous. “We do not automatically upload contacts,” a Twitter representative explained to VentureBeat. But the “Find Friends” feature, located in the Discover tab of the iOS application, does not require explicit permission for access to the address book, even though it does upload address book data. On the web, Twitter informs its members that it stores contacts for up to 18 months, and may use contact information to make “Who To Follow” suggestions.

Popular photo-sharing app Instagram uploads contact data as well (first names, last names, email addresses, and phone numbers when available, as depicted in the mitmproxy screenshot above), but the app makers recently introduced a permission screen that now reads, “In order to find your friends, we need to send address book information to Instagram’s servers using a secure connection,” and now requires the user to click “allow” to continue.

Foursquare has just followed suit with an update to its iOS app Tuesday (pictured right). Foursquare’s permissions dialog is uniquely up-front about what it’s actually doing.

“We’ve always been doing things the secure way — we only access the user’s address book when the user taps on the ‘Find via address book.’ That is, we only access the address book with an explicit user action,” Instagram co-founder Kevin Systrom said. “The extra dialogue is simply good practice so users are 100 percent sure they understand what’s going on — it’s a step to ensure transparency that we imposed on ourselves.”

Yelp also claims that it does not store the data and requests user permission when accessing the address book. “When a repeat user launches the Yelp application, we provide a prompt for them to give their explicit permission to Find Friends via their Contact list,” a Yelp rep said. However, when VentureBeat tested this feature, we didn’t get a prompt.

When we pointed this out, the Yelp representative said that the prompt only appears the first time you launch the application. They then added,  ”To provide redundant disclosure, our latest app update, which is pending approval by Apple, provides a persistent permission request each time you seek to utilize the Find Friends feature beyond just the first time it is introduced.”

The representative also said, “No emails are sent to anyone in their address book without explicit authorization, we don’t expose this data to marketers, and we do not store your contacts. If the user denies permission, the feature is bypassed and their Contacts are not accessed.”

Are app makers taking unnecessary risks?

Without access to their servers, we can’t determine if some of these applications are storing contacts without disclosing the practice, as Path was doing. That would be the most egregious of offenses because it makes your contacts the property of an unapproved third-party. It’s also a security risk: Should the company’s database ever get hacked, that information would become the hackers’ property as well. Most companies claim not to do this.

“We don’t store address book information and never have,” a Foursquare representative told VentureBeat. “When a person searches for friends on Foursquare, we transmit the address book information over a secure connection and do not store it beyond that point.”

All the applications named, however, are choosing to take a shortcut that could put your data at risk. In an interview with VentureBeat, application maker Martin May, co-founder of food-focused startup Forkly and previously with location-based app Brightkite, explained that developers should avoid sending the private data at all costs. Sending encrypted data, he said, only protects the user’s data until it gets to the company’s server, where it is decrypted. At that point, May explained, we have to trust that each company is only using this sensitive data in honorable ways, but they could theoretically do with it as they please.

More than three years ago, May and fellow co-founder Brady Becker faced the “Find Friends” issue but found a better way to make matches without transmitting actual address book data.

“When we were discussing the implementation, the first iteration inevitably lead to the same strategy that Path is using: upload the user’s address book information to our servers so we can do the matching. But it didn’t feel right,” May wrote in a recent blog post. “It didn’t take very long before we realized that we didn’t actually need the actual phone numbers and email addresses of people to match them; we just needed their hashes.”

The hash system, explained in May’s post, allowed the company to compare hashes, rather than the full text of phone numbers and email addresses. That way, it could make matches without needing to “see” the actual names, numbers, or email address of members’ contacts. “This enabled us to implement the same ‘Find Friends’ functionality that so many apps nowadays use without compromising the privacy of the address book,” May wrote.

“It’s pretty easy to replicate,” May told Venturebeat of the system. “It’s not very complicated.”

iOS developer Matt Gemmell sides with May on the topic of hashing. “Why are you uploading the actual address book data, rather than (say) generating hashes of the user’s email addresses locally, then uploading just those hashes?,” Gemmell asked Path founder Dave Morin in a comment posted to the original blog post that exposed the company’s prior bad acts. “You’d be able to do friend-finding that way, and similarly if you uploaded hashes of all email addresses in the user’s address book, you’d be able to do your notifications of when a friend joins. At no point would your servers ever need to see the actual email addresses or phone numbers from our contacts.”

Gemmell followed up a few days later with his own post detailing the hashing method and explained that applications users should not have to sacrifice privacy for cool social features.

Apple provides no protection

Why aren’t more app makers employing the hash-matching approach or similar techniques? The answer, some say, is that Apple allows the practice of uploading full address books to continue. Apple does not require app makers to request permission before accessing a user’s address book, nor does the company regulate contact data transmission and storage.

User interface designer Dustin Curtis puts the blame squarely on Apple’s shoulders. “I fully believe this issue is a failure of Apple and a breach of trust by Apple, not by app developers,” Curtis wrote last week in a widely circulated blog post entitled “Stealing Your Address Book.”

“There is a huge section of the Settings app dedicated to giving people fine control over which apps have access to location information,” Curtis detailed. “That Apple provides no protections on the Address Book is, at best, perplexing.”

Instapaper creator Marco Arment concurs. “I felt like iOS had given me far too much access to Address Book without forcing a user prompt. It felt a bit dirty,” Arment wrote in a post detailing how Instapaper uses address book data. (Instapaper sends encrypted email addresses to its servers, with permission, but does not store them.) “Apple can, and should, assure users that no app can read their contact data without their knowledge and explicit permission.”

Apple, Arment argued, should change its API to require permission. Apple did not respond to a request for a comment.

For now though, the more pressing questions seem to be: How vulnerable is our private data and how concerned should we be?

May believes that most of the applications that access your address book have good intentions. Still, there have been instances of bad egg applications, solely designed to steal your contacts, making it into the App Store, only to be removed after someone cries foul.

Considering that the practice of uploading address book data is so widespread, the answers to those questions are unknown, and the uncertainty is enough to make even the most trusting of people paranoid.

Photo credit: miguel77

VentureBeat is holding its second annual Mobile Summit this April 2-3 in Sausalito, Calif. The invitation-only event will debate the five key business and technology challenges facing the mobile industry today, and participants — 180 mobile executives, investors, and policymakers — will develop concrete, actionable solutions that will shape the future of the mobile industry. You can find out more at our Mobile Summit site.

He made the announcement during a conference call with analysts after the company’s first quarterly financial release as a public company.

Driven by the strength of games like Words With Friends, the mobile game growth will help supplement Zynga’s player base of 240 million monthly active users on Facebook. Mobile is a big strategic opportunity for Zynga, as the market for games on mobile could be much bigger in the long run.

“The world is embracing play,” Pincus said in the call. “Social gaming and, more broadly, play is becoming the new TV.”

John Schappert, chief operating officer at San Francisco-based Zynga, said that Zynga’s core strengths are its tech infrastructure, its detailed analytics, and its huge user base.

He said that 80 percent of the company’s daily active users were on Zynga’s own proprietary zCloud, or its Zynga-owned data centers, at the end of the year, compared to just 20 percent a year ago. More traffic will be transferred to the zCloud this year, which means Zynga will not use Amazon.com’s Amazon Web Services data centers as much as it has in the past. The zCloud cuts costs and makes games run reliably and fast.

Zynga’s strategy going forward is to launch new games, enhance existing games, expand into mobile, improve monetization, and expand internationally.

Its Scramble With Friends game, released in January, became a top-five brand in the Apple App Store. Daily, monthly, and monthly unique user numbers all showed growth in the fourth quarter, Schappert said.

CastleVille exceeded expectations when it launched in the fourth quarter, but Mafia Wars 2 was a disappointment. Early results from Hidden Chronicles, launched last week, are positive.

“The team has gotten a lot better at driving new-player conversion with packages and offers,” Pincus said. Dave Wehner, chief financial officer, said that the number mobile of payers is growing as well.

Reach, engagement, and monetization are the key measures of Zynga’s performance. The company’s monthly unique user numbers grew 38 percent to 153 million. Many of those users play multiple games, so the monthly active users is 240 million. FarmVille, Mafia Wars, and Poker accounted for 78 percent of revenues. The number of paying users in 2011 was 12.2 million, or about 5 percent of all players. Player conversion in the fourth quarter was 1.9 percent, up from 1.7 percent in the third quarter.

Zynga’s games are available as free-to-play titles. Users play for free but pay real money for virtual goods. A small number of users actually pay, but they buy enough virtual goods to make the entire game profitable, and Zynga is increasingly monetizing the users who don’t pay via advertising. Most of Zynga’s revenue is from virtual goods purchases, but advertising revenue tripled in the quarter. Both mobile and Facebook ad revenue grew, Wehner said. International revenue grew faster in the quarter than domestic revenue.

The company has games in 17 languages now, compared to five a year ago. Head count was 2,846 up about 92 percent from a year ago and 2 percent from the prior quarter. Zynga is still investing heavily in research and development.

Capital expenses were down in the quarter, but the company still spent money as it built out its private cloud, zCloud. Zynga has a line of credit that allows it to borrow up to $1 billion. Despite the cheery nature of the talk on the call, Zynga’s stock price continued to fall in after-hours trading, with the stock at $13.42 a share, down 6.5 percent from the close. But Zynga’s stock price on Tuesday’s regular session rose 6.95 percent.

Schappert said Zynga is still working on Project Z, which is in closed beta testing. The site is Zynga’s own social network where it will host its own games. It connects with friends on Facebook. Schappert said he hoped that Project Z could launch soon. Zynga spent $110 million on research and development in the quarter, up 139 percent. Most of that went into game development.

“The results were in line, guidance was actually very good, but the comment about it being back-end loaded caused the stock to pull back a bit,” said Michael Pachter, analyst at Wedbush Securities. “I am a little disappointed that they didn’t guide to Q1, so there will probably be continued volatility for a while.”

Wehner said on the call that the back-end-loaded 2012 is a consequence of the pipeline of games and the usual pattern of bookings during the first half of the year. Wehner said that Words With Friends is an ad-driven game with very little virtual goods purchases associated with it.

Atul Bagga, an analyst at Lazard Capital Markets, said the quarter seemed “pretty strong” with revenue and earnings per share coming in above expectations. User numbers and other metrics were also up in the quarter, so he continues to believe Zynga has a large opportunity just by growing monetization, mobile users, international revenue, and expanding to new platforms.

Schappert said, “We have a bunch of games in the hopper right now, and we will release them when they are done and when they are great.”

The non-GAAP earnings per share were five cents, or $37.1 million, for the quarter. The largest publisher of social games on Facebook was expected to report a profit of 3 cents a share, according to analysts polled by Thomson Reuters.

The company reported fourth-quarter bookings of $306.5 million, up 26 percent from a year ago and 7 percent from the third quarter. Full-year bookings were $1.16 billion, up 38 percent from a year ago. Full-year revenue was $1.14 billion, up 91 percent.

Quarterly revenues were expected to be $302.4 million, up 54 percent from $195.8 million a year ago. On a GAAP basis, Zynga reported a loss of $435 million on revenues of $311.2 million for the fourth quarter. The reason for the big difference between the GAAP and non-GAAP numbers is a non-cash expense of $510 million in stock-based compensation for restricted stock that was issued to employees and previously unrecognized until triggered by the initial public offering in December.

For 2012, Zynga said it expects its bookings to be in the range of $1.35 billion to $1.45 billion, with slower sequential growth in the first half of the year and more bookings in the second half.

Adjusted earnings before income tax, depreciation and amortization (EBITDA) is expected to be $390 million to $440 million. Stock-based compensation expense is expected to be $400 million to $425 million. Capital expenditures are expected to be $140 million to $160 million.

Zynga said that its adjusted EBITDA for the fourth quarter was $67.8 million, down 34 percent from a year ago due to increased investment in new games.

Zynga has been launching one social or mobile game after another in the past few months; the company said it launched 12 games in 2011, including four on web-based platforms and eight on mobile. The company now has 246.3 million monthly active users on Facebook, compared with 230 million when the company went public on Dec. 15. Zynga’s newest game, Hidden Chronicles, is a big hit, with more than 29.6 million monthly active users. Thanks to that game’s success, Zynga once again has the top five social games on Facebook.

The company is trading under the symbol ZNGA. Its stock price opened at $10 a share and then fell immediately after the IPO. But after Facebook filed for an IPO earlier this month, Zynga’s stock climbed quickly and closed on Monday at $13.42 a share, well above the 12-month targets of several analysts who follow the company closely. Today, the stock closed before the report was issued at $14.35 a share, up 6.95 percent. It is down 3.7 percent in after-hours trading at $13.82 a share.

Arvind Bhatia, an analyst with Sterne Agee, wrote in a research report on Monday that Zynga’s stock is overvalued with its market capitalization at $9.38 billion. The company faces stiff competition on Facebook from Electronic Arts, Wooga, King.com, Disney-Playdom, and a host of others. Zynga has also moved into mobile games but faces an even bigger array of rivals there.

The bears on Zynga say that its cost of acquiring new users is rising and its competition is heating up. They say that Zynga’s growth will slow as Facebook hits a wall. But the bulls such as Michael Pachter of Wedbush Securities say that Zynga has a lot of opportunity to expand as it diversifies beyond Facebook, moves into mobile, and grows its advertising revenue, which is a mere 5 percent of the company’s revenues. Almost all of Zynga’s money comes from Facebook games, and most of its revenues are generated by virtual goods purchases.

“The results were in line, guidance was actually very good, but the comment about it being back-end loaded caused the stock to pull back a bit,” said Pachter, after the earnings came out. “I am a little disappointed that they didn’t guide to Q1, so there will probably be continued volatility for a while.”

Colin Sebastian, an analyst at R.W. Baird, said Zynga has had a good start as a public company, beating expectations for Q4 revenues and earnings.

“Zynga still has some challenges ahead as the growth in paying users continues to moderate,” he said.  “But the company’s relationship with Facebook, pipeline of new games, and increasing presence on smart platforms should drive another year of solid 20 percent or better growth. It also appears that Q1 is off to a good start – with Castleville and Hidden Chronicles both performing quite well.”

Atul Bagga, an analyst at Lazard Capital Markets, said the quarter seemed “pretty strong” with revenue and earnings per share coming in above expectations. User numbers and other metrics were also up in the quarter, so he continues to believe Zynga has a large opportunity just by growing monetization, mobile users, and international revenue and by expanding onto new platforms.

Zynga has been active. Last week, it announced that toymaker Hasbro would produce co-branded toys based on Zynga’s most popular games and game characters. As we chronicled in our in-depth history of the company, Zynga has come a long way since Pincus founded the company as Presidio Media on April 19, 2007. At the time, Pincus wanted to jump on the Facebook bandwagon as that company took its shot at beating rival network MySpace by inviting third parties to make applications to run on the Facebook platform. Now the company has a huge share of the fast-growing market on Facebook, accounting for 12 percent of Facebook’s revenue.

More recently, Zynga took a lot of flak for copying others’ games. That prompted Mark Pincus, chief executive of the company, to tell us in an interview that the company is pioneering a new wave of games not by copying others but by making games easier to play and more social.

In the third quarter ended Sept. 30, Zynga reported net income of $12.5 million, down 54 percent from $27 million a year ago.

For the fourth quarter, Zynga said that its daily active users increased from 48 million in the fourth quarter a year ago to 54 million in the fourth quarter of 2011, up 13 percent. Monthly active users were 240 million in the fourth quarter, up 23 percent from a year ago.

Fans of Zynga‘s Words With Friends social game on Facebook are making love connections. For Valentine’s Day, Zynga polled 100,000 of its 19.9 million players and found that one in 10 of them said that playing it has “directly led to a hookup.” That’s amusing since the Scrabble-like word game isn’t outwardly promoting dating between its players.

About 47 percent of players say they have a crush on someone they’re playing Friends with right now. About one in three say they would be more willing to hook up with someone if they were good at the game, while 68 percent said they would date someone who beat them in it.

About one of four have exchanged their Words With Friends username instead of a phone number when meeting someone. And 44 percent say they have flirted with someone via the in-game chat. And one of three players say they have shown mercy to someone they loved.

So the company is restricting the amount of stock employees can sell on the secondary markets, trying to stay under the SEC’s 500 shareholder limit that would force them to go public.

The rule restricting sales of stock at Twitter has been in place for more than year, reports CNN, and has led to the departure of senior level employees. Chief executive Dick Costolo responded to the exits with an email explaining the rational behind the rule. “We don’t want to be public until we have very predictable quarterly earnings growth. We’re not ready to be a public company for a couple years.”

In another email obtained by CNN, Twitter’s human resources department worried that the rule was costing the company key talent. “Folks continue to be worried about the company losing its best talent – most of who left over the stock policy,” wrote Twitter’s VP of Human Resources. “You’ll note that there are not necessarily solutions here — more so just anxiety that we lost so many ‘senior’ people.”

That anxiety would explain why Twitter wrote to Congress encouraging them to expand the limit on shareholders in a private company.

Companies like SecondMarket, which facilitates the trade in private shares, is also looking for a replacement to make up for the substantial revenue it will  lose when Facebook goes public. Twitter is a prime candidate for this, having recently sold $300 million in shares to a Saudi Prince. The trick is finding individual buyers who can afford to purchase such big chunks of stock.

This shows that transmedia properties, where an entertainment property is available on multiple media, are coming to life. History is launching the Facebook game to correspond with the season premiere of the television show today.

In the game, developed by San Francisco’s Fifth Column Games, players can try out various guns and engage in target-shooting mayhem. Top Shot players will be able to try out weapons from all eras of human history. In the Daily Contest, single players can use guns such as a Gatling gun, a cannon, or an anti-tank gun to test their skill at aiming. They can win rewards that unlock bonuses. Players can then rise through a challenge ladder, facing off against contestants from the TV show, earning virtual money, weapons and titles.

Players will be able to see their most explosive shots replayed in slow motion. They can share the video playback of the shots with friends. If the game is good, it has an audience waiting for it. History’s Facebook page for Top Shot has nearly 400,000 fans.

History is a property of A+E Networks, which has 20 million unique visitors per month across various properties including Lifetime, Bio, Lifetime Moms and Roiworld. Also from A+E games on Facebook: PawnStars, based on the pawn shop reality TV show.