Despite Lawsuits, Aereo Marches Through Atlanta; Why Their Model Works

The folks at  are not cowed by broadcast television interests who are afraid of their efforts to repeat publicly broadcast television signals on the Web. Even as they are taking on legal battles with CBS and other major TV broadcasters in their initial pilot markets, Aerero is expanding their Internet-based broadcast TV retransmission program to the city of Atlanta, Georgia. While there are some potential legal pitfalls in Aereo's arguments for this strategy, in general their opportunity stems from broadcast TV interests refusing to acknowledge that the Internet has changed fundamentally how the "ether" of public communications works.

When radio frequencies were first allocated for commercial radio and television,

the idea of a wide-area dissemination of a broadcast required radio antennas transmitting a powerful signal - sometimes as much as 50,000 watts of power on U.S. radio frequencies. The physics of such powerful signals is such that they will tend to interfere with other signals over a broad area. You can get a sense of what this is like when you experience interference on a car radio, mobile phone or Bluetooth-equipped accessory right under a well-equipped cell phone or radio tower. So, one big signal on one particular frequency actually meant that in a given area you could have only a relative handful of powerful signals available.

The Internet turns this model on its head. Any broadcast on the Web connects

with a low-power signal that can be repeated endlessly around the world via the Web at similarly low power at any given point. So, instead of one publisher/broadcaster determining the bandwidth required for services, the overall design of the Web ensures good service for receiving any Internet signal anywhere in the world. The government doesn't have to allocate a public resource - radio waves - to enable a specific broadcast source to go anywhere in the world. Internet service providers provide one signal to an end point at a desired frequency of updates, and that is that. Thus, the entire design of the Internet is antithetical to the notion that one signal is more powerful than another from the perspective of someone receiving it. The only performance requirements revolve around how many individual signals an Internet broadcaster wants to support, how many signals people want in a given area and how much they're willing and able to pay for them - none of which requires government licensing.

So the fundamental economics of the Internet are built around the notion of paying for signal, not paying for

content. Looking at the business model of , the presumption that some basic level of signal can't be free to citizens is also turned on its head - basic Internet service (about 1.5MB downloads) is available via Google Fiber for free, provided that someone can pay to install a piece of equipment no more expensive than a common television set, a cost that is subsidized by people who are willing and able to pay a nominal fee for about 660 times more signal.

What this means in sum is that using the most likely standards for Internet service that are likely to emerge in the U.S. over the next decade, any person should be able to receive one clear basic video "signal" at a given time - the equivalent of channel flipping - and for a few dollars anyone should be able to receive as many basic video signals as a typical cable service could produce - regardless of their source. So, today's Internet is an ideal public medium for basic television service.

Aereo knows this, and argues that all it is doing is providing better reception for a publicly available radio signal via another public medium - the Internet. That the economics of the organizations behind that signal are different fundamentally than the economics of PSY posting a video on the Internet that's been viewed by over a billion people is irrelevant ultimately to the public. 

Broadcast television frequency allocation was designed to provide the public with optimal reception of the most available signals, so that there could be competition for people's need for information and entertainment. The government's radio frequency scheme was not designed to restrict signals, but to propagate as many of them to the public as is feasible (with some wrinkles thrown in by powerful broadcast interests). The Internet's signal-neutral design carries on this concept, providing the greatest choice to a person and providing a quality of service based on how much service they want at a given time. It doesn't make sense to use the power given to broadcasters based on an old scheme meant to maxmize competition to reduce the reach of their signal on the Web - they should be willing to compete in public signal space no matter what technology makes their signal available as public broadcasters, it would seem. There's pretty sound logic behind Aereo's argument, overall.

So where's the potential catch for Aereo's strategy? Today's courtrooms are a mine field for intellectual property litigation, enabling any scenario, strong or weak, to have a chance of catching at least one court's ear, so even rational arguments may go astray. The intellectual property infringement angle is probably not their weakness - that seems to have been weakened already in court, as Aereo's claim to being IP-neutral seems to have held up. If there's any gap in their plans I'd have to say that it's in their forcing of the issue of television broadcast licensing economics. Broadcasters pay a lot for the right to purchase a given broadcast frequency in a given regional or local market, and they pay the U.S. government for that right based on exclusive rights to broadcast in that market. So in effect the government is implicitly negating the potential economic value of those licenses - taking the money and then changing the game, you might say.

But so it goes with technology - the government doesn't make a guarantee that they won't find more efficient use of public resources. Frequencies used for TV broadcasts are licensed, not owned, and the terms of the license can change. However, you can see where this is going - the TV broadcasters are likely to seek damages from the government for the depreciation of the value of their licenses based on their opening the Internet to TV signal retransmissions. It's hard to say how soon this may happen, or if in fact this strategy may in fact surface at all outside of conference rooms in corporate and government offices, but a bit of "corporate welfare" may be the payoff required to push broadcast television into the Internet era. Since that would mean doing so on the government's terms, it's possible that broadcasters would rather fight it out, but time is slipping away, and they may be wise to take some government cash now - before interest in their programming slips even further away from the awareness of today's Web-savvy television audiences.

Cracks in the Garden Walls: Barnes & Noble Opens Nook to Full Range of Android Apps

The Barnes & Noble +NOOK was an early entrant into the world of Android tablets, and it enjoyed early sales success as one of the first non-Apple devices to enable both ebooks and mobile apps in a convenient color touch-screen tablet. At one time the NOOK represented a significant share of all Android tablets on the market and powered a revolution at B&N's retail book stores as they began to take generous front-and-center display space with tech-aware staff on hand. The NOOK was also equipped with a relatively small range of hand-picked Android apps, most all of them available on a paid basis from an online NOOK storefront. All of this came in a unit that was aggressively priced at for least half of what an iPad would cost - it was the first wide-scale Android tablet to sell well near the magic $200 price point. Things looked pretty good for NOOK - for a short while.

But along came a host of other Android tablets, including Amazon's Kindle units, which offered a more complete line of Amazon's own electronic content from its online storefront and its own collection of Android apps. All of a sudden NOOKs became also-rans, statistical rounding errors in a market that now boasted hundreds of millions of Android tablets. It's really a shame, because the flaws of the NOOK strategy were evident from the beginning. Barnes & Noble's presumption is that people wanted a small number of apps that might complement the ebooks that they could buy from their own online storefront, that the typical ebook reader was more interested in flipping pages than playing "Cut the Rope" or watching YouTube videos. Like many publishers, Barnes & Noble viewed the Web as inferior to their ability to curate content and services.

Well, it appears that consumers have proven them wrong. Yes, people who want ebooks want a great ebook experience - but tablets are capable of so much more than that, acting as both "second screens" for Web videos from YouTube and high-definition libraries from Netflix and many other sources. And, of course, there's the Web - people want nothing less than the best Web experience possible, especially since the amount of programmable content now appearing on the Web is mushrooming as software developers take advantage of advanced programming tools like HTML 5, Dart and a host of other capabilities that make Web apps about as powerful as any app installed on a tablet, PC or phone. In short, nobody wants to waste a good machine on less than what it's capable of doing.

So finally Barnes & Noble has relented and come up with a better marketing strategy for NOOKs. As of now, NOOK HD and HD+ tablets will be able to access all of the native apps available on other Android tablets - including Google's own Play Store, Chrome browser for Android and YouTube videos. By adding the Play Store, NOOK owners will be able to access books, movies and music available for sale from Google as well as from other sources that have Android-installable apps available in the Google Play Store. All of this will be in parallel to the native NOOK storefront, which will now use the NOOK in essence as a street for commerce with other storefronts rather than a walled garden that it tries to control tightly.

Stephane Maes, vice president of product for Barnes & Noble, notes that "while we may lose some sales to Google, a rising tide carries all ships." In other words, if people like the NOOK as a tablet experience first and foremost, and NOOK content is particularly appealing on that storefront in a fair comparison, then the NOOK will help to market electronic content and services from Barnes & Noble more effectively - instead of getting lost in the shuffle as soon as a stock Android tablet is pulled out of a box. So although Barnes & Noble doesn't make a lot of money on these low-margin units, they do get better electronic marketing. 

You might say that their walled garden strategy has given way to a streetcorner bookstore strategy. Instead of assuming that a tablet is a device that a bookstore brand can own, Barnes & Noble recognized that their brand is but one experience that people want on a tablet, much as someone going to a downtown shopping area may have a visit to the local bookstore there in mind but also wants to visit many other independent merchants. With this in mind, instead of Barnes & Noble trying to be the Downtown Merchants Association and Zoning Board in addition to running its store, it's decided to sponsor free parking in the downtown area - its tablets - and hope that its good positioning along the "street" that's been prettied up by their design team will result in awareness and goodwill for their marketing efforts.

This is a good hybrid strategy that many other "walled garden" content services should think about carefully. Example: Cable television companies fight services like Google TV and Netflix head-on, trying to keep everyone in their walled gardens of subscription television services. But consumers are increasingly dissatisfied with the cable TV experience and branching out to choose services like Netflix from a wide variety of non-cable services. Instead of trying to pretend that walled gardens are sustainable for commodity TV content in a Web era, cable companies could instead sponsor units like Google TV and tweak their interfaces to promote their own subscription packages. Since Google's own cable company - Google Fiber - has headed in this direction anyway, why not cut to the chase and come up with a better promotional strategy for their services on the most competitive technology platforms available?

The bottom line is that publishers of all kinds can fight for distribution control over their content all they want, but at the end of the day consumers of content want the best content on the best technology platforms with the best choice available - period. No one vendor of intellectual property is ever going to own that entire equation. The smart ones, like Google, are willing to own just a part of the content sales picture whilst keeping customers happy with the best technology tools to enjoy it in an openly competitive environment. They are constantly inviting content competitors into their platforms, so that they can make their own teams work harder to make the best experiences possible. Google partners, such as mobile phone carriers and TV makers, are welcome to customize their Android software to create NOOK-like "sponsored downtowns" - or not. This flexibility forces both Google and the carriers to make sure that they're offering the best experiences for their customers.

So if you're using a walled garden content strategy right now on Web-connected platforms, consider whether you're trying to build walls around technology that's growing far too quickly for you to control it. If so, then consider how you can learn from Barnes & Noble and use technology sponsorship to become better promoters of your market position in an open market for content-oriented services. Your customers will appreciate your willingness to go with the most powerful technologies out there - and, experience seems to show, will reward your brand with better sales as long as you work hard to stick with the best technology services out there in an open market. Worth a shot.

Online Book Discovery: Broken or Waiting for The Next Right Thing?

I found +paidContent's recent article highlighting research on problems with the disconnect between book discovery and book purchasing to be interesting. In some ways, the problem that booksellers have is not much different than those faced by any other "bricks" oriented merchants. People browse for books in one place, and then purchase them in another, in large part shifting purchases to online channels where they can get more competitive choices for pricing and fulfillment.

However, the discovery gap between online an in-store book outlets is not necessarily what you may think. The research from The Codex Group notes that for books purchased online, only seven percent of those units were discovered online and discovered in-store only twenty percent of the time. Moreover, in-store sales account for 39 percent of units sold.

In other words, though online sales are accounting now for the lion's share of book sales, almost twice as many books are purchased in bookstores than are discovered there. In other words, lots of people are still making the journey to a local bookstore with a specific title in mind. At the same time, online portals, including those dedicated to book discovery such as Goodreads, aren't a major factor as of yet in helping people to find books worth reading.

Book industry experts in the article suggest that booksellers should up their commitment to local bookstore outlets as one logical conclusion from this research, supporting concepts such as daily deals that have been made popular via online book selling sites. But I think that this is an incomplete view of what needs to be done to improve the connection between book discovery and book sales. One key hint lies in the second-most powerful conversion channel between content discovery and content sales: author Web sites. Although visits to author Web sites or blogs account for only about 4 percent of online content discovery activities in the study, they account for about 3.1 percent of conversions from online discovery to actual sales - a conversion rate of about 76 percent.

That's by far the highest conversion rate of all surveyed sources, and it highlights the notion that having a sense of both authors and their fans is a key factor in choosing books for purchase. What this means to me is that the huge gap in book discovery is in developing the ability of people to share their enthusiasm about books in a way that makes it easy for people who they know to share their enthusiasm. Generally these are real-world relationships that create these connections, both in the retail space - trusted booksellers - and personal acquaintances. Tightening the ability of someone to move from personal influence to transactions is the real key to improving book sales.

It's notable that while Amazon dominates online book sales and is the "go-to" starting point for 66 percent of online book browsing activity, it's only reaping about 6.6 percent of sales from those visits - a ten percent conversion rate. That's the second-best rate of the surveyed sources but a distant second in the actual rate, even if the volume of those visits build their revenues. This means that there are enormous gaps in Amazon's ability to act as a trusted source of book recommendations and discovery tools.

Social media and social sharing features in ebook apps can help this process, but by and large these tools are very under-developed at this point. +Google+, Google's rapidly growing social media portal, enables users to embed links to their online Google Play bookstore in posts on that servie, along with a link to preview content from a book. This is a good example of the sorts of things that could be done to enable individual enthusiasm for a book to translate much more directly to browsing and purchasing activity. But, it's only a start - and since it's tied to one social media platform and one specific book-selling platform, it's not going to solve the greater picture of getting personal recommendations translated into transactions more universally.

A few things might help book publishers to maximize the value of trusted recommendations:

• Standards for social sharing. While there are a lot of good experiments online for sharing book content, overall it's a rabbit warren of little ideas that just aren't scaling. If personal recommendations and sharing are the primary key to book discovery, why are there not industry-wide standards to facilitate them across all ebook discovery and sales platforms? These standards should include enabling excerpts to be read, ability to discover prices and availability and to link directly to any purchase execution channel.
• Standards for on-demand local printing. Local bookstores are likely to remain vital if they can do a better job of matching their ability to meet demand at least as well as online stores. Print-on-demand would seem to be one of the best tools for this capability, making it far more likely that a visitor to a store is actually going to purchase things. But print on demand need not be just about picking up pre-purchased items. It's also a major merchandizing opportunity, giving the merchant data that could help them to guide the visitor into other in-store items and even to custom-tailor in-store displays, both physical and virtual, to the expected visitors coming to pick up pre-sold merchandize. If an existing customer is your best source of new business, then print-on-demand has enormous potential to build upon that concept in local retailing for books.
• Focusing on book conversations as key marketing vehicles. If markets are conversations - the old Cluetrain Manifesto axiom that gets only more relevant as time goes on - then booksellers need more than just a few talk shows to drive conversations for their authors. There has been a marked improvement in these sorts of facilities at bookseller sites, but the general environment where people actually engage people whose interests they trust - social media - is still highly under-engaged for these sorts of interchanges. Targeting bloggers, key influencers in social media communities and other trusted peers should be focused on much more heavily by agents and book marketers as sales starters for both new and existing titles, much as other marketers use social media monitoring tools to understand where they need to engage potential audiences.

None of these are likely to be sure-fire solutions, but they do show that although the book industry has been hard at work in trying to come to terms with online book discovery, they're really just at the foothills of this process. Many of the processes required to succeed in this environment may seem to be counterintuitive, especially when it comes to brand-building, but they are necessary for any successful book publishers. Without mastery of these tools, we can expect bookselling to drift away further from established marketing channels. That may not be a bad thing necessarily, but it will represent a major missed opportunity for them to do the next right thing.

Facebook Graph Search: Necessary, But is it Sufficent?

Facebook seems to have done a good job wooing the press for the introduction of its new Graph Search feature, with dozens of articles strewn across the Web touting Facebook's new search feature as an awesome breakthrough in social media discovery. But let's be clear about what this feature really is, what it really offers and what it doesn't offer. Put these three things together, and I think that what you get is the story of a company that has lagged woefully in content discovery tools that is just beginning to catch up.

Graph Search is not really a revolutionary tool at its heart: it's a combination of relational database lookup and a natural language processor on its front end that organizes the database lookups. The fields that are searched are the relatively sparse personal information that a person or entity enters into their Facebook profile, plus the links and signals (such as "likes") that people enter into Facebook. This information is used to retrieve profile cards for the people and entities that match the query.

If you're saying to yourself, "Um, I think that we've seen these things before," well, you're right. It's been over a decade since search engines like Ask.com pioneered natural language query on the Web, and social media sites such as LinkedIn have had far more extensive social network queries based on their more detailed profiles since its inception for about as long as that. So please, let's not get overwhelmed by information science that's old hat, for the most part. Moreover, the queries that you're targeting are based on people who are a part of your social network. So claiming that this exposes billions of people to a search is only valid if you have billions of people in your social network or who are interested in a particular topic. For the most part it's more akin to a sophisticated contacts lookup feature.

Moreover, it intentionally doesn't include content from the Web. As The New York Times put it in their review: "Its search tool is based on the premise that the data within Facebook is enough and that its users will have little reason to venture outside its blue walled garden. What they cannot find inside the garden, its search partner, Bing, a Microsoft product, will help them find on the Web." In other words, this is meant quite intentionally to infer that information about your social graph can only find relevance within the walls of Facebook's little world.

However, at least for the moment Facebook's feature does give it somewhat of a leg up in its growing competition with Google's growing Google+ community. Google's main search engine tops the Web, of course, and Google+ content from social contacts in Google+ are integrated into Google's search results by default. And this, too, has a natural language interface, one that isn't hobbled by trying to fake a formatted query via natural language. It's also worth noting that Google+ has similar lookups of one's social network with simpler queries. If I type in "music" into to the Google+ search box, for example, the autocomplete search feature automatically brings up a listing of post, people and communities in my network that relate to this topic. Add on a little natural language fluff and it could look just like Facebook's tool.

Upgrading Google+ search for even more powerful results wouldn't be too hard for Google to do, given that Google+ profiles have more in-service data fields than Facebook and it also has the benefit of pointing to more content on the open Web than Facebook. Unlike Facebook, Google seems to use Google+ more as a Web content relevance indicator than as a walled garden, so while its search is powerful, Google is not so intent on keeping people inside Google+ as a walled garden - they want you to find good content on the Web, because, after all, that's where their ads are and where their indexing strengths lie.

So there's no doubt that Facebook's Graph Search is a necessary upgrade, and a good one. But I have strong doubts as to whether it's going to be sufficient in and of itself to make Facebook that much more a valuable site. The data that it can leverage is powerful, but its inability to integrate effectively with people's Web presences and interests would seem to be a strong minus, one that's not likely to be addressed any time soon. Facebook is indeed trying to be a destination that obviates the need for the Web as much as possible, and in this it is just another "big media" play and not very social. Real social media acknowledges that we post things all over the place, and that this is OK. So kudos to Facebook for finally putting an indexed search on the Web site. Please let us know when there's a real breakthrough, though.

Elsevier Acquires Knovel for Smart SciTech Content Aggregation

I've been privileged to know folks at both Knovel and Elsevier for many years, so it's with great pleasure that I read today about Elsevier's acquisition of Knovel. Knovel has been hard at work for the past decade acquiring the rights to a huge corpus of scientific journals, reference data sources and other key publications that it carves up into useful, searchable chunks of knowledge. Need to search for literature on a chemical compound based on its molecular structure? Knovel's got it. Need to explore graphs of viscosity data interactively to think about the properties of a substance? Covered.

Knovel has listened carefully to scientists and other users of scientific reference materials in applied sciences, and continued to refine both the collection and the interface for using its content year after year. Now it has amassed such a wide range of information that's so searchable and usable that it's hard to ignore - and hard to replicate if you want to get into the game of smart content search and aggregation. While Elsevier has been hard at work trying to improve its own content aggregation services, ultimately its efforts have been stymied at the level of how the actual information sources are structured. You can find clever ways to search for journal articles, but at the end of the day, if the journal that you retrieve is still just a paper-formatted heap of words and images, then you haven't necessarily accelerated your subscriber's productivity all that much.

Knovel technologies help to close that productivity gap significantly, enabling people working in applied sciences to consider alternatives more rapidly and to develop innovations more rapidly, instead of having to muck around with journals, spreadsheets and the like. Just point, ciick, calculate automatically and be done with it. Knovel offers one of the very few platforms that really does make significant changes to the formatting and usability of scientific content to the point that it can be more usable and productive content. That makes its extensive library of sources one of the most powerful tools available for scientific content aggregation. For many publishers, Knovel looked like a niche productivity play for many years. Now it's the leading paradigm for the evolving SciTech editorial model. Kudos to Elsevier for jumping on the opportunity - it's a platform that will be a great value leader for years to come.

Like it or Not, News Paywalls are Here to Stay - for Some.

With news that +The New York Times is now turning more digital subscription dollars than ad dollars, the media world is crowing about the concept of online paywalls for digital content. Clearly paywalls have helped the NYT to turn away losses from plummeting print subscriptions and to modulate the limits of online ad revenues diluted by the ocean of online outlets available for advertisers. When you have the right brand, the right community and the right information and experiences, paywall content pays, no question.

The main question, though, is how many news organizations fit that profile, and will they be willing to be as sophisticated in their implementation of outlets for paywalled content as The New York Times. Gannett's +USA TODAY, for example, has no regional footprint or other niche demographics behind which cohesive, high-value cohorts might huddle in a paywalled service. And few news outlets have the depth of staffs focused on hard-to-replicate relationships with newsmakers that make The New York Times' brand resonate with both its readers and the people about whom they read. With the combination of those three legs - demographics, high brand value and exclusive access to newsmakers - there's not doubt that many news organizations will have a core of strengths from which to build high-value online subscription news communities.

However, a core is just the start for defining success in subscription paywall news services. The New York Times has also lead in creating ways for consuming its news that can enable them to see the NYT as a style leader, also. When someone flicks open a copy of a premium newspaper such as the NYT, +The Wall Street Journal or the Financial Times in public, it's a lifestyle statement as much as their business suits or other  demographic-appropriate attire might be. It fits the image. Your average Web news site has no image-making substance - it just puts up words and multimedia on pretty standard Web pages. The sidelines of multimedia shows that are available may help them to differentiate their content for click-sensitive viewing of ad-supported content, but people need a lot more bling than that to make them feel not-uncool as people peek at what they're looking at on their tablets and touch-screen laptops.

Hence we have to credit the NYT for iterating rapidly on new versions of its mobile apps, providing a much slicker look, better touch-screen design and more usable multimedia via these apps. It's trial of Compendium, a stab at Pinterest-like sharing of NYT-only content, is slick-looking, although rather silly in its focus on only NYT content. Yes, this "reinforces the brand," but it's also rather an insult to readers who actually do have the ability to be influenced by more than just their own content. But even at that, the fact that a major newspaper is taking a stab at enabling users to become news aggregators in the most modern style is probably the first respectable attempt to get decent social media integration in a major newspaper since the +Houston Chronicle started hosting community bloggers years ago.

So with tech pieces that help their audiences to feel in style with other news consumers, the core of subscription paywalls targeted at the right demographics with the right exclusive content can begin to come alive. But even with this, news media companies are still pretty much just sewing together the pieces of old news flesh and bones into new forms like Dr. Frankenstein in his lab. What's still missing in the news business is an acceptance that their most valuable asset is not the news itself but the people who consume and make their news. Yes, they have always understood it from an advertising standpoint, but to news organizations content has always been about editorial operations. The spark that brings the new news monster to life is us.

Its the data and metadata that publishers are able to collect from their communities that's the real gold, and this is value behind news subscription paywalls that's largely untapped to date. Companies like Google will continue to have overall advantages in gathering this "signal" from audiences, but news media companies need not be out of this mix altogether. Editorial needs to be an agnostic information broker more at the intersection of gathering and interpreting signal from its subscribers' own online publishing, its valuable newsmaking contacts and the ocean of Web content from both people and sensor technologies that report information into the Web moment by moment every day. When subscription communities can get the most value from understanding when signal is news, they win - and they'll pay.

So yes, paywalls are with us to stay, but that's not to say that the work is done. We're still at the very early phases of shifting how news is made, what's newsworthy, and how news brands are formed in an era in which mobile content platforms are changing how people relate to news. There are many ingredients that will make it work well. Don't just look at the numbers that the NYT can generate and say, "Well, the time has come for paywalls." Look carefully at all of the ingredients required to maximize your success - and be ready to invest in them.

Bloomberg/LinkedIn Deal: A Hit or The AOL/TimeWarner of B2B?

Normally I'd advise consumer tech journalists to take a seat rather than to go off analyzing B2B information services, but then  comes up with a pretty good take on Bloomberg's prospective acquisition of LinkedIn. While Bloomberg, LP grew to a multi-billion dollar B2B information empire based on financial and government information markets, LinkedIn has managed to become a going concern with $12 billion in market capitalization, and CNET points out that based on a Merrill Lynch share purchase of Bloomberg in 2008 its market cap is around $22.5 billion. That makes Bloomberg a bigger fish, but not that much bigger.

However, this math can be misleading. Merrill had had an interest in Bloomberg from its founding, and the stock event in 2008 was more a matter of converting that interest into a more fungible form. That doesn't make the market cap estimate wrong, necessarily, but you have to take it with a grain of salt, especially since it's an event from four years ago. The key factor here is cash. As a private and closely held company, Bloomberg LP's cash position is pretty opaque. Based on the history of similar companies like Reuters, they could have a pretty hefty cash mountain that its investors are now trying to figure out how to deploy. 

With that in mind, with its near lock on business information contacts and networking, LinkedIn is the Web's cash cow for B2B networking. B2B networking has formed the core of Bloomberg's value proposition since its inception, albeit with very different technologies and focus. What Bloomberg understands explicitly is that if you own the contact network and the conversation, your information services are built on the strongest anchor possible. LinkedIn is that anchor for the business world at large. So, as it has started to do in government markets,  Bloomberg can use LinkedIn networking as the core of communicating business opportunities with real-time communications and sophisticated analytics on a whole new level.

Yes, there are sure to be cultural differences, but fewer than you may think. LinkedIn is first and foremost a data company - its profiles were the first to provide really detailed, normalized tagging and categorization, the heart of its platform's real power. Its social media elements are powerful, but it's the data structure of LinkedIn that provides its real market differentiation.And LinkedIn figured out that you need a lot of content, especially real-time social content, to make those profiles attractive destinations and to capture information to provide more meaningful matching of services and interests. That's something that would be a huge plus with Bloomberg premium services wrapped around this capability.

But most importantly, if you have a cash mountain to invest in B2B media, there's not really any other company worth purchasing of that scale that would give Bloomberg a brighter future. Most major B2B information companies are slow growth/no growth companies that are challenged to reinvent themselves based on aging business models. Why not invest in information that ties every business sector together and can pave the way for more advanced business information services for specific verticals? Seems reasonable - especially if you can also wrap editorial content form sources like FT around it.

It's hard to say if such a deal will actually come to fruition, and the powerful Bloomberg culture built up around very strong personalities may indeed wind up having a hard time reconciling itself with online business culture and its own strong personalities. You may wind up with a new AOL/Time Warner fiasco, certainly, if that comes to be. But if "synergy" is a misused word in many major mergers, this may be an instance where it makes eminent sense. Both of these companies have mature and vibrant business models, and clear points of intersection where they can leverage off of one another well. If the "people issues" can be managed well, I think that this combo has a far greater chance of long-term success than anything that Dow Jones or Thomson Reuters is cooking up. Let's see what happens.