One of my favorite sayings is “Those who can’t innovate, litigate.” Many patent defends claim the patent system protects small inventors, but it more often seems as a way for large businesses to stifle competition. Look at recent lawsuit announcements and it’s a who’s who of no longer relevant companies who ceded their market leads by failing to continue innovating with market.

Apple has seemed like a company more focused on innovation. Even as Jobs proudly announced more than 200 patents related to the iPhone, Apple appeared to want to seriously compete in the mobile space by offering a more compelling product.  Those 200 patents did little to stop the many patent lawsuits lodged by marketplace losers against Apple including most recently Nokia (think, what was the last good Nokia phone).

Now Apple, rather than continuing to fund and innovate on the iPhone, has sued HTC, the maker of many Google Android phones, over several patents.  HTC and Google Android have been stealing much of Apple’s thunder in the mobile space and are both growing very rapidly (thanks, in part, to Google’s free and open-sourced operating system allowing HTC and other phone manufacturers to innovate and create compelling phones). Apple apparently thinks its worth spending millions of dollars on lawyers to sue HTC rather than spend that time and money making an even better iPhone.

Apple suing HTC, and by association Google, is a thinly veiled way of saying they’re scared of competition. Yes, Apple has a legal right to sue over patent infringement (even though most patent lawsuits are not over willful infringement but because two companies came up with the same idea but one patented it first), but what is gained from these lawsuits, aside from making lawyers richer. Rather than out-innovate and compete in the marketplace, as is object of capitalism, Apple would rather sue to keep quality products out of consumers hands. Enjoy that AT&T 3G. We might get stuck with it.

On the proverbial eve of the New York Times’ return to paywalldom (has everyone forgotten the Times already dropped its pay wall once because it didn’t work), a research firm posted a study showing 44 percent of Google News visitors scan headlines and don’t click through.

They think this is high. I’m shocked it’s so low.

Analyst Ken Doctor says: “Though Google is driving some traffic to newspapers, it’s also taking a significant share away. A full 44 percent of visitors to Google News scan headlines without accessing newspapers’ individual sites.”

What is Google taking away? If I read all the newspaper and magazine headlines at the newsstand, am I taking something away? No. It’s the newspaper’s job to convince me to “buy” or, in this case, click. Google is providing a huge amount of free advertising for these newspapers and converting 56 percent of that traffic. Any marketer will tell you a 56 percent conversion rate is astronomically high. It is up to those newspapers to turn that traffic into loyal readers.

For Rupert Murdoch and others looking to block Google because it’s taking so much for itself, they are just going to leave that 56 percent for the thousands of other news sources willing share in free advertising. And if they really learn from this study, they’ll figure out how to write better headlines and better stories to convert the other 44 percent.

Facebook CEO Mark Zuckerberg called up Tweet-storm over his comments that the Age of Privacy is over.  Zuckerberg tells TechCrunch:

When I got started in my dorm room at Harvard, the question a lot of people asked was ‘why would I want to put any information on the Internet at all? Why would I want to have a website?’

And then in the last 5 or 6 years, blogging has taken off in a huge way and all these different services that have people sharing all this information. People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that has evolved over time.

But the internet has made privacy more complicated rather than vanquished it completely. The issue for both Zuckerberg’s Facebook and online users is that our expectations of privacy and the reality are far separated. The truth is we are just as private as people. But the internet changes the scale.

Expectations for privacy often revolve around the good intentions of the companies we give information to. Facebook and Google will keep our data secret, for our use only.  One study found that most people, rather than reading a website’s privacy policy, assume that if a website has one, it means they will keep the data protected.

Of course, this is far from the trust. Even the best intentioned websites have security breaches or mistakes that leave users open to privacy violations.  Several of my family members are still petrified to use their credit card online, not concerned by the dozens of credit card and social security number leaks done because some employee lost a laptop.

On Facebook, privacy concerns focus more on our personal data, like interests, pictures, and relationship status. Talk about a widespread case of narcissism. No one cares about every little college student’s love of the Big Lebowski or how they’ll take “whatever they can get”. My rule, if I don’t want people to know something, I don’t put it online because once its online, it’s up for grabs. Even if I deleted one of my old blog posts, there would still be ways to find them.

Shockingly, several studies show people will give out personal information, including passwords and income levels, if you simply ask or if you’re nice, offer them a chocolate bar.

And the data many expect to be private, or to use the buzzword, anonymized, but would be surprised to know how easy it can be for an intrepid researcher, like Latanya Sweeny, a computer science professor at Carnegie Mellon University who showed that just gender, zip code, and birth date are unique for about 87 percent of the U.S. population.

So expectations – people and companies want and keep data private (and apparently lots of people want your information too) but the reality is tons of data leaks out all the time, most people are unaffected because there’s so much data and yours isn’t that important, and it takes just a tiny bit to figure out who you are (even the stuff you feel safe sharing).

Zuckerberg is right that our concept of privacy is changing. When I first went on the internet, my mother forbade me from telling anyone my name or where I live, but now I post that all over. I regularly meet people in person that I first talked to online. I often recommend people buy the domain of their full name and build some kind of web presence for in case they get Googled (better the first link is something you know and control).

This is not because we keep less private. Just more people know. Like everyone who wants to. You had no problem telling a room full of strangers at a party what you do, where you live, and how you like your steak. Now, it’s incredibly easy to tell a world wide web full of strangers.

Privacy still matters. And more than an effort, it should at least be a challenge for bad guys to get good data. But now we’re not just teaching our kids (and adults) to not talk to strangers. It’s about common sense online. Knowing that anything you share can be shared again. And again and again. And it might never ever go away.

Rupert Murdoch, after a short time of seemed like he understood the internet was a new and exciting tool, has since changed his medication and now sees it as the evil of all evils. He has been pushing, vocally, not through action, reinstating paywalls on his various media properties. The Wall Street Journal is one of the last major newspapers to have a paywall around most of its content.

Now Murdoch is claiming he will block Google from indexing the WSJ and his other media properties. Murdoch told Sky News Australia “If they’re just search people… They don’t suddenly become loyal readers.” He explained that traffic from search engines involve no loyalty – just view a few headlines and leave.

Removing a site from Google takes just a few lines of code in a robot.txt file, something Google and other search engines make no attempt to hide. So why is Murdoch waiting?

Maybe because even without loyalty, Murdoch knows traffic will drop significantly without search engines bringing tons of free traffic. Even if 99 percent of those people never return, there are 1 percent that stay and might return. It’s up to Murdoch and his websites to give these users a reason to stay and then find ways to monetize that traffic. Murdoch has previously said no news websites or blogs are making serious money, ignoring the massive enterprises behind Gawker, Huffington Post, PerezHilton, TechCrunch and hundreds of others who have embraced the internet to find more cost-effective ways to engage audiences and produce compelling content.

Techdirt points out that for all Murdoch’s grandstanding, his own websites have aggregators that link to other people’s content the same way he claims others are stealing his content. When others aggregate content it’s stealing. When Murdoch does it, its convenient? Maybe this will stop his crusade to overturn fair use in the courts since he’d be culpable too.

I don’t know what will happen tomorrow, but I know it will be different than yesterday. Obvious, right? Even more obvious, the way we live today is different than 5, 10, and 25 years ago. This is how life works. So why do so many smart people want everything to stay the same.

Richard Corliss for Time Magazine, which alone is having trouble understanding the future of the news business, has several criticisms for Netflix and why it stinks, yet makes certain to contradict himself with his own article. Corliss, a successful movie critic for more than 30 years, has gone blind as to the future and why Netflix is not something to fight, but to embrace. Corliss laments the traditions internet features – no human interaction or leaving the house. Netflix is causing obesity.  It’s also why his local video store closes. Corliss also criticizes Netflix’s wait times (sometimes a whole day) and the dreaded “mail delays and the botched orders.”

Of course, all this is invalidated by Corliss’ own admission that Netflix “has the No. 1 customer-satisfaction rating among online retailers.”  Meaning for all these problems, people really like Netflix and the service it provides (which includes instantly streamed movies to your computer and TV, something he failed to mention).

Corliss, of course, is just about 10 years too late to criticizing Netflix. Does anyone really believe they’ll be renting discs from a store in the next 10 years?

Most of the criticisms against Netflix, Google, YouTube, blogs, and other “new” businesses trends toward the better than/worse now argument from people who were better than/worse now, such as news papers, recording companies, and brick and mortar retailers (and video rentals). But consumers are happy. They have more choice, more convenience, and lower prices leaving them with more time and money to do other things (that’s how an economy grows).

Microsoft’s newest rebranding of its search engine (is this the 3rd?) is coupled with an $80 million marketing campaign and an assortment of TV ads.  These TV ads follow the conventional marketing tactic: define a problem and present a solution.  Problem: Search doesn’t work, offering the wrong results for your query. Solution: Bing, the first decision engine.

But that problem doesn’t exist.

Microsoft’s incredibly annoying ads (and I liked the weird Seinfeld ads) are better suited for the late 1990s when search really didn’t know what words went together or how to best serve results. Now, search works pretty well.

If I search for breakfast or lcd vs. plasma, I get results for breakfast food and which kind of TV to buy (even without putting TV in the search query). This is the same on Google, Yahoo, and yes, Bing, and has been true for about a decade.  So Microsoft’s trying to solve a problem that doesn’t exist.

Mostly, Microsoft’s massive marketing campaign did more to impress the press and investors, who did their part to claim Bing was winning or posing a real threat to Google, which has been shown not to be the case. At best Bing is just a more publicized version of Windows Live. Let’s remember, Google became Google with no marketing at all (and only started advertising a little last year). Having good products helps.

Shockingly, I read newspaper…content. Like most Wednesdays and Sundays, I enjoy Maureen Dowd’s dry wit and political commentary. She’s brilliant and kept me sane during much of the election (except for when she wrote her column in French and Latin). But today, Dowd’s column took aim against a true evil, Google, for destroying newspapers.

Dowd, in skillful style, made no question about Google’s culpability. She just compared Google to Big Brother and said while Google’s C.E.O. Eric Schmidt isn’t Dick Cheney, he isn’t far off.  He hates your privacy, but he hates newspapers more.

Dowd is a columnist, and I love her for her opinions.  But this column ignored the basic economics and facts of newspapers’ relationship with Google.  She makes it sound like Google it’s just taking content, posting it, and then laughing as newspapers suffer. She writes “Google is in a battle royal over whether it has the right to profit so profligately from newspaper content at a time when journalism is in such jeopardy…[Schmidt] declines to pony up money, noting that newspapers could opt out of giving their content to Google free and adding, ‘We actually like making our own money for obviously good capitalist reasons.’”

But Google does not take newspaper content or post it (with the exception of Associated Press content which it explicitly pays for), Google just links to the content.  Google, in fact, only added ads to its News search the beginning of this year. Before that, Google made no money directly from news search. But either way, Google just links to news articles.  It helps people find the news articles they want.  Google sends thousands if not millions of people to newspapers through these links.

But Dowd, instead of realizing how much Google increases the value of her content, tries to paint them as just a step behind Dick Cheney in taking over the world.

Newspapers as a whole need to stop looking for people to blame (Techdirt has the excellent point that Craigslist deserves just as much if not more blame for “stealing” all those classified ads it doesn’t charge for).  Dowd is just another newspaper veteran looking to protect newspapers without asking if there’s a better way.  Just because you’ve always done it one way, doesn’t mean business can’t evolve.  Look at how newspapers used to do business – they lost money. Weird.

After years of watching blogs and online news sites grow and prosper, you’d hope the news industry would see the potential and not the end.  Unfortunately, all the posturing of the past few years is exploding as the Associated Press and some news leaders are basically declaring war on the internet.

I haven’t been a fan of the Associated Press, who for a news organization, has surprising distain for fair use (except when it suits AP). This week, the non-profit organization announced it will police the web for anyone pirating news content. This is not limited to copying full articles, but anyone partial copies or even sentences and headlines, targeting aggregators like Google News, Digg, and many others.  As part of a coordinated assault, News Corp. owner Rupert Murdoch put it succinctly: “Should we be allowing Google to steal all our copyrights? Thanks, but no thanks.”

But Google and aggregators are not stealing your copyrights. It’s called free publicity. Just because someone else benefits by publicizing you isn’t bad or stealing.  It’s the way the internet works.

The other ironic part of AP’s strategy is to make sure search engines post “the original source or the most authoritative source” first in it’s results. Of course, AP wants to do this by pressuring Google rather than building good SEO websites and encouraging linking to their articles (since Google ranks authority, partly, by how many incoming links you have). So aggregators and linking is bad, but special treatment from search engines, like a special section prioritizing news outlets is okay. And sounds a lot like Google News. Techmeme editor-in-chief Robert Thomson points out the Wall Street Journal and New York Times make use of aggregators themselves, linking to other outlet’s content.  The New York Times was even sued over its linking practices.

Google Chairman and CEO Eric Schmidt spoke to newspaper publishers, urging them to think about the consumers, saying “if you piss off enough of them you will not have any more.” His point is newspapers need to address the needs of consumers, not fight against the way the market is evolving. Aggregators and link sharing is how the internet works – and both make content easier to find and more valuable to the person finding it.  Newspapers spent years hiding behind pay walls and found that didn’t work (though it seems it won’t stop them from trying again).

Also part of the news industry’s problem is an attachment to the medium paper.  As Michael Masnick writes: “It’s like saying ‘how to reinvent the horse-drawn carriage’ rather than ‘how do we improve transportation’”.  Charlotte Hall, an editor from the Orlando Sentinel, says:

It stops the clock once a day and takes an assessment, offering the kind of in-depth and analytical work that the 24/7 breaking news world on the Web cannot provide. Print is good at the things the Web is not good at–watchdog, explanatory, enterprise, narrative storytelling.

But Masnick notes that nothing Hall says print is good at can’t be done on the web. Newspapers are trying to convince people that if newspapers all go out of business, there will no news. All those television networks seem to be absent in this dialogue. But this is not the case.  Newspapers can be replaced by news websites.  Websites do some things better; paper does some things better, but neither matters when consumers are more and more choosing to get their news on websites.  The customer is always right, unless, it seems, it destroys your century old business model.

I don’t think paper will completely disappear. Some people still like the tangible product, so there is a market to sell to.  But overall the market is demanding evolution, and if the current players do not want to fill the market demand, someone else will.

Arriving late to the internet revolution, Microsoft seems more interested in blocking the competition rather than building a long term business.  The software giant has already spent months paying people to use its search engine rather than convince them its a better product. But more payoffs are on the way.

Microsoft is paying or offering free software to developing countries to use its products rather than free alternatives like Linux (though Microsoft denies specific examples).  Microsoft is discovering the high price it charges for Windows and Office are pushing poor countries toward free and cheap alternatives. Instead of realizing the long term implications, Microsoft is hoping to lock in these customers with big payoffs now hoping they’ll pay in the future (even though they still won’t be able to afford Microsoft’s prices).  This is not a new business model, but it’s a nice way to blow millions of dollars (don’t need that research and development money anyway).

Further, to stave off Google’s free cell phone operating system, Android, Microsoft is looking to payoff cellular providers to use its expensive alternative. Steven Ballmer showed (once again) how disconnected he is from the realities of the software world when he said about Google’s Android “I don’t really understand their strategy. Maybe somebody else does.” I do: Google’s investing in a long term strategy, increasing the value of Google search and other Google products. It’s a way to make more money (even if that money is not from Android licenses).

The truth is Microsoft is still relevant and obviously has a place in the market.  The Xbox brand, with all its foibles, is a refreshing example of Microsoft’s innovation and willingness to take risks.  Even Xbox has relied on massive payoffs to game developers to push its way into the market – but that’s not a bad thing when it’s part of a long-term strategy. Microsoft wants Xbox to be profitable on its own merits, something that’s harder to say about Windows and its other products.

Even Microsoft’s branding strategy failed because of a lack of a long term plan – one that the company had faith in.  After three commercials, Microsoft pulls its controversial Seinfeld ads because bloggers didn’t like them.  But they were talking about them! People watched them over and over again to try to understand them.  But that understand would have come later on.  Instead, the new “I’m a PC” commercials reveal Microsoft’s lack of faith in their own branding and instead let their adversary, Apple, dictate the conversation (just ask McCain how well “change” worked for him).

I’m still an avid Microsoft customer (I’m writing this post on Live Writer).  But the company needs to realign itself with the new technology realities.  Branding, reminding customers how much we’ve trusted MIcrosoft all these years (even though they were fun to hate), shows they can still be relevant in our lives, for business and fun.  Paying off customers, buying also badly run companies (Yahoo), and criticizing successful competitors you don’t understand are not recipes for success.  Long term planning and real investment are.

Last week Google announced a $125 million settlement with book publishers to allow the search engine to copy out of print books and make snippets available with options to buy. The settlement avoids a lawsuit brought by the Author’s Guild and Association of American Publishers.

While many are praising the decision, I’m hesitant for several reasons. While it’s excellent to make thousands of out-of-print books available for research, the many restrictions, cost questions, and lack of legal precedent make this a lost opportunity for so much more.

Harvard University criticized the program for these reasons, going to far as to back out of the deal already in place before the settlement.  The university pointed out libraries, who would pay an unspecified price for full access, would be restricted to one terminal with access to the books and many copies would be missing pictures. Downloading would still not be allowed.

Second, Michael Masnick points out Google had previously stated it wanted these lawsuits to make better laws, using its massive war chest to fight lawsuits others couldn’t afford to. By paying off book publishers, Google not only lets go of an opportunity to stand up for fair use, but also opens itself up to other companies looking for an easy pay off. Viacom, in the middle of a $1 billion lawsuit with Google, used this settlement to claim Google learn its lesson in relation to honoring copyrights. Google’s made similar concessions, like paying off the Associated Press just to link to its stories, leading other news organizations to want their cut.

I’ve already found the limitations of Google Book Search reasons not to use it. Google is certainly trying to make the search mroe valuable for users, using an opt-out program to make sure orphan works can be accessed so this is better than nothing. But once again, book publishers are ignoring the value Google is adding to their books, books that are out-of-print and wouldn’t find an audience without Google’s scanning and searching.  Google is adding value publishers should want and be seeking out. But because of these restrictions (and cost), fewer people will be able to find these books and thus fewer people will be likely to pay.