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A new development in the Amazon vs. Macmillan fiasco. Amazon just posted an announcement indicating that it will be “capitulating” to Macmillan by selling the publishers’ books for their desired prices.

Macmillan is trying to price their e-books at $15, while Amazon prices e-books at $9.99. Macmillan’s CEO John Sargent said that unless Amazon sets the price of new e-books to $15, the publisher will not distribute new books to Amazon when they are released. On Friday, Amazon basically banned titles, both paper and digital, published by Macmillan by refusing to directly sell them. And Macmillan took out an ad in the Publishers Marketplace magazine protesting the tactics being used by Amazon regarding pricing.

Amazon is now giving into Macmillan’s demands because of the publisher’s monopoly over its titles. In a passive aggressive manner, Amazon says that readers will decide whether it’s reasonable to pay $14.99 for e-books. And that other publishers will compete by offering their books and lower prices.

Apple CEO Steve Jobs said last week that publishers were unhappy with Amazon’s pricing mode, foreshadowing this disagreement with Macmillan. Jobs revealed that publishers are withholding their titles from Amazon because of Amazon’s pricing model. Jobs also said that prices for books on Apple’s new tablet device, the iPad, will be the same as Amazon’s pricing.

Here is Amazon’s announcement:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

I sat down with Brightcove CEO Jeremy Allaire at the World Economic Forum in Davos, Switzerland last week to talk about his business.

Brightcove isn’t the sexiest startup out there. They’re a video platform – giving websites the tools they need to host and stream video, for a fee ranging from $100/month to “six figures per year” for the largest customers. For the most part users never see the Brightcove brand. And Allaire is just fine with that. He just wants happy customers.

The company launched in 2005, has raised just over $90 million in venture capital, and is approaching profitability, he says. Allaire says he wants to build a public company, and is happy being based in Boston.

Brightcove competes with newer upstarts like Ooyala, although Allaire says Brightcove remains the strongest company in its space. Another competitor, Maven Networks, was acquired by Yahoo in 2008 for around $160 million. The product was unceremoniously shut down by Yahoo a year later. Allaire says they picked up most of Maven’s customers.

You can see the full interview above. And don’t miss the outtake at the end of the video where Allaire gives some free tech support to a customer. Time Inc. reporter Barbara Kiviat was having some issues uploading a video.

The transcript of the interview is pasted below.

MICHAEL ARRINGTON : Jeremy Allaire is the founder and CEO of Brightcove. You’re the founder, the sole founder, right?

JEREMY ALLAIRE: I am the founder and CEO, yeah.

ARRINGTON: You’ve been around since ‘04, ‘05? When did you found…

ALLAIRE: 2005, yeah.

ARRINGTON: And you help companies get their video up on the internet.

ALLAIRE: That’s right, yeah.

ARRINGTON: We’ve known you forever.

ALLAIRE: Yeah.

ARRINGTON: And so we’ve been following you from the earliest days of TechCrunch, but every once in a while it’s always good to check in and just hear what’s going on with your business. So what’s going on with your business? How much money have you raised to date? How many customers do you have? What’s the revenue?

ALLAIRE: Yeah, absolutely. So well, we’ve raised about 90 million in capital over the last five years.

ARRINGTON: How much of that is left?
ALLAIRE: Quite a bit, actually. The last time we raised money was three years ago, a little over three years ago.

ARRINGTON: Are you profitable now?

ALLAIRE: We started generating cash in 2009.

ARRINGTON: OK.

ALLAIRE: And we still have a very, very healthy balance sheet, so we’re in a very good place on that front.

ARRINGTON: Yeah. What’s your cash position right now?

ALLAIRE: We’re not gonna tell you what the cash position is, but it’s quite substantial around this until the last…

ARRINGTON: Sometimes start-ups will say how much money they have left in the bank though. I mean…

ALLAIRE: Yeah.

ARRINGTON: It’s not crazy to do that.

ALLAIRE: No. We have a lot of cash that’s letting us invest and look at acquisitions, things like that, but…

ARRINGTON: So your customers are paying you…

ALLAIRE: Yeah.

ARRINGTON: To basically host their video, give them the tools for the player, all the tools for that.

ALLAIRE: Yeah.

ARRINGTON: Ad advertising.

ALLAIRE: Yeah, all the – everything that you need in an online video, basically.

ARRINGTON: Yeah.

ALLAIRE: From publishing and content management, advertising, analytics, social media integration, making a great experience.

ARRINGTON: And how do you charge? – do you charge for bandwidth, do you charge for the set up, do you…

ALLAIRE: Sure.

ARRINGTON: What’s your relation with the…

ALLAIRE: It’s a software subscription model.

ARRINGTON: Yeah.

ALLAIRE: And we have – actually, the last couple months ago, we launched the Brightcove Express.

ARRINGTON: Yeah.

ALLAIRE: Which is a $99 product.

ARRINGTON: Yeah.

ALLAIRE: And it’s doing extremely well. So there’s – it appears to be a really sizable market of smaller projects and small, medium businesses that also want to do this. We have a lot of customers.

ARRINGTON: What do they get for the $99?

ALLAIRE: They get basically the full tool set that, you know, maybe three years ago, people would have spent $30,000 on, so it’s – we’re really trying to, you know, in some ways, commoditize the market.

ARRINGTON: Yeah.

ALLAIRE: And that’s going well, but they get the full tool set and they get a certain amount of capacity so they can have like a library of videos of a certain size. If they need more, they can move up to $199 and $499.

ALLAIRE: And then included capacity for delivering that to people. And then you know, it goes up to people who spend, you know, more than seven figures a year with us.

ARRINGTON: OK. And so Time magazine – we’re sitting here with the Time writer, Barbara. They’re one of your customers.

ALLAIRE: Time Inc. Yeah.

ARRINGTON: Time Inc., they do all of their video through you.

ALLAIRE: Yes. So a lot of magazine companies work with us. Time Inc., People , and Time and InStyle and major brands – producing more and more video and have an integrated experience on their site and that’s…

ARRINGTON: And how do you charge them? Is that a six, seven-figure deal a year?

ALLAIRE: Most medium to large media companies are six-figure per year licenses.

ARRINGTON: And what do they get for that? Just because they’ll pay, you charge them more or do you…

ALLAIRE: No, no. Pricing is a lot like – you know, the pricing on the service is like Omniture or Double Click where it’s really based on the scale of traffic usage.

ARRINGTON: Yeah.

ALLAIRE: So there’s an annual fee, which is sort of the features you get and there’s a capacity that people pay for. So you know, someone who is doing, you know, hundreds of millions of video views needs more capacity and is getting more value out of our services as well. So we have the pricing that moves up for that.

ARRINGTON: Are you going to get out of Boston at some point? Because not many startups are left there, right? You are one of the only ones.

ALLAIRE: Well, we’re trying to build a great company in Boston, actually.

ARRINGTON: You like Boston?

ALLAIRE: I do, yeah. It’s actually proven to be a very good place for us to recruit and – I mean, we have offices all over…

ARRINGTON: Have you finished that whatever thing they’re building?

ALLAIRE: The Big Dig. Yeah, totally.

ARRINGTON: I mean, that’s done now?

ALLAIRE: It’s done. Life is good.

ARRINGTON: And so traffic is a little easier now.

ALLAIRE: That’s kind of the key.

ARRINGTON: Yeah.

ALLAIRE: Yeah.

ARRINGTON: And there’s a good month or two here, the weather is reasonable, right?

ARRINGTON: I guess people work harder if they don’t have anything to do outside.

ALLAIRE: That’s pretty good.

ARRINGTON: So what happens to your company? Are you going to go public at some point or possibly…

ALLAIRE: We’re definitely focused on being global, independent, and that’s the path we’re on.

ARRINGTON: What happened to Maven? Yahoo! bought them and then just…

ALLAIRE: It’s gone. Yeah.

ARRINGTON: What was that all about? They paid about a hundred something.

ALLAIRE: Yeah. 160, 170 million.

ARRINGTON: And then – and then Maven was a competitor, right?

ALLAIRE: Yeah, yeah.

ARRINGTON: And they just shut it down.

ALLAIRE: Yeah. Well, I think…

ARRINGTON: Did you get any of their customers?

ALLAIRE: Most of them, yes.

ARRINGTON: And then what about Ooyala? They’re like an upstart, they do things -how do they do things that are different from you? They charge only for bandwidth. Is that right?

ALLAIRE: No. I think they’re pricing is a little bit different. They try and charge for both software and bandwidth, kind of mix those together. I think, you know, they’re – I think they have good products. They’re definitely a good business in this market.

ARRINGTON: Yeah.

ALLAIRE: You know, they’ve grown over the last year.

ARRINGTON: But you’re going to crush them.

ALLAIRE: I think we’re doing a very good job remaining the top company in this market.

ARRINGTON: And then who else… didn’t Juice say they were going to get into this business?

ALLAIRE: There’s a lot of failed companies that have tried to morph into technology services businesses, not with much success at all. So I don’t see a lot of them, but yeah.

ARRINGTON: Anything else you want to tell me that’s, you know, news worthy coming up. You’re done raising money for now…

ALLAIRE: Yeah.

ARRINGTON: You bought anyone, you’re buying someone…

ALLAIRE: Well, I’ll tell you. The online video ecosystem, there’s a lot of interesting stuff happening. And as we look at what we do as a very horizontal platform, we’re always looking to say and see, you know, what are the natural things that will be part of it, so we’re definitely looking at opportunities to expand into new products and possibly do acquisitions as well.

ARRINGTON: Jeremy, thanks very much.

ALLAIRE: Thank you, Michael.

Back in October, Google changed the mobile navigation space when it launched Google Maps Navigation for Android. While the product itself is solid it also has one killer feature: it’s free. This has forced the makers of other non-free navigation tools to scramble to convince users their products are still worth paying for. Verizon is the latest to do so with its VZ Navigator 5, launching tomorrow.

So what would make it worth paying for? Verizon has a few new features in this latest update, but one of the ones they are touting the most is social media integration. Specifically, you can now update your Facebook status by way of VZ Navigator. This in and of itself isn’t that interesting, but you can also send out your location to Facebook with this feature, apparently.

While Facebook has yet to launch any major location functionality itself, a few third parties including Yahoo’s Fire Eagle and Nokia have leveraged the network for their location-based products. But VZ Navigator’s Facebook integration might be the most meaningful yet, as we could actually see people who use the service sending their location to their friends on Facebook. In other words, customers could start using this integration to make Facebook more like the popular location services such as Foursquare.

Of course, unlike the popular location services, VZ Navigator isn’t free. Using it will cost you $9.99 a month or $2.99 for 24-hours of usage. But with that price you also get other features, namely turn-by-turn navigation. With this new version, Verizon has also added new “enhanced” points of interest that show up on their maps with details about the place. There is also now crowd-sourced traffic information that Verizon claims will make traffic reports more timely and accurate. Overall, the look and feel of the application has been updated as well.

Another nice feature is that if you need roadside assistance, you can send your location and number with the click of a button.

VZ Navigator 5 will be available tomorrow for the BlackBerry Curve 8530, the LG enV Touch, the HTC Touch Pro2, and the Samsung Omnia. The plan it to roll it out to other smartphones on Verizon’s network in the coming weeks, we’re told. Verizon builds VZ Navigator in association with TeleCommunication Systems.

Last September, YourVersion took the stage at TechCrunch50 as the DemoPit People’s Choice winner, after receiving the most votes from conference attendees. The startup’s goal is fairly simple: to help you find content that you’re interested in, in real time. And now it’s bringing its application to the iPhone. You can download the free app here.

The app is pretty straightforward. First, you enter some topics that you’re interested in. Every time you launch the app, you’ll be presented with a list of these topics. Clicking on one will bring you to a list of recent blog posts, tweets, and other content that contains those topic keywords. You can also filter through this content by source, allowing you to see only content from Twitter, news sites, and so on. If you’ve already set up an account on the YourVersion website, you can sync that with the app (any items you bookmark or share from the app will be reflected on the site as well).

Of course, there are plenty of other applications out there that let you search for news stories by keyword. YourVersion tries to go a step further than basic keyword matching by adding some intelligence to its story recommendations. In the current version, the app will track all of its users’ attention data, which includes the stories they’ve click on, shared, given thumbs up/down to, and a handful of other metrics. YourVersion then uses this data to generate a weekly Email digest, which includes the week’s top stories from each of your YourVersion topics (it will omit any stories that you’ve already read).

This is only the first step, though. In the next month or so, the site plans to roll out a feature to both its website and the iPhone application that will use this attention data to enhance the “Discover page” (the section of the app that presents you with recent stories), so that you don’t have to wait til the end of the week to get smarter recommendations.

YourVersion still has a lot of work to do — in its current form, there isn’t much to differentiate it from the countless feed readers and news apps already out there.  The app needs to implement more robust algorithms that can provide story recommendations that are both more timely and accurate than its competitors’.

Orli Yakuel noticed that Google has quietly added a new icon in the ‘Compose Mail’ window of its free webmail service Gmail, enabling users to run search queries from within the interface and insert results and URLs straight into drafted e-mails or open chat conversations.

This is an expansion of a Google Labs feature, simply dubbed ‘Google Search’, that was introduced back in April 2009 as an optional setting in Gmail.

The first iteration of the labs feature added a ‘Web Search’ box next to the main column (left side on the screenshot) that provides much of the same functionality, only you needed to remember to go to the side column to run a search. Now, enabling the feature also adds an icon to the top toolbar in the ‘Compose Mail’ window, where you can also customize colors and fonts for your message, add links and emoticons and more.

It’s unclear when the icon was added, but we can’t retrieve any mention about this on the Gmail blog and today marks the first time we’ve seen it.

The icon opens up a search box at the bottom of your screen and lets you run a search like you would using the regular Google search interface. A small arrow opens up a limited menu where you can paste results, paste URL and send by e-mail (which is kind of redundant in this case, since you’re already in a new e-mail). If you have a chat conversation open in Gmail, you’ll also get an extra option to send search results to your contact.

Obviously, this isn’t a ground-breaking feature, but if you’re a Gmail user you might want to (re-)enable the Labs feature in Settings. Guaranteed to save you quite some time.

It used to be that Twitter followers were worth something, or at least people thought they were worth something, which is the same thing. It was only about a year ago when Jason Calacanis was offering $250,000 to buy a spot on Twitter’s Suggested User List, which would have guaranteed him perhaps a million followers before Twitter ended up revamping the SUL to be less monolithic. He never got on the list, but if his offer would have come to roughly $0.25 per follower.

Today, you can “buy” followers on eBay for less than a penny each. Some of the Buy-It-Now listings include 5,000 followers for $20 (which comes to 0.4 penny/follower), $5,500 for $40 (0.7 penny/follower), $1,100 for $10 (0.9 penny/follower). You are not actually buying followers outright (Twitter doesn’t allow people to transfer their followers), but rather services which “guarantee” getting your account up to the promised number of followers through “proven and safe methods.” Some even only count reciprocal followers (followers who follow back).

How do they do this? Well, there are automated bots, of course. But another method we’ve heard about anecdotally uses cheap labor in China to create Twitter Follower farms (similar to the gold farms that grew around online games like World of Warcraft). Online laborers in China essentially create thousands of Twitter accounts which can then follow other accounts. Yes, people are actually paying for this worthless service. The sellers on eBay may very well use different methods. But the fact that these types of followers are worthless shows in the plummeting rate for Twitter followers from a quarter each a year ago to less than a penny now.

So are Twitter followers simply worthless as many people have suspected all along? I think you have to distinguish between real followers and fake followers (maybe Twitter could start a Verified Follower service), and how engaged those followers are. Do they retweet a lot and engage in conversation, or never tune in at all? Follower counts don’t tell you that. Just as all Website visitors are not worth the same, neither are all Twitter followers. But you can’t buy real followers. They come to you.

Columnist’s Note: In a little under 24 hours, I have to submit the final manuscript of my next book. My original deadline – January 1st – sailed past weeks ago, as did the one-week extension I awarded myself on the basis that no-one does any work in the first week of the year. This last deadline, though, is immovable: lawyers and editors and typesetters and proof-readers are standing by; the thing has to be printed at some point. I haven’t slept for days, my blood is an 80:20 Caffeine:Provigil blend and I can’t feel my fingers. I guess what I’m trying to say is that I don’t have time to write this week’s column.

And yet, I still have a contract with TechCrunch – one that’s no less binding or legally enforceable than the one I have with my publisher. By hook or by crook, 1000 words have to appear in this space. I briefly considered outsourcing this week’s column to India – or maybe employing some Indians on H1Bs here; I gather that’s the future. But then I remembered that employing people costs money. Next I considered asking one of my journalist friends to take over for the week; but there’s always the danger that they’ll be better at the job than I am and I’ll find myself unemployed. Again. I needed a solution which a) fills space, b) is free and c) is unlikely to put me out of a job.

And that’s when it hit me – I should commission a Guest Post.

But I’m not going to give away my space on TechCrunch to just anyone: I need to make sure that they conform to the high standards demanded of a typical tech blog guest author. To that end, I’ve put together this useful list of hints for writing the perfect Guest Post…

• Tip One: Choose a topical issue
  This is vital. Without a topical issue to hang from, all Guest Posts would to forced to use honest titles like “My marketing director told me to write this because it’s the only way our bullshit product will get on TechCrunch” or “I only wrote this to warrant an entry on CrunchBase”. The obvious topical issue this week is the launch of the iPad. Like new spin-offs of CSI, the world will never tire of new opinions on the iPad, even if yours brings absolutely nothing fresh or new to the genre. If you’re feeling bold though, why not try to link your customised iPhone cover startup to the recent death of JD Salinger? (hint: bunchofphoneys.com is still available)

• Tip Two: Ask yourself “do I actually know anything about this subject?”
  If yes, go back to the drawing board. It is critical that you choose a subject that has absolutely no relation to your areas of expertise. For example: I am a former book publisher who now splits his time between writing books and blogging about technology. I also read maybe 75-100 books a year. Therefore, if I were to write a Guest Post comparing – say – the iPhone and the Kindle – readers would assume that I was allowing my prior knowledge to cloud my judgment on which device is better for enjoying books. They would smell bias. Much better that I opine on, say, the pet food industry or why Belgians make terrible lovers. I mean, they do, right? My wife/mother/kids told me.

• Tip Three: Work your issue into a snappy title
  Let’s say you’ve decided to write about the iPad – because, let’s face it, you have. Next comes the important task of picking a title. Remember, a good title serves two important functions: 1) to attract comment trolls, and 2) to amuse Gabe Rivera from Techmeme. One tried and tested format is the “Why X will be the Y killer” construction, or the even more popular “Five tips for…” meme. The latter is especially recommended for authors who are working against a tight deadline: readers will tolerate any shit as long as it’s in a numbered list (the so-called ‘Mashable Rule’). Note: there is no need for the title to actually relate to the body of your Guest Post: the two are quite separate entities.

• Tip Four: Write any old crap
  The trick here is to avoid looking or sounding like a real writer or a journalist. If your prose is too polished or your argument too well thought out, readers will assume you’re one of TC’s paid writers and will ignore your carefully written promotional bio. The trick is to make readers get one paragraph in and think “who the fuck is this idiot?” and then scroll down to find out. How can you telegraph your amateur status? I, personally, myself believe that the use of tautology is a good way to go. As is unnecessary repetition. Another approach is to completely ignore the most obvious flaw in your argument. For example, if you’re comparing the iPad unfavourably to the Kindle, it’s important to appear oblivious to the existence of e-ink. Instead point to the iPad’s superior video-handling abilities, or the fact that its name has a more balanced vowel-to-consonant ratio than the Kindle.

• Tip Five: End on a high-five, with a blatantly self-promotional bio
  After all, you didn’t spend hours waiting for your PR company to finish ghost-writing your Guest Post, only to throw away your big chance to stroke your ego and make a few dollars at the end. Am I right?

Ok, then get to it!

If you think you’re up to the challenge of writing a guest post, please summarise your pitch on the inside cover of a copy of Paul Carr’s multi-Steve-wynning book – Bringing Nothing To The Party: True Confessions of a New Media Whore – and send to him via TechCrunch where, until this post goes live, he writes a weekly column.

Editor’s note: This is a guest post penned by Ethan Nicholas, developer of the million-dollar iPhone game iShoot and the newly released Kim Rhode’s Outdoor Shooting. Before the iPad was even announced, Nicholas was already conceiving his next game with the tablet device in mind.

The Internet is a funny place. After Apple announced its new iPad, I cringed at the hate being directed its way on sites such as Slashdot and Digg. Even the guys at Penny Arcade, whom I normally agree with, said “that iPad presentation had to be the worst thing I’ve even seen on on the Apple stage” and that Apple had failed to make a case for the device.

If you believe them, the iPad is going to be a massive flop.

Well, the unwashed masses on the Internet also predicted that the iPod would be a failure. They were wrong then, and they are wrong now.

The iPad is a computer for people who don’t like computers. People who don’t like the idea of upgrading their 3D drivers, or adjusting their screen resolution, or installing new memory. Who don’t understand why their computer gets slower and slower the longer they own it, who have 25 icons in their system tray and have to wait ten minutes for their system to boot up every day.

For what most of these people need a computer for, the iPad is perfect. It doesn’t do as many things as a “real” computer does, but the things it does do it does in a way even non-tech-savvy people can figure out, and there are far fewer ways to screw it up. So if you have managed to convince yourself that the iPad is a useless, locked-up DRM-laden failure of a ‘computer’ before even touching one, I have two words for you:

My mom.

My mother is a lovely lady in her sixties who is… well, “not computer savvy” is probably a good way to put it. I regularly have to figure out why her computer is running incredibly slowly, or why it won’t print, or any of the million other random things that happen when people who don’t live and breathe computers sit down at one daily.

The iPad is perfect for her. It does exactly what she needs. It will let her watch movies and listen to music and read books on long flights. It will make using a computer fun instead of an annoying chore.

But it also won’t allow her to install umpteen news and weather gadgets that start up on boot and slow her computer to a crawl. It won’t suddenly forget how to talk to a network, or get so confused by all of the software installs and uninstalls that you finally have to break down and reinstall the system from scratch. In other words, my mother’s next computer is going to be an iPad, and I dream of the day when I can finally throw off the oppressive chains of being the one guy in the family who knows how to actually keep a computer working.

And you know what? There are millions upon millions of people just like her out there. They outnumber us. And they finally have a chance to become productive, self-sufficient computer users instead of constantly asking family members to fix their computers or, even worse, keeping the Geek Squad in business.

No, the iPad isn’t for everyone. But I’m going to go on record as saying that, for non-computer-geeks everywhere, the iPad is going to redefine computing.

(Image courtesy of Flickr/Scott Chang)

Calvin Chin is an American entrepreneur who lives in Shanghai. He founded Qifang, a P2P lending site for Chinese student loans. You can read more about Qifang here. He attended the World Economic Forum in Davos, Switzerland this last week, where China was the center of attention. We asked him to write this guest post and share his unique perspective as an American building a startup in the heart of China.

Here at Davos it seems China keeps coming up in two ways – neither of them positive. One, with the worst of the crisis behind us, people are turning from last year’s hopes of China as economic savior to China as free-rider keeping its currency cheap, bullying its minorities and shirking its responsibilities in Copenhagen. Two, in the tech community, seems everyone is talking about Google, Chinese government hackers and censorship.

My view, and I think it’s one that many in China would probably share, is that while free access to information and the rest of the world is inherently a good thing, so is political stability. The Chinese government has earned a lot of slack for raising hundreds of millions of people out of poverty, and if things did go out of control a heck of a lot of people would get hurt. So even if they want China to be plugged in to the rest of the world to encourage innovation and Chinese tech entrepreneurship (which I think they do), they’d put that priority after getting most Chinese people better lives.

It’s kind of the same deal that Chinese startups all make, to try to do build cool stuff but while working within the system. So Tudou and Youku screen their videos and the fastest growing microblogging service is run by a portal that has the infrastructure from screening blogs to be able to screen tweets. All these companies are making the same decision that Google made to enter China in 2004 too (and stay for now), but for Chinese entrepreneurs they don’t have the option of not being in the China market. It’s what they know and where they have their best shot at success. And I’m sure if you’d ask them, they’d sincerely agree that eliminating poverty and keeping things stable comes way before access to a few articles in a foreign language about events that don’t mean much to them. I don’t think many non-Chinese would like the aggressively patriotic and self-important China that would probably be the outcome of democracy there today anyways.

The Chinese market for startups is growing so fast, is so competitive and is characterized by so many unfair advantages for the big players, that local entrepreneurs just keep their heads down and roll with the political and market changes. Take Digu for instance, they launched as a pretty simple copy of Twitter that focused on celebrity accounts, then pivoted to a social game model when all the startup microblogging platforms got shutdown and Sina (with a lock on celebrity blogs) launched Weibo, and are now back to straight microblogging with a better ability to keep the tweet streams “harmonized.” Digu didn’t whine, they just sucked it up and forged ahead.

This is typical for Chinese startups. Whether they are localizing an international hit, copy-2-china style, at a much cheaper price and a better UI like Kuukie. Or they’re a fit for Chinese net culture with a product that you don’t see elsewhere like Douban’s social network for talking about books (and now other media).

The thing is while the majority of Chinese netizens really don’t care that much about what’s going on outside of China, the ones who do care, people who would start companies, people who want international news, all know workarounds to use services they like or read about sensitive topics from other perspectives. They use Twitter clients like Bage or free (http://hotspotshield.com/) or paid VPNs. So much so that Twitter won in the grassroots Chinamode awards.

So actually, the Chinese government kinda gets the best of all worlds: most Chinese netizens are sufficiently inconvenienced so they’ll never stumble into places they shouldn’t, motivated innovators still find out about, get to, and can track any going on globally, and international companies that would otherwise compete for local market share get locked out.

Sometimes tips come in that seem too good to be true. Take today, for example. I got a tip that Bill Gates’ new site, The Gates Notes, was running on a Linux-powered server. This would be ironic since Gates is of course the founder of Microsoft, which is Linux’s biggest competitor in the server market. It would be the equivalent of catching Gates or CEO Steve Ballmer being caught using (and not just signing) a MacBook at a conference. So is it true?

A quick search on Netcraft shows that thegatesreport.com sure enough looks to be running on the Linux OS. But wait. The results also say that web server is Microsoft-IIS/7.0. That doesn’t sound right, so what gives? Well, it turns out that because Gates is using Akamai to mirror his sites’ content in the event of massive traffic (or more specifically, something like a DDoS attack), this data is being filtered through there. Akamai uses Linux for its servers, so that’s what OS is being passed back to Netcraft. But at the same time, to make things more confusing, the Akamai servers are still passing back the correct server header for Gates’ site: Microsoft-IIS/7.0.

How do I know this? Because the same thing happened in 2003 when it was humorously, but erroneously reported that Microsoft was using Linux servers to run microsoft.com. In fact, the same thing was going on: Microsoft was routing its traffic through Akamai, which again, runs Linux boxes. Microsoft has since apparently changed to its own servers since then so that they now correctly return Windows Server 2003 as their OS. That is likely what The Gates Report is running on as well given the Microsoft-IIS/7.0 web servers.

So sadly, no nice bit of irony here, it would seem. But if you haven’t yet done so, take the opportunity to check out Gates’ site, it’s really well done and full of good information.

[photo: flickr/world economic forum]