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The theme of Microsoft Advance ‘08 is “Connected Entertainment:” mobile, music, TV/video, gaming. The big Live Search announcement will be covered live tomorrow.

Today, filmmaker James Cameron’s producing partner at Lightstorm Entertainment, Jon Landau said the abundance of digital information and the ability to use technologies opened up a whole new window for Jim didn’t know e3xisted.

James Cameron started making films when they were photochemical emulsions. Now, films are digital.

“The essence of storytelling stays the same,” said Cameron. “Intense CG (computer-generated) scenes with multiple shots doesn’t change that. My greatest horror was the best thing we create would end up like Ark of Covenant and put in a warehouse somewhere. I will make all my films in 3-D. I’ve been banging on the door at Microsoft since I introduced Windows Media 9 with LL Cool J and Bill Gates in 2002. Now I tell them, this is what you guys need to be doing. I’m going to continue to
surf that wave.”

His new film, Avatar, features a man who tries to become a miner by combining his being with an alien during an interplanetary war in which aliens can manifest themselves through human bodies — avatars.

“‘Avatar’ will make people truly experience something,” said Cameron.”One more layer of the suspension of disbelief will be removed. All the syn-thespians are photo-realistic. Now that we’ve achieved it, we discovered CG characters in 3D look more real than in 2D. Your brain is cued it’s a real thing not a picture and discounting part of image that makes it look fake.”

Part of the movie is subtitled because it takes place on alien planet.

Avatar will have a human heart beating at its narrative center. It’s an emotional journey of redemption and revolution; the story of a wounded ex-marine, who’s thrust into an effort to settle and exploit an exotic planet rich in bio-diversity. He eventually crosses over to lead the indigenous race in a battle for survival.

Cameron has created an entire world, a complete ecosystem of phantasmagorical plants and creatures, and a native people with a rich culture and language. The film has a December 2009 release date.

“I don’t know whether will be great film from narrative and critical standpoint,” said Cameron. “The experience of Avatar will be an experience unlike any other movies.”

He started with Microsoft Research looking at the way people see. The project soon moved out of the realm of speculation.

“‘Avatar’ is the single most complex piece of filmmaking ever made,” said Cameron. “We have 1,600 shots for a 2.5 hour movie. It’s not with a single CGI character, like King Kong or Gollum. We have hundreds of photo-realistic CG characters. We were Microsoft’s sandbox for filmmaking beyond the cutting edge.”

During the film he would grab chairs, gather his team, and talk about what they were doing wrong, how to do it better. That just isn’t done on a film set.

The heart of the film technology is a digital asset management system created by Microsoft, which was praised by Cameron and Landau for understanding the arts and filmmaking. The system can track every cloud and every blade of CGI grass in the film.

Cameron noted that Titanic was about how technology let us down. He has always tried to be on cutting edge of what’s going on. The Abyss featured the first photo-realistic CG character. Then “The Terminator” combined CG and human actors. “True Lies” pushed the bar even higher with composite technology.

In “Titanic” as a filmmaker, I struck the perfect balance of technology and the human heart,” said Cameron. “I haven’t forgotten that lesson with Avatar. It’s the best lesson for any filmmaker.”

Cameron also noted the radical changes in film distribution and made a prediction for the future:

“I’m on the fourth screen. The giant screen. Then it scatters down to other screens. It gets more interesting as more means of digital distribution become available to us. The interesting thing the actual movie business going strong. If valued up revenues of what’s lost to piracy, movies doing better now than they ever have. You can have HD screen in your home.

He noted, “Windows organized things spatially. That gave it its power. But we’re not displaying things spatially. What could happen is now that digital cinema revolution has taken place is killer app is 3D. Dreamworks has announced all its animated films will be made and projected in 3-D. Gaming will be changed by 3-D. Consumer electronics people will need to make players stereo-enabled monitors. Future version of Windows should be fully stereoscopic. Smaller devices already are 3D enabled without glasses. If you play “Avatar” on a 50 inch monitor, you’re in the game.”

Cameron said, “This is the ultimate immersive media. It’s my fundamental belief that when you’re viewing media in stereo, more neurons are firing, learning rates are higher. Engagement levels are higher. As advertisers, you need to think about how you’re going to use this new dimension. How will you use the deeper levels of engagement?”

Nielsen Online has released data showing that Wikipedia’s 8,000% growth in the past 5 years is attributed to search. Really? Is that what happens when Google ranks all of your pages as #1? I had no idea.

Breaking down the not-at-all suprising data:

Google sent the most search traffic to en.wikipedia.org with 61% of searches on home computers and 66% of work computers. Yahoo came in second at 19% home, 16% work. The main www.Wikipedia.org came in third, beating out MSN and AOL at home and search.MSN.com and search.Live.com at work.

Wikipedia’s growth is slowing, however. Here’s data for unique visitors in the month of April for the past six years with the year-over-year growth percentages:

2003 700,000, n/a
2004 2,082,000, 197%
2005 6,753,000, 224%
2006 25,970,000, 285%
2007 45,934,000 77%
2008 55,820,000 17%

Related Reading:
Powerset Launches Piggybackipedia: Wikipedia Search Engine
Wikipedia External Links Now “Nofollow”
Ten Reasons Marketers Should Pay Attention to Wikipedia

The strength of Chinese search engine Baidu in the Asian market - beating Google in the valued China market - has been reflected in investor confidence it seems. While Google made back some of their recent drop in value, it is the 78% rise in Baidu over the past month that is truly impressive.

The Motley Fool asks “Do You Believe in Baidu?” And seem to present a good argument to do so.

“Baidu has been on the move in many ways, expanding outside its search engine stronghold with recent forays into instant messaging, consumer auctions, online games, and even a bold leap into the mature yet lucrative Japanese search engine market,” they report.

Nice to see another engine growing in a Google like manner, both financially and corporately.

Google frustrated Wall St. bears, earnings whisperers, and the world’s most bearish bloggers today by beating analysts’ earnings estimates.

Listeners on the Google conference call could virtually hear the sound of much gnashing of teeth from naysayers who cried doom and gloom this quarter.

The news was so good you’d think Quattrone was in the house.

Google blew away all revenue predictions, posting $5.19 billion for the first quarter, a 42% increase over the first quarter of 2007 and an increase of 7% compared to the retail and holiday-driven fourth quarter.

We’ll have more on what the Q1 call means to search marketers later. (It’s all good.) But first: the biggest dissappointment was the early departure of Paul Kedrosky of Infectious Greed fame who had to drop off the call early to catch a flight in the middle of live-blogging commentary.

Paul showed how far off the mark Citigroup analyst Mahaney was:

“Here is how Google came in versus one cheat sheet (Mahaney’s at Citi) floating around out there:

* Net revenues — Forecast $3.54b / Actual: $4.0b
* Earnings — Forecast: $1.76b / Actual $1.83b
* EPS: — Forecast: $4.50 / Actual: $4.84″

Paul also had some of the best and funniest con call commentary on his blog, so we’ll share a few blog bytes with our readers (and the few remaining GOOG bears out there). Paul’s capital expenditures (CapEx) comment came pre-call just after Google announced earnings results to the media (and the world):

What. in. the. world. are. these. GOOG. guys. building?

Google CapEx in Context. Moon base Theory, Redux.

For you conspiracy theorists — Google’s building a moon base! Google’s building a moon base! — here is the last five quarters of Google’s re-spiraling CapEx …

Sergey tipping 100 improvements in search introduced in quarter. Not to be rude, but does this deserve so much time?This is awfully inside search-baseball for the opening of an earnings call.

Wait. Sergey talking mobile. Something coming? News? Oh, language versions. Mobile search traffic “growing rapidly”. Great, glad to hear that. I was so worried. YouTube? “Mobile video traffic growing rapidly” too. Another load off my mind. Not.

Ten hours of new video going up onto YouTube every minute. No idea what that actually means in monetization, but it’s a great stat for future presentation porn. Whoa, and Dunkin’ Donuts uses YouTube.

Catch Paul on CNBC tomorrow morning — and for breakfast?

Rumor has it Google will be serving crow for any bears who wander by the Googleplex.

Sure there are lots of global news stories in Bloomberg News today. For example, “Verizon Faces Fight With FCC’s Martin Over Rules for Open Wireless Network.” Bloomberg.com says Verizon Wireless faces a new challenge after beating Google Inc. in the biggest U.S. mobile- phone airwaves auction: scrutiny from regulators who expect the carrier to build a truly open network.

While we get just as excited about “scrutiny from regulators” as the next guy, that’s not the best story of the day.

Nor was it “Houston Topless Clubs May Turn to Pasties After Losing 10-Year Legal Fight” detailing Eric Langan’s plans to respond to the U.S. Supreme Court with pasties.

And while we’re impressed by Ivy League students with hearts of gold turning Spring Break into a “Guilt Trip” for all the other Spring Breakers in Cabo (”Students on Spring Break Skip Mai Tais on Cabo to Serve at Bowery Mission”) we’re wondering why Ivy League students need to fly to Cabo to volunteer in a soup kitchen.

The story says “It’s lunchtime at the Bowery Mission, and seven Cornell University students are serving rice, chicken and gravy to homeless men staying there to learn job skills and conquer addictions.”

They must be serving the homeless with a “Silver Spoon.”

Here’s the one story we loved:

Global SEO expert Nick Wilsdon and his wife, Anna, starred in the headline news story, Russia’s `City of Brides’ Triggers Baby Boom After Love Quests by Bloomberg reporter, Yuriy Humber.

It’s a great story. Don’t miss it. The Bloomberg News photo shows:

English-Russian couple Anna and Nick Wilsdon in their home in Ivanovo, Russia, on Feb. 7, 2008. This year in the town of Ivanovo, babies are being born faster then ever, and deaths are slowing down. With any luck, the town known as Russia’s “City of Brides” will start to increase in population for the first time since the Soviet era.”

Courtesy of the exceptional photographer, Dmitry Beliakov of Bloomberg News.

The value of Google’s stock has taken a bit of a beating recently from their high of $747 last year to yesterday’s close at $438. After doing my weekly news review, I saw a lot of articles questioning many actions Google has been doing lately.

Is this pervasive critiquing of Google having an impact of investors’ confidence?

The articles I read this week came from a wide range of sources - not just limited to the search industry specific ones we all know within the industry. (I was at a offline/online media event on Thursday where the majority had not heard of SEW, AussieWebmaster or for that matter Danny Sullivan!)

The firing of people from DoubleClick supposedly slated for April 1, according to ValleyWag, should show investors that they are lowering expenses and thus increasing profits for them. But the general public usually sees the company laying people off after an acquisition as Gordon Gekkoish. The eventual impact should be seen in the coming week as this actually happens.

I was having dinner one night during SES NYC last week, I noticed a friend there who does angel investing and asked him what Google closed at that day to determine who in my party was paying. He knew to the penny as he told me he was shorting Google (now I know where he gets his seed capital).

Then I see an article this morning from the UK Guardian stating Google’s PPC numbers were slowing. Given January had shown zero growth and February’s growth was low single digits compared to previous growth being as high as 30-40%, this spending and growth wall could be a major hurdle for the company’s valuation.

“Google maintains that the deceleration is a consequence of its strategy of focusing on quality. The Silicon Valley firm has been trying to eliminate accidental clicks and has been working with advertisers to make sure that links relate closely to users’ search queries.

But the slowdown has contributed to a 36% slump in Google’s shares since the beginning of the year and analysts are divided on whether the company’s confidence is justified,” the Guardian stated.

This is also challenged a little by recent complaints by advertisers over some of these methods of improving the quality. The $10 Minimum Bid push has lost Google advertisers. The arbitragers squeezing a few pennies from a click have had to drop away (leaving the really good ones at it a cheaper range), but so have the companies that provide legitimate inexpensive products or services very relevant to the people searching from that perspective.

The impact Google is having on other online industries may also be impacting their brand and through that their value. The analytics industry was impacted by Google’s purchase of Urchin and the development of the free services of Google Analytics - so even a popular free service gets flak, and their mistakes are made public quickly as was the case with GA information being displayed in the Google organic results..

There will be an additional backlash from the DoubleClick acquisition. It is going to be hard for the soon to be unemployed to find jobs in the industry as Google launched Ad Manager which offers ad serving for free and thus will hurt the job market in the industry as the competitors lose market share.

The words of Larry Page’s recent Annual Report letter reflect the perspective the founder sees his realm of “users, customers, Googlers (our employees), and investors who help bring everything that is Google to life”.

Part of Google’s success has been in its ability to maintain the “church and state” separation of organic listings and paid search ads. While that is to be commended, isolating customers from the users pool is a little naive - people advertise on Google because they have used Google and want to advertise to similar users.

Google would not still be in business if they had not been able to monetize the popular search engine. When they first started the company was nearly sold to Excite.com for a million dollars, because they could not monetize what they were doing.

With revenues of more than $10 billion last year - 90% of which came from paid search advertising - you would think the customers would take top billing, but the behemoth of search still sees search through the eyes of its users.

” We continue our effort to extract more and more real meaning from the web in order to help people find the right answers. We recently improved universal search, integrating different types of relevant information, such as video, maps, news, books, images, and more, right into your search results.

Sometimes you don’t get a good answer to a search because the information simply isn’t available on the web. So we are working hard to encourage ecosystems that can generate more content from more authors and creators. For example, we recently announced an early version of a tool called “knol” to help people generate and organize more high-quality authored content.”

Watch out Wikipedia your space is soon to be seriously invaded.

And one has to wonder if Google is getting into the conference and hotel business next. Their proposal to develop a parcel of land in the Mountain View industrial park for office space, conference center and a hotel is lodged with the local council.

Wonder if they plan on starting their own search conferences, with attendees staying at the nearby hotel? Are we to see a conference advertising tab soon in our AdWords accounts?

Click to read the rest of this post…

I have been following the unfolding developments regarding Microsoft/Yahoo since they were announced with only mild interest. This is not because the potential alliance would not have an effect on the industry - clearly it would shake things up quite a bit. But there has been actually very little of interest since the initial buyout proposal. Despite the posturing on all sides, events have unfolded in an entirely predictable manner. In the latest development, Nathania Johnson blogged about Yahoo! Goes on a Date with Microsoft, and wondered if there would be a second date to follow.

To me, there is no drama. This is not a first date - it’s a shotgun wedding.

The only reason that two companies with such completely different philosophies and business cultures would even consider such a deal is because they have no choice. Yahoo!Search (Overture/GoTo) was an early innovator in the PPC space, but has clearly fallen behind. Microsoft was late to the party, and is once again finding it hard to establish dominance in the Internet arena (outside of its comfortable desktop monopoly).

There may be more posturing in the next few weeks, with crying, chest beating, and histrionics. But the final act has already been written. The only question to be settled is how many goats and chickens Yahoo will get in the dowry. The alternative for both companies in the search advertising arena is unthinkable: to languish and lose market share as perennial also-rans to Google.

Unless you’ve been living in a cave this past week—or at least not reading this blog—you’ve heard about Microsoft’s offer to buy up Yahoo! for $31 a share, for a total of $44.6 billion. John Markoff, of the New York Times, called the moved the “firing the final shot of yesterday’s war”—the war in question being one we all know well: the battle for search advertising.

Nothing could be further from the truth. Buying Yahoo is firing the first futuristic shot in tomorrow’s war; Yahoo! is just the beginning for Microsoft. And the war is not for search advertising space alone; even a combined 34.6% for Microsoft/Yahoo! (assuming no one drops off during the merger) doesn’t compete with Google’s 61% (including its major partners). This deal is about much more.

For one, it is about mobile, one of the last frontiers in which Google’s dominance is still tenuous. Google has spent time and made waves developing the Android mobile operating system, but its mobile offerings are relics compared with the new Yahoo! Go 3.0 and Microsoft’s recently-acquired TellMe service. It’s about emerging ad space, like Facebook—of which Microsoft owns a piece and has a 10-year exclusive advertising deal, beating out a Google bid—and advertising exchanges like Right Media, which was acquired by Yahoo!

Google may have video covered online, as it owns most video streams via its acquisition of YouTube and most video searches via its new integrated search bar and rumors of true frame-by-frame video search being developed. Photos, however, are still fair game, with Yahoo! holding on to more than 2 billion photos via its acquisition of Flickr. Blogging is worth fighting for as well. Blogger.com has been given over to spammers, but Windows Live Spaces and Yahoo! 360 both do well, with 45 million users between the two of them.

Microsoft wants Yahoo! for search, but it recognizes the need to lead in every other emerging online market where advertising dollars can be spent. And that means more acquisitions. And lots more shots fired.

Across the board, the search engines are being hit just as bad as every other stock on the international exchanges. Guess the ability to measure profitability for the buyers of search products, the growing numbers of users and the attraction of Fortune 500 companies to their usage has not kept our industry’s lights from dimming.
The [...]

When people are looking for reliable information, they don’t trust and use search engines quite as much as you think. According to USC’s Center for the Digital Future, only 51% of people currently believe that “most or all of the information produced by search engines is reliable and accurate.”
So does everyone settle [...]