Say what? (Mr. Carey via www.123people.ca)

What's the best way to respond when a court ruling doesn't go in your favor? Public histrionics, judging by statements from News Corp. COO Chase Carey.

Last week, the Second Circuit appeals court upheld a decision denying broadcasters their motion for a preliminary injunction against Aereo, the Barry Diller-backed startup that lets users live-stream broadcast TV. The plaintiffs in the case are a cohort of powerful media companies, including NBC, CBS, Disney and, yes, News Corp, whose COO Chase Carey is not taking the decision lying down.

At an industry conference in Las Vegas today, Mr. Carey told audience members that he's considering switching Fox from a free, over-the-air broadcast station into a pay cable one if the courts won't protect his company, reports Variety.

“If we can’t have our rights properly protected through legal and governmental solutions, we will pursue business solution. One solution would be to take the network and make it a subscription service. We’re not going to sit idly by and let people steal our content.”

The rights in question are hefty "retransmission fees" for carrying networking programming. The plaintiffs argue Aereo needs to pay for the right to show their content, Aereo argues the individual antennas assigned to each user means its that its streaming service doesn't count as a "public broadcast."

How seriously should "New Girl" obsessives (will they/won't they, amiright?) take this threat? "You can probably file this under 'sword-rattling aimed at regulators' more than 'things Fox actually intends to do,'" says AllThingsD's Peter Kafka.

To back up that thesis, News Corp. already had a passionate press release plea to interested overseers drafted. The full text below:

STATEMENT FROM NEWS CORPORATION PRESIDENT AND CHIEF OPERATING OFFICER CHASE CAREY REGARDING BROADCAST TELEVISION AND AEREO

NEW YORK, NY – April 8, 2013 – “News Corporation has a long-standing commitment to the broadcast television business, and to delivering the highest-quality entertainment, sports and news programming to our viewers on a localized basis.  We are committed to broadcasting under a business model where programmers receive fair compensation from parties that want to redistribute our product while continuing to make our product available for free to individual consumers that want to access our signal.

“We believe that Aereo is pirating our broadcast signal.  We will continue to aggressively pursue our rights in the courts, as well as pursue all relevant political avenues, and we believe we will prevail.

“That said, we won’t just sit idle and allow our content to be actively stolen. It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable. We simply cannot provide the type of quality sports, news, and entertainment content that we do from an ad supported only business model.  We have no choice but to develop business solutions that ensure we continue to remain in the driver’s seat of our own destiny.  One option could be converting the FOX broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates.”

UPDATE: It looks like News Corp. isn't the only party given to grand pronouncements. Aereo spokesperson Virginia Lam emailed Betabeat the following statement, declaring that "Having a television antenna is every American's right.":

“Aereo has invented a simple, convenient way for consumers to utilize an antenna to access free-to-air broadcast television, bringing television access into the modern era for millions of consumers. It's disappointing to hear that Fox believes that consumers should not be permitted to use  an antenna to access free-to-air broadcast television. Over 50 million Americans today access television via an antenna. When broadcasters asked Congress for a free license to digitally broadcast on the public's airwaves, they did so with the promise that they would broadcast in the public interest and convenience, and that they would remain free-to-air. Having a television antenna is every American's right."

For more information about Aereo, check out our feature from last May. 

And another bites the dust. And another one bites the dust.

Betabeat was sceptical when we first heard about Beyond Oblivian, a New York based music startup that got $87 million in backing from big names like Allen & Co., Sony and News. Corp. The startup aimed to take on Spotify by offering an unlimited music streaming service with no monthly fee. Instead the service came baked into smartphones, adding around $60 to the cost of each device,

Seems like our doubts were well founded. The Financial Times is reporting that  has shut down before it even launched. It's another costly and very public black eye for Rupert Murdoch's digital explorations, which so far have included Myspace and iPad-only newspaper The Daily.

The service apparently struggled to convince the four major labels that consumers would buy into its pricing plan. It wasn't clear how a user who paid $60 extra for a device would react when it came time to buy a new phone. Would the service transfer over, or would they be charged a flat fee a second time?

Beyond Oblivian executive Adam Kidron told The FT “Beyond was always a tremendously grand ambition as the advances required by the record labels and music publishers were substantial, reflecting the breadth of the rights required to create a true digital music one-stop."

Anyone who has followed the history of Spotify should have seen that coming. The record labels love to pile on the onerous demands and fees, trying to squeeze as much revenue as possible from assets that no longer sell well in physical form. In fact, Nokia had tried to do something just like Beyond Oblivian, a service called Comes With Music, but was forced to scrap the project after it also failed to take off.

Obviously we would love to read this as another case of corporate hubris gone horribly wrong. Startups, we prefer to think, work best when the idea and the technology are innovative, not dreamed up by bankers, media titans and record execs. But it might also just be an abject lesson in how difficult a space the streaming music market is. Spotify, Pandora, Rhapsody, all are mature companies, some public, none of which have yet turned a profit.

If anyone who worked with Beyond Oblivion is reading this, give us your thoughts on what went wrong in the comments.

Will Murdoch join Myspace?

The full News. Corp board will meet this week to discuss the fallout from the News of the World "Phone Hacking" scandal and then, on Wednesday, deliver its end of year financial report which it hopes will shift attention and allow the company to move on.

The big news on the tech side is that News Corp. finally sold off the long suffering Myspace, which had been a perpetual eye sore on its quarterly results. The purchase price wasn't enough to move the needle, but it will stem the losses in the interactive division. The cable division and Fox in particular, are expected to deliver their typically stellar results.

News Corp is sitting on $12 billion in cash, much of which it had hoped to spend on the now defunct BSkyB deal. The company will probably heed its large investors wishes to buy back a large chunk of stock, but savvy start-ups could also grab a piece of the pie through a tactical M&A deal. Start pitching those biz dev types today!

The big question is whether Murdoch will remain his position as chairman of the company. Institutional investors in News Corp. are game to strip him of his title, hoping that his removal will allow the company's stock to bounce back from the losses it sustained during the scandal.

Hackers at MIT's Model Railroad Club

The word hacker has been everywhere recently, splashed across the front page for weeks as the “Phone Hacking” scandal at News of the World engulfed Rupert Murdoch and his media empire. There is a sensational mystique to the term that makes it irresistible to journalists. But typing the default password “1111” into the voicemail box of a murdered girl is not hacking. Neither is bribing the police for the phone numbers of celebrities and crime victims. Unless we’re ready to call smashing the window on my Honda Civic “car hacking,” nothing in the News. Corp scandal fits the bill.
“If it had been me, I would have broken into the phone company system, so I could have had direct access to the messages of all their customers,” said Kevin Mitnick, who was for several years the most wanted computer criminal in America, after hacking into the voicemail computers at Pacific Bell. “What News Corp. did, guess pin codes, spoofing voicemails, that is amateur script kiddie stuff.”

Mr. Mitnick, who now works as a security consultant and is publishing his first book in August, said he’s disappointed to see what passes for hacking these days. “I can remember writing a program in high school that was supposed to calculate 100 digits of the Fibonacci Sequence. It did that, but of course, it also stole passwords from my professor and classmates. But I didn’t get in trouble for that, I got an A, because my teacher recognized it was smart. That’s what hacking is supposed to be about, not crime, but innovation and creativity.”

In the 1950s, on the campus of The Massachusetts Institute of Technology, a great “hack” meant a  practical joke; covering the campus dome in tin foil, for example. Among the nerdy members of the Model Railroad Club, a hack came to mean a feat of technical skill, a particularly sweet switching station or miniature drawbridge. As these young geeks moved from laying track to working with computers, training massive IBM mainframes to make music and play chess, they took this attitude and vernacular with them.

Ruining it for the rest of us

The word hacker began to mutate, like a quartet of teen turtles, during the late 1980s and early 1990s. What had been a compliment among programmers and engineers became a byword for cyber-crime. Hollywood played a big role: films like WarGames and the eponymous Hackers made the word synonymous with mischief and mayhem.

The laws that sprung up to combat the rising tide of cyber-crime followed suit. “Hacking is breaking into computer systems, frequently with intentions to alter or modify existing settings,” according to the National Conference of State Legislators. “Sometimes malicious in nature, these break-ins may cause damage or disruption to computer systems or networks.”

A Google Trends chart of the period between 2004 and today shows the prevalence  of hacking in the press isn't just anecdotal,  news coverage of hacking over the last three years has grown by leaps and bounds. Some of this coverage has been about real hacking. The attacks that penetrated Google’s systems in China and caused the search giant to pull it business out of the country. The infiltrators who stole sensitive data from hundreds of thousands of Sony customers. And the hack-tavism by Anonymous and Lulzsec that defaced websites of major governments and corporations.

via Google Trends

But just as often hackers have been convenient boogeymen. For example it turned out to be Rep. Anthony Weiner, not a hacker, who posted a photo of the congressman’s package to Twitter.  When Pfc. Bradley Manning was arrested for passing classified military documents to Wikileaks, publications like Wired and CNN speculated  Pfc. Manning had learned the dark arts from MIT students he partied with at a hack spaces in Boston. The banal truth was that an angry young man with access to information downloaded sensitive files and burned them to a CD. Writing Lady Gaga on the disc was a nice bit of misdirection, but hacking it was not.

The sad reality is that cyber-crime is on the rise. And in fact News Corp has engaged in computer hacking. As The New York Times recently pointed out, the company paid $29.5 million back in 2009 to settle charges that it hacked into the computer system of New Jersey based company called Floorgraphics and stole information for a smear campaign that cost the the small advertising company several major clients. There were no 9/11 victims involved, no celebrities or young murder victims, and so the story went largely untold. Hell, the head of U.S. cyber-security, Randy Vickers, resigned on Monday in the aftermath of hacking assaults on the Senate, FBI and CIA websites. Yet only the only major publications to carry the story so far have been foreign outlets, Reuters and The Guardian.

Hackers are like Jedi, wielding mysterious powers that enable them to peer into the private lives of normal folks. Just as there are Jedis on the light and dark side, so hackers are divided into white and black hat, a porous boundary which contributes to confusion around the term. Before he built computers, Steve Jobs and his partner Woz built blue bloxes that helped phone phreakers hack their way to free long distance calls. And the most widely known and admired young entrepreneur of this generation, Mark Zuckerberg, has dark hacking in his DNA. He didn’t ask for permission when he took the names and faces of his classmates and put them together into Facemash, an early experiment at Harvard that nearly got him expelled.

But when Zuckerberg sat down earlier this year with Leslie Stahl for a 60 minutes interview, he tried to explain to her that Facebook was strictly white hat. “The graffiti is largely gone,” Stahl said to Zuckerberg, during her tour Facebook’s fancy new offices, “except for one word, you just can’t miss. I see hack everywhere. Hack! It has a negative connotation, doesn’t it?”

“When we say hacker, there is this whole definition that engineers have for themselves, it’s very much a compliment,” said Zuckerberg. “To hack means to build something very quickly. In one night you can sit down and churn out a lot of code and at the end you have a product. Hackathons are these things where all of the Facebook engineer get together and stay up all night building things, and I do too, usually I code alongside everyone.”

Zuckerberg’s comment highlights an interesting divide. “The word now has two branches, the one used among computer progammers and the one used in the media,” said author Stevy Levy, whose 1984 book Hackers, first introduced the term to the mainstream.” On one hand it means “to create”; on the other “to steal.”

“There was a time when hacker had lost almost all of it positive connotation,” said Mr. Levy, who wrote in the update to the 2005 edition of his book that he considered dropping the word altogether. “But the community seems to have really reclaimed it for themselves, and that has spread, to the point where people talk about hacking healthcare or hacking education, and they mean working to make it better.”

The once proud papa

Despite handing out pink slips to almost 40 percent of its employees and putting another 40 percent on a transition plan that will keep them on staff as they look for new gigs, Myspace seems likely to sell for a fraction of the $580 million News Corp paid for it back in the summer of 2005.

The remaining suitors, according to Kara Swisher, are not exactly big names. Specific Media is a five-year-old ad network who would most likely be buying Myspace for its vast collection of user data in order to improve ad targeting.

Golden Gate Capital is the other bidder, a private equity firm that has made its name turning around real stinkers, but has never worked with a social media firm like Myspace before.

Apparently the original founders, Tom Anderson and Chris DeWolfe, are both involved in separate investor groups that threw their hat into the ring. A big piece from Bloomberg Businessweek recently got Mr. DeWolfe on record for the first time about the sale to News Corp. and the sale of the site. He still has a profile, but says he cringes ever time he sees it.

News Corp is desperate to get Myspace unloaded before the end of the month, in order to avoid the companies red ink appearing on its financials for 2012, so expect more news on this sale within the next few days.

Fun fact: Myspace's adult users are younger than those of Facebook, Twitter and LinkedIn.

A dispatch from the sad saga of Myspace, the Tumblr-Facebook precursor once thought to be worth $327 million, comes to us from the Pew Center, which today issued a comparative report on "social networking services." Myspace had a still-impressive 35 million visitors last month, according to comScore (although that number is dropping) and Pew has one statistic that contrasted starkly with the other social networks. A supermajority of Myspace's users have been on the site for more than two years: 76 percent. For the other sites, that number is around 33 to 36 percent.

This is a reflection of Myspace's inability to recruit new users, sure. Just three percent of its users joined in the last six months. But isn't it a basic rule of sales that new customer acquisition is much more expensive than existing customer retention? Myspace's users are highly familiar with the brand and the interface. Considering all the money flowing to start-ups whose main challenge is the struggle to recruit users, it's hard to believe its corporate overloads (this bloodbath is all your fault anyway, News Corp.) are having so much trouble finding a buyer.The headlines about Twitter changing the world, Tumblr growing like crazy, and Facebook and LinkedIn's IPOs must be rough on Myspace's executives. But Myspace.com still has valuable technology, a sizable userbase, years of data, a front page with a lot of traffic on which ads can be placed, and a staff of social media veterans.

Tumblr's David Karp studied Myspace's missteps, he told Betabeat. Myspace employees told him among other things that the company had gotten bogged down with trying to bring musicians onto the platform, losing sight of other areas where they should have been innovating. If Myspace can share its lessons with Tumblr, why can't it learn from them itself?

Recently, a brand-new social network got $40 million for a product with zero users, botched its launch, and then lost a co-founder. At the same time, AllThingsD says there is just one group of investors that wants to buy Myspace. What the hell?

Last year's massive redesign, which restyled the brand to My[____]--note to CEO Mike Jones: not calling it that--now looks like News Corp.'s last-ditch effort to resurrect the network. Maybe this is News Corp.'s problem: It secretly believes the site is worthless. To believe otherwise would be to admit failure.

Incidentally, we're wondering how Myspace developers introduce themselves in Beverly Hills bars given all the Myspace haterade. "I work at Myspace, haha. No, seriously." Maybe they call it My[____]?

The big redesign that rolled out a few months back was supposed to refocus the site and increase user engagement. But Mike Arrington found that over the two months from February to April, 2011, average time on the site dropped 48% and pageviews dropped a staggering 50%.

Those are numbers for the U.S., global stats are about half as bad.

At the same time, the number of unique visitors to Myspace, which is now becoming the most sought after metric, at least by Nick Denton's calculations, suddenly leveled off. It seems unlikely that while all these other statistics that track user engagement continued to plummet, this one category would reverse course.

There are ways of course, to artificially boost traffic. It would be sensible during the ongoing negotiations for News Corp. to want a few bright spots to put in the pitch deck. But when all other signs are to the contrary, pay to play tactics might only increase the smell of desperation.