You’ve got to love Foursquare: in a few short months, it has gone from one of the myriad background apps struggling for respect into the new darling of hyper-connected users. Unlike many of its digital brethren, however, Foursquare is demonstrating a sophistication in its business model which other startups would do well to emulate.

According to AdAge, Foursquare is working on a new suite of tools and services:

…there will be three tiers of paid services: ones for small (local) businesses, ones for retail chains, and ones for big marketers. With these offerings, Foursquare would offer up analytics packages. “Then, deals could be sold against impressions such as web ads, clicks such as search ads, or a completely new model: cost per check-in,” Kunur Patel writes in the AdAge piece.

The complexity of Foursquare’s approach shows that it is determined not to rely upon the unimaginative approach of simply counting on ad revenue. I am increasingly hearing this refrain echoed by angels and VCs, and it’s clear that Foursquare is getting the memo.

via As The Deals Roll In, So Does Some Revenue For Foursquare.

Wow. Not since Yahoo turned down Microsoft’s acquisition offer last year has the tech scene seen so much M&A drama. In a surprise move, Yelp’s board has rejected Google’s buyout offer of $500 million, citing its need to follow its fiduciary duty. This almost surely means that Yelp has received interest from another quarter.

The New York Times reports that this is, indeed, the case, and claims that the yet-unknown other party is willing to pay as much as 50% above Google’s offer for Yelp:

Yelp received interest from another company for a price of about 50 percent more than Google was willing to pay, according to a person who is close to the negotiations. That would put the price around $750 million.

This screams Microsoft, which is sitting on a lot of cash and has been known to overspend for a chance to get a piece of the social networking scene. (Remember its insane $15 billion valuation of Facebook three years ago?) Try as it might, Microsoft just cannot figure out how the hell to build a good social networking product.

Fiduciary duty, if narrowly interpreted, would lead Yelp’s board to accept Redmond’s higher offer– especially given the high premium Microsoft is willing to pay. The long-term interpretation of fiduciary duty, however, dictates that Yelp should run, not walk as far away from Microsoft as possible. What’s the last company that has flourished under Microsoft’s leadership? On the contrary, it seems that Microsoft suffers from that particular malady of not knowing what, precisely, to do with the companies it has overpaid to acquire.

A marriage of Yelp and Microsoft would yield some obvious synergies, including the integration of Yelp user content into Microsoft Maps and Bing, but this is merely a switching-out of search engines, as both functions are currently performed by Google. Care to see Yelp content filter into Microsoft Office? I don’t think so.

It’s easy to see what Microsoft gets out of this deal– a nice piece of the social media scene– something it hasn’t been able to figure out for the life of it. Hard to see what Yelp gets out of this deal except for a handsome payday.

via Yelp Turns Down Google, for Now – Bits Blog – NYTimes.com.

A thought-provoking piece by Rory Maher about the challenges currently faced by MySpace in executing its “Social network– Us?” strategy:

Bottom line: MySpace is in a very difficult position.  Facebook has won the social network war, and MySpace’s new strategy is to go head-to-head with massive, seasoned Internet companies that have many competitive advantages.  The odds that MySpace will turn itself around seem low.

The one aspect that Maher may miscalculate is just how un-smart these seasoned Internet companies actually are. He is almost certainly referring to Yahoo, whose own implosion over the past 12 months may provide MySpace with a perfect opportunity to steal share. (Lest we forget, Yahoo CEO Carol Bartz has been trying to pull a similar slight-of-hand over investors with claims that Yahoo has never really been a search company.)

A more puzzling question is: why is MySpace looking to former AOL and Yahoo executives to revive its fortunes? Neither company has much to recommend it today. Why not steal from the best and poach executives from amazing companies like Google, Apple, and, er, Facebook? (To be fair, MySpace was able to execute on this last one in nabbing Owen Van Natta, who formerly served as Facebook’s Chief Revenue Officer.)

Another troubling issue where MySpace’s hopes regarding ad revenue are concerned has to do with the anonymity of its user base. Unlike Facebook, which actively verifies user identities, MySpace differentiated itself early on from Friendster by allowing anyone to hold dozens of fictitious user profiles. Van Natta’s recent comments suggest that he views this as a distinct advantage:

“We think we’re different from Facebook because you don’t have to have a real connection to use it. Maybe you use it to discover music. Music tastes get influenced by your friends. Also movies. These are touchstones in relationships. You shouldn’t have to know them in the socialization of content.”

The upshot of allowing fictitious profiles? Absolutely insane early growth rates. But no one anticipated the hidden downside to this decision: how do you convince advertisers that you really are serving up relevant eyeballs for their products? Someone once commented that selling products and services on MySpace based upon users’ self-entered demographic data is like trying to market to people based upon who they dress up as for Halloween.

There’s a lot here worth reading. Let’s hope that someone at MySpace is taking notes.

via MySpace’s New Strategy Won’t Work, Either.

Blockuster Video, that one-time killer of the Ma & Pa video rental store, is in a tough bind. Having received a going-concern warning from its auditors in April, it has been trying to show investors that it has a real plan to turn its fortunes around.

It hasn’t been easy.

First, it’s getting walloped by Netflix, which owns mail-order rentals. Netflix is powerful enough to have beaten back Walmart’s nascent attempts to carve-out a corner of mail-order for itself. Next, Coinstar’s RedBox kiosks have provided cash-strapped consumers with an affordable alternative to the steep rental (and penalty) fees associated with Blockbuster.

So what’s the plan? Get ready for it: all those enormous stores are a good thing. Far from being a drag on profits, its stores will provide consumers with something the competition cannot: choices–

Thursday, the company will announce that if Blockbuster customers want a movie that isn’t available at their local store, they have another option: Blockbuster will mail the movie, on a rental basis, even if the customers don't subscribe to the company’s by-mail subscription plan, and charge the in-store rental price.

In addition, the company announced Wednesday an iPhone application that will let Blockbuster customers check in-store availability and manage their online movie queues.

“It’s not always about price,” says Mr. Keyes, who led the turnaround of convenience retailer 7-Eleven in his days as chief executive there. “It’s more about value, being able to provide a whole package. That’s where we think Blockbuster will prevail.”

I doubt the market– or consumers –will perceive the value proposition in quite the same way. The notion that a customer who visits a Blockbuster store only to find their intended video out-of-stock will be impressed by the fact that they can–

1. Wait in line
2. Place an order with a clerk
3. Receive the intended video several days later in the mail

–is highly doubtful. If I were to visit a video rental store and was unable to find the video I wanted, I would go home and look for it on Netflix’s innovative Instant Viewing service, which allows me to stream the movie right to my TV.

Or, better yet: I would avoid going to Blockbuster at all.

Let’s see if anyone buys this Jedi mind-trick.

via Blockbuster Tries to Recast Itself – WSJ.com.

Here’s what’s not news: Twitter is down again. The popular microblogging platform has been beset with stability concerns throughout its short lifespan, and the sheer number of outages has placed the term “fail whale” squarely within the popular vernacular.

Normally, these outages are the cause of systemic instability related to Twitter’s astronomical growth rates. Then, a few months back, a single Twitter user managed to down the entire site when his political comments made him the target for scads of Russians with an axe to grind. This DOS attack took Twitter down for the better part of a day.

Oh, and don’t forget about the time that a bunch of private internal documents were hacked from Twitter and given to Mike Arrington’s TechCrunch. These documents included, among other things, the company’s business strategy roadmap and internal valuation.

Oops.

Now, several digital media outlets are reporting that the latest DNS attack may have been the result of an Iranian hacker group calling itself The Iranian Cyber Army. Apparently, the ICA replaced Twitter’s name and logo with its own after redirecting users to non-Twitter servers.

Given the precarious nature of Twitter’s security, it’s hardly a feather in the cap of the Iranian Cyber Army to have taken it down. Seems like any bright hacker with time to kill can do so. You want to really impress people? Down Facebook.

via Twitter Disrupted by Web Attack – Bits Blog – NYTimes.com.