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Swindlers have stepped up their effort to fleece millions of dollars from online advertisers who use lucrative marketing networks run by Google and Yahoo, according to a quarterly report to be released on Monday.

The sales referrals generated by clicks on the brief advertising links popularised by the two internet powerhouses are a sham 14.1% of the time, based on information collected from 1,300 online marketers. That’s up from a click fraud rate of 13.7% three months ago, according to Click Forensics, a San Antonio-based consulting service that compiles the index. The statistics jibe with other data asserting advertisers are paying a significant sum to Google, Yahoo and their partner Web sites for phantom shoppers even as more resources are devoted to thwarting scammers.

A recently released survey of 407 online advertisers by market research firm Outsell estimated click fraud cost advertisers $800m last year. Click fraud is a highly sensitive subject for Mountain View, Google and Sunnyvale, Yahoo because it raises doubts about the trustworthiness of the advertising model that drives their profits and stock prices. Google, Yahoo and partner Web sites get paid each time someone clicks on advertising links usually displayed at the top and on the side of Web pages.

Advertisers pay the commission even when the click doesn’t produce a sale — a system that inspired bilking schemes. The motives for click fraud vary. Most often, Web site owners repeatedly click the ads on their own sites to generate money for themselves. In other cases, advertisers target the ads of their rivals to drain their marketing budgets.

As click fraud becomes more prevalent and attracts more media attention, advertisers are becoming more aggressive about demanding refunds and better protection, said Tom Cuthbert, Click Forensics’ president. “Advertisers aren’t satisfied with the status quo,” he said.

“They don’t want to keep losing sleep at night wondering how much money they are losing to click fraud.” Reflecting those concerns, about 900 advertisers have joined Click Forensics’ anti-fraud network during the past three months. Google and Yahoo are better at weeding out click fraud than smaller Web sites, but Click Forensics still concluded both companies are being hard hit.

About 12.8% of the clicks on ads served up by Google and Yahoo are deceptive, up from 12.1% three months ago. Mr Cuthbert said Google and Yahoo may be identifying some of those fraudulent clicks and removing fees from advertisers’ bills. Both companies are tightlipped about how they monitor for click fraud, another factor that has frustrated some advertisers that want more transparency.

Google chief executive Eric Schmidt acknowledged click fraud remains an ongoing headache, but disputed the notion that the problem is becoming more prevalent. “Smart people are trying to break the law, but we have even smarter people trying to prevent it,” Mr Schmidt said during an interview at a conference that concluded Sunday in Idaho. Yahoo CEO Terry Semel declined to discuss the latest data on click fraud, saying he intended to address the issue Tuesday when the company is scheduled to release its second-quarter earnings.

“We will be very proactive about it,” Mr Semel said during the same Idaho conference. Both Google and Yahoo have agreed to settle class-action lawsuits to limit their potential liability for past click fraud. If approved, the two settlements would address any click fraud that occurred amid more than $22bn of ad spending. A two-day court hearing on Google’s offer to pay up to $90m in refunds and attorney fees is scheduled to begin July 24 in an Arkansas court. Yahoo’s proposed settlement, which doesn’t limit how much the company might pay, isn’t scheduled to be reviewed in a Los Angeles federal court until late this year.

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Microsoft Corp. picked two well-respected technical minds to fill the void from founder Bill Gates’ pending departure in two years, but it also identified a next tier of leaders charged with reinventing the software giant to compete against younger, agile rivals.Grabbing headlines in Thursday’s announcements were Ray Ozzie, 50, who assumes the company’s top technical mantle as chief software architect, and Craig Mundie, 56, who takes over some of Gates’ role as long-term visionary.

But Microsoft also tapped a next tier of technical talent in J Allard, Steven Sinofsky and Bob Muglia — executives in their 30s and 40s — to play a larger role in shaping the company’s future business and technology strategy.

Analysts said all three have won the respect of Microsoft’s rank-and-file programmers with deep technical knowledge and an understanding that technology improvements cannot come at the expense of delays to new products, a problem that has plagued the company’s mainstay Windows division.

“They have really good technical minds and really good experiences about what kind of decisions you have to make in order to ship a product,” said Rob Horwitz, an analyst at independent research firm Directions on Microsoft.

“Those are the guys with their feet on the ground and not as much pie in the sky.”

An ability to ship new products in a timely manner seems all the more important in light of investor perceptions that Microsoft has been outmaneuvered by aggressive and more agile competitors like Google Inc. and Yahoo Inc.

“Microsoft is at a crucial inflection point,” said Jupiter Research analyst Joe Wilcox. “The technologists are important for the company’s future.

The decision by Gates to step back from Microsoft in two years follows longtime Windows guru Jim Allchin’s plan to retire after Windows Vista ships in 2007, representing a changing of the guard at the Redmond, Washington-based company.

“The world has had a tendency to focus a disproportionate amount of attention on me. In reality, Microsoft has always had an unbelievable strong depth and breadth of technical talent,” Gates said at a news conference on Thursday.

WHO’S NEXT

Sinofsky, 40, earned his stripes as the head of product development for the Microsoft Office business software team, gaining a reputation as a tough taskmaster with an ability to meet targeted release dates.

Earlier this year, he took on the role of leading the team of developers creating the next version of Windows after Vista. Sinofsky’s responsibilities include integrating the operating system with a set of Windows Live Web-based services.

Allard, 37, gained prominence with a note he sent to Microsoft leaders about the looming importance of the Internet, which became the basis for the company’s change of strategy to embrace the Internet in the mid 1990s.

An avid video game player, Allard now oversees the engineering and design of the Xbox game console. He pushed Microsoft into online gaming well before rivals Sony Corp. and Nintendo Co. Ltd.

Muglia, 46, has the longest track record of the three at Microsoft, having joined the company in 1988. As the senior vice president of Microsoft’s server and tools business, Muglia needs to keep outside developers happy with its tools and technology professionals using its servers.

All three executives were already considered stars in the company, but analysts said granting them more say over strategy and keeping them happy and motivated is a smart move.

Navigating government bureaucracy is not easy, but it may become faster with Google Inc.’s new search site for U.S. federal, state and local government.Google U.S. Government Search, http://usgov.google.com, was launched on Thursday by the search leader.

Google said the site should make finding U.S. government information easier for government employees and contractors. For example, a search of the word “highway” on the site returned links to the Federal Highway Administration and the California Highway Patrol.

Another for “Iraq” returned links to Library of Congress documents and The World Factbook, a collection of country profiles published annually by the Central Intelligence Agency.

The site can be personalized and also offers news from the White House, the armed forces and even provides a weather report for Washington, D.C.

It is the latest in a series of specialized content sites developed by Google, which launched a search engine devoted to Shakespeare on Wednesday.

Al Losey, a corporate trainer at a Detroit auto parts maker, lost his job six weeks ago in what could be another down-and-out story from a hard luck corner of the American economy.Instead, Losey, and his wife Peggy, a devoted part-time seller of odds-and-ends on eBay, flew to Las Vegas this week trying to change their fortunes by hitting the jackpot as full-time sellers on the online auction site.

They joined thousands of other hopefuls who made the pilgrimage to eBay Inc.’s annual user conference to learn how 1.3 million people worldwide support themselves, in whole or in part, through online auctions.

“This is a great opportunity to kind of do our own thing,” said Al, who, after being downsized from two jobs in the auto industry in six years, is ready to join his wife of 35 years in building a small business online.

“We’ve had it with corporate America,” says Peggy. “I’m tired of relying on other people,” echoes her husband.

Since 1998, she’s created a sideline to her day job as a medical assistant by scouring garage sales for items many people might consider junk, but collectors on eBay covet. Now, the couple are gearing up to become full-time eBay sellers.

“No more mom-and-pop operation. It’s time to move up to the next level,” Al enthuses during a break in courses on how to incorporate a small business and become trading assistants by helping manage other people’s eBay sales.

The middle of Middle America — retirees, stay-at-home moms and school teachers — are learning how to support themselves by the detailed work of turning items they buy on the cheap into profitable sales.

EBay sellers are protected from what to outsiders might seem like the latest in a long line of get-rich-schemes because they control the sale price and how payments are received, minimizing the risk of fraud.

TURNING JUNK INTO GOLD

Trainers at the event estimated there are 12 million eBay sellers, including those who sell the occasional unwanted item on eBay’s vast market. EBay recently signed up its 200 millionth registered user worldwide.

“It’s pretty much my life,” says Nancy MacGillivray, 49, of San Marcos, California. She turned to eBay four years ago, after her employer went bankrupt.

Her schooling 30 years ago in fashion merchandising came in handy. She sells extra large-sized clothing for young people under the eBay seller name Plus Size Fashions and More.

Her daughter, Kristi Roller, 22, a fashion student, started out helping her mother, but now runs her own eBay business, called KLR Couture, which specializes in clothing for juniors.

MacGillivray says she sells 35 to 50 packages of clothing a day, which at an average price of $20, translates into around $700 to $1,000 in gross sales. Among eBay sellers, she ranks as No. 8,904 in volume, company figures show.

“Last year it started to feel like a real business,” Nancy says. “But I’m still waiting to hit the jackpot.”

“You’re happy, mother. Don’t be greedy,” chides Kristi

Peggy Losey believes she hit the jackpot three weeks ago, when she found some old plates shaped like lettuce leaves. She recognized the markings a type of Majolica pottery she’d seen on an antiques television show.

Because they had tiny chips on the edges, she paid just $10 for 15 pieces. When listing the items for auction on eBay, she acknowledged the defects, fearing the wrath of buyers and the harm to her all-important user feedback rating if she did not.

She auctioned off the plates for $1,419. Coming just weeks after her husband’s lay-off, it amounted to winning a jackpot.

“I was just running around the house yelling, ‘Oh, my God! Oh, my God!’”

Christian Godfrey is more sanguine about eBay.

“There is no jackpot,” Godfrey said. “It’s just another way to sell.”

Still, he drove 12 hours with his wife, Kathy, 37, from their home in Idaho Falls, Idaho. The 39-year-old teacher of Web site development at a technical college has been on eBay since 1998. He says he sells $2,000 a month of merchandise, mostly home furnishings.

“Everyone thinks that people can sell junk on eBay and make lots of money,” Godfrey said. “It’s way more work than people let on,” he said between checking on inquiries. “That’s the problem,” he says. “You are on call all the time.”

Yahoo Inc., the world’s largest provider of e-mail services, said on Monday that a software virus aimed at Yahoo Mail users had infected “a very small fraction” of its base of more than 200 million accounts.The e-mail virus, or worm, has been dubbed Yamanner and landed in Yahoo mailboxes bearing the headline “New Graphic Site.” Once opened, the message infects the computer and spreads to other users listed in Yahoo users’ e-mail address books, security experts said.

The e-mail containing the virus need only be opened — in contrast to most worms that are hidden in attachments and require users to take an additional step — to release the virus, according to computer security site Symantec Corp..

The Sunnyvale, California-based company advised users to update virus and firewall software on their computers and to block any e-mail sent from the address “av3@yahoo.com.”

“We have taken steps to resolve the issue and protect our users from further attacks of this worm,” Yahoo spokeswoman Kelley Podboy said in a statement.

“When we learn of e-mail abuse, such as a worm or other online threat, we take appropriate action,” she said. “(A) solution has been automatically distributed to all Yahoo Mail customers, and requires no additional action on the part of the user.”

Yamanner, first detected by Yahoo and major computer anti-virus software makers earlier on Monday, was ranked as having a low threat level by Trend Micro Inc. and McAfee Inc.

But Symantec considers the worm an “elevated threat,” one step up from the lowest ranking in terms of relative danger.

Symantec’s Security Response site suggested Yahoo Mail users might protect themselves by upgrading to the latest test version of the recently upgraded Yahoo Mail software.

“The worm cannot run on the newest version of Yahoo Mail Beta,” Symantec’s site said.

A Yahoo spokesman was not immediately available to comment on whether the company advised users to do this.

The worm exploits a vulnerability in Javascript technology used to make the mail program easier to use by triggering embedded HTML scripts to run in the computer user’s browser.

The e-mail addresses are also sent to a remote online computer server, which may be used to run spam campaigns, experts said. The technical name of the worm goes by variants of “JS.Yamanner.”

source - reuters

The newspapers of the future - cheap digital screens that can be rolled up and stuffed into a back pocket - have been just around the corner for the last three decades.But as early as this year, the future may finally arrive. Some of the world’s top newspapers publishers are planning to introduce a form of electronic newspaper that will allow users to download entire editions from the Web on to reflective digital screens said to be easier on the eyes than light-emitting laptop or cellphone displays.

Flexible versions of these readers nay be available as early as 2007.

The handheld readers couldn’t come a moment too soon for the newspaper industry, which has struggled to maintain its readership and advertising from online rivals.

Publishers Hearst Corp. in the U.S., Pearson Plc.’s Les Echos in Paris and Belgian financial paper De Tijd are planning a large-scale trials of the readers this year.

Earlier attempts by book publishers to sell digital readers failed due to high prices and a lack of downloadable books.

But a new generation of readers from Sony Corp. and iRex, a Philips Electronics spin-off, have impressed publishers with their sharp resolution and energy efficiency, galvanizing support for the idea again.

“This could be a real substitution for printed paper,” Jochen Dieckow, head of the news media and research division of Ifra, a global newspaper association based in Germany, said.

It’s easy to see why publishers are keen. Digital newspapers, so called e-newspapers, take advantage of two prevailing media trends — the growth of online advertising and widespread use of portable devices like the iPod music player.

Nearly all papers run Web sites, but few readers relish pulling out laptops in transit or risk dropping one in the bathroom.

E-newspapers would cut production and delivery costs that account for some 75 percent of newspaper expenses.

Circulation in the $55 billion U.S. newspaper industry has slid steadily for nearly two decades as papers compete with Internet news for attention and advertising dollars.

Some publishers now see new devices as a way to help them snatch a bigger slice of online advertising and protect their franchise in reading away from home.

Ad spending on newspaper Web sites grew 32 percent in 2005 but only accounted for 4 percent of total ad spending in newspapers, according to the Newspaper Association of America.

Still, little is known about demand for an e-paper. “The number of consumers who are interested in reading on the go as opposed to listening to music on the go is probably smaller in the U.S. today,” NPD Group analyst Ross Rubin said.

PRINT SCREENS

Sony and iRex’s new devices employ screen technology by E Ink, which originated from the Massachusetts Institute of Technology’s Media Lab. Investors include Hearst, Philips, McClatchy Co., Motorola Inc. and Intel Corp.

The company produces energy-efficient ink sheets that contain tiny capsules showing either black or white depending on the electric current running through it.

Some of the latest devices apply E Ink’s sheets to glass transistor boards, or back planes, which are rigid. But by 2007, companies such as U.K.-based Plastic Logic Ltd will manufacture screens on flexible plastic sheets, analysts say.

Separately, Xerox Corp. and Hewlett-Packard Co. are developing methods to produce flexible back planes cheaply. Xerox, in particular, has created a working prototype of system that lets manufacturers create flexible transistor boards much like one would print a regular paper document.

Production costs are expected to be low enough soon for publishers to consider giving away such devices for free with an annual subscription. Data on subscribers could also help publishers better tailor ads.

Sony’s reader will cost between $300 and $400. “If you can get one of these products to cost less than the cost of a year’s subscription it could probably work,” Kenneth Bronfin, president of Hearst Interactive Media, said.

He declined to name which other groups plan testing, but said Hearst’s San Francisco Chronicle and Houston Chronicle will likely be among the first of its 12 daily papers to offer such devices to several hundred subscribers later this year.

In Europe, Ifra is discussing trials with 21 newspapers from 13 countries. The New York Times Co. is a member.

Sony is separately in discussions with some publishers to offer newspaper downloads in its e-bookstore due to launch this summer, although no decision has been made, said Lee Shirani, vice president of Sony’s online content service, Sony Connect.

Like Napster and BitTorrent before it, LTDnetwork’s Qtrax is a brand from the early days of peer-to-peer music piracy that is relaunching as a completely legal service.The reborn version formalized the evolution by announcing a deal with EMI Music to make the music company’s catalog available to its users.

Qtrax still allows consumers to get free music, but there will be no free lunch. The service is ad-supported, and the free songs are in a proprietary “.mpq” format that can only be played a limited number of times and only on the computer to which they were downloaded.

Additionally, each time a track is played, the Qtrax player offers click-to-buy purchasing.

It also suggests that the user upgrade to a premium subscription service for a flat monthly fee, in which case they get unlimited downloads in Windows Media format that can be moved or transferred to almost any digital music player except Apple’s iPod. The songs become unplayable should the subscription lapse.

“Qtrax is going to offer the consumer a pretty cool way to sample and discover music in a way that P2P users are used to,” said Ken Parks, EMI’s senior vice president for strategy and business development. “The difference is, you’ll be presented with stuff that is cleared in a way that respects copyright yet preserving that ‘free’ experience. You’ll not be asked to pay until you want to pull the trigger, so it’s a pretty friendly place to explore and discover music.”

Financial terms of the EMI deal were not disclosed, but EMI does get a share of advertising revenue generated by Qtrax.

“Advertisers are willing to pay a lot of money to be associated with music, and the music industry is willing to cooperate as long as the value is preserved and the artists get paid,” Parks said.

Some of the advertising will be served in way relevant to the results of song searches and will include click-through options to buy products on Shopping.com.

An additional opportunity allows labels to promote artists through spotlight placement on the Web site. EMI is testing the capability internally with such artists as KT Tunstall, Coldplay and Gorillaz.

Parks said that EMI also will get valuable data because it will know every time a song is played and whether that resulted in the consumer making a purchase. That same tracking capability ensures that royalty payments are very accurate, he added.

There is no firm date for Qtrax to launch, though EMI has begun delivering and registering its content with Qtrax’s filtering system, powered by Audible Magic. The company has said it is waiting to sign with the other major labels before it goes live to the public and is on schedule to enter a test phase this year.

Qtrax will incorporate community-building and music discovery tools along with incentive programs that provide discounts or additional music plays.

Founded in October 2000, LTDnetwork is a division of Brilliant Technologies Corp. that specializes in technologies, software and services for online retail, advertising, media and marketing companies.

In April, EMI Music announced a separate initiative with Rhythm NewMedia, the first major label agreement to provide videos to an ad-supported mobile service.

Collaborative trials already are under way. The ads are embedded in the on-demand programming similar to television but are highly targeted to individual users.