Stock markets slipped across the world today, probably fuelled by a drop in China’s Stock Exchange. The Nasdaq (the NY technology SE) has slipped just as all the others have, raising the possible question of a Web 2.0 bubble burst, brought about by other economic factors. Since the question ‘is this a bubble?’ is asked (or answered) by someone just about everyday in the tech blogosphere, I thought this would be a good opportunity to take a look at what might happen from here, using some common-sense economics.

In order to work out if we will see a bubble, we need to take a guess at what this stock slip means for the rest of the economy; this is either a correction of stock prices which were becoming slightly over-optimistic, or it is a more sinister economic downturn.

In the first case, there will be little or no impact on Web 2.0, because private equity is over-funded at the moment anyway, and they want to spend that money. If other areas of the economy, such as advertising and consumer spending, are doing well, then there is no reason why web companies shouldn’t continue to succeed. Therefore venture capital will continue to be available, and companies will continue to succeed.

However, in the other option, there could be a significant impact. Crucially, if the advertising market is hit (which can be one of the first cuts companies make if they are short of cash) then monetisation for much of the Web 2.0 sector becomes much harder. Companies will also have less cash to make acquisitions. Therefore, in a situation when it is difficult for Web 2.0 companies to succeed, the good venture exits (such as that seen with YouTube and Skype) will not happen because a) the companies won’t be making any money, and will have little prospect of making money, and b) no-one will be able to afford them anyway. In this situation, we could see a ‘bubble burst’, although it will be far less dramatic than that seen in 2000.

We’ll have to watch over the coming weeks to see what happens; I’m fairly hopeful that this is just a recognition by the markets that they were getting a little too excited. Given that the economy is inevitably cyclical, it seems much healthier to have mini booms and mini busts with sustained net growth than enormously successful booms and devastating busts.

Google Finance is the best place to get stock prices for the US stock exchanges. Unfortunately they don’t display the FTSE (the UK index), so you have to use Yahoo Finance for that.

Ars Technica is reporting that Microsoft are pushing out a new update via Windows Update to their controversial anti-piracy software, Windows Genuine Advantage (WGA).

WGA is a tool which runs on the user’s system and verifies whether Microsoft thinks the user is running and genuine, or pirated version of Windows. If it finds you’re not running what it thinks to be an illegally acquired version of Windows, it nags you via the system tray to do something about it (i.e. buy a licence). You also can’t install certain applications and updates without having successfully validated your Windows installation.

It sounds simple enough, but WGA has come under fire for privacy issues (it phones home to perform the validation) and because it kept producing a lot of false positives.

This update is supposed to reduce the number of false positives and apparently there’s a new category called ‘Not Sure’, which, as the name suggests, is the category you get put in if Microsoft have doubts about your copy’s authenticity.

While Microsoft has not responded to requests for comment, it’s quite obvious what is going on here: Microsoft has added “not sure” as a way of cutting down on the number of false positives associated with WGA. As many as one in five PCs were failing WGA checks, but this new setting should both reduce this and give Microsoft the chance to investigate further the kinds of things that are landing folks in the “not sure” category.

I think part of the problem here is that a lot of OEM copies of Windows, that is, copies bundled with and usually pre-installed on PCs, use one activation code for each batch of computers (or even a whole model). That meant that if that one key got leaked, many users would find themselves being told about their illegal copies.

Clearly, piracy is something that Microsoft have to address, but the way they are going about it in recent times has not made them many friends. This move looks to be them toning down the severity of WGA.

One thing strikes me though - how easy it would be for malware to emulate WGA’s notifications and perhaps extort sums of cash from unsuspecting users to ‘fix’ the problem. Or maybe that’s just me.

Have you been falsely marked as a pirate by WGA? What are Gizbuzz readers’ thoughts on the issue? Let us know in comments.

If you want a quicker way to search the Gizbuzz blog archives, and you’re using Firefox 2 or Internet Explorer 7, you’re in luck! I’ve just added an OpenSearch setup, so you can search Gizbuzz really quickly and easily from the built-in search box.

To add us, just go to any Gizbuzz page and click the down arrow on the search box and choose to add Gizbuzz.

You can remove it again by going to Manage Search Engines (in Firefox) on that same menu.

Enjoy!

I just became the owner of a brand new 13″ white MacBook and for the first time, I’ve been able to experience for myself many of the delights of Mac OS X.

Safari is Mac OS X’s default browser and it is a fine browser at that. According to Wikipedia, it has a market share now of around 4.7% in Q1 2007, and the general trend is increasing.

In this special Gizbuzz post, I thought I would take a look at Safari - where it is now and where it might go in the future.

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The BBC is reporting that Viacom, the network behind MTV and many other major brands, has announced availability of a YouTube-style embeddable player for clips from their shows which can be inserted into third party websites. This follows their demand to YouTube to remove 100,000 of their videos, and the availability of such a player from Comedy Central in late 2006. This is interesting because it marks a change in the way that large media companies are thinking about new media.

The first point is that they are prepared to, to some extent, lose control of their content, in that they are enabling it to be displayed anywhere on the web. Whilst that has clear advantages (because of the viral growth possible with videos displayed on blogs and social networking profiles etc), it is not something that companies like Viacom have been prepared to do before. I could easily set up a splog or exploit site using the Viacom videos as free content. For obvious reasons Viacom would not want to be associated with such a site.

The second interesting point is that they have decided to go it alone, leaving the much higher viewing figures possible by using YouTube on the table. There are a few advantages for them in this. Firstly they maintain more control than otherwise over their content. They get better metrics; they can count how many times their video has been viewed, where it has been embedded, what country the viewers were in and whether they watched the video to the end. They decide, rather than viewers, which clips are posted on the internet. Most importantly, however, is the change in advertising model. By going it alone, Viacom may get fewer views of its videos, but it does keep the whole amount from the advertising rather than being forced to share it with YouTube or a similar service.

Ultimately, if Viacom can make itself an online content destination, this will result in more money for them, which would make this a very sensible move indeed.

Steve Jobs has just posted an open letter to the world on the Apple website, talking about various issues surrounding DRM, addressing concerns about iTunes + iPod lock-in, and interestingly, saying that if they could, they would remove DRM from the iTunes Store.

The third alternative is to abolish DRMs entirely. Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Apple are apparently feeling the heat from judgements in places like Norway, where the iTunes + iPod lock-in has been declared illegal by the Norwegian government. I think Apple see the threat here, that if one country takes out iTunes, other markets could follow suit and that could be disastrous for Apple. Therefore, if Apple manage to get rid of the DRM, then iTunes can no longer be a problem, as it won’t lock you into an iPod anymore (assuming they offer downloads in a standard format, like MP3).

Much of the concern over DRM systems has arisen in European countries. Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.

This sounds like very promsing news for anyone in the anti-DRM camp (like me), and it sounds quite convincing. Clearly, from some of the statistics Mr Jobs made clear in this letter, iTunes could be selling a lot more songs than it is at the moment (only 3% of all music on iPods is bought from iTS) and I guess this is where Apple’s real motive is.

Still, it’s very good news for anti-DRM folks, and it almost looks possible that in time and with some persuasion from other big players in this business, the recording industry will realise that the downfall of DRM is inevitable.