An Ignoble Experiment

2. Report: Apple's iTunes Radio terms more generous than Pandora

Mobile malware threats surged 614 percent between March 2012 and March 2013 to eclipse 275,000 total malicious apps, according to a new Juniper Networks report.

Ninety-two percent of all mobile malware identified by Juniper's Mobile Threat Center targets Google's (NASDAQ:GOOG) open-source Android operating system, up from 24 percent in 2010. Juniper blames Android's vulnerabilities on the fragmentation afflicting the platform, noting that the vast majority of devices run older versions of the OS, preventing them from receiving new security measures delivered by Google and leaving users exposed to even known threats. "According to Google, as of June 3, 2013, only 4 percent of Android phone users were running the latest version of the operating system, which provides mitigation against the most popular class of malware measured by the MTC that makes up 77 percent of Android threats," Juniper said.

Attackers are also exploiting lax security standards across third-party Android app stores. "The MTC identified more than 500 third-party Android application stores worldwide, most with very low levels of accountability or oversight, that are known to be hosting mobile malware--preying on unsuspecting mobile users as well as those with jailbroken [Apple (NASDAQ:AAPL)] iOS mobile devices," Juniper said. Three out of five malicious third-party stores originate from either China or Russia, the network services firm added.

Seventy-three percent of all known mobile malware falls into the category of "FakeInstallers"--SMS Trojans that transmit messages to premium rate numbers without the user's consent, under the guise of installers for legitimate applications. Juniper research indicates that each successful FakeInstaller attack can yield approximately $10 in immediate profit. The MTC also found that a growing number of more sophisticated attackers are designing intricate botnets and targeted attacks capable of disrupting and accessing data across corporate networks.

Juniper additionally identified a series of legitimate free applications that could leak corporate data on devices. "Free mobile applications sampled by the MTC are three times more likely to track location and 2.5 times more likely to access user address books than their paid counterparts," the company said. "Free applications requesting/gaining access to account information nearly doubled from 5.9 percent in October 2012 to 10.5 percent in May 2013."

The Juniper Networks report follows on the heels of a new Lookout Mobile Security study revealing that more than 1 million U.S. consumers have downloaded adware to Android devices over the past 12 months. Approximately 6.5 percent of all free Android apps available for download from the Google Play digital storefront contain adware, defined by Lookout as ad networks that exhibit intrusive behavior without first securing appropriate user consent--e.g., displaying advertising outside of the normal app experience, harvesting personally identifiable information or initiating unexpected actions in response to ad clicks. Adware is most commonly lurking inside personalization apps (26 percent), followed by racing games (23 percent) and sports games (18 percent).

For more:
- read this release

Read more about: Google Play, Metrics
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3. Microsoft: Windows Phone is 'growing faster than anyone else'

Apple (NASDAQ:AAPL) has begun circulating financial terms of its forthcoming iTunes Radio streaming music service to independent record labels, with The Wall Street Journal reporting that many of the stipulations are more generous to labels than their current agreements with rival Pandora Media.

Initially rolling out in conjunction with the new iOS 7's overhauled Music app, iTunes Radio enables listeners to access more than 200 Apple-curated featured stations or to create their own stations based on favorite artists and songs. Users may also share stations with friends. Any song played through iTunes Radio may be purchased with one click from Apple's iTunes digital storefront, the music business' largest source of digital revenues with an estimated $4.3 billion in download sales in 2012.

iTunes Radio will pay royalties to labels based on how many times listeners hear their songs and how much advertising Apple sells, the Journal states. During the first year the service is live, Apple will award label partners 0.13 cents each time a song is played, as well as 15 percent of net advertising revenue, proportionate to a given label's share of the music played on iTunes Radio. In year two, label payouts increase to 0.14 cents per listen and 19 percent of ad revenue. Some people familiar with Apple's thinking said ad revenues may not be significant, however, explaining that the computing giant is looking to monetize iTunes Radio more by encouraging consumers to purchase songs they like from the iTunes storefront, in turn driving sales of iPhones, iPods and other hardware.

By comparison, Pandora pays labels 0.12 cents per listen on its free service. Apple is also offering music publishers more than twice as much in royalties as Pandora. Pandora founder Tim Westergren told the Journal it is unfair to compare Apple's royalty rates with Pandora's because their respective digital radio services contain different features that could trigger different royalty payments. "It's apples and oranges," Westergren said in reference to the two services.

Apple will not pay royalties for some performances of songs that are already included in listeners' iTunes libraries, or songs on an album that a listener owns some part of. So-called "Heat Seeker" tracks selected by iTunes editors for special promotions are also exempted. Moreover, Apple is not required to pay for some iTunes Radio songs skipped by listeners within the first 20 seconds, although royalties do kick in once a user has skipped three or more songs within an hour.

An Apple spokesperson declined to comment.

Rights management organization Broadcast Music Inc. recently filed suit against Pandora Media, petitioning the Federal Rate Court to set royalty fees for all music played across the streaming music platform. The suit follows on the heels of Pandora Media purchasing South Dakota terrestrial radio station KXMZ, a move to capitalize on reduced performance royalty fees available to broadcast radio stations and Internet radio services operated by owners of broadcast outlets.

In November 2012, Pandora filed a lawsuit in a federal district court seeking a license with terms available to Internet radio services under a settlement between the Radio Music Licensing Committee and the American Society of Composers, Authors and Publishers, which determined that each licensee would pay a royalty of 1.7 percent of their gross revenues. By comparison, Pandora handed over 4.1 percent of total 2012 revenues to its performance rights partners. Music publishers told Billboard that Pandora is "trying to turn that [RMLC/ASCAP] deal on its head" by acquiring KXMZ.

"Pandora's stunt makes a mockery of the performing rights licenses and the rate court process," BMI said in the lawsuit, filed in the U.S. Southern District Federal Court in New York. In a separate statement, the organization--which represents more than 600,000 songwriters, composers and music publishers--said it is asking the court to set "reasonable, market-driven fees for Pandora" after direct negotiations with the company came to a halt.

Earlier this week, Cracker frontman David Lowery published a much-discussed Trichordist essay revealing that Pandora users played the band's song "Low" more than 1.15 million times during the first quarter of 2013, generating songwriting payments of just $16.89--"Less than I make from a single T-shirt sale," Lowery writes. "Low" earned Lowery $1,522 from U.S. terrestrial radio and $181 from Sirius XM during the same period. "I urge all songwriters to post their royalty statements and show the world just how terrible webcasting rates are for songwriters," he writes. "The revolution will not be webcast."

For more:
- read this Wall Street Journal article

Read more about: Apple, iOS
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By Jason Ankeny

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4. Facebook install ads galvanizing iOS app download growth, Fiksu says

Microsoft's (NASDAQ:MSFT) Windows Phone mobile operating system has eclipsed BlackBerry (NASDAQ:BBRY) and is "growing faster than anyone else right now," Windows Phone Senior Product Manager Larry Lieberman told The Verge.

"We think we're solidly the third ecosystem right now," Lieberman said during an interview at Microsoft's Build developers conference. "That's a huge announcement in some respects."

Lieberman dismissed the competitive challenge posed by BlackBerry, which launched its overhauled BlackBerry 10 OS earlier this year. "I don't think they can bring to the table some of the things we have," he said. "The fact like we're delivering across such a different set of price points to such a large audience." (In addition to high-end Windows Phone devices, Microsoft partner Nokia [NYSE:NOK] has rolled out products like the Lumia 610, a low-end handset designed to expand the OS into new consumer markets.)

Vendors shipped 7 million Windows Phone units worldwide during the first quarter of 2013, up 133 percent from 3 million during the first three months of 2012 and increasing the platform's global market share from 2 percent to 3.2 percent, research firm IDC reported last month. Nokia accounted for 79 percent of all Windows Phone shipments during the quarter, IDC added. BlackBerry shipments declined to 6.3 million during the first quarter, plummeting 35.1 percent from 9.7 million during the year-ago period. BlackBerry's market share slipped from 6.4 percent to 2.9 percent.

Windows Phone nevertheless continues to trail far behind Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS. Manufacturers shipped 162.1 million Android smartphones during the first quarter, a 79.5 percent year-over-year spike. The Google OS accounted for 75 percent of all shipments during the period, up from 59.1 percent in the first quarter of 2012. At the same time, Apple posted its largest-ever first quarter volume on the strength of iPhone shipments of 37.4 million, up 6.6 percent from 35.1 million a year ago. iOS suffered a year-over-year decline in market share, however, sliding from 23 percent to 17.3 percent.

Lieberman acknowledged that Windows Phone must make dramatic gains to catch up to Android and iOS, admitting that the platform must increase both the size of its addressable device market and its third-party mobile software developer community. "It's chicken and egg, so we need to create the bionic chicken," he cracked.

For more:
- read this Verge article

Read more about: Microsoft, Nokia
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By Jason Ankeny

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5. Google Now for Android adds TV Cards, Google Offers

Daily downloads from Apple's (NASDAQ:AAPL) App Store increased 5 percent in May, in part driven by increasing marketer spending on Facebook (NASDAQ:FB) mobile app install ads, mobile user acquisition platform Fiksu reports.

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The Fiksu App Store Competitive Index, which measures the average aggregate daily download volume of the top 200 free U.S. iPhone apps, reveals that App Store downloads averaged 5.9 million per day last month, up from 5.61 million per day in April. Fiksu notes that May 2013 App Store traffic increased 31 percent year-over-year, underlining both the continued growth of the mobile sector as well as some maturation in the overall quality of mobile apps and their ability to engage consumers.

Fiksu's Cost per Loyal User Index, which measures the cost of acquiring a loyal user for brands who proactively market their apps, decreased 11 percent to $1.33, down from $1.50 the previous month.

"Mobile app marketers have quickly realized the disruptive power of Facebook mobile app install ads, which have poured a new stream of effective and cost-efficient inventory into the market," Fiksu CEO Micah Adler said. "Savvy marketers have already taken advantage of Facebook's extensive capabilities for focusing on specific audiences, and as more brands follow suit, we can expect volume to continue to climb--along with costs, as competition heats up in the coming months."

The Facebook install ads, introduced last fall, target consumers based on the apps and games they already access on their smartphones. Developers select their intended audience demographic, budget and method of payment, and Facebook inserts ads for their apps directly into targeted users' mobile news feeds.

Fiksu also credits May's gains to Apple's decision to stop accepting new iOS apps and updates that access unique device identifiers [UDIDs] to collect personal data about consumers, a ban that went into effect on May 1. Developers must now leverage vendor or advertising identifiers introduced in Apple's iOS 6. "[Those moves] prompted many marketers who were waiting for the dust to settle on the new, standardized solution to resume regular marketing activities," Fiksu explains.

The Fiksu platform is designed to help brands more cost-effectively market their iOS and Android applications, leveraging predictive algorithms to optimize advertising campaigns in real time. The firm has accumulated more than 119 billion app actions like launches, registrations, in-app purchases and real-time bidding requests.

For more:
- read this release

Read more about: App Store, Fiksu
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By Jason Ankeny

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