Slashdot Mirror

Good results

First, we have the second quarter fiscal 2002 results, released last week. These were actually really quite good. VA has reduced its cash burn to $6.1m/quarter this is not only a massive fall from the hardware services days of a >$30m cash burn, but is substantially below the target of $8m/quarter which VA announced at the time of quitting the hardware business. Having left the hardware and consulting businesses, VA was concentrating on selling its main software product, Sourceforge 3.0, and had made a number of new sales to blue-chip customers such as Stanford Universty and Pfizer. We had a few problems with their statement in the conference call and the press release that they had "$61m in cash and marketable securities" which is true, but highly misleading as to their actual financial position as they also have current liabilities of $18m (ie; they need this much to pay bills falling due in the next six months, so the actual cash available to burn is more like $43m), and we regard their description of the redundancy payments and lease cancellation fees which make up their restructuring costs as "non cash items" as actively ludicrous, but this is nit-picking; the facts as of a couple of weeks ago appeared to be that VA Software was on the raspberry road to profitability.

But .

Then we got this little bombshell; Slashdot, jewel in the crown of VA Software's OSDN network of Open Source websites, is moving to a pay subscriptions model a la Salon. Well, perhaps that's being a little bit too harsh; Slashdot isn't doing the full reader reduction exercise of making you pay for the only content you came to read, but it is going to be having "more intrusive" ads (by which I think we mean expanded banners and skyscrapers surely Slashdot wouldn't dare to go down the route of pop-ups or interstitials, would they? WOULD THEY? AARRGH!), and you'll be able to view slashdot without these ads at the bargain subscription rate of $5 per thousand pages. Obviously, this caused much wailing and gnashing of teeth among the assorted slashbots (2275 comments so far, nearly a third as many as adequacy.org's most popular article), but we can't help thinking that they're missing the point. Nobody, least of all VA, thinks that there will be material revenue opportunities from the subscription model; all this is, is a figleaf designed to allow Slashdot to accept pop-up X10 ads while giving its editors hobbyists Rob Malda and Jeff Bates, a lightning conductor of "well, why don't you subscribe?" to deal with the floods of threatening email they are likely to receive.

So fair enough. But when we read the actual announcement on Slashdot, we at adequacy.org got worried. When we think we're looking at a company which is on the right track, we don't like to see senior staff at its only profitable business unit making statements like:

" The large ads that you see on many other sites are coming here. We really don't have an option: these are what advertisers want, and if we don't provide them, we won't be around much longer"

or

" We won't create subscriber only features that cost more to maintain than they generate. But we do need support from you if we are to continue."

What the hell? Slashdot was known to be profitable and cash positive when taken over by Andover.net in 1999. Andover.net was known to be profitable and cash-positive when taken over by VA Linux in 2000. The OSDN group of sites was, according to the 2Q02 results conference call, the source of more or less all the revenue generated by VA Software. And now we're being told that the ad market is so precarious that the VA cash pile is likely to be burnt up imminently? What gives? Quite apart from anything, statements like "we won't be around much longer" are Forward Looking Statements. Companies with publicly traded securities outstanding should not be making forward looking statements outside of the context of a scheduled conference call or an announcement to the general public under Regulation FD. It is, quite simply, not good enough for Rob Malda to be making this kind of wild assertion about the trading conditions faced by the key media property in the only profitable division of VA Software, ad hoc and without any kind of "safe harbor" statement. We don't know whether or not this announcement was technically in breach of Section 21 (E) of the Securities Exchange Act 1934, but we do know that well-managed companies with competently run press office and investor relations functions don't leak rumors in this kind of way.

Adequacy investigates

When we at adequacy.org witness an informational cluster-fuck like this in the making, we want to dig and delve, for the benefit of you our readers. We're about to make a few fairly controversial statements in this report, and we'd like you to take the following on trust: all the statements we make below which are in bold face can be sourced to a prominent (as in, you'd recognise the name if we told you) employee of Slashdot. We at adequacy don't want to cost anyone their job, so we'll make the following statement:

The statements sourced to an employee of Slashdot were acquired as the result of IRC conversation on an open channel. For this reason, adequacy.org does not feel bound to protect its source come what may. However, on general principles, we will only hand over the IRC logs which prove the veracity of our information on receipt of a subpoena from VA Software. In the event of our receiving such a subpoena, we will do our very best to publicise throughout the Internet the fact that VA Software issued such a subpoena to us in order to track down a critical employee, something which we would imagine would not generate good publicity with the core slashdot audience.

Sourceforge is not profitable and looks like it never will be. According to our source, "it's a giant vacuum". And this seems about right to us. The recent conference call with VA Chief Executive Larry "Eleven Million Dollar Man" (that's how much VA stock he's sold for cash since the float) Augustin was full of the joys of Sourceforge "Enterprise Edition" 3.0, a "proprietary" version of the popular Open Source collaborative software development tool. Indeed, in response to a question, VA's Chairman and Chief Executive told the world that VA Software (a company which, according to its CFO made "substantially all" of its revenue from the online advertising of the OSDN) was "a company in the enterprise software market". Much was made of the fact that new sales had been made to Stanford and Pfizer, two new key clients. But when you try to pin down these sales to hard revenue numbers, it kind of drifts away. The hard fact is that Sourceforge charges $1000 per seat license (there are apparently issues relating to revenue recognition over the term of the long-term licensing contracts which VA is trying to sll, but $1K was the hard number given at the conference call). That means that, before VA Software can be considered to be mainly a software company, it needs to be selling 5000 seats worth of Sourceforge per quarter (generating $5m of revenue, roughly the same as OSDN's revenue). How close is it now to that goal?

Not close. Although the reference implementation of Sourceforge; the licensing level at which it starts to generate positive RoI for its customers, is estimated to be 120 seats, the vast majority of its current customer base are installing it on trial implementations of 30 seats to see if it's any good. Two or three big sales of Sourceforge might make a quarter of a million bucks at the outside; Sourceforge revenue for 2Q02 might possibly be as low as $60,000. Since Sourceforge 3.1, with better integration with other tools and added functionality is on the way, we can't see anyone springing for a full installation of 3.0, meaning that sales are at the mercy of the development schedule. In any case, we're not sure why anyone would buy 3.0; as far as we can tell, the main advantage over the Open Source version is that you get to use Oracle rather than PostGreSQL as a back end, which shouldn't be too terribly hard an alteration to make in-house given that the source code for the biggest existing implementation of Sourceforge (http://www.sourceforge.net) is available.

So, on the basis of publicly verifiable facts, our source appears to know what he's talking about.

OSDN is run tightly; VA as a whole is not. This is more or less a direct quote from our source, and we believe it. OSDN, for all its expensive branding and new name, is the business of Andover.net, which was always the poor man's CMG, or Ziff-Davis for the technologically literate. Which is to say, a bunch of guys who knew how to sell ads for computer stuff. They're still good. Let's consider the following:

Again from the conference call, we learn that in 2Q02, Intel accounted for 20% of total revenues. That's (cue drum roll, Dr Evil voice) one million dollars! Did they buy a thousand Sourceforge seats? To put it bluntly, no. They spent this on advertising

You can't spend one million dollars on advertising

At any reasonable CPM rate (or indeed, at OSDN's quoted rates for "selfserve" ads recently posted, one million dollars would buy you 250 million ad impressions. According to the OSDN advertising screen, they serve 120 million page views a month. So, by this standard, roughly two out of every three ads on OSDN during the second quarter of fiscal 2002 would have been ads for Intel. I have to tell you, and every regular viewer of Slashdot will agree, that they weren't.

Slashdot is notorious for running ads for thinkgeek tshirts, other OSDN sites and caffeinated mints, but surprisingly few ads for the high-end server gear which is the unique selling point of OSDN to its advertiser base. And slashdot accounts for an awful lot of those 120 million pages. Specifically, according to figures given in in Malda's statement, Slashdot has "one third of a million visitors per day", and the median visitor generates ten pageviews (we guesstimate this from the statement that, at a subscription rate of $5 per 1000 pages without ads, "82% of our readers could view slashdot for a year for $20", ie, 4000 pages per year). That means that over a quarter, just about 90 million of OSDN's 120 million pages are accounted for by Slashdot. So if Intel has spent One Million Dollars on OSDN advertising without making a material impact on slashdot, then something pretty strange has gone on.

Here's our guess. Intel is the sponsor of the "Large Linux Installation Foundry" on sourceforge.net. What's been going on here is "narrowcasting" Intel isn't so much interested in serving 250 million pages to random Slashbots, but is more interested in serving about 400 pages over the quarter to a group of people possibly as small as nine or ten, who were making the decision in 2Q02 about which technology provider they would be going for in a large Linux installation. It is not at all unknown for big ticket computer salesmen to drop a seven-figure check in promotions if they're hoping to land a nine-figure contract. It's also not impossible that the sponsorship of Sourceforge Large Linux Installations during 2Q02 was the subject of a bidding war between to rivals over the same large contract. We can't prove this, but we're pretty sure that something of this sort happened (if there are any more disgruntled VA employees out there, we'd love to know if we were right). In any case, it's not what you might call "high-quality income"; although VA hope to continue doing business with Intel, this is a big chunk of revenue to be dependent on one piece of marketing whim.

Slashdot could be sold to another media organisation. We had to read between the lines to get to this one, and it's probably not fair to pin it on our source, but he certainly entertained our speculation on the subject. And the interesting thing is that, with the information we were able to glean about the decomposition of 2Q earnings, Slashdot doesn't look like the cash cow for VA that we thought it might be. Out of the $5m revenue of VA Software, we can take out approximately $750K of interest income on the cash balance and maybe $200K for Sourceforge, meaning that the Intel contract accounts for roughly a quarter of the operating income of OSDN. From the pagecount, we know that Slashdot accounts for three quarters of the pageviews (and thus roughly three quarters of the bandwidth costs); to assume that it generates three quarters of the revenue would be tantamount to assuming that the other OSDN sites make next to zero revenue. Which is a crazy assumption, particularly given the intangible benefit to VA Software of having sourceforge.net as a promotional device for Sourceforge Enterprise Edition. And if Slashdot accounts for three quarters of the costs and less than three quarters of the revenues, it's a dog in the OSDN portfolio, not a star or a cash cow.

So, why not sell it? Although Slashdot may be a drain on the average profitability of OSDN, it probably breaks even, and in the world of magazine publishing, that's not bad. Publishing companies know that profitability has to be measured across a portfolio of magazines, not unit by unit, and it's often worth your while publishing a loss-making Talk Magazine for a while for the touch of stardust glamour it adds to a lucrative (but potentially rather prosaic) Conde Nast Traveller. Slashdot would be a perfect "hood ornament" for a profitable stable of computer magazines, dragging the kids in while they were in college and then cross-promoting them onto other titles by the time they had reached a saleable demographic. And all this could be done without compromising its "editorial integrity", which is something usually respected in the media world, though not so much in the software publishing world ("Andover.net had all sorts of evil plans for Slashdot", our source reveals).

Bottom line: If Larry Augustin wants to claim to be running a company in the enterprise software business, it's time for him to walk the talk. Let's see some divestment of non-core assets like Slashdot. Otherwise, we ought to be facing facts and reminding ourselves that the company which used to be "VA Linux" and is now "VA Software" has always been "VA Media". It's a publishing company, and ought to be managed as one. If that means getting rid of Eleven Million Dollar Larry and getting a graduate of the Si Mewhouse academy, then so be it.

Good results

First, we have the second quarter fiscal 2002 results, released last week. These were actually really quite good. VA has reduced its cash burn to $6.1m/quarter this is not only a massive fall from the hardware services days of a >$30m cash burn, but is substantially below the target of $8m/quarter which VA announced at the time of quitting the hardware business. Having left the hardware and consulting businesses, VA was concentrating on selling its main software product, Sourceforge 3.0, and had made a number of new sales to blue-chip customers such as Stanford Universty and Pfizer. We had a few problems with their statement in the conference call and the press release that they had "$61m in cash and marketable securities" which is true, but highly misleading as to their actual financial position as they also have current liabilities of $18m (ie; they need this much to pay bills falling due in the next six months, so the actual cash available to burn is more like $43m), and we regard their description of the redundancy payments and lease cancellation fees which make up their restructuring costs as "non cash items" as actively ludicrous, but this is nit-picking; the facts as of a couple of weeks ago appeared to be that VA Software was on the raspberry road to profitability.

But .

Then we got this little bombshell; Slashdot, jewel in the crown of VA Software's OSDN network of Open Source websites, is moving to a pay subscriptions model a la Salon. Well, perhaps that's being a little bit too harsh; Slashdot isn't doing the full reader reduction exercise of making you pay for the only content you came to read, but it is going to be having "more intrusive" ads (by which I think we mean expanded banners and skyscrapers surely Slashdot wouldn't dare to go down the route of pop-ups or interstitials, would they? WOULD THEY? AARRGH!), and you'll be able to view slashdot without these ads at the bargain subscription rate of $5 per thousand pages. Obviously, this caused much wailing and gnashing of teeth among the assorted slashbots (2275 comments so far, nearly a third as many as adequacy.org's most popular article), but we can't help thinking that they're missing the point. Nobody, least of all VA, thinks that there will be material revenue opportunities from the subscription model; all this is, is a figleaf designed to allow Slashdot to accept pop-up X10 ads while giving its editors hobbyists Rob Malda and Jeff Bates, a lightning conductor of "well, why don't you subscribe?" to deal with the floods of threatening email they are likely to receive.

So fair enough. But when we read the actual announcement on Slashdot, we at adequacy.org got worried. When we think we're looking at a company which is on the right track, we don't like to see senior staff at its only profitable business unit making statements like:

" The large ads that you see on many other sites are coming here. We really don't have an option: these are what advertisers want, and if we don't provide them, we won't be around much longer"

or

" We won't create subscriber only features that cost more to maintain than they generate. But we do need support from you if we are to continue."

What the hell? Slashdot was known to be profitable and cash positive when taken over by Andover.net in 1999. Andover.net was known to be profitable and cash-positive when taken over by VA Linux in 2000. The OSDN group of sites was, according to the 2Q02 results conference call, the source of more or less all the revenue generated by VA Software. And now we're being told that the ad market is so precarious that the VA cash pile is likely to be burnt up imminently? What gives? Quite apart from anything, statements like "we won't be around much longer" are Forward Looking Statements. Companies with publicly traded securities outstanding should not be making forward looking statements outside of the context of a scheduled conference call or an announcement to the general public under Regulation FD. It is, quite simply, not good enough for Rob Malda to be making this kind of wild assertion about the trading conditions faced by the key media property in the only profitable division of VA Software, ad hoc and without any kind of "safe harbor" statement. We don't know whether or not this announcement was technically in breach of Section 21 (E) of the Securities Exchange Act 1934, but we do know that well-managed companies with competently run press office and investor relations functions don't leak rumors in this kind of way.

Adequacy investigates

When we at adequacy.org witness an informational cluster-fuck like this in the making, we want to dig and delve, for the benefit of you our readers. We're about to make a few fairly controversial statements in this report, and we'd like you to take the following on trust: all the statements we make below which are in bold face can be sourced to a prominent (as in, you'd recognise the name if we told you) employee of Slashdot. We at adequacy don't want to cost anyone their job, so we'll make the following statement:

The statements sourced to an employee of Slashdot were acquired as the result of IRC conversation on an open channel. For this reason, adequacy.org does not feel bound to protect its source come what may. However, on general principles, we will only hand over the IRC logs which prove the veracity of our information on receipt of a subpoena from VA Software. In the event of our receiving such a subpoena, we will do our very best to publicise throughout the Internet the fact that VA Software issued such a subpoena to us in order to track down a critical employee, something which we would imagine would not generate good publicity with the core slashdot audience.

Sourceforge is not profitable and looks like it never will be. According to our source, "it's a giant vacuum". And this seems about right to us. The recent conference call with VA Chief Executive Larry "Eleven Million Dollar Man" (that's how much VA stock he's sold for cash since the float) Augustin was full of the joys of Sourceforge "Enterprise Edition" 3.0, a "proprietary" version of the popular Open Source collaborative software development tool. Indeed, in response to a question, VA's Chairman and Chief Executive told the world that VA Software (a company which, according to its CFO made "substantially all" of its revenue from the online advertising of the OSDN) was "a company in the enterprise software market". Much was made of the fact that new sales had been made to Stanford and Pfizer, two new key clients. But when you try to pin down these sales to hard revenue numbers, it kind of drifts away. The hard fact is that Sourceforge charges $1000 per seat license (there are apparently issues relating to revenue recognition over the term of the long-term licensing contracts which VA is trying to sll, but $1K was the hard number given at the conference call). That means that, before VA Software can be considered to be mainly a software company, it needs to be selling 5000 seats worth of Sourceforge per quarter (generating $5m of revenue, roughly the same as OSDN's revenue). How close is it now to that goal?

Not close. Although the reference implementation of Sourceforge; the licensing level at which it starts to generate positive RoI for its customers, is estimated to be 120 seats, the vast majority of its current customer base are installing it on trial implementations of 30 seats to see if it's any good. Two or three big sales of Sourceforge might make a quarter of a million bucks at the outside; Sourceforge revenue for 2Q02 might possibly be as low as $60,000. Since Sourceforge 3.1, with better integration with other tools and added functionality is on the way, we can't see anyone springing for a full installation of 3.0, meaning that sales are at the mercy of the development schedule. In any case, we're not sure why anyone would buy 3.0; as far as we can tell, the main advantage over the Open Source version is that you get to use Oracle rather than PostGreSQL as a back end, which shouldn't be too terribly hard an alteration to make in-house given that the source code for the biggest existing implementation of Sourceforge (http://www.sourceforge.net) is available.

So, on the basis of publicly verifiable facts, our source appears to know what he's talking about.

OSDN is run tightly; VA as a whole is not. This is more or less a direct quote from our source, and we believe it. OSDN, for all its expensive branding and new name, is the business of Andover.net, which was always the poor man's CMG, or Ziff-Davis for the technologically literate. Which is to say, a bunch of guys who knew how to sell ads for computer stuff. They're still good. Let's consider the following:

Again from the conference call, we learn that in 2Q02, Intel accounted for 20% of total revenues. That's (cue drum roll, Dr Evil voice) one million dollars! Did they buy a thousand Sourceforge seats? To put it bluntly, no. They spent this on advertising

You can't spend one million dollars on advertising

At any reasonable CPM rate (or indeed, at OSDN's quoted rates for "selfserve" ads recently posted, one million dollars would buy you 250 million ad impressions. According to the OSDN advertising screen, they serve 120 million page views a month. So, by this standard, roughly two out of every three ads on OSDN during the second quarter of fiscal 2002 would have been ads for Intel. I have to tell you, and every regular viewer of Slashdot will agree, that they weren't.

Slashdot is notorious for running ads for thinkgeek tshirts, other OSDN sites and caffeinated mints, but surprisingly few ads for the high-end server gear which is the unique selling point of OSDN to its advertiser base. And slashdot accounts for an awful lot of those 120 million pages. Specifically, according to figures given in in Malda's statement, Slashdot has "one third of a million visitors per day", and the median visitor generates ten pageviews (we guesstimate this from the statement that, at a subscription rate of $5 per 1000 pages without ads, "82% of our readers could view slashdot for a year for $20", ie, 4000 pages per year). That means that over a quarter, just about 90 million of OSDN's 120 million pages are accounted for by Slashdot. So if Intel has spent One Million Dollars on OSDN advertising without making a material impact on slashdot, then something pretty strange has gone on.

Here's our guess. Intel is the sponsor of the "Large Linux Installation Foundry" on sourceforge.net. What's been going on here is "narrowcasting" Intel isn't so much interested in serving 250 million pages to random Slashbots, but is more interested in serving about 400 pages over the quarter to a group of people possibly as small as nine or ten, who were making the decision in 2Q02 about which technology provider they would be going for in a large Linux installation. It is not at all unknown for big ticket computer salesmen to drop a seven-figure check in promotions if they're hoping to land a nine-figure contract. It's also not impossible that the sponsorship of Sourceforge Large Linux Installations during 2Q02 was the subject of a bidding war between to rivals over the same large contract. We can't prove this, but we're pretty sure that something of this sort happened (if there are any more disgruntled VA employees out there, we'd love to know if we were right). In any case, it's not what you might call "high-quality income"; although VA hope to continue doing business with Intel, this is a big chunk of revenue to be dependent on one piece of marketing whim.

Slashdot could be sold to another media organisation. We had to read between the lines to get to this one, and it's probably not fair to pin it on our source, but he certainly entertained our speculation on the subject. And the interesting thing is that, with the information we were able to glean about the decomposition of 2Q earnings, Slashdot doesn't look like the cash cow for VA that we thought it might be. Out of the $5m revenue of VA Software, we can take out approximately $750K of interest income on the cash balance and maybe $200K for Sourceforge, meaning that the Intel contract accounts for roughly a quarter of the operating income of OSDN. From the pagecount, we know that Slashdot accounts for three quarters of the pageviews (and thus roughly three quarters of the bandwidth costs); to assume that it generates three quarters of the revenue would be tantamount to assuming that the other OSDN sites make next to zero revenue. Which is a crazy assumption, particularly given the intangible benefit to VA Software of having sourceforge.net as a promotional device for Sourceforge Enterprise Edition. And if Slashdot accounts for three quarters of the costs and less than three quarters of the revenues, it's a dog in the OSDN portfolio, not a star or a cash cow.

So, why not sell it? Although Slashdot may be a drain on the average profitability of OSDN, it probably breaks even, and in the world of magazine publishing, that's not bad. Publishing companies know that profitability has to be measured across a portfolio of magazines, not unit by unit, and it's often worth your while publishing a loss-making Talk Magazine for a while for the touch of stardust glamour it adds to a lucrative (but potentially rather prosaic) Conde Nast Traveller. Slashdot would be a perfect "hood ornament" for a profitable stable of computer magazines, dragging the kids in while they were in college and then cross-promoting them onto other titles by the time they had reached a saleable demographic. And all this could be done without compromising its "editorial integrity", which is something usually respected in the media world, though not so much in the software publishing world ("Andover.net had all sorts of evil plans for Slashdot", our source reveals).

Bottom line: If Larry Augustin wants to claim to be running a company in the enterprise software business, it's time for him to walk the talk. Let's see some divestment of non-core assets like Slashdot. Otherwise, we ought to be facing facts and reminding ourselves that the company which used to be "VA Linux" and is now "VA Software" has always been "VA Media". It's a publishing company, and ought to be managed as one. If that means getting rid of Eleven Million Dollar Larry and getting a graduate of the Si Mewhouse academy, then so be it.

Good results

First, we have the second quarter fiscal 2002 results, released last week. These were actually really quite good. VA has reduced its cash burn to $6.1m/quarter this is not only a massive fall from the hardware services days of a >$30m cash burn, but is substantially below the target of $8m/quarter which VA announced at the time of quitting the hardware business. Having left the hardware and consulting businesses, VA was concentrating on selling its main software product, Sourceforge 3.0, and had made a number of new sales to blue-chip customers such as Stanford Universty and Pfizer. We had a few problems with their statement in the conference call and the press release that they had "$61m in cash and marketable securities" which is true, but highly misleading as to their actual financial position as they also have current liabilities of $18m (ie; they need this much to pay bills falling due in the next six months, so the actual cash available to burn is more like $43m), and we regard their description of the redundancy payments and lease cancellation fees which make up their restructuring costs as "non cash items" as actively ludicrous, but this is nit-picking; the facts as of a couple of weeks ago appeared to be that VA Software was on the raspberry road to profitability.

But .

Then we got this little bombshell; Slashdot, jewel in the crown of VA Software's OSDN network of Open Source websites, is moving to a pay subscriptions model a la Salon. Well, perhaps that's being a little bit too harsh; Slashdot isn't doing the full reader reduction exercise of making you pay for the only content you came to read, but it is going to be having "more intrusive" ads (by which I think we mean expanded banners and skyscrapers surely Slashdot wouldn't dare to go down the route of pop-ups or interstitials, would they? WOULD THEY? AARRGH!), and you'll be able to view slashdot without these ads at the bargain subscription rate of $5 per thousand pages. Obviously, this caused much wailing and gnashing of teeth among the assorted slashbots (2275 comments so far, nearly a third as many as adequacy.org's most popular article), but we can't help thinking that they're missing the point. Nobody, least of all VA, thinks that there will be material revenue opportunities from the subscription model; all this is, is a figleaf designed to allow Slashdot to accept pop-up X10 ads while giving its editors hobbyists Rob Malda and Jeff Bates, a lightning conductor of "well, why don't you subscribe?" to deal with the floods of threatening email they are likely to receive.

So fair enough. But when we read the actual announcement on Slashdot, we at adequacy.org got worried. When we think we're looking at a company which is on the right track, we don't like to see senior staff at its only profitable business unit making statements like:

" The large ads that you see on many other sites are coming here. We really don't have an option: these are what advertisers want, and if we don't provide them, we won't be around much longer"

or

" We won't create subscriber only features that cost more to maintain than they generate. But we do need support from you if we are to continue."

What the hell? Slashdot was known to be profitable and cash positive when taken over by Andover.net in 1999. Andover.net was known to be profitable and cash-positive when taken over by VA Linux in 2000. The OSDN group of sites was, according to the 2Q02 results conference call, the source of more or less all the revenue generated by VA Software. And now we're being told that the ad market is so precarious that the VA cash pile is likely to be burnt up imminently? What gives? Quite apart from anything, statements like "we won't be around much longer" are Forward Looking Statements. Companies with publicly traded securities outstanding should not be making forward looking statements outside of the context of a scheduled conference call or an announcement to the general public under Regulation FD. It is, quite simply, not good enough for Rob Malda to be making this kind of wild assertion about the trading conditions faced by the key media property in the only profitable division of VA Software, ad hoc and without any kind of "safe harbor" statement. We don't know whether or not this announcement was technically in breach of Section 21 (E) of the Securities Exchange Act 1934, but we do know that well-managed companies with competently run press office and investor relations functions don't leak rumors in this kind of way.

Adequacy investigates

When we at adequacy.org witness an informational cluster-fuck like this in the making, we want to dig and delve, for the benefit of you our readers. We're about to make a few fairly controversial statements in this report, and we'd like you to take the following on trust: all the statements we make below which are in bold face can be sourced to a prominent (as in, you'd recognise the name if we told you) employee of Slashdot. We at adequacy don't want to cost anyone their job, so we'll make the following statement:

The statements sourced to an employee of Slashdot were acquired as the result of IRC conversation on an open channel. For this reason, adequacy.org does not feel bound to protect its source come what may. However, on general principles, we will only hand over the IRC logs which prove the veracity of our information on receipt of a subpoena from VA Software. In the event of our receiving such a subpoena, we will do our very best to publicise throughout the Internet the fact that VA Software issued such a subpoena to us in order to track down a critical employee, something which we would imagine would not generate good publicity with the core slashdot audience.

Sourceforge is not profitable and looks like it never will be. According to our source, "it's a giant vacuum". And this seems about right to us. The recent conference call with VA Chief Executive Larry "Eleven Million Dollar Man" (that's how much VA stock he's sold for cash since the float) Augustin was full of the joys of Sourceforge "Enterprise Edition" 3.0, a "proprietary" version of the popular Open Source collaborative software development tool. Indeed, in response to a question, VA's Chairman and Chief Executive told the world that VA Software (a company which, according to its CFO made "substantially all" of its revenue from the online advertising of the OSDN) was "a company in the enterprise software market". Much was made of the fact that new sales had been made to Stanford and Pfizer, two new key clients. But when you try to pin down these sales to hard revenue numbers, it kind of drifts away. The hard fact is that Sourceforge charges $1000 per seat license (there are apparently issues relating to revenue recognition over the term of the long-term licensing contracts which VA is trying to sll, but $1K was the hard number given at the conference call). That means that, before VA Software can be considered to be mainly a software company, it needs to be selling 5000 seats worth of Sourceforge per quarter (generating $5m of revenue, roughly the same as OSDN's revenue). How close is it now to that goal?

Not close. Although the reference implementation of Sourceforge; the licensing level at which it starts to generate positive RoI for its customers, is estimated to be 120 seats, the vast majority of its current customer base are installing it on trial implementations of 30 seats to see if it's any good. Two or three big sales of Sourceforge might make a quarter of a million bucks at the outside; Sourceforge revenue for 2Q02 might possibly be as low as $60,000. Since Sourceforge 3.1, with better integration with other tools and added functionality is on the way, we can't see anyone springing for a full installation of 3.0, meaning that sales are at the mercy of the development schedule. In any case, we're not sure why anyone would buy 3.0; as far as we can tell, the main advantage over the Open Source version is that you get to use Oracle rather than PostGreSQL as a back end, which shouldn't be too terribly hard an alteration to make in-house given that the source code for the biggest existing implementation of Sourceforge (http://www.sourceforge.net) is available.

So, on the basis of publicly verifiable facts, our source appears to know what he's talking about.

OSDN is run tightly; VA as a whole is not. This is more or less a direct quote from our source, and we believe it. OSDN, for all its expensive branding and new name, is the business of Andover.net, which was always the poor man's CMG, or Ziff-Davis for the technologically literate. Which is to say, a bunch of guys who knew how to sell ads for computer stuff. They're still good. Let's consider the following:

Again from the conference call, we learn that in 2Q02, Intel accounted for 20% of total revenues. That's (cue drum roll, Dr Evil voice) one million dollars! Did they buy a thousand Sourceforge seats? To put it bluntly, no. They spent this on advertising

You can't spend one million dollars on advertising

At any reasonable CPM rate (or indeed, at OSDN's quoted rates for "selfserve" ads recently posted, one million dollars would buy you 250 million ad impressions. According to the OSDN advertising screen, they serve 120 million page views a month. So, by this standard, roughly two out of every three ads on OSDN during the second quarter of fiscal 2002 would have been ads for Intel. I have to tell you, and every regular viewer of Slashdot will agree, that they weren't.

Slashdot is notorious for running ads for thinkgeek tshirts, other OSDN sites and caffeinated mints, but surprisingly few ads for the high-end server gear which is the unique selling point of OSDN to its advertiser base. And slashdot accounts for an awful lot of those 120 million pages. Specifically, according to figures given in in Malda's statement, Slashdot has "one third of a million visitors per day", and the median visitor generates ten pageviews (we guesstimate this from the statement that, at a subscription rate of $5 per 1000 pages without ads, "82% of our readers could view slashdot for a year for $20", ie, 4000 pages per year). That means that over a quarter, just about 90 million of OSDN's 120 million pages are accounted for by Slashdot. So if Intel has spent One Million Dollars on OSDN advertising without making a material impact on slashdot, then something pretty strange has gone on.

Here's our guess. Intel is the sponsor of the "Large Linux Installation Foundry" on sourceforge.net. What's been going on here is "narrowcasting" Intel isn't so much interested in serving 250 million pages to random Slashbots, but is more interested in serving about 400 pages over the quarter to a group of people possibly as small as nine or ten, who were making the decision in 2Q02 about which technology provider they would be going for in a large Linux installation. It is not at all unknown for big ticket computer salesmen to drop a seven-figure check in promotions if they're hoping to land a nine-figure contract. It's also not impossible that the sponsorship of Sourceforge Large Linux Installations during 2Q02 was the subject of a bidding war between to rivals over the same large contract. We can't prove this, but we're pretty sure that something of this sort happened (if there are any more disgruntled VA employees out there, we'd love to know if we were right). In any case, it's not what you might call "high-quality income"; although VA hope to continue doing business with Intel, this is a big chunk of revenue to be dependent on one piece of marketing whim.

Slashdot could be sold to another media organisation. We had to read between the lines to get to this one, and it's probably not fair to pin it on our source, but he certainly entertained our speculation on the subject. And the interesting thing is that, with the information we were able to glean about the decomposition of 2Q earnings, Slashdot doesn't look like the cash cow for VA that we thought it might be. Out of the $5m revenue of VA Software, we can take out approximately $750K of interest income on the cash balance and maybe $200K for Sourceforge, meaning that the Intel contract accounts for roughly a quarter of the operating income of OSDN. From the pagecount, we know that Slashdot accounts for three quarters of the pageviews (and thus roughly three quarters of the bandwidth costs); to assume that it generates three quarters of the revenue would be tantamount to assuming that the other OSDN sites make next to zero revenue. Which is a crazy assumption, particularly given the intangible benefit to VA Software of having sourceforge.net as a promotional device for Sourceforge Enterprise Edition. And if Slashdot accounts for three quarters of the costs and less than three quarters of the revenues, it's a dog in the OSDN portfolio, not a star or a cash cow.

So, why not sell it? Although Slashdot may be a drain on the average profitability of OSDN, it probably breaks even, and in the world of magazine publishing, that's not bad. Publishing companies know that profitability has to be measured across a portfolio of magazines, not unit by unit, and it's often worth your while publishing a loss-making Talk Magazine for a while for the touch of stardust glamour it adds to a lucrative (but potentially rather prosaic) Conde Nast Traveller. Slashdot would be a perfect "hood ornament" for a profitable stable of computer magazines, dragging the kids in while they were in college and then cross-promoting them onto other titles by the time they had reached a saleable demographic. And all this could be done without compromising its "editorial integrity", which is something usually respected in the media world, though not so much in the software publishing world ("Andover.net had all sorts of evil plans for Slashdot", our source reveals).

Bottom line: If Larry Augustin wants to claim to be running a company in the enterprise software business, it's time for him to walk the talk. Let's see some divestment of non-core assets like Slashdot. Otherwise, we ought to be facing facts and reminding ourselves that the company which used to be "VA Linux" and is now "VA Software" has always been "VA Media". It's a publishing company, and ought to be managed as one. If that means getting rid of Eleven Million Dollar Larry and getting a graduate of the Si Mewhouse academy, then so be it.

Second, I am very familiar with the broken window fallacy, and did not mean to over simplify to the point where that became the only primary point. What I am saying is that OSS is done primarily by people with free time and money due to their employment for very large institutions (universities/large corporations) as indicated in this study. Their time/money and education is funded through some method, and, in this case, it is generally the sales of commercial software (and generally not services), and university salaries. I'm not saying we should raise taxes 100-fold so that we can increase open source development, but at the same time, the system is the way it is. People have the free time and knowledge to contribute to the system not available if the tax/sales revenue were not otherwise available. This contributes to the overall GOODS of the economy, not just jobs. This is where I believe it diverges from the broken window fallacy. Research (not just in the area of software, but all sorts of research) creates knowledge rather than just places for people to work. That adds to the overall value of society.

Third, though the $1.9 B number has gotten a lot of press, the numbers seem to be a lot of smoke and mirrors. Last night I worked on patching a driver for my Ethernet card because it wasn't working. I submitted that patch back (as to whether or not it will be accepted is another matter). I normally bill out at $150/hr. I spent 2 hours working, does that mean that I have contributed $300? No, my time was free, and it is unlikely that I would have put $300 into a fund. The entire equation where # of lines of code * dollar value per code = value of work put into it does not equate to actual investment dollars. ESPECIALLY given the fact that many many packages are included that the average person would not need/use and redundant counting (e.g. all the lines for make files) are included. Calling something man-hours dedicated and something $s invested are two different things. And the worst is that the man-hours invested may not even be as valuable as when a centralized firm puts dollars towards something. If Quicken spends 1000 hours developing something, they will have most likely done market research, customer profiling, etc so that the product is appropriate for the most amount of people. The same almost universally cannot be said for an OSS project, where, to paraphrase ESR, each developer is scratching their own itch. That is not to say OSS development is bad in anyway, but the two time investments are just apples and oranges.

As to the point that MS doesn't pay taxes (from elsewhere in the thread), from a corporate level, you are absolutely right, they don't pay income taxes. HOWEVER, every option that allows them to write off that income tax IS taxed (capital gains et al), MS spends billions of dollars each year on goods and services (sales tax), among hundreds of other taxes not included in the federal corporate income tax. There are lots of ways to tax a company; federal income tax is only one of them.

To see my full review, go to Peterswift.org/ html [peterswift.org]

Does Jon Katz post stuff on that web site that says "To see my full review, go to http://slashdot.org"? These are supposed to be Slashdot reader comments. If you want to advertise on Slashdot, go to this link. You will find all of the information on rates, ad types, etc.

Thought number 5 about OSDN advertising: Be believable.

The OSDN advertising page, says,

"Average annual purchasing amount for technical products and services in which the OSDN visitor is or will be involved $2.1 million***"

OSDN seems to be saying here that the average of the money spent by each person who views Slashdot pages is $2,100,000. Does that include the trolls? Does that include the ASCII art people? Does that include poor college and high school students? If 9 out of 10 of Slashdot readers bought almost nothing, that means that people like me supposedly bought $21 million worth of technical products and services last year. I didn't.

Thank you, Monkeyman334. I had forgotten about Google caches.

Advertising lessons 3 and 4 (Otherwise known as "How not to go broke running Slashdot."):

At the bottom of the OSDN advertising page, it says,

"Why not ask our competitors, they'll tell you we beat them hands down. "

Good advertising is the combination of being very creative about the big things, and getting hundreds of small details right, also. It is best not to use colloquial expressions in advertising, because they presume that everyone knows the meaning. There are many people who read Slashdot for whom English is not their native language. They cannot be expected to know the meaning of "hands down".

Also, this same phrase demonstrates an even bigger defect. Advertising people should read the advertising of their competition thoroughly. If OSDN people had done this, they would have realized that "hands down" is a very much over-used phrase in computer advertising and writing. If you don't believe this, do a google search: hands down. When you use such phrases, you aren't giving the reader fresh thinking.

I care very much about Slashdot, and don't want to see the site be self-destructive. I'm trying to give you some help.

Slashdot is NOT adding popups. They are just adding normal ads like the skyscraper and the big square display ad . Normal ads you see everywhere else, and that already run on Newsforge and other OSDN sites.

These ads run from $90 per thousand (megabanner , one month) and $24 per thousand (below the fold , 1 year). Of course these are list prices, minus potentially deep discounts.

But what of subscriptions?

The slashdot subscription service can be viewed another way: you're buying ad banners for $5 per thousand! (Actually, it's more like $5 per 2000 or 3000, since most pages have several ads.) You're just buying blank space, or absence of ad banners, not actual banners.

Now this is a deep discount by any measure. Is it above the marginal cost of serving the pages? Yes. But is it also lower margin than serving ads? ABSOLUTELY. So the economics are interesting: now, in a period of crappy ad sales, $5 per thousand is a hell of a lot better than $0 (which they get for the Sourceforge ads); but if ad sales pick up, the opportunity cost of giving members such a cheap way to avoid ads could be substantial.

So I actually think slashdot is doing us a favor by setting up the subscription system. And if they tell us fuck you in the process, who cares? It's still a better deal than the alternative.

----

Followup comment: Look at the economics! Slashdot's subscription system may not be the best user interface (I certainly think all you can eat is better, even if it's not the best financial deal for the buyer, because you can set it and forget it) but it is the fairest I have ever seen. Don't like an ad? Pay not to see it, at a discounted price. I don't see how much fairer it could be.

And it's a smart move for the Slashboys because they need the revenue from bigger ads, and if even a few subscribe, it's another revenue stream, which is better than X10 and Casino-On-Net.

Of course people can run junkbuster. And people can take slashdot .rdf's and make alternate sites. Let 'em! They cut down on bandwidth utilization anyway.

The point of this is to allow big ads on the front page, like skyscrapers and square displays. That's what ad buyers want (newspapers and magazines have had display ads of even larger proportions for over a century). And remember what CT said: 82% of readers don't comment - many don't even click through to the stories! So front page ads reach these users.

Without subscriptions, the hue and cry would have been even louder. So by doing it this way, they gave people an alternative; sent pageviews through the roof on a HOF story; and will get some revenue out of it. Makes sense to me.

----

Following up based on this discussion: I do think all-you-can-eat would be better, and I suspect that /. would make more money from me (a heavy user with over 1600 posts, not including the occasional fuck-you posted as AC) from all-you-can-eat than from per-pageview. But if they decide it's not worth it to go that route, I'm okay with it too.

The big problem now is that the ads look weird because the layout hasn't been fixed yet to accommodate them. This too shall pass. Frankly I rather like the ads (notably the IBM ones) - bring 'em on! (I will subscribe however, when I get around to it.)

Slashdot is NOT adding popups. They are just adding normal ads like the skyscraper and the big square display ad . Normal ads you see everywhere else, and that already run on Newsforge and other OSDN sites.

These ads run from $90 per thousand (megabanner , one month) and $24 per thousand (below the fold , 1 year). Of course these are list prices, minus potentially deep discounts.

But what of subscriptions?

The slashdot subscription service can be viewed another way: you're buying ad banners for $5 per thousand! (Actually, it's more like $5 per 2000 or 3000, since most pages have several ads.) You're just buying blank space, or absence of ad banners, not actual banners.

Now this is a deep discount by any measure. Is it above the marginal cost of serving the pages? Yes. But is it also lower margin than serving ads? ABSOLUTELY. So the economics are interesting: now, in a period of crappy ad sales, $5 per thousand is a hell of a lot better than $0 (which they get for the Sourceforge ads); but if ad sales pick up, the opportunity cost of giving members such a cheap way to avoid ads could be substantial.

So I actually think slashdot is doing us a favor by setting up the subscription system. And if they tell us fuck you in the process, who cares? It's still a better deal than the alternative.

----

Followup comment: Look at the economics! Slashdot's subscription system may not be the best user interface (I certainly think all you can eat is better, even if it's not the best financial deal for the buyer, because you can set it and forget it) but it is the fairest I have ever seen. Don't like an ad? Pay not to see it, at a discounted price. I don't see how much fairer it could be.

And it's a smart move for the Slashboys because they need the revenue from bigger ads, and if even a few subscribe, it's another revenue stream, which is better than X10 and Casino-On-Net.

Of course people can run junkbuster. And people can take slashdot .rdf's and make alternate sites. Let 'em! They cut down on bandwidth utilization anyway.

The point of this is to allow big ads on the front page, like skyscrapers and square displays. That's what ad buyers want (newspapers and magazines have had display ads of even larger proportions for over a century). And remember what CT said: 82% of readers don't comment - many don't even click through to the stories! So front page ads reach these users.

Without subscriptions, the hue and cry would have been even louder. So by doing it this way, they gave people an alternative; sent pageviews through the roof on a HOF story; and will get some revenue out of it. Makes sense to me.

----

Following up based on this discussion: I do think all-you-can-eat would be better, and I suspect that /. would make more money from me (a heavy user with over 1600 posts, not including the occasional fuck-you posted as AC) from all-you-can-eat than from per-pageview. But if they decide it's not worth it to go that route, I'm okay with it too.

The big problem now is that the ads look weird because the layout hasn't been fixed yet to accommodate them. This too shall pass. Frankly I rather like the ads (notably the IBM ones) - bring 'em on! (I will subscribe however, when I get around to it.)

Slashdot is NOT adding popups. They are just adding normal ads like the skyscraper and the big square display ad . Normal ads you see everywhere else, and that already run on Newsforge and other OSDN sites.

These ads run from $90 per thousand (megabanner , one month) and $24 per thousand (below the fold , 1 year). Of course these are list prices, minus potentially deep discounts.

But what of subscriptions?

The slashdot subscription service can be viewed another way: you're buying ad banners for $5 per thousand! (Actually, it's more like $5 per 2000 or 3000, since most pages have several ads.) You're just buying blank space, or absence of ad banners, not actual banners.

Now this is a deep discount by any measure. Is it above the marginal cost of serving the pages? Yes. But is it also lower margin than serving ads? ABSOLUTELY. So the economics are interesting: now, in a period of crappy ad sales, $5 per thousand is a hell of a lot better than $0 (which they get for the Sourceforge ads); but if ad sales pick up, the opportunity cost of giving members such a cheap way to avoid ads could be substantial.

So I actually think slashdot is doing us a favor by setting up the subscription system. And if they tell us fuck you in the process, who cares? It's still a better deal than the alternative.

----

Followup comment: Look at the economics! Slashdot's subscription system may not be the best user interface (I certainly think all you can eat is better, even if it's not the best financial deal for the buyer, because you can set it and forget it) but it is the fairest I have ever seen. Don't like an ad? Pay not to see it, at a discounted price. I don't see how much fairer it could be.

And it's a smart move for the Slashboys because they need the revenue from bigger ads, and if even a few subscribe, it's another revenue stream, which is better than X10 and Casino-On-Net.

Of course people can run junkbuster. And people can take slashdot .rdf's and make alternate sites. Let 'em! They cut down on bandwidth utilization anyway.

The point of this is to allow big ads on the front page, like skyscrapers and square displays. That's what ad buyers want (newspapers and magazines have had display ads of even larger proportions for over a century). And remember what CT said: 82% of readers don't comment - many don't even click through to the stories! So front page ads reach these users.

Without subscriptions, the hue and cry would have been even louder. So by doing it this way, they gave people an alternative; sent pageviews through the roof on a HOF story; and will get some revenue out of it. Makes sense to me.

----

Following up based on this discussion: I do think all-you-can-eat would be better, and I suspect that /. would make more money from me (a heavy user with over 1600 posts, not including the occasional fuck-you posted as AC) from all-you-can-eat than from per-pageview. But if they decide it's not worth it to go that route, I'm okay with it too.

The big problem now is that the ads look weird because the layout hasn't been fixed yet to accommodate them. This too shall pass. Frankly I rather like the ads (notably the IBM ones) - bring 'em on! (I will subscribe however, when I get around to it.)

Slashdot is NOT adding popups. They are just adding normal ads like the skyscraper and the big square display ad . Normal ads you see everywhere else, and that already run on Newsforge and other OSDN sites.

These ads run from $90 per thousand (megabanner , one month) and $24 per thousand (below the fold , 1 year). Of course these are list prices, minus potentially deep discounts.

But what of subscriptions?

The slashdot subscription service can be viewed another way: you're buying ad banners for $5 per thousand! (Actually, it's more like $5 per 2000 or 3000, since most pages have several ads.) You're just buying blank space, or absence of ad banners, not actual banners.

Now this is a deep discount by any measure. Is it above the marginal cost of serving the pages? Yes. But is it also lower margin than serving ads? ABSOLUTELY. So the economics are interesting: now, in a period of crappy ad sales, $5 per thousand is a hell of a lot better than $0 (which they get for the Sourceforge ads); but if ad sales pick up, the opportunity cost of giving members such a cheap way to avoid ads could be substantial.

So I actually think slashdot is doing us a favor by setting up the subscription system. And if they tell us fuck you in the process, who cares? It's still a better deal than the alternative.

----

Followup comment: Look at the economics! Slashdot's subscription system may not be the best user interface (I certainly think all you can eat is better, even if it's not the best financial deal for the buyer, because you can set it and forget it) but it is the fairest I have ever seen. Don't like an ad? Pay not to see it, at a discounted price. I don't see how much fairer it could be.

And it's a smart move for the Slashboys because they need the revenue from bigger ads, and if even a few subscribe, it's another revenue stream, which is better than X10 and Casino-On-Net.

Of course people can run junkbuster. And people can take slashdot .rdf's and make alternate sites. Let 'em! They cut down on bandwidth utilization anyway.

The point of this is to allow big ads on the front page, like skyscrapers and square displays. That's what ad buyers want (newspapers and magazines have had display ads of even larger proportions for over a century). And remember what CT said: 82% of readers don't comment - many don't even click through to the stories! So front page ads reach these users.

Without subscriptions, the hue and cry would have been even louder. So by doing it this way, they gave people an alternative; sent pageviews through the roof on a HOF story; and will get some revenue out of it. Makes sense to me.

----

Following up based on this discussion: I do think all-you-can-eat would be better, and I suspect that /. would make more money from me (a heavy user with over 1600 posts, not including the occasional fuck-you posted as AC) from all-you-can-eat than from per-pageview. But if they decide it's not worth it to go that route, I'm okay with it too.

The big problem now is that the ads look weird because the layout hasn't been fixed yet to accommodate them. This too shall pass. Frankly I rather like the ads (notably the IBM ones) - bring 'em on! (I will subscribe however, when I get around to it.)

I liked Rob's description of the subscription service as a "donation" and the ad removal as a kind of perk.

Oh, wait, you were serious. Sorry youre so gullible.

Someone corrected the misspelling of the word "political" on the OSDN advertising page very quickly.

This suggests a game. I've saved the original HTML of the: OSDN advertising page, so I have a record.

The game is this: I will point out the errors, one at a time, and they will correct them, one at a time, demonstrating that they can't see their errors, and shouldn't be in the advertising business. I'll mention the small errors first.

So, here is the next error. The page says

"We are unique"

It is normal to put a period after every full sentence. The period is missing.

I am very much interested that OSDN be a financial success. What is needed now, to get the job done, is a quick sober awakening about the difficulties and complications of technical advertising.

Technical people know very easily when someone doesn't understand their field. It is not possible to write good technical ad copy unless you have a good technical understanding. Most advertising people do not bother to educate themselves. The poor quality of technical advertising brings poor results. That's why technical advertising pays as little as it does, and why it has so many "inexplicable" failures.

I agree with Wire Tap. (See the parent post.)

Slashdot Editors: You are obviously smart people, but that doesn't automatically mean you know everything. Advertising is a VERY complicated business of creating a connnection between a company and prospective customers. You are showing, very clearly, that you know NOTHING about good advertising. That is entirely okay; no one can know everything about everything.

But, this can have VERY unpleasant consequences for Slashdot authors and the entire Slashdot community. Get help! If you want free help, contact me.

First, I saw the woman whose agency has the IBM advertising account interviewed on the Charlie Rose show. She knows and cares NOTHING about technical products. She is making fools of IBM executives with those stupid ads of dorky-looking guys in space suits.

Slashdot editors, you can let yourselves off the hook. If IBM executives are clueless about technical advertising, you don't need to worry that you don't understand it either. (However, remember that IBM top management is composed of people with no technical background, unlike Slashdot editors. At least you have half the knowledge that is required. Remember that IBM ran OS/2 into the ground with stupid marketing, calling it "Warp", a term for something that is useless because it is bent.)

It may be that executives of your parent company, having failed at their own endeavors, have a subtle desire to destroy Slashdot. Obviously they are clueless about making Slashdot pay a reasonable return. (For example, they try to sell us high-caffeine candy. Caffeine is a chemical made by tropical plants to discourage insects. It interferes with the normal functioning of their nervous systems, as it does human nervous systems. Yes, there are people who buy such things, but those people are misguided. Using strong chemicals to force your body to submit is not a good strategy. Trying to sell things that are bad for the customer is not a good strategy either.

There is a HUGE need for advertising of technical products. There is money in this field! For example, check out the hardware firewalls available, and get advertising from the ones that are good. Plenty of us work in situations where such products are needed. Good advertising, if properly done, is a big help to the reader, not an annoyance.

Maybe now is the time to negotiate the sale of Slashdot to some other company that has a better understanding of the issues. Slashdot is an extremely valuable resource! Yes it has shortcomings (such as editors who don't spell check), but it is extemely valuable!

Board of Directors: I hereby apply to be CEO of Slashdot's parent company. OSDN says it is:

"#2 for delivering people who look for General / Politcal News* "

I kid you not! That's what it says! See the Advertising page.

My first qualification is that I know how to spell the word political.

Slashdot editors: I recommend "Confessions of an Adverising Man" by David Ogilvy. It's an old book, but good. It's a difficult field. Learn it.

Remember, ./ already have self serving ads.

Take a look at http://www.osdn.com/advertise/, you'll find out that for Slashdot they're currently offering 728 x 90, 468 x 60, and newsletter sponsorships (which are a 468x60 banner and text only).

I think the 728 x 90 is the annoyance thing they're talking about. Well, it certainly does sound like an annoyingly big ad.

Slashdot doesn't accept any flash ads according to that site, and none of OSDN's sites accept pop-up, pop-under or Java ads.

I think they should implement a micro-ad policy as well. The average user buying the smaller banner type ads for whatever purpose for a small payment (heck, the bigger players don't want those ads anymore, might as well release them to the people).

Might this be an opportunity in the making? Instead of paying $1-5 here and there... pay a central authority for access to affiliated sites. I know this has shades of Passport (which I don't support), but it could be great. Pay $5 to OSDN and get access to every OSDN site (I bet they are all going to try out similar policies in the future), not just Slashdot (Linux.com, Newsforge.com, Freshmeat.net). Or pay $3 to NewsFactor Network for access to all of its affiliated sites like OS Opinion and so forth. It should cut down on some of the payments. Then each affiliate would get its cut based on unique page views or some other metric.

I guess I am saying that a network TV or Radio model might work a little better here.

I could be completely off base... but if not and hiring personnel from OSDN, NewsFactor, or some other "web network" are reading, I am willing to entertain consulting or full-time position opportunities =^) .

I would say that the self service advertising model is one reason it can work.
People who go to the site will advertise on the site.
Look for a combination of google self-serve adwords and what is already going on. at slashdot.

What I would really like to know from both companies, is where the opensource variants of their ad software can be found? Is there software out there that I can use for my own site like this? To let the people who actually use the site become advertisers on the site which in turn will pay for the site?

I looked on freshmeat but came up blank :(

I guess neither google or OSDN want to free their ad software...pity

I found a recent Slashdot article very informative about what coders look for in a manager. This survey in that article contains a slide that shows what I believe to be a very good detail of what coders want.

I found a recent Slashdot article very informative about what coders look for in a manager. This survey in that article contains a slide that shows what I believe to be a very good detail of what coders want.

According to this slide from their survey results, 45% of respondents are employed as programmers, another 15% in related fields. So while I don't see where the 9/10 came from, clearly the majority of Open Source developers do some sort of software development as their profession.

On page 7, the authors make a distinction between three groups: "leadership", "virtual teams", and "user developers". Their selection methods seem to be skewed toward identifying many of the first group, somewhat less of the second, and relatively few of the third. I wonder - I really wonder - how their findings wrt motivation, experience level, or licit/illicit use of work time might be different if they'd managed to capture a more balanced cross-section of the three categories. Heck, it would help even to have an estimate in hand of the relative numbers of people in each category. At the very least, BCG should have asked in the survey which category the respondent felt best represented their own role in their open-source project(s).

I found the most interesting numbers to be on Page 37. There, 19% of respondents admitted that they were stealing time from their employers to write open-source software. Would anyone like to bet on what fraction of the 46% who answered "do not participate at work" were telling the truth, the whole truth, and nothing but the truth? What fraction of the "part of core job" respondents were in the "not known by supervisor" category at some point in their careers?

There are a lot of people who work on open-source software in their spare time. There are quite a few who get paid to do it. Bless them all. However, these numbers seem to indicate that at least 19% and probably much more than a third are regularly working on open-source projects while they're being paid to do something else. Maybe it's time to question whether the equation "open source == moral high ground" has any validity.

http://www.osdn.com/bcg/BCGHACKERSURVEY.pdf

-Jon

Jeff "hemos" Bates is a visionary of both space and time.

Is it significant that 34% of SourceForge developers responded but only 2.4% of Linux Kernel list subscribers? Does this survey prove anything more than "SourceForge developers are more likely to be successfully trolled than Linux Kernel list subscribers?"

As the PDF link is broken, and the HTML link is annoying, here are some short-cuts: Motivation for programmers, Job functions, Time Spent, Feelings about OS software, Project desires

As the PDF link is broken, and the HTML link is annoying, here are some short-cuts: Motivation for programmers, Job functions, Time Spent, Feelings about OS software, Project desires

As the PDF link is broken, and the HTML link is annoying, here are some short-cuts: Motivation for programmers, Job functions, Time Spent, Feelings about OS software, Project desires

As the PDF link is broken, and the HTML link is annoying, here are some short-cuts: Motivation for programmers, Job functions, Time Spent, Feelings about OS software, Project desires

As the PDF link is broken, and the HTML link is annoying, here are some short-cuts: Motivation for programmers, Job functions, Time Spent, Feelings about OS software, Project desires

Actually, I'm going to try that when I get laid off.

OSDN are hiring. I don't see 'human mirror' on their list of openings though.

The trip down hardware failure started with a hand full of Redhat 7.2 machines. Fresh installs. The install uses 2.4.7-10-smp. The site using that kernel have been complaining about the VM, random lock ups, bad disk I/O, the list goes on. One persons solution. Upgrade the kernel. Sounds ok with me, but Kernel Panic's aren't.

The hardware is one of the no longer made VA Linux^H^H^H^H^HSoftware 3500's. A Quad Xeon, 4G RAM, and a Mylex DAC960PRL. Not all have the same Mylex, some have eXtreamRAID 1100 (DAC1164P). All have the same problem. Kernel Panic! We can't install the latest 2.4.9-13-smp kernel from Redhat. Fine compile our own from source. The same problem even when we do the compile. Tried the latest -ac patches and have visited Dandelion s page and followed the steps there. Visited kernel mailing lists searching for people with similar problems. Afew from Nov. but not much of a follow-up. Its driving the Admins nuts not to mention the developers of the websites that now have some unstable hardware/software combination.

Right now were stuck with 2.4.7-10-smp from Redhat.. I would love to get rid of the Mylex and get another RAID controller. Maybe a ICP-Vortex Now if only I could get the higher ups to agree with me...

Yea I work for OSDN but my opinions are my own

And this is different how?

No, VA is not in Chapter 11, in fact VA has hardly any debt and still has cash in the bank. As for Slashdot, it's best revenue stream has been advertising and large ad clients such as IBM will not buy ad space here unless we post a network privacy policy

Important message below. Take the time to read it, in its
entirety, to understand how slashdot works, and why you need to
moderate.



In an effort to restore slashdot to
it's previous level of quality, I've begun a two step process. The first
step is a determined effort to point out, and mod down, all obvious karma
whores and trolls. The second step is to rid this site of Jon Katz. The job
is large, but not impossible.


This poster obviously does not care about the topic, rather he
(or she, perhaps), cares only about inflating karma, and to do so, this
person has posted absolute crap.


What qualifies as crap on slashdot? Well, quite honestly, about
half of the comments ranked above 2.


One way to easily spot a karma whore attempt, is to look for an
obvious, but pathetic, post of linux superiority. A linux karma whore will
often attempt to point out that linux is the best for job x, even
though there may be, and probably are, better alternatives, such as
Microsoft for desktops and FreeBSD for servers. These points will be ignored
by linux karma whores, as pointing this out will not ensure the positive
moderation they desire.


Another method for spotting karma whores is to look for comments
posting, verbatim, something stated in the article, or in the editor's
summary. While this often includes italicizing the quote, this is
frequently a ploy to show that the person read the article, even though it's
more likely the person only skimmed to find a comment worth repeating.
Additional signs of the repetitive karma whore are: commentary on a quote
that says nothing, "mirroring" an article that is not slashdotted, or
pointing to google's cache. Also be careful before moderating up posts which
link to obviously related sites: karma whores occasionally search popular search engines to find related
stories in an effort to gain more karma.


The third type of karma whore, one that very often succeeds on
slashdot, is the sympathy whore. A sympathy whore often tries to gain karma
by appealing to the moderator's sense of decency, either with a story about
how they were unfairly fired, perhaps how they were unfairly persecuted, or
occasionally how main stream capitalism is trampling on a sense of global
decency. The latter tends to link common, benine events to horrific events
of the past, making unfair generalizations and calling for action on behalf
of a charity rather than carrying on with one's life. Do not let your heart
be fooled into thinking that they are genuine: the sympathy whores want
nothing more than karma.


Why would someone try to whore karma? Well, the simple answer is
that everyone wants to feel smart, or popular. Many posters on slashdot
describe themselves as nerds or geeks, societal outcasts. Posting to
slashdot is their only true sense of community, and they view karma as a
measure of popularity or status. Others karma whore to try to increase
revenue and traffic to their own websites. Frequent marks of traffic whores
are links in the posts that match the user's homepage, or links to hardware
reviews on small sites, where links to purchase the hardware occupy the
bottom half of the review. Again, do not let these subtle traffic whores
fool you.


Now, turning our attention to Mr. Jon Katz. While he may possess
some talents as a writer, his technical knowledge is seriously lacking.
Furthermore, his credibility as a journalist is next to zero following his
Afghanistan fiasco.. He also has nothing to do with open source,
linux, or free software in general: thus, much like kuro5hin , he no longer fits in OSDN's mission statement. It is for this
reason that we must finish what we star
ted and get rid of Jon
Katz .


With these basic guidelines in mind, go out and moderate. Realize
that many of the higher moderated comments are whores, and mod them back
down. In an effort to increase the quality of comments, try to mod down no
more than 3 posts in a given session ; use your remaining points to moderate
some users UP. This ensures that not only are karma whores eliminated
but that valid posts are acknowledged.

Important message below. Take the time to read it, in its entirety, to understand how slashdot works, and why you need to moderate.


In an effort to restore slashdot to it's previous level of quality, I've begun a two step process. The first step is a determined effort to point out, and mod down, all obvious karma whores and trolls. The second step is to rid this site of Jon Katz. The job is large, but not impossible.

This poster obviously does not care about the topic, rather he (or she, perhaps), cares only about inflating karma, and to do so, this person has posted absolute crap.

What qualifies as crap on slashdot? Well, quite honestly, about half of the comments ranked above 2.

One way to easily spot a karma whore attempt, is to look for an obvious, but pathetic, post of linux superiority. A linux karma whore will often attempt to point out that linux is the best for job x, even though there may be, and probably are, better alternatives, such as Microsoft for desktops and FreeBSD for servers. These points will be ignored by linux karma whores, as pointing this out will not ensure the positive moderation they desire.

Another method for spotting karma whores is to look for comments posting, verbatim, something stated in the article, or in the editor's summary. While this often includes italicizing the quote, this is frequently a ploy to show that the person read the article, even though it's more likely the person only skimmed to find a comment worth repeating. Additional signs of the repetitive karma whore are: commentary on a quote that says nothing, "mirroring" an article that is not slashdotted, or pointing to google's cache. Also be careful before moderating up posts which link to obviously related sites: karma whores occasionally search popular search engines to find related stories in an effort to gain more karma.

The third type of karma whore, one that very often succeeds on slashdot, is the sympathy whore. A sympathy whore often tries to gain karma by appealing to the moderator's sense of decency, either with a story about how they were unfairly fired, perhaps how they were unfairly persecuted, or occasionally how main stream capitalism is trampling on a sense of global decency. The latter tends to link common, benine events to horrific events of the past, making unfair generalizations and calling for action on behalf of a charity rather than carrying on with one's life. Do not let your heart be fooled into thinking that they are genuine: the sympathy whores want nothing more than karma.

Why would someone try to whore karma? Well, the simple answer is that everyone wants to feel smart, or popular. Many posters on slashdot describe themselves as nerds or geeks, societal outcasts. Posting to slashdot is their only true sense of community, and they view karma as a measure of popularity or status. Others karma whore to try to increase revenue and traffic to their own websites. Frequent marks of traffic whores are links in the posts that match the user's homepage, or links to hardware reviews on small sites, where links to purchase the hardware occupy the bottom half of the review. Again, do not let these subtle traffic whores fool you.

Now, turning our attention to Mr. Jon Katz. While he may possess some talents as a writer, his technical knowledge is seriously lacking. Furthermore, his credibility as a journalist is next to zero following his Afghanistan fiasco.. He also has nothing to do with open source, linux, or free software in general: thus, much like kuro5hin, he no longer fits in OSDN's mission statement. It is for this reason that we must finish what we started and get rid of Jon Katz.

With these basic guidelines in mind, go out and moderate. Realize that many of the higher moderated comments are whores, and mod them back down. In an effort to increase the quality of comments, try to mod down no more than 3 posts in a given session ; use your remaining points to moderate some users UP. This ensures that not only are karma whores eliminated but that valid posts are acknowledged.

I have no idea!

Gosh now that my competitors are all charging for access, I'll have no trouble rising to popularity with my free pages.

Wouldn't this crazy scheme lead to a resurgence in quality hobbyist web sites? You know, the type created at home a couple years ago that have now all sold out to companies like OSDN/VA Linux?

I ran across an archive at OSDN.com that had a video from the 2.5 Kernel Summit (March 30th and 31st 2001). On the list of videos is 'Future VM Work presented by Rik Van Riel. Its a 1 Hour 4 Minute Video clip, but after listening to it for 5 minutes I knew it was WAY too technical for me. =P Anyways, if you want to see what he said about improving VM, head over to:

http://www.osdn.com/conferences/kernel

They have Real format in both 56K and 128K streams, Mpeg, and Mp3 of his speach. Looks interesting if you've got the bandwidth and the time.

Is it a little ironic to anyone else that OSDN.com is running ASP?

Does the Slashdot Customer Profile violate my Privacy?

It is strongly reccomended that you understand Slashdot Customer Profiles [slashdot.org] before asking this question. Now that you do, let's attempt to understand the answer.

The Right to Privacy is not guaranteed by the United States Constitution, and in America whatever "right" we may have had to privacy is rapidly dissapearing. Nowhere is this more true than on the Internet. However, many Americans value their privacy, and the courts have attempted to safeguard the privacy of citizens to some degree. However, "privacy" on the Internet is a subjective and hotly contested term, so any attempt to define it objectively will most likely fail.

Does the Slashdot Customer Profile violate the OSDN Privacy Statement?

This much more focused question can be easily answered. The Slashdot Privacy Policy is linked from the toolbar in the upper left hand corner of your web browser. Slashdot is part of VA Linux Inc.'s OSD Network, and is bound by OSDN's Privacy Policy [osdn.com]. Let's examine the relevant portions of this policy:

With regard to personal information, users can view their data on their personal profile page.

This statement is empirically false. No user has ever been permitted to view his or her Slashdot Customer Profile "IP address history" field.

OSDN will track the domains from which people visit OSDN and analyze this data for trends and statistics.

This statement is empirically false. Slashdot does not track domain statistics in the aggregate, rather it profiles every customer and their IP address history [slashdot.org] for the purpose of gagging abusive content on a per-user or per-subnet basis [slashdot.org].

Subject to the provisions of this Privacy Policy, different OSDN sites may use accumulated data for different purposes, including but not limited to marketing analysis, service evaluation and planning.

This statement is true, but misleading. Tracking and gagging users by IP address is certainly a "different purpose", and it is clearly stated that use of per-customer information includes but is not limited to the stated purposes. One must wonder what the other unstated purposes are?

General: In cases where users voluntarily and publicly disclose personal information which may contain Registration Data or otherwise post personal information in conjunction with content subject to an open source license, such personal information necessarily will be disclosed subject to the terms of the applicable license.

Keep in mind that your IP address history is not a "voluntarily disclosed" piece of information: you are forced to disclose an IP address when you interact with a web site. Therefore IP address histories are not bound by this clause.

At OSDN, we intend to give you as much control as possible over your personal information, including the Registration Data

It is not possible to change, modify, or "opt out" of having your IP address history stored in your Slashdot Customer Profile. Therefore, we must understand this statement to mean "OSDN does not believe it is possible for a Slashdot user to check a box which opts them out of being profiled by IP address".

The simple answer to the question "Does the Slashdot Customer Profile violate the OSDN Privacy Statement?", therefore, is a resounding yes. The recent changes to Slashcode to profile every customer and their IP address history [slashdot.org] for the purpose of gagging abusive content on a per-user or per-subnet basis [slashdot.org] have only been made recently. It is therefore possible - nay, likely - that these changes have been made without a careful examination of the OSDN Privacy Policy.

Which brings any concerned privacy advocate to the obvious question: Should I be concerned about potential privacy violations on Slashdot? More importantly, should Slashdot users be given the option of "opting out" of being profiled? The answer is a resounding... perhaps [slashdot.org] .

NOO! I'm scared mommy. the ghosts are going to get me.


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Does the Slashdot Customer Profile violate my Privacy?

It is strongly reccomended that you understand Slashdot Customer Profiles before asking this question. Now that you do, let's attempt to understand the answer.

The Right to Privacy is not guaranteed by the United States Constitution, and in America whatever "right" we may have had to privacy is rapidly dissapearing. Nowhere is this more true than on the Internet. However, many Americans value their privacy, and the courts have attempted to safeguard the privacy of citizens to some degree. However, "privacy" on the Internet is a subjective and hotly contested term, so any attempt to define it objectively will most likely fail.

Does the Slashdot Customer Profile violate the OSDN Privacy Statement?

This much more focused question can be easily answered. The Slashdot Privacy Policy is linked from the toolbar in the upper left hand corner of your web browser. Slashdot is part of VA Linux Inc.'s OSD Network, and is bound by OSDN's Privacy Policy. Let's examine the relevant portions of this policy:

With regard to personal information, users can view their data on their personal profile page.

This statement is empirically false. No user has ever been permitted to view his or her Slashdot Customer Profile "IP address history" field.

OSDN will track the domains from which people visit OSDN and analyze this data for trends and statistics.

This statement is empirically false. Slashdot does not track domain statistics in the aggregate, rather it profiles every customer and their IP address history for the purpose of gagging abusive content on a per-user or per-subnet basis.

Subject to the provisions of this Privacy Policy, different OSDN sites may use accumulated data for different purposes, including but not limited to marketing analysis, service evaluation and planning.

This statement is true, but misleading. Tracking and gagging users by IP address is certainly a "different purpose", and it is clearly stated that use of per-customer information includes but is not limited to the stated purposes. One must wonder what the other unstated purposes are?

General: In cases where users voluntarily and publicly disclose personal information which may contain Registration Data or otherwise post personal information in conjunction with content subject to an open source license, such personal information necessarily will be disclosed subject to the terms of the applicable license.

Keep in mind that your IP address history is not a "voluntarily disclosed" piece of information: you are forced to disclose an IP address when you interact with a web site. Therefore IP address histories are not bound by this clause.

At OSDN, we intend to give you as much control as possible over your personal information, including the Registration Data

It is not possible to change, modify, or "opt out" of having your IP address history stored in your Slashdot Customer Profile. Therefore, we must understand this statement to mean "OSDN does not believe it is possible for a Slashdot user to check a box which opts them out of being profiled by IP address".

The simple answer to the question "Does the Slashdot Customer Profile violate the OSDN Privacy Statement?", therefore, is a resounding yes. The recent changes to Slashcode to profile every customer and their IP address history for the purpose of gagging abusive content on a per-user or per-subnet basis have only been made recently. It is therefore possible - nay, likely - that these changes have been made without a careful examination of the OSDN Privacy Policy.

Which brings any concerned privacy advocate to the obvious question: Should I be concerned about potential privacy violations on Slashdot? More importantly, should Slashdot users be given the option of "opting out" of being profiled? The answer is a resounding... perhaps .

I assume you've already gotten emails from individuals asking for specs so they can submit an RFP. I assume you haven't tried guru.com, too.

This is a good opportunity for some body to put together a site for codeteams (in fact, you could even register codeteams.com) for displaced/unemployed IT professionals who are familiar with open-source software to get together and supply talent and solutions in ad-hoc groups for companies like this.

Pull a napkin out of the holder and write down some numbers. Let's say the servers and bandwidth are $10K a month. Add four employees at $72K/year including benefits and overhead for another $24K. That's $34K of expenses each month. Revenue? Banners are going for about $2 CPM net--if you're lucky--after commissions and fees. Assuming you can sell 16 MILLION page views you can break even for the month.

The OSDN media kit says Slashdot gets 30MM views, so no there's no problem right? Just sell all your ad inventory and you can CLEAR $30K each month after expenses. Bzzt, wrong. The Internet is swimming in ad inventory, you'll have a hard time selling that many banners at a good price. It's a buyer's market, so you either overdeliver to whatever advertisers you can find to please them or "remainder" your ads to a low-cost ad network. Ad networks like Tribal Fusion are offering sites sub-$1 CPMs, and sites are taking it because there's no better offer.

Advertisers are demanding the big obnoxious billboard ads or popups and they're getting it because sites are desperate for money. You can get a net $10 to $20 CPM on some of them! These new ad formats are all that seem to be selling lately. You either get with the program or do without ad revenue.

Some people are talking about how things will get better once the Internet ad market recovers. What makes them think the current prices are too low? Internet page views continue to increase even if the rate is slowing, so we're faced with more ad inventory instead of less. And how can an advertiser justify the price? If I'm selling a gizmo for $20 and buy banner ads on this site, I can expect best case maybe 0.1% click-throughs or one click for every 1000 impressions. If I pay a $4 gross CPM for the ads then it costs me $4 per click-through. Even if one of every 10 people who click through buy something--unusually high in my experience--it costs $40 to get one person to buy a $20 product. I need something more like a $1 CPM for this deal to make any financial sense.

If you don't like my numbers make up your own, but the bottom line is that nothing short of a bug in Microsoft Excel is going make Slashdot look wildly profitable.

I speak from experience here. The site I work on has been through all the money making schemes in the last 18 months--affiliate programs, Paypal/Amazon donation boxes, banner ads, big Cnet-style ads--and none of them work. We're not even covering our very meager expenses.
Next stop, subscriptions?

Never mind, decided to resist my natural slackful state and found it
here

http://www.osdn.com/jobs.com.shtml

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