ReadWriteWeb DeathWatch: T-Mobile USA

The dresses in the commercials may be magenta, but the ink on the balance sheets is red. T-Mobile USA continues to slip behind its rivals. Can the rebel mobile carrier find a new CEO to bring it back to prominence before Deutsche Telekom hangs up?

The Basics

T-Mobile USA (a subsidiary of the German giant Deutsche Telekom) is the fourth-largest mobile carrier in the United States. It's also one of the country's most recognizable brands, thanks to a marketing push featuring model Carly Foulkes, a five-note jingle and liberal use of garish neon colors. For years, the scrappy company built a growing business on cheap minutes, cool phones and a network that was fast, if spotty.

Recent years have been tough. Deutsche Telekom's 2011 bid to unload the company on AT&T was shut down by the feds, stoking customer uncertainty. After 10 consecutive quarters bleeding 'branded contract customers' (the most valuable 'post-paid' users), T-Mobile tried to spin another half million defections as a positive, since the losses were 'our lowest level in seven quarters.' During the same quarter, Sprint (239,000), Verizon (501,000) and AT&T (187,000) all added contract customers. With the big two consolidating their lead, Sprint pulling away in the number three spot, and a hard Autumn ahead (more on that later), T-Mobile is foundering.

The Problem

The bungled AT&T deal left T-Mobile behind the curve, and now it's playing catchup. Here are the four biggest reasons for its troubles:

1. Europe. Since it's owned by Deutsche Telekom, T-Mobile is far more exposed to European unrest than other U.S. carriers. With revenue declining in Europe and more market turmoil on the way, T-Mobile may not get the network upgrades it so desperately needs. Deutsche Telekom has long made it clear that it would love to exit the U.S. market, though it has backed off on that goal since the failed sale.

2. The iPhone. According to the latest numbers from Nielsen, iPhones account for more than a third of all smartphones in use, and T-Mobile is the only major U.S. vendor that can't sell them. iPhone envy has driven hundreds of thousands of T-Mobile users to other networks, and with the iPhone 5 expected this Fall, the bleeding is about to get much, much worse.

3. The Technology. Beyond phone selection, T-Mobile is being pressed on technology. Like AT&T, T-Mobile made the dubious assertion that its HSPA+ network (considered firmly 3G by many) was fourth-generation technology, claiming to be 'the nation's larger 4G network' as a result. Now that it is eyeing a move to a faster 4G LTE network in 2013, T-Mobile has finally dropped the claim from its marketing. The truth of the matter is that T-Mobile will be the last major American carrier to move to LTE, and that will likely cost it more subscribers.

4. The Legacy. T-Mobile can change its spokesmodel's outfit, quote cherry-picked speed tests, and give away free phones that won't be compatible with next year's upgrade, but to many Americans, T-Mobile is still a budget carrier with a budget network.

The Players

On June 27, T-Mobile USA CEO Philipp Humm resigned. The official press release cited a desire to 'reunite with his family,' but many observers believe that Humm, who was a Deutsche Telekom insider before moving to T-Mobile, was there to sell the company. When the deal fell through, it was time for Humm to go.

According to Deutsche Telekom CEO René Obermann, T-Mobile needs 'somebody who can convert initiatives into market-successes.' Humm's interim replacement, COO Jim Alling, is not that man. Alling, whose LinkedIn profile does not even mention his new role, will bring stability during the transition, but T-Mobile is still searching for its new closer.

The Prognosis

Barring something crazy, like a merger with Sprint, T-Mobile won't ever challenge AT&T and Verizon for contract users, where the money is, and Sprint is probably out of reach, too. Increasing reliance on prepaid plans will likely hurt profits. The promise of an LTE network and an iPhone in 2013 sounds like too little too late.

Can This Company Be Saved?

T-Mobile's biggest enemy is time, with finances a close second. If Deutsche Telekom really does invest as planned in T-Mobile's infrastructure, it could complement new spectrum acquisitions from AT&T and Verizon. With an iPhone, a new network, a rebranding and a strong push into the enterprise, T-Mobile has a shot at returning to growth. Making all that happen will require a strong leader with vision, experience and connections, and the clock is already ticking.

The Deathwatch So Far

Research In Motion: Things are hurtling downhill even faster than expected. Massive losses - more than 11 times worse than expected - and new delays in its Hail Mary BlackBerry 10 operating system update have made the company's dire situation even harder to ignore. And over the weekend, a federal jury found RIM liable for $147 million in patent damages to Mformation Technologies.

HP: No change in status

Nokia: The mobile phone giant's quarterly revenue and earnings exceeded expectations and it has reduced its cash burn rate, but the company lost money yet again and saw its debt ratings cut to junk status. And it still hasn't cracked the U.S. smartphone market as it halves the retail price of its flagship Lumia 900 to $49.99.

38 Studios: No change in status

Barnes & Noble: No change in status

Sony: No change in status

Groupon: No change in status

Philipp Humm photo by LGEPR on Flickr.

 

Driven by breakthrough thinking and a wide-open sense of what's possible, Alcatel-Lucent delivers the world's most advanced technologies to companies all across the globe. Our driving motivation is to realize the potential of the connected world - by providing the technologies needed to turn networks into engines of sustainable economic growth, social development and opportunity. We provide a comprehensive suite of software solutions and services offerings designed specifically to meet the needs and demands of communication network operators and strategic industries. These solutions allow our customers to optimize network costs and quickly deploy innovative, value added products and services for their subscribers that increase loyalty and create new revenue streams. To learn more about how we're turning the network into a platform, visit http://www2.alcatel-lucent.com/hln/network_evolution.php

Taking Your Startup Global

Every online startup has a global presence, whether that's its goal or not. For e-commerce startups the question then becomes, 'Do you really want to turn down a sale just because the order comes from overseas?'

To Laurel Delaney, founder and president of Chicago-based GlobeTrade.com and creator of The Global Small Business Blog that's like asking, 'Are you really going to turn down the opportunity to go skydiving because you don't know what precautions to take when diving out of a plane?'

Know Before You Leap

Either way, the key is to know what you're getting yourself into. Learn what to do so you minimize your risks and enjoy the experience, advises Delaney. 'Do your homework and take action when you are confident you know what you are doing.'

Recruiterbox founders Raj Sheth, Raghuveer Kancherla and Girish Redekar never considered any other alternative when they started their company, which provides Web-based job applicant tracking software, in 2010. With headquarters in both San Francisco and Bangalore, India, Sheth says the decision to go global was a no-brainer: 'Since there is no physical product shipping, we decided to be open to the world. [Our product] is a software subscription which anyone can buy with an international credit card.'

That didn't mean being a worldwide company was smooth sailing from the outset. 'We had folks not able to pay online, or wanting local country invoices in certain cases,' says Sheth. 'Also, we had language support requests that we could not fulfill.'

What Language Barrier?

Language barriers may seem the most obvious obstacle to navigate around, but they're not a complete roadblock. Fiverr, which founders Micha Kaufman and Shai Wininger describe as 'the next eBay for the services economy,' also launched in 2010. Fiverr is a social space where buyers and sellers from more than 200 countries network and establish business relationships. Although headquarters is in Tel Aviv, the site is in English, but online translation services such as Google Translate have made multilingual communication easy. 'From what we've seen, our users are able to overcome any language barriers. We are planning to provide more language support in the near future,' says Kaufman.

Paul Gollash, Founder and CEO of Voxy, knew his target market could come from all over the world. Recognizing that self-study language learning was a huge and underserved global market, Gollash saw local branding as the key for his business. 'We learned very quickly that localization is incredibly important. It's crucial to localize your brand, have perfect language translations, and be culturally aware and sensitive,' explains Gollash. For example, Voxy delivers a different product to Brazil than to other South American nations.

8 Common Mistakes

That's not to say it's simple to establish a world-wide startup. Fiverr's Kaufman identifies eight common mistakes new businesses make when going global:

1. Moving too soon instead of executing on a well-thought-out global strategy
2. Diverting attention to the overseas market at the detriment of domestic business
3. Being too understaffed to adequately serve the overseas market
4. Starting in a complex market (a country with a lot of red tape or few English speakers)
5. Negotiating with the wrong party (e.g., untrustworthy individuals or a bad fit
6. Too quick to execute on a sale without securing payment
7. Providing online banking information only to have a bank account cyber-attacked
8. Not clearly stating on the website if you accept international orders. If your site does accept international orders, specifically list which countries you serve.

Delaney of GlobeTrade.com says research and planning can greatly reduce these errors. 'Find out everything you can about the country where you wish to conduct business,' she advises. 'Don't jump in blindly... only to discover later on that you have taken your eye off the [local] business directly in front of you. Create a history of success that proves your business model works. Once that happens, you can transfer the knowledge and skill set to just about any place in the world provided there is a demand for your product or service.'

Brands vs. Retailers

For some companies, however, going overseas from the start can work. 'There is a difference between selling overseas as the owner of a product brand and as a retailer of other brands,' says Nate Gilmore, vice president of Shipwire, an ecommerce order fulfillment company. 'Retailers have a wider variety of products, so they need to focus on their top sellers and be more margin-conscious. This doesn't mean they shouldn't enter overseas markets, just that they need to look at the market differently.

'Brands, on the other hand, can likely go overseas much faster to support direct sales [or] and distributors,' Gilmore explains. 'They have fewer products and typically higher margins than a retailer. With a marketing plan and a fulfillment partner, there are few reasons why a brand shouldn't look overseas right away.'

The Hottest Markets?

So where do you start? 'It depends what you are selling,' answers Delaney. 'If you're selling luxury items with international prestige, developing Asian countries, such as China and India, are the go-to-markets. If you're selling automotive parts, China, Japan and South Korea are good bets.'

Gilmore believes the most exciting markets right now are Asia-Pacific. 'With a GDP of $16 trillion and some of the fastest-growing markets in the world, it's a really exciting place for new brands to grow,' he says. 'China alone will have 650 million Internet users in just a few short years, with consumers set to spend $37 billion online by 2015.'

Gilmore also points to Australia as a superpower where consumers spent $12 billion online in 2010. Last, don't ignore Japan as a leader in ecommerce sales; online sales there are expected to hit $98 billion by 2016.

Lead image courtesy of Shutterstock.

The Best App Is the One You Don't Have to Use

Apps are reaching an inflection point. Now that zillions of apps are available to serve every imaginable purpose, there are two ways for them to keep us interested. They can either melt into the background and do their jobs with minimum fuss, or they can force us to pay attention to them. Which option sounds better in the long run?

This is a story of two apps. One has evolved from an inconvenience to a convenience, the other has done the opposite.

Greplin: The Business of Friction

I loved Greplin. It provided a critical service better than any other app: It searched across everything. You logged into your various cloud things, your Gmail, your Evernote, your Dropbox, your Google Docs and Calendars, your Facebook and Twitter feeds, and it gave you a search box that helped you find anything in any of those places. It indexed over a million of my documents, messages, reminders and notifications, no matter how small. It was one of the handiest apps on my phone.

I didn't need Greplin often. But when I did, I really needed it. I would be in a meeting and need to recall the contents of a document that could have been in a number of places. By far the quickest way to find it would have been to pull out my phone and search Greplin. But I launched the app only once every couple of weeks.

You could pay Greplin to unlock the ability to connect to some services, but you could also do it by inviting friends to Greplin. I found it easy to get all the services I needed for free, and I bet I use a lot more apps than the average person.

Now, a free app has to get you to launch it all the time if the publisher has any hope of turning it into a business; frequent use brings the opportunity to display lots and lots of ads. Greplin didn't inspire its users to launch it that often. So Greplin 'pivoted,' relaunching as Cue. While it still has a search button way down in the corner, Cue is designed for an altogether different use.

Taking advantage of Greplin's connection to calendars and email and all that, Cue sends push notifications that remind you of every event in your entire life. That, of course, prompts you to open the app. Often. Like, many, many times a day. That may be better for business, but it's a raw deal for users. Notifying users of upcoming appointments is not a new service. All phones can already do that. Search across the cloud was profoundly useful, but now it's a minor feature of an app that has become annoying and redundant.

Paying for Convenience

Contrast Greplin's trajectory with that of Square. Square's first product was a mobile app for accepting payments by credit card using a plastic dongle. It allowed regular people to pay each other with plastic, a new convenience, but it required that they keep track of this tiny gizmo if they wanted to be on the receiving end.

To drive more usage, Square did the opposite of Cue. It iterated itself out of the picture. The Pay With Square app stores customers' credit card info, and merchant users keep a 'tab' for each customer under his or her name. A user just has to open the tab in the app when getting ready to buy something, and the seller just matches the face and the name and processes the payment.

The new app even allows geofencing, so it can open your tab automatically whenever you come near a store, food cart or whatever it is. Your phone doesn't even have to come out of your pocket to handle the transaction.

The Long Run

Which of these experiences sounds like the future?

Cue's business is mired in an old model devised for the desktop Web. It demands eyeballs, reminding its user to fiddle with a computer as often as possible.

Square is an example of the new promise of mobile. When we carry computers around with us, packed with sensors and storing our account info, the right kind of software can help us get around in the world while operating undercover.

But this is all bound up in how an app does business. If Greplin isn't willing to charge its users for the convenience, it has to show ads, so it has to be annoying. Square is in the payments business, so it can take its cut as money changes hands, but it has the same hurdles as Greplin: It has to get people to use the app often, even in a sea of alternatives.

With iTunes and the App Store, Apple proved that people will pay - even just a little bit - for digital convenience. The alternative for free apps is to gamble on this question: How much annoyance will users tolerate to get something for nothing?

Weekly Wrap-Up: There's a New Evening Edition, the Mac Retina Display Disagreement and Twitter's Credibility Problem

A Web design firm, not a newsroom, has built a stellar Evening Edition of the top stories from across the Web. Our writers are at odds on the MacBook Pro's Retina Display. Twitter has a credibility problem. After the jump you'll find more of this week's top news stories on some of the key topics that are shaping the Web - plus highlights from some of our six channels. Read on for more.

These Designers Did for Fun What News Sites Can't Do to Save Their Business

A Web design studio built the first news site I've ever read from top to bottom two days in a row, and it did so as a side project. Mule Design is not in the journalism business. It builds sites to solve all manner of client communication problems. But it did in a week's work what news organizations can't seem to do at all: deliver their output in a form that's comfortable and convenient for the audience. I couldn't help myself. I had to figure out how and why. More

Yes, MacBook Pro's Retina Display Is Brilliant, But Not For the Average User

If you tweet from your iPhone, get ready for big changes. Twitter's official iOS app is about to get a meaty upgrade, judging by screen shots leaked from the App Store. Twitter 4.3 for iPhone is expected to deliver deeper interactivity, improvements to search and more granular push notification settings, among other things. More

Twitter's Credibility Problem

Where you read something may impact credibility as much as what you read - especially if where you read something is on Twitter, according to a new study. Published last month in Communication Quarterly, the research by Mike Schmierbach and Anne Oeldorf-Hirsch used two experiments to show that a New York Times story posted on the website was seen by respondents as more credible than when the same story was posted on the newspaper's Twitter feed. Additionally, stories posted on Twitter were seen as less important than stories in a newspaper or linked by a blog. More

More Top Stories

What Google Lost When Marissa Mayer Left to Run Yahoo

On Monday, The New York Times broke the story that Marissa Mayer, employee No. 20 at Google, had suddenly resigned by phone to become the CEO of Yahoo. Yahoo's gain is Google's loss, as Mayer was personally responsible for some of Google's most iconic products. Here are just some of Mayer's accomplishments over her years at Google. More

[Infographic] Survey: Consumers Are Concerned About Privacy, Tracking, Advertising

How much do social and mobile service providers know about you? What are they doing with your personal information? If you're worried, you're not alone. A Harris Interactive survey commmissioned by TRUSTe, which helps its clients manage customer privacy, shows that 60% of adults surveyed are more concerned about their online privacy now than they were a year ago. More

From Inmates to Entrepreneurs: The San Quentin Startup Accelerator

Prison inmates have all day, every day, to sit around and think. It could be the world's largest pool of untapped brain time. Chris Redlitz decided to put it to productive use. He founded the Last Mile startup accelerator program at San Quentin State Prison in California. 'I've driven by San Quentin every day for the last 14 years, but never bothered to understand the prison system,' says Redlitz, who lives in Marin County north of San Francisco (where the prison sits on San Francisco Bay) and runs the KickLabs tech accelerator in San Francisco. More

How to Get Bloggers to Write About Your Startup: Insider Advice

It's every startup's dream - to get the attention of the people who matter. You might think that refers to customers or clients, or even venture capitalists or angel investors. Nope. We're talking about bloggers. Sure, investors and customers are vital to the success of a startup business, but few things can turn your tech startup into the 'it' company on everyone's lips (and tweets) as quickly as getting mentioned by a prominent blog or blogger. More

5 Surprising Facts About Yahoo CEO Marissa Mayer

New Yahoo CEO Marissa Mayer confirmed on Monday that she and husband Zachary Bogue are expecting a son in October. Her pregnancy makes all the more notable Mayer's landmark appointment to the helm of a tech titan - only 19 Fortune 500 companies are headed by women, and not long ago a pregnant chief executive was unthinkable. But beyond her pregnancy, she is a multifaceted, dynamic leader who might prove to be the smartest choice for Yahoo since it fell from grace. Here are some lesser-known facts about Mayer that hold clues to her ability to save Yahoo. More

Age Bias: Young Startup Founders Get More Investor Cash

Blame Mark Zuckerberg. Since he invented Facebook in the third grade (or so it seems) high-tech investors have been throwing more and more money at younger and younger whiz kids. Older entrepreneurs may not like the trend - but it shows no sign of slowing anytime soon. More

The New Microsoft Office: 20 Things to Like, Not Like and Worry About

For all the parental and media hand-wringing, sexting remains a poorly studied phenomenon. But according to new peer-reviewed research, that concern might not be unfounded. Teen texts are indeed ablaze with sexual content - but how does technology-based sexual activity intersect with actual behavior? More

ReadWriteWeb Channels

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• Age Bias: Young Startup Founders Get More Investor Cash
• 7 Ways to Help Startup Workers Innovate
• From Inmates to Entrepreneurs: The San Quentin Startup Accelerator

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• Dear Marissa Mayer: Don't Change Yahoo
• Amazon Gets Ready for Sales Taxes

Enterprise

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• The New Microsoft Office: 20 Things to Like, Not Like and Worry About
• Utilities and Other Industries Not Ready for Big Data, Say New Oracle Reports
• Don't Believe the Doomsayers: Microsoft's Q4 Results Are Good News

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• What's Killing the Printer Business?
• Is a VMware/EMC Cloud Spin-Off in the Works?

Hack

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• Copyright Enforcement Irony: Hip Hopper Lord Finesse Silences YouTube Rapper Dan Bull

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• Tablets & PCs: One Industry or Two?

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Apple Won't Let You See What iPhone Apps Do With Your Data

Do you know what your apps are doing when you are not paying attention? How are they taking care of your personal data? An iOS app called Clueful from security company Bitdefender told users exactly what the apps on their iPhone were doing. That is a valuable service for consumers who may trust an app simply because it had the App Store stamp of approval, when not all apps are so trustworthy. Yet Apple has removed Clueful from the App Store for unspecified reasons.

According to Bitdefender, Clueful 'identifies deviant apps on your iPhone. It looks at what applications are currently running in memory and it retrieves audit information from the Clueful Cloud. This audit info lets you know if the app is taking your address book, sharing your location, etc.' 

Clueful would also let you know if an app integrated a mobile analytics platform so it could track a user's behavior within the app. Mobile analytics is a powerful tool for developers, and the information is extremely useful to developers for marketing and designing updates. Clueful would tell you how an ad network was interacting with an app. It would tell if an app was accessing your Facebook or Twitter credentials or if it used telemetry data to ascertain your behavior across several apps. If an app was sending your data unencrypted, Clueful would let you know. 

Apple has good reasons for not wanting consumers to have that information. Several companies have gotten into trouble in 2012 for improperly transmitting user data to servers, such as Path and LinkedIn. 

What this comes down to is a basic matter of trust. Apple wants consumers to implicitly trust what they download from the App Store. The company has established a rigorous approval process for any app that is published on the App Store for precisely that reason. If Apple cannot keep malicious or carelessly developed apps out, people will not trust the App Store and will be less likely to download from it. That would hurt Apple's bottom line as well as the ecosystem the company has built. Yes, iPhones and iPads are high-quality devices, but Apple's marketing centers around what you can do with them: There's an app for that. 

That said, Apple's reasoning is unclear. Bitdefender's Chief Security Researcher Alexandru Catalin Cosoi declined to comment, citing a nondisclosure agreement. Bitdefender is working with Apple to have the app reinstituted and will resubmit it to the App Store on Monday or Tuesday of next week. 

Although users can't currently download Clueful to find out what their apps are doing, Bitdefender offers statistics that illuminate the behavior of iPhone apps en masse. Between May 22, when it was published, and this week, when it was taken down, Clueful reported the behavior of 65,000 of the App Store's most popular apps. Bitdefender found that 41% of the apps studied could track users' location and about 33% stored user information without encrypting it. 18.6% of apps could access all contact information in address books. 

16.4% of apps studied can connect to Facebook. By itself, that is not a big deal, since a variety of applications use Facebook's user authentication as the default way to log in. In fact, many of the behaviors Clueful tracked were benign and even in the user's interest, if the app developer employed proper security and respected privacy. That said, it is still beneficial for users to know what an app is doing and how it is tracking behavior.

We have contacted Apple concerning the removal of Clueful and will update if we get a response. 

The infographic below summarizes the information Clueful found before it was removed from the App Store. 

Driven by breakthrough thinking and a wide-open sense of what's possible, Alcatel-Lucent delivers the world's most advanced technologies to companies all across the globe. Our driving motivation is to realize the potential of the connected world - by providing the technologies needed to turn networks into engines of sustainable economic growth, social development and opportunity. We provide a comprehensive suite of software solutions and services offerings designed specifically to meet the needs and demands of communication network operators and strategic industries. These solutions allow our customers to optimize network costs and quickly deploy innovative, value added products and services for their subscribers that increase loyalty and create new revenue streams. To learn more about how we're turning the network into a platform, visit http://www2.alcatel-lucent.com/hln/network_evolution.php

Kayak and Palo Alto Networks Put Technology IPOs Back on Track

Two high-profile initial public offerings seem to indicate a waning of investor wariness following the much-maligned Facebook IPO. Kayak Software and Palo Alto Networks were able to price their shares above proposed ranges and enjoy healthy bumps in share prices in their market debuts on Friday.

As of early afternoon Eastern Time Friday, Palo Alto shares (PANW) rose more than 34% to $56.39 and Kayak (KYAK) climbed 30% to $33.8928, according to Bloomberg. The performance indicates that investors are continuing to look favorably on the tech industry after the IPO of ServiceNow in June. That software maker's stock rose 37% on its first day.

Wall Street Worries Put to Rest

Wall Street worried that investors would be overly cautious with tech IPOs because of Facebook's tainted public offering. Allegations that large investors got more information from the lead underwriters than smaller investors sparked lawsuits and drew the attention of federal securities investigators. Facebook stock has yet to recover, having lost almost a quarter of its value since the IPO in May.

Palo Alto and Kayak are very different businesses. Palo Alto is in the hot security market, selling firewalls that protect corporate networks against Internet-carried malware. Kayak is an aggregation site for booking airlines and hotels in the highly competitive online travel business. Kayak had delayed its IPO following Facebook's troubles. Morgan Stanley, the investment bank that led the social network's debut, led the IPOs for Kayak and Palo Alto.

The Differences in Companies

Beyond having the same lead underwriter, the performance of the three companies heading into the IPOs was quite different. In filings with the Securities Exchange Commission, Facebook showed slowing revenue and acknowledged it hadn't figured out how to build a strong advertising business on mobile devices. And its IPO was massive, valuing the company in the neighborhood of $100 billion.

Kayak and Palo Alto are much smaller bets with clearer prospects.

Kayak revenue was up 39% year-to-year for the first quarter that ended in March, while Palo Alto's revenue more than doubled in the nine months ending April 30, according to The Wall Street Journal. Kayak has been profitable on a full-year basis for several years, while Palo Alto has yet to be profitable for a full fiscal year.

Investors Willing to Take Risks

Both companies face stiff competition, though. Kayak is up against Google, which owns the airfare engine software Kayak uses. And it is also battling smaller upstarts like Hipmunk. Google acquired the software last year in the purchase of ITA Software.

Palo Alto competes against larger players including Cisco and Juniper Networks.

Nevertheless, investors seem willing to take the risk, which means confidence in the tech sector is building once again. That could lead to more tech IPOs in the months to come.

Censored Romney Videos Highlight YouTube Abuse of Copyright Claims

Earlier this week, YouTube took down videos attacking President Obama due to a copyright claim by music publishing giant BMG Rights Management. The clips, which featured Obama singing Al Green's hit 'Let's Stay Together,' fell squarely within the Supreme Court's fair use guidelines. YouTube's action illustrates how its copyright enforcement policy allows politically motivated organizations to control what its audience sees and hears.

The Romney incident is especially troubling because a corporation used copyright law to censor a political campaign and a press outlet. BMG Rights Management passed over numerous unauthorized copies of Al Green's song on YouTube to single out the ones that mocked Obama. The organization is no stranger to issuing copyright claims on YouTube, and it certainly knows what constitutes fair use.

YouTube came under heavy fire during the few days that they were unavailable (though criticism of BMG Rights Management was surprisingly muted). Timothy B. Lee at Ars Technica was convinced of a nefarious plot at YouTube, since his source there 'refused to explain takedown policies.'

Alas, the blame actually lies with a series of machines. YouTube's copyright claim process, whether for a Digital Millennium Copyright claim or a complaint lodged via the site's Content ID System, is completely automated. You fill out a Web form, click a button and bam, the video is removed, just like that.

YouTube offers a counterclaim process to handle abusive takedown requests. However, it warns prospective counterclaimants that they should be prepared to back up their claim in court. Counterclaims can take weeks to process. (It took only days to restore Romney's videos in this high-profile case).

YouTube representatives declined to comment. However, the company's executives have said in prior cases of copyright claim abuse that there's no other way to handle claims. With 72 hours of video content uploaded every minute, the site couldn't possibly monitor clips manually. Moreover, leaving humans out of the process washes YouTube's hands of potential lawsuits. 

Althought it might suit the company, YouTube's process is deeply flawed from a copyright point of view. It assumes that all claims are rightful, and because the takedowns are processed almost instantaneously, it invites abuse on a regular basis - and not just by Hollywood producers and RIAA-types. YouTube pranksters have removed music by Justin Bieber and Lady Gaga, angry ex-boyfriends have removed incriminating voicemails, and feuding YouTubers have censored each other for random digital vendettas. None of these frivolous claims would have been possible if YouTube's copyright claims weren't automated. 

Users have been complaining, even petitioning, the site for years. YouTube warns that those issuing frivolous claims will be punished, but one would be hard-pressed to find such a case. With a season of intense political debate coming with the 2012 U.S. presidential election, the Romney case only highlights the pressing need for YouTube to overhaul its copyright claim process.