Small Government Planes are Sucking Up Phone Calls; Amazon Makes Peace with Hachette and More

BURYING THE HACHETTE – Amazon and Hachette have ended their longstanding feud – or as Lou Schachter aptly put it here on LinkedIn, their sales negotiation gone semi-public – by signing a multiyear agreement for ebook and print sales. But because it is only semi-public, we won't be privy to exact numbers and both companies make it sound as though they won (which ideally is the result of any sales deal.) The retailer and the publisher were in conflict over the sales price of Hachette publications sold on Amazon. And Hachette was the proxy for the entire publishing industry, which both reap immense benefits from Amazon's success and fear that they have let a juggernaut grow too big. On the front lines were writers, some standing with Hachette, some with Amazon, and most fearing that either way the deal goes they'd lose. As the New York Times' David Streitfeld writes:

What began as a spat between supplier and retailer — completely routine, Amazon said — soon became a public standoff. Depending on where you stood, it was a struggle between the future and the past, the East Coast and the West Coast, culture and commerce, the masses and the elite, technologists and traditionalists, predator and prey. (Read the full post.)

For Amazon, this isn't one deal it didn't want but five: Jeff Bezos can expect the other Big Five publishers to demand the same terms, while smaller publishers will take the deal they can get. Still, Amazon was able to show it's not afraid of a fight (as if we had doubts...) On the other side, Hachette will be able to set its own prices for e-books sold on Amazon and its uber-popular Kindle and reduce Amazon's commission on discounted items. It's what the publisher wanted but the victory came with a hefty price tag: a 18.5 percent drop in third-quarter sales as Amazon reduced inventory and slowed deliveries, and an inconvenient realization in the writing community. While it's become clear that, for now at least, Amazon is an inevitable fact of life for contemporary writers, Hachette may not be. With self-publishing and self-marketing tools so wildly available, and traditional publishers putting most of their weight behind only their best-selling writers, the math isn't so clear for first-time authors. And Amazon made sure they knew that.

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MOOD SWINGS - Wall Street is a fickle mistress: after being incensed as "the one tech company that did its IPO right" – praise usually lavished in comparison with Facebook's own rocky start – Twitter is now getting trashed with a "junk" credit rating from Standard & Poor's. The stock closed at $40.04 last night, slighly below levels from its iPO a year ago and losing all gains from an impressive day of trading Wednesday. CNNMoney's Alanna Petroff notes that the stock has dropped 37% since the start of the year, making it the worst performer on CNNMoney's Tech30Index. (To be fair, the stock went up a lot just before January 1st, so this arbitrary cut-off date makes Twitter look especially bad. And no gloating here: any tech employee holding stock is used to Wall Street's wild mood swings, often bearing little relation to business fundamentals. It's best not to look.)

Twitter got a BB-, i/e "speculative grade," which means near-term prospects are stable, but major questions are being raised for the future. It's the eternal fears around Twitter's business model, which CFO Anthony Noto tried to assuage Wednesday by showing this chart for projected revenue growth – and setting very high expectations for himself. Wall Street bought it for 24 hours. One final caveat: S&P's ratings is for investors wanting to make their money back quickly. The fact that Twitter is reinvesting a lot of its profit rather than distributing it – a philosophy most young tech companies hold to – is playing against it in this case. To sum up: remain skeptical about Twitter – and about S&P.

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GET IT NOW? – Facebook has translated its privacy policy into plain English with a web page dedicated to explaining settings and recent changes. It's part of Facebook's ongoing efforts to make these controls more intuitive and obvious, since privacy is the main bone of contention with its critics. (Remember the psych experiment?) And yet as Facebook know-all David Kirkpatrick argued, Facebook was from its inception probably the first major site to care about privacy. At re/code, Peter Kafka is a bit blasé:

It’s very likely that if you use Facebook, you don’t care.

At some point you accepted, consciously or not, that Facebook is interested in turning your attention and personal information into advertising dollars. And if you didn’t like that idea, you stopped using Facebook. (Read the full post.)

If you do care, and you should, remember that here too you have control. Your settings are right here.

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I SPY... – The Wall Street Journal's Devlin Barrett reports (paywall) that the US Department of Justice is secretly spying on the mobile phones of millions of Americans from the air. Small planes carry "dirtboxes" which scan for devices and capture their data indiscriminately, acting like a cell tower and receiving the phones' unique ID number. The system is used to locate suspects in criminal investigations, but to locate that one fish in the sea, it must first drag a wide net, looking at thousands of cellphones at a time – and catching the occasional dolphin. While investigations are meant to focus on suspects, it's unclear what happens to the location data collected about innocent bystanders.

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SLOWLY BUT SURELY? – Europe has dodged a recession in the third quarter but only just. The eurozone grew 0.2% in the quarter, with Germany underperforming at just 0.1% growth and France a comparatively happy surprise at 0.3% after two consecutive quarters of stagnation. Italy is in the worst shape, with 11 out of the last 13 quarters showing a contraction and the Italian economy 10% smaller than before the financial crisis. And the best student in the class? Greece – you read that right – with 0.7% growth. Don't bring out the ouzo just yet but rather encouraging.

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