Ever since the iPad came out, print media companies have been feeling their way in this new medium, but so far they’ve just been stumbling over themselves.
They are latching onto the iPad as a new walled garden where people will somehow magically pay for articles they can get for free in their browsers. But if they want people to pay, the experience has to be better than on the Web, and usually it’s not.

This sorry state of affairs is true for both magazines and newspapers. The New York Times iPad app, for instance, is gorgeous but crippled. All the links are stripped out of the articles, even from the blogs. Meanwhile, most iPad magazines are little more than PDFs of the print issues with some photo slideshows and videos thrown in. They end up being huge files—I recently downloaded a single issue that was 350 MB, some issues of Wired are 500 MB—with the same stale articles as in the print version. Replicating a dead-tree publishing model on a touchscreen is a recipe for obsolescence.

Despite the poor reviews and uninspiring number of downloads, media companies sold millions of dollars worth of advertising last year for their iPad apps because advertisers want to be associated with anything shiny and new. Make no mistake: advertising dollars are driving media companies to embrace the iPad, not readers. The same is true for the upcoming launch this week of News Corp’s iPad-only newspaper, The Daily, but at least it will be built from the ground-up for the iPad. I suspect it will take a while for it to reach its true potential—it’s hard enough to launch a new publication as it is without reinventing the reading experience—but I am curious to see where it goes.

However, I am not holding my breath. I’ve already written my thoughts on what The Daily should look like.

From a reader’s perspective, the optimal iPad newspaper should be three things:

• Social: It should show you what your friends and the people you trust are reading and passing around, both within that publication and elsewhere on the Web.
• Realtime: News breaks every second, and publications need to be as realtime as possible to keep up.  A “daily” already sounds too slow.
• Local: The device knows where you are and should serve up news and information accordingly, including, weather, local news and reviews.

At the very least, Apple should fix the subscription problem in iTunes. Right now, each new issue of a paid magazine or newspaper must be bought separately as an in-app purchase. But subscriptions are not going to save the media companies. In fact, they’d be smarter to give the apps away for free and make more money from the advertisers, who want to reach as many people as possible. The ads should also be worth more because they just look better in an app where they look more like a magazine ad and can take over the whole screen when tapped on.

But making these media apps social and realtime is the key. It should be constantly updated like a blog or Twitter. And it should be social like Flipboard in that it shows me what people I follow are reading and retweeting elsewhere by unpacking their links into full articles, images, and videos.

More so than iPad newspapers, iPad magazines have a real opportunity to break the mold, but they can’t do that if they are just trying to repurpose their print publications. Starting from scratch like The Daily is the right idea. But what magazines are better at than newspapers is really packaging the news, distilling big ideas, and presenting stories in a narrative arc that sticks in readers’ minds.

If I were creating an iPad mag it wouldn’t look like a magazine at all. It would look more like a media app, and there wouldn’t be any subscription or even distinct issues. New content would appear every time you opened it up, just like when you visit TechCrunch or launch Flipboard or the Pulse News Reader. In order to make it addictive, it would have to be realtime. But it would also be more selective than simply reading everything that anyone links to in your Twitter or Facebook streams.

Instead, it would present readers with a continuum from original articles and videos to curated streams by topic. The curated streams would combine Tweets from the staff writers and editors with those of other journalists, entrepreneurs, and experts for any given topic or section. These streams would be unpacked Flipboard-style into a magazine-like layout, but with more filters to show trending stories and highlight the ones which are getting the most buzz.

At the same time, there would be a view showing only the articles from that publication. And there would be other ways to navigate the app than just a reverse-chronological stream of the latest posts. In addition to the hourly drumbeat of breaking news and analysis, there would be longer narratives. These would not necessarily be 10,000-word articles (although those could be part of it), but rather taking readers through a series of experiences to tell a story.

Maybe you start with an article, followed by a video interview with the subject, an interactive infographic, and then wrap up with a selected Tweet stream about the topic. At every point, the reader would be led by the hand from one experience to another, coming away with a fuller understanding of the topic. Supplemental images and data should always be at her fingertips. And, of course, the reader could dive right in by commenting, Tweeting, sharing, taking opinion polls and all the rest.

A digital magazine or newspaper should feel like a media app, not like a PDF viewer. It needs to take advantage of technology to tell better stories. These include both presentation technologies (immersive panoramic photos, interactive charts) and data-sifting technologies to filter the news from outside sources.

What do you want to see in a media app that you are not getting today?

The Social Network star Jesse Eisenberg hosted “Saturday Night Live” tonight and opened the show talking about the movie’s impressive eight Oscar nominations. The monologue then switched to video of actual Facebook CEO Mark Zuckerberg watching his two “Berg” doppelgangers backstage, ”Why can’t I go in there, I’m the real Mark Zuckerberg? That guy’s like my evil twin and that guy’s Andy Sandberg. Those guys are such nerds! I mean I invented poking …”

Watch the whole “Awkberg”skit, above.

Via Mediaite/NBC

This week’s episode of OMG/JK, the show I do on TechCrunch TV alongside Jason Kincaid, is all Google all the time. So just to even things out a bit, we kick things off by showing off my awesome new TikTok iPod nano wristwatch. For those who don’t remember, this is the result of the most successful Kickstarter project ever.

We then dive into the Google stuff including Eric Schmidt being replaced by Larry Page as CEO, Google’s index changes, Google Voice number porting, and the upcoming Android Honeycomb event. Watch it above.

Here are the links to some of the things we talk about:

• Big Bang At Google: Larry Page To Replace Eric Schmidt As CEO On April 4
• Live: Eric Schmidt And Larry Page Talk About Google's Q4 And Their New Roles
• TechCrunch Interview With Eric Schmidt, Larry Page And Sergey Brin
• Schmidt: Decision Made Over The Holidays, It's About Execution, And Larry Is Ready To Lead
• Google: Spam Really Has Increased Lately. We're Fixing That, And Content Farms Are Next
• Algorithm change launched
• Google Voice Number Porting Now Live (For Real This Time)
• Payback: I Just Canceled AT&T By Way Of Google Voice
• Google To Give A Better Taste Of Honeycomb Next Week At Press Event And On YouTube
• War Maneuvers: Android Event Will Battle iPad Event For Press Love On February 2

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Late last night the 43 startups in the most recent Y Combinator class got quite a surprise. Start Fund, a new fund created by DST’s Yuri Milner as an individual and SV Angel, offered each of the companies a $150,000 investment in the form of a convertible note with no cap and no discount.

Most of these companies are still in stealth mode, and Start Fund hasn’t seen them. They made the offer based on the Y Combinator stamp of approval.

The startups are jumping on board. 36 of the 43 startups in the class had signed the paperwork to take the loan before the event was even over last night, says David Lee, a managing partner at SV Angel who’s also managing the Start Fund. “As of 3 pm today we’ve received 39 confirmed signature pages, and we believe the rest are awaiting approval from their attorneys.”

Lee also says this isn’t a gift, it’s an investment. He says “These aren’t gifts, we’re not a charity. It’s an investment that gives these startups that first critical $150k that gets them to product. We intend to make money on these investments.”

He added – “This is a chance for us to invest in some of the best young entrepreneurs in the world.”

The funds will be wired to startups in the next few days, says Lee.

You may recall that back in the summer of 2009, there was a lot of hubbub over a Google 20 percent project with a near impossible name: Pubsubhubbub. Creators Brad Fitzpatrick and Brett Slatkin actually unveiled it at our Realtime Stream CrunchUp back then. And it garnered a lot of buzz for a good reason: it aimed to speed up traditionally slow feeds of information to realtime. Well, now the two are back at it again (with a few other contributors) with a new project: Camlistore.

First of all, aside from the fact that I keep typing “Camilstore”, this name is a significant improvement over the last project. It’s an acronym for “Content-Addressable Multi-Layer Indexed Storage”. But more importantly, the project once again looks to be a very interesting one. Though the team is quick to note on its homepage that it’s “not ready for users”, the site has quite a bit of information about the general hopes for the project and how they imagine it working.

So what is Camlistore? As the team’s first bullet point notes, it’s “a way to store, sync, share, model and back up content”. Farther down, they also call it your “home directory for the web”. Naturally (from these guys), it’s also entirely open source.

So it sounds like it could be a potential competitor for a few things, namely, Dropbox (and the like), Amazon S3, and MySQL. The group addresses the latter two right on the homepage. They note that it’s “not necessarily” a replacement for S3, and that it’s “not yet” a MySQL alternative. They also say it’s both “cloud” and “local”, which again sounds a bit like Dropbox, though they don’t bring up that service or any of its direct competitors.

As for the competition angle, they want to make it very clear that this is not an official Google project — as they say, it’s “not Google-centric nor endorsed by Google (other than them letting us open source our side project)”. Humorously, they also note that it’s “pro-paranoia and privacy”.

Long story short, it appears we’re going to have to wait a bit to see what it evolves into. But it certainly sounds ambitious at this point.

And it’s definitely worth following given that Fitzpatrick is not only behind Pubsubhubbub, but also Memcached (which he first developed for his startup LiveJournal), and the equally ambitious WebFinger.

The full team behind Camlistore is Brad Fitzpatrick, Brett Slatkin, Dan Erat, Evan Martin, Adam Langley, and Andrew Gerrand. And they’re encouraging others to help them out.

Kevin Rose and Tim Ferriss have made a co-investment in Facebook on the secondary market. In this video clip posted this week, Rose announces that he and Ferris recently invested in Facebook “before the craziness.” We’ve embedded the video below; Rose talks about the investment just after the 34 minute mark.

We confirmed with Rose that he and Ferriss actually bought shares on secondary market SecondMarket at a $45 billion valuation. We’re told the deal was in the seven figures. The ‘craziness’ Rose is referring to is Facebook’s recent $1.5 billion funding round from Goldman Sachs and DST at a $50 billion valuation, and the possibility of an IPO for the network by April 2012.

In terms of why he invested in Facebook at this stage of the game, Rose said this of the investment: This is still early days for Facebook, the graph is starting to extend into interests and personal preferences. This is going to enable a slew of new ideas and startups — I believe Facebook is well positioning to be in the middle of it all.

Rose has been a prolific angel investor in a number of startups and high-profile companies, including Twitter, Zynga, Foursquare, Gowalla, DailyBooth, and Square. Ferriss is also an angel investor, and has made investments in Twitter, SimpleGeo, Posterous, Foodzie and a number of other startups.

While Rose and Ferriss’ investment isn’t monumental news it does show that experienced investors are betting that value of Facebook’s shares will definitely grow significantly, especially if the social network does IPO next year. And Facebook is dominating share auctions on SecondMarket. Ferriss actually spoke to PEHub early this year on investing in Facebook, saying, “I think it'll be hard to lose on Facebook — assuming there's not a repeat macroeconomic double dip. If things are fairly stable, I think Facebook is a very strong bet.”

Random Episode 87 from Glenn McElhose on Vimeo.

Hat tip to UniPaul.

Editor’s note: Guest author Chris Yeh is an independent angel investor and VP of Marketing for PBworks, one of his investments. He has been involved with Internet startups since 1995. His Twitter handle is @chrisyeh.

Update: This post refers to DST as the investor in Start Fund when it actually is Yuri Milner personally investing, along with Ron Conway’s fund SV Angel.

The big news this morning is Yuri Milner’s announcement that DST and Ron Conway will be investing $150,000 in *every* Y Combinator startup on a no-discount, no-cap convertible loan.

Many people have already weighed in with instant reactions—”It’s a bubble!” “It’s the greatest thing to happen to the US economy!” As usual, these off-the-cuff reactions focus on a single part of the story, rather than looking at the big picture.

Let’s walk through the news, step-by-step, and see what it really means. Ultimately, my take is that it’s good for Y Combinator and DST, but bad for the rest of Silicon Valley.

1) “Yuri is a fool who believes he can sell to a greater fool.”

Many people mocked DST when it began investing in companies like Facebook at “outlandish” valuations. DST invested in Facebook at a $10 billion valuation; with the valuation now above $50 billion, I’d say Yuri is having the last laugh (for now).

If DST is investing in YC companies on these terms, it’s because DST believes it can make money on these terms (more on this later).

2) “I can’t believe all the money going into YC’s dipshit companies.”

Once upon a time, Y Combinator’s companies were features masquerading as companies. But anyone who still thinks that isn’t paying attention. The quality of YC companies has risen considerably; the companies graduating from YC these days are much more polished and accomplished. And with monster successes like Dropbox and AirBnB (along with Heroku’s exit), YC’s company quality is looking better and better.

3) “Finally, someone who’s willing to take risks, unlike today’s pantywaist angels and VCs!”

Now we’re getting to something more substantive. There seems to be a feeling among entrepreneurs that investors are no longer willing to take risks, and that no one is willing to invest in ideas any more. My response to that is simple—if startups are really so low-risk, why is it that only a tiny fraction of the companies that do get funded (which are presumably “no-brainer” investments for all the cautious VCs) actually return any money to investors?

Of course I try to invest in companies that I expect to be “sure things,” but I also know that history predicts that at least 60% of my investments are going to be complete financial failures. The reason DST is willing to take on such risk is simple—in addition to the actual investment, it’s also buying option value.

Option value is what makes the VC system work—by investing in stages, investors are able to abandon companies that don’t look likely to succeed. This is why startups are so much more effective than big companies at innovation—a big company’s internal politics make it difficult to try lots of things that will probably fail. DST has additional option value available to them that traditional angels do not because of its ability to invest at later stages. By investing in the seed round, DST gets the inside track on any future financings.

Let’s say that I was lucky enough to invest in Facebook’s seed round (I wasn’t). As the company raised further rounds of funding at $100 million and $10 billion valuations, I would have to come up with increasingly large checks to maintain my ownership position. Buying 0.1% of the company is pretty easy at a $5 million valuation (that’s just $5,000). It gets harder at $100 million ($100,000) and $10 billion ($10,000,000).

For Yuri, however, investing a few million in YC companies is well worth it if it gives him the inside track to do a $100 million expansion round in the future. Moreover, is DST really making it easier for entrepreneurs to raise money? I was not under the impression that YC grads were having difficulties raising money. It’s not like DST is giving $150K to anyone who asks—the investment is reserved for companies which pass YC’s rigorous screening process.

4) Okay, Mr. Smarty-Pants, why is this bad for Silicon Valley then?

In the TechCrunch comments, Ted Rheingold of Dogster fame says simply, “This is not going to be healthy for the ecosystem.” I think he’s right, but the reasons he’s right are subtle. Allow me to explain.

a) Independent angel investors need to be able to invest at reasonable valuations.

As I explained in (3) above, folks like me need to be able to invest at reasonable valuations. That means either priced rounds or convertibles with valuation caps, and seed round valuations of $1-3 million. We don’t have the money to stay in the game with the VCs and DSTs of the world, so if seed funding shifted to a model of no-cap convertibles, we would be priced out of the ecosystem.

In today’s environment, many companies skip straight from a seed round to $20 million+ valuations, and angels simply won’t get rewarded for the extra risk they assume without priced rounds or caps.

b) The DST/YC partnership could end up upsetting this delicate balance

As I’ve argued in the past, angel investing is a fragmented game. No one has enough power to collude on valuations. However, someone who is influential enough can influence what is and isn’t considered “standard.”

Once upon a time, there was no such thing as a convertible note with a cap. There were convertible notes, and there were priced rounds, and nothing in between. Then a few years ago, a number of prominent players in the ecosystem (YC included) began pushing the concept of a capped convertible. Today, even though there are plenty of angels who despise any kind of convertible note, capped or not, the capped convertible is pretty much the standard seed financing instrument.

Now imagine the impact of YC, the most influential incubator, standardizing on uncapped, no-discount convertibles. It’s not difficult to envision a scenario in which the entire industry moves in this direction. The problem is that this shift eliminates the incentive for independent angels to participate in the ecosystem.

Angels play an important part in the ecosystem because we are willing to take on more risk than the VCs. Some of that is non-economic behavior, but some of that is also due to the fact that we get compensated for that risk-taking with much lower valuations. Eliminating that compensation will surely reduce the number of independent angel investments.

The irony is that the DST/YC deal didn't have to cause problems for independent angel investors. If DST simply committed to providing $150K to every YC company, at whatever terms were determined by the lead investor in the syndicate, DST wouldn't be pricing the angels out of the ecosystem.

c) Removing independent angel investors from the ecosystem is a bad idea

Naturally, angels like me will be upset about getting shut out of the ecosystem, but why is that bad for Silicon Valley? After all, between YC, TechStars, the Founders Institute, and all the other incubators and quasi-incubators, who needs us? Let the incubators pick the winners, and let the DSTs fund them.

The problem is that the chaotic, fragmented, Darwinian nature of Silicon Valley is an integral part of what makes it great. We need those random mutations to generate innovation, especially breakthrough innovation.

If we concentrate the decision-making on who does and doesn’t get funding in the hands of a small number of institutions, we hurt Silicon Valley as a whole, no matter how smart those institutions are.

I tell many people that Paul Graham is a genius. He saw the opportunity to start YC, and he’s done the Valley a huge favor by broadening the pool of company founders. But I don’t want Paul to be one of a small group of people who decides which companies get funding—not because he isn’t smart (he is) or a great guy (he is). When it comes to innovation, central decision-making is bad, no matter how good the decision-makers are.

For all our flaws, independent angels serve the important role of enabling the “genetic diversity” of the startup population. That diversity is at the heart of Silicon Valley’s success, and that’s something we don’t want to lose.

With the eyes of the world on Egypt, the Gillmor Gang convened to discuss the impact of social media on what appears to a revolution without borders. Doc Searls, Seth Goldstein, John Taschek, and Kevin Marks put aside vendor sports and Silicon Valley to focus on a brave new world and its apparent off switch. What we came up with was the strong feeling that, whatever the tumult of the day, the genie is out of the bottle and will soon return.

What started as what we were having for lunch has emerged as a worldwide message bus, whether by tweet or friend to friend, search, or gesture. And as the media tries to capture the speed of realtime, the incredible scope and power of the global network has never seemed more fragile and yet sturdy in its robust elastcity. The cloud has found its moment to change and augment history.