Bits Blog: Oracle’s Next Cloud Moves

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Bits Blog: Tech Moves to the Background as Design Becomes Foremost

Stephen Lam/Reuters Craig Federighi, Apple’s senior vice president for software engineering, discussing the redesign of its mobile software system.

In the last few decades, the computing industry has passed through several different eras. In the ’90s, the big tech companies were in a race for faster and more powerful computers. Then in the 2000s, the industry moved to mobile in a quest for slimmer phones with brighter screens.

Now, the industry is entering the era of design.

As I noted in my column this week, Disruptions: Mobile Competition Shifts to Software Design, tech companies are looking for ways to make sure the user interfaces of their products are unique.

Design experts I spoke with noted that many of the devices we use today look almost exactly the same, which explains the emphasis on the software that goes into that interface. Battery life and processing speed are only marginally different within product categories such as smartphones. But the look and feel of the software is what allows a competitor to leap ahead of the competition.

Cesar Torres, a former Apple designer who now works for Sidecar, a ride-sharing start-up, said on Twitter: “While I don’t agree with the stylistic choices in iOS 7, it excites me that ‘design’ is a term that shows up in major news site headlines.”

Design, it seems, is becoming a mainstream topic. And for those who have lived and breathed design for decades, it’s a refreshing change.

“In the ’90s when I would meet with investors, there was no return on investment for design. Yet today, 20 years later, every project I do is because design is seen as absolutely central,” said Yves Béhar, the founder of Fuseproject, a San Francisco design agency.

Mr. Béhar said that, now, directors, chief executives and investors often sit in meetings and ask about user interface, overall experience, and the look and feel of a product. Twenty years ago, most investors wouldn’t even know what those terms meant.

What the mainstream and the financiers are now starting to realize is that design is a doorway to something much more important.

“Design, even if you’re talking about Apple and their sexy devices, is a promise of quality,” explained James Victore, an award-winning art director, designer, and author. “It’s a promise that the public is not going to be let down.”

What Happens in Brooklyn Moves to Vegas

Brian Finke for The New York TimesTony Hsieh, the chief executive of Zappos, on Fremont Street in downtown Las Vegas.

The mountain-lodge gathering felt like an annual shareholders’ meeting, with department heads offering optimistic forecasts backed by charts, graphs and photos. Except that the 50 or so attendees wore jeans and sneakers and sat at round tables in a faux log cabin 7,700 feet above sea level and at least 20 degrees cooler than the Nevada desert below. And what they were discussing was not a corporation but a very unusual project.

Fremont Street in downtown Las Vegas.

Tony Hsieh, the 38-year-old chief executive of Zappos, had called the 24-hour retreat as a debriefing of sorts. It was almost a year into the Downtown Project, his $350 million urban experiment to build “the most community-focused large city in the world” in downtown Las Vegas — an area dominated by bare lots and check-cashing stores about an hour’s drive away. An icebreaker kicked off the event with whoops and hollers as each attendee stood up to share personal anecdotes or facts, like “I’ve tried chicken-fried steak in more than 30 states.” One woman announced that she had been a salsa dancing champion. Hsieh (pronounced shay) shared how to write his last name in Morse code.

A jammed schedule was handed out, with most of the dozen or so presentations lasting less than 10 minutes. The schedule featured updates from a number of Hsieh’s deputies on how they were spending the project’s money, including: Andrew Donner, a veteran of the 1990s Vegas real estate boom, on the $200 million that the project is investing in land and buildings; Don Welch, a former Citigroup banker, on the $50 million the project is spending on small businesses; and Andy White, a former start-up founder, on the $50 million going to tech companies. Hsieh’s cousin Connie was scheduled to discuss the remaining $50 million, which is to be used for education. A woman sat off to the side with a digital timer, ready to yank anyone offstage who went over his or her allotted time.

The Downtown Project got its unofficial start several years ago when Hsieh realized that Zappos, the online shoe-and-apparel company that he built to $1 billion in annual sales in less than a decade, would soon outgrow its offices in nearby Henderson, Nev. Though Amazon bought Zappos in 2009 for $1.2 billion, Hsieh still runs the company, and he has endeavored to keep alive its zany corporate culture. This includes a workplace where everyone sits in the same open space and employees switch desks every few months in order to get to know one another better. “I first thought I would buy a piece of land and build our own Disneyland,” he told the group. But he worried that the company would be too cut off from the outside world and ultimately decided “it was better to interact with the community.”

Around the same time, the Las Vegas city government was also about to move, and Hsieh saw his opportunity. He leased the former City Hall — smack in the middle of downtown Vegas — for 15 years. Then he got to thinking: If he was going to move at least 1,200 employees, why not make it possible for them to live nearby? And if they could live nearby, why not create an urban community aligned with the culture of Zappos, which encourages the kind of “serendipitous interactions” that happen in offices without walls? As Zach Ware, Hsieh’s right-hand man in the move, put it, “We wanted the new campus to benefit from interaction with downtown, and downtown to benefit from interaction with Zappos.” The only hitch was that it would require transforming the derelict core of a major city.

For Hsieh, though, this was part of the appeal. Transforming downtown Vegas would “ultimately help us attract and retain more employees for Zappos.” For the city itself, it would “help revitalize the economy.” More important, it would “inspire,” a word Hsieh uses often. Hsieh closed his presentation at the faux log cabin high above the desert with the sort of fact he seems to always have on hand: up to 75 percent of the world’s population will call cities home in our lifetime. “So,” he concluded, “if you fix cities, you kind of fix the world.”

What Happens in Brooklyn Moves to Vegas

Brian Finke for The New York TimesTony Hsieh, the chief executive of Zappos, on Fremont Street in downtown Las Vegas.

The mountain-lodge gathering felt like an annual shareholders’ meeting, with department heads offering optimistic forecasts backed by charts, graphs and photos. Except that the 50 or so attendees wore jeans and sneakers and sat at round tables in a faux log cabin 7,700 feet above sea level and at least 20 degrees cooler than the Nevada desert below. And what they were discussing was not a corporation but a very unusual project.

Fremont Street in downtown Las Vegas.

Tony Hsieh, the 38-year-old chief executive of Zappos, had called the 24-hour retreat as a debriefing of sorts. It was almost a year into the Downtown Project, his $350 million urban experiment to build “the most community-focused large city in the world” in downtown Las Vegas — an area dominated by bare lots and check-cashing stores about an hour’s drive away. An icebreaker kicked off the event with whoops and hollers as each attendee stood up to share personal anecdotes or facts, like “I’ve tried chicken-fried steak in more than 30 states.” One woman announced that she had been a salsa dancing champion. Hsieh (pronounced shay) shared how to write his last name in Morse code.

A jammed schedule was handed out, with most of the dozen or so presentations lasting less than 10 minutes. The schedule featured updates from a number of Hsieh’s deputies on how they were spending the project’s money, including: Andrew Donner, a veteran of the 1990s Vegas real estate boom, on the $200 million that the project is investing in land and buildings; Don Welch, a former Citigroup banker, on the $50 million the project is spending on small businesses; and Andy White, a former start-up founder, on the $50 million going to tech companies. Hsieh’s cousin Connie was scheduled to discuss the remaining $50 million, which is to be used for education. A woman sat off to the side with a digital timer, ready to yank anyone offstage who went over his or her allotted time.

The Downtown Project got its unofficial start several years ago when Hsieh realized that Zappos, the online shoe-and-apparel company that he built to $1 billion in annual sales in less than a decade, would soon outgrow its offices in nearby Henderson, Nev. Though Amazon bought Zappos in 2009 for $1.2 billion, Hsieh still runs the company, and he has endeavored to keep alive its zany corporate culture. This includes a workplace where everyone sits in the same open space and employees switch desks every few months in order to get to know one another better. “I first thought I would buy a piece of land and build our own Disneyland,” he told the group. But he worried that the company would be too cut off from the outside world and ultimately decided “it was better to interact with the community.”

Around the same time, the Las Vegas city government was also about to move, and Hsieh saw his opportunity. He leased the former City Hall — smack in the middle of downtown Vegas — for 15 years. Then he got to thinking: If he was going to move at least 1,200 employees, why not make it possible for them to live nearby? And if they could live nearby, why not create an urban community aligned with the culture of Zappos, which encourages the kind of “serendipitous interactions” that happen in offices without walls? As Zach Ware, Hsieh’s right-hand man in the move, put it, “We wanted the new campus to benefit from interaction with downtown, and downtown to benefit from interaction with Zappos.” The only hitch was that it would require transforming the derelict core of a major city.

For Hsieh, though, this was part of the appeal. Transforming downtown Vegas would “ultimately help us attract and retain more employees for Zappos.” For the city itself, it would “help revitalize the economy.” More important, it would “inspire,” a word Hsieh uses often. Hsieh closed his presentation at the faux log cabin high above the desert with the sort of fact he seems to always have on hand: up to 75 percent of the world’s population will call cities home in our lifetime. “So,” he concluded, “if you fix cities, you kind of fix the world.”

F.T.C. Moves to Tighten Online Privacy Protections for Children

The moves come at a time when major corporations, app developers and data miners appear to be collecting information about the online activities of millions of young Internet users without their parents’ awareness, children’s advocates say. Some sites and apps have also collected details like children’s photographs or locations of mobile devices; the concern is that the information could be used to identify or locate individual children.

These data-gathering practices are legal. But the development has so alarmed officials at the Federal Trade Commission that the agency is moving to overhaul rules that many experts say have not kept pace with the explosive growth of the Web and innovations like mobile apps. New rules are expected within weeks.

“Today, almost every child has a computer in his pocket and it’s that much harder for parents to monitor what their kids are doing online, who they are interacting with, and what information they are sharing,” says Mary K. Engle, associate director of the advertising practices division at the F.T.C. “The concern is that a lot of this may be going on without anybody’s knowledge.”

The proposed changes could greatly increase the need for children’s sites to obtain parental permission for some practices that are now popular — like using cookies to track users’ activities around the Web over time. Marketers argue that the rule should not be changed so extensively, lest it cause companies to reduce their offerings for children.

“Do we need a broad, wholesale change of the law?” says Mike Zaneis, the general counsel for the Interactive Advertising Bureau, an industry association. “The answer is no. It is working very well.”

The current federal rule, the Children’s Online Privacy Protection Act of 1998, requires operators of children’s Web sites to obtain parental consent before they collect personal information like phone numbers or physical addresses from children under 13. But rapid advances in technology have overtaken the rules, privacy advocates say.

Today, many brand-name companies and analytics firms collect, collate and analyze information about a wide range of consumer activities and traits. Some of those techniques could put children at risk, advocates say.

Under the F.T.C.’s proposals, some current online practices, like getting children under 13 to submit photos of themselves, would require parental consent.

Children who visit McDonald’s HappyMeal.com, for instance, can “get in the picture with Ronald McDonald” by uploading photos of themselves and combining them with images of the clown. Children may also “star in a music video” on the site by uploading photos or webcam images and having it graft their faces onto dancing cartoon bodies.

But according to children’s advocates, McDonald’s stored these images in directories that were publicly available. Anyone with an Internet connection could check out hundreds of photos of young children, a few of whom were pictured in pajamas in their bedrooms, advocates said.

In a related complaint to the F.T.C. last month, a coalition of advocacy groups accused McDonald’s and four other corporations of violating the 1998 law by collecting e-mail addresses without parental consent. HappyMeal.com, the complaint noted, invites children to share their creations on the site by providing the first names and e-mail addresses of their friends.

“When we tell parents about this they are appalled, because basically what it’s doing is going around the parents’ back and taking advantage of kids’ naïveté,” says Jennifer Harris, the director of marketing initiatives at the Yale Rudd Center for Food Policy and Obesity, a member of the coalition that filed the complaint. “It’s a very unfair and deceptive practice that we don’t think companies should be allowed to do.”

Danya Proud, a spokeswoman for McDonald’s, said in an e-mail that the company placed a “high importance” on protecting privacy, including children’s online privacy. She said that McDonald’s had blocked public access to several directories on the site.

Last year, the F.T.C. filed a complaint against W3 Innovations, a developer of popular iPhone and iPod Touch apps like Emily’s Dress Up, which invited children to design outfits and e-mail their comments to a blog. The agency said that the apps violated the children’s privacy rule by collecting the e-mail addresses of tens of thousands of children without their parents’ permission and encouraging those children to post personal information publicly. The company later settled the case, agreeing to pay a penalty of $50,000 and delete personal data it had collected about children.

It is often difficult to know what kind of data is being collected and shared. Industry trade groups say marketers do not knowingly track young children for advertising purposes. But a study last year of 54 Web sites popular with children, including Disney.go.com and Nick.com, found that many used tracking technologies extensively.

“I was surprised to find that pretty much all of the same technologies used to track adults are being used on kids’ Web sites,” said Richard M. Smith, an Internet security expert in Boston who conducted the study at the request of the Center for Digital Democracy, an advocacy group.

Using a software program called Ghostery, which detects and identifies tracking entities on Web sites, a New York Times reporter recently identified seven trackers on Nick.com — including Quantcast, an analytics company that, according to its own marketing material, helps Web sites “segment out specific audiences you want to sell” to advertisers.

Ghostery found 13 trackers on a Disney game page for kids, including AudienceScience, an analytics company that, according to that company’s site, “pioneered the concept of targeting and audience-based marketing.”

David Bittler, a spokesman for Nickelodeon, which runs Nick.com, says Viacom, the parent company, does not show targeted ads on Nick.com or other company sites for children under 13. But the sites and their analytics partners may collect data anonymously about users for purposes like improving content. Zenia Mucha, a spokeswoman for Disney, said the company does not show targeted ads to children and requires its ad partners to do the same.

Another popular children’s site, Webkinz, says openly that its advertising partners may aim at visitors with ads based on the collection of “anonymous data.” In its privacy policy, Webkinz describes the practice as “online advanced targeting.”

If the F.T.C. carries out its proposed changes, children’s Web sites would be required to obtain parents’ permission before tracking children around the Web for advertising purposes, even with anonymous customer codes.

Some parents say they are trying to teach their children basic online self-defense. “We don’t give out birth dates to get the free stuff,” said Patricia Tay-Weiss, a mother of two young children in Venice, Calif., who runs foreign language classes for elementary school students. “We are teaching our kids to ask, ‘What is the company getting from you and what are they going to do with that information?’ ”

DealBook: Groupon Moves Into Restaurant Reservations With Savored Deal

Over recent months, Groupon has sought to expand its core business of daily deals with a number of new business propositions, including with ventures like a mobile payment system.

Now, it appears that the online coupon purveyor is moving into restaurant reservations — and a little into OpenTable‘s domain.

Groupon said on Monday that it had bought Savored, an Internet start-up that offers customers ways to reserve tables at restaurants in 10 cities across the country. Terms weren’t disclosed.

Unlike its more established competitor, OpenTable, however, Savored offers discounts for its customers. The business model is a bit like Hotwire.com’s, in that Savored scans for openings at its partner restaurants and offers discounts — up to 40 percent, according to Groupon, though the company’s own site describes the savings as “uncapped” — to customers.

The proposition is that both sides win: restaurants get patrons they otherwise wouldn’t, and customers get both dining reservations and a discount.

Savored is meant to supplement the existing Groupon Now service, which is aimed at giving customers a list of discounts should they decide to indulge in impromptu shopping. The bigger goal is in turning Groupon into more than just a sender of daily deal e-mails: it’s to transform the company into a broad platform for merchants, allowing them to provide discounts, book restaurant reservations and travel packages and track customer spending.

“Savored’s platform nicely complements Groupon’s efforts in yield management, an area we’ve pioneered with Groupon Now,” Dan Roarty, the vice president of Groupon Now, said in a statement. “We look forward to working together to achieve a common goal – making dining out even more fun and affordable for consumers while helping restaurateurs manage inventory and grow their businesses.”

So far, however, investors haven’t really taken the pitch to heart. Shares of Groupon were down 2.3 percent in late afternoon trading on Monday, at $5.15, and have plummeted more than 80 percent since the company began trading last fall.

Advertising: Samsung-Apple Fight Moves to the Marketing Arena

In a round of ads that began this week, Samsung takes direct aim at Apple, claiming its Galaxy phone is a better choice than the new iPhone 5.

While going after a competitor in an ad is not a new technique, the tone of the Samsung ads is decidedly sarcastic for a technology company emerging from a $1 billion defeat in the latest patent battle between the two companies.

One of the ads features the company’s new Galaxy S III alongside the iPhone 5. The ad, which began appearing in print publications over the weekend, features an image of an iPhone tilted to the right and a white Galaxy phone tilted to the left under the headline, “It doesn’t take a genius.” Below each phone is a list of its features.

“This is a marketing campaign; it’s not a legal campaign,” said Teri Daley, a Samsung representative. “As marketers we’re focused on educating consumers. We feel like they’ve somewhat been led down a blind path when truly that innovation has stopped a long time ago.”

The genius reference could be interpreted as a swipe at the Apple customer support employees, who work at the company’s “Genius Bars.” This summer, Apple started a television ad campaign featuring a Genius Bar employee. The campaign was short-lived.

Todd Pendleton, Samsung’s chief marketing officer, said the “It doesn’t take a genius” ad was not meant to insult iPhone owners. “Apple users or fanboys, or whatever you call them, they’re not the target of this work at all,” he said. “If you look at the core essence of the work, it really is showing an innovation story. A more innovative product in this case is the GS III.”

Innovation has been at the heart of the dispute between the companies. In August, a California jury ruled that Samsung had infringed upon a series of mobile technology patents and awarded Apple $1 billion in damages.

In a statement after the verdict, Samsung showed it was still in fighting spirit. “It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies,” the company said. It vowed that the defeat was “not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims.”

In an interview, Mr. Pendleton said Samsung’s new ads were part of a larger campaign for the Galaxy S III that began in June and included ads on television, online, in print and in outdoor areas, like posters at bus stations. Major markets for the company include Chicago, Dallas, Los Angeles, San Francisco and New York, he said.

A headline on a Samsung ad that ran in newspapers on Sept. 9, days before Apple introduced its iPhone, says, “The Next Big Thing Is Already Here.” Samsung used a similar tag line in 2011, “The Next Big Thing Is Here,” to promote its 4G service and the Galaxy S II. Television ads for that campaign showed people waiting in line for the latest Apple device while Samsung owners showed off the features of phones they already had.

Adding the word “already” to this latest iteration of the campaign signaled the brand’s focus on the iPhone 5 coming to market. The technology blog Gizmodo published a collection of homemade ads that Apple fans created in response to the latest Samsung ads. Headlines included “Don’t settle for cheap plastic” and “In high school, it doesn’t take a genius to understand who is just a bully.”

Apple, which declined to comment about the Samsung campaign, has undertaken its share of ad campaigns mocking the competition.

Ken Segall, the ad guru who worked on Apple’s “Think Different” marketing campaign and the author of “Insanely Simple,” a book about Apple, said that over the years, Apple learned to apply a light touch of humor when it mocked competitors in ads. For example, in its previous “Get a Mac” TV commercials, a PC, personified by a pudgy John Hodgman, exchanged comedic jabs with a Mac, played by a handsome Justin Long.

In 1985, Apple ran an unpopular TV commercial during the Super Bowl that depicted PC users as mindless lemmings leaping to their death from a cliff. “It was widely panned because they were insulting the ones they were trying to talk to,” said Mr. Segall, who worked at TBWA\Chiat\Day, the agency that produced the ad.

Samsung’s new ads are repeating the same mistake, he said, by making iPhone customers seem foolish. “It seems like an odd way to seduce them because you’re basically telling them they’re idiots,” he said.

While Apple has outspent Samsung on advertising wireless devices, both companies have increased their ad spending in that category over the last year, according to data from Kantar Media, part of WPP. From January to June, Apple spent $193.1 million on advertising mobile products, while Samsung spent $99.9 million. In 2011, Apple spent $104.1 million during the same period, while Samsung spent $6.95 million.

Tom Denari, the president and a principal at the advertising agency Young & Laramore, said the Samsung campaign was reminiscent of the Pepsi and Coke wars of the 1970s and ’80s.

“It’s a classic challenger strategy, where No. 2 throws stones at the leader, in order to attract attention to itself,” Mr. Denari said.

Any brand would like to have the kind of loyalty that Apple gets from its fans, Mr. Denari said, “because these fans identify themselves so closely to the brand that they feel that Samsung is not only attacking Apple, but they feel like they are being personally attacked as well.”

Bill Winchester, chief creative officer of Lindsay, Stone & Briggs, said Samsung should decide what its brand stands for instead of responding to whatever Apple does and competing with Apple based on the features of the phone. “At the end of the day, don’t you think these phones more or less do the same thing?” said Mr. Winchester, who uses an iPhone. “We carry these as a prop to tell people in the world what we are. As soon as you get down to features and starting to compare features, you’re not really going to convince me at that level.”

Advertising: Samsung-Apple Fight Moves to the Marketing Arena

In a round of ads that began this week, Samsung takes direct aim at Apple, claiming its Galaxy phone is a better choice than the new iPhone 5.

While going after a competitor in an ad is not a new technique, the tone of the Samsung ads is decidedly sarcastic for a technology company emerging from a $1 billion defeat in the latest patent battle between the two companies.

One of the ads features the company’s new Galaxy S III alongside the iPhone 5. The ad, which began appearing in print publications over the weekend, features an image of an iPhone tilted to the right and a white Galaxy phone tilted to the left under the headline, “It doesn’t take a genius.” Below each phone is a list of its features.

“This is a marketing campaign; it’s not a legal campaign,” said Teri Daley, a Samsung representative. “As marketers we’re focused on educating consumers. We feel like they’ve somewhat been led down a blind path when truly that innovation has stopped a long time ago.”

The genius reference could be interpreted as a swipe at the Apple customer support employees, who work at the company’s “Genius Bars.” This summer, Apple started a television ad campaign featuring a Genius Bar employee. The campaign was short-lived.

Todd Pendleton, Samsung’s chief marketing officer, said the “It doesn’t take a genius” ad was not meant to insult iPhone owners. “Apple users or fanboys, or whatever you call them, they’re not the target of this work at all,” he said. “If you look at the core essence of the work, it really is showing an innovation story. A more innovative product in this case is the GS III.”

Innovation has been at the heart of the dispute between the companies. In August, a California jury ruled that Samsung had infringed upon a series of mobile technology patents and awarded Apple $1 billion in damages.

In a statement after the verdict, Samsung showed it was still in fighting spirit. “It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies,” the company said. It vowed that the defeat was “not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims.”

In an interview, Mr. Pendleton said Samsung’s new ads were part of a larger campaign for the Galaxy S III that began in June and included ads on television, online, in print and in outdoor areas, like posters at bus stations. Major markets for the company include Chicago, Dallas, Los Angeles, San Francisco and New York, he said.

A headline on a Samsung ad that ran in newspapers on Sept. 9, days before Apple introduced its iPhone, says, “The Next Big Thing Is Already Here.” Samsung used a similar tag line in 2011, “The Next Big Thing Is Here,” to promote its 4G service and the Galaxy S II. Television ads for that campaign showed people waiting in line for the latest Apple device while Samsung owners showed off the features of phones they already had.

Adding the word “already” to this latest iteration of the campaign signaled the brand’s focus on the iPhone 5 coming to market. The technology blog Gizmodo published a collection of homemade ads that Apple fans created in response to the latest Samsung ads. Headlines included “Don’t settle for cheap plastic” and “In high school, it doesn’t take a genius to understand who is just a bully.”

Apple, which declined to comment about the Samsung campaign, has undertaken its share of ad campaigns mocking the competition.

Ken Segall, the ad guru who worked on Apple’s “Think Different” marketing campaign and the author of “Insanely Simple,” a book about Apple, said that over the years, Apple learned to apply a light touch of humor when it mocked competitors in ads. For example, in its previous “Get a Mac” TV commercials, a PC, personified by a pudgy John Hodgman, exchanged comedic jabs with a Mac, played by a handsome Justin Long.

In 1985, Apple ran an unpopular TV commercial during the Super Bowl that depicted PC users as mindless lemmings leaping to their death from a cliff. “It was widely panned because they were insulting the ones they were trying to talk to,” said Mr. Segall, who worked at TBWA\Chiat\Day, the agency that produced the ad.

Samsung’s new ads are repeating the same mistake, he said, by making iPhone customers seem foolish. “It seems like an odd way to seduce them because you’re basically telling them they’re idiots,” he said.

While Apple has outspent Samsung on advertising wireless devices, both companies have increased their ad spending in that category over the last year, according to data from Kantar Media, part of WPP. From January to June, Apple spent $193.1 million on advertising mobile products, while Samsung spent $99.9 million. In 2011, Apple spent $104.1 million during the same period, while Samsung spent $6.95 million.

Tom Denari, the president and a principal at the advertising agency Young & Laramore, said the Samsung campaign was reminiscent of the Pepsi and Coke wars of the 1970s and ’80s.

“It’s a classic challenger strategy, where No. 2 throws stones at the leader, in order to attract attention to itself,” Mr. Denari said.

Any brand would like to have the kind of loyalty that Apple gets from its fans, Mr. Denari said, “because these fans identify themselves so closely to the brand that they feel that Samsung is not only attacking Apple, but they feel like they are being personally attacked as well.”

Bill Winchester, chief creative officer of Lindsay, Stone & Briggs, said Samsung should decide what its brand stands for instead of responding to whatever Apple does and competing with Apple based on the features of the phone. “At the end of the day, don’t you think these phones more or less do the same thing?” said Mr. Winchester, who uses an iPhone. “We carry these as a prop to tell people in the world what we are. As soon as you get down to features and starting to compare features, you’re not really going to convince me at that level.”

Europe Moves to Aid Digital Music Industry

PARIS — The European Commission plans to introduce legislation on Wednesday to bolster the digital music market in Europe by streamlining the methods of agencies that collect royalties on behalf of copyright holders.

Michel Barnier, the internal market commissioner, is expected to propose a bill aimed at resolving problems at the 250 collecting societies that operate in the European Union, some of which are holding back growth in digital music. The move follows the disclosure that some of these groups have lost money on risky investments or, in some cases, failed to pay royalties owed to rights holders.

“Collecting societies need to modernize their operations to meet the challenges of a fast-evolving digital economy,” the commission says in a memo explaining the proposals. “An underlying problem is the insufficient transparency and control of the way collecting societies are managed.”

It is not the first time that the commission has taken aim at the collecting societies, which gather about €6 billion, or $7.5 billion, annually from radio stations, restaurants, bars and other music users, and distribute the proceeds to authors, composers and other rights holders. In 2008, lawmakers enacted legislation aimed at breaking down national barriers in the digital music business, making it possible for rights holders to issue pan-European licenses.

Yet cross-border licensing of music and other media content has not developed as quickly as Mr. Barnier would like, limiting consumer choice, hurting rights holders and promoting piracy as listeners seek alternate ways to obtain the music they want, the commission says. Only one legitimate digital music service, Apple’s iTunes store, is available in all 27 E.U. member states and digital sales accounted for only 19 percent of recording industry revenue in the European Union in 2010, compared with 49 percent in the United States, according to the International Federation of the Phonographic Industry.

The commission acknowledged that there were several reasons for this, but singled out collecting societies.

“The ability of collecting societies to efficiently deliver their services is increasingly being questioned, leading to a loss of trust and confidence in their services,” the commission says in a written assessment.

Less than half the amount collected in royalties is distributed within the first year, and as much as 10 percent not until three years after collection, the commission says. Under the proposal, societies would have to disburse the money within one year.

In the interim between collection and distribution, rights holders complain, some societies have been making risky investments with the money. The commission says an Italian collecting society in 2008 lost €35 million in a “debt instrument” with the failed investment bank Lehman Brothers.

Véronique Desbrosses, general director of Gesac, a Brussels-based group that represents European collecting societies, said the organization “welcomes the E.U. directive.” But she disputed the notion that collecting societies were to blame for the problems of the digital music business.

She said European collecting societies gather more than 60 percent of the revenue collected worldwide by such groups, undermining the argument that the European societies are inefficient.

“We believe that we are already active in working to achieve the highest standards possible in transparency and efficiency,” she said. “In some cases, these standards are already higher than what the commission is proposing.”

Kelvin Smits, a spokesman for Younison, a group that represents artists, said the proposal would improve the workings of the digital market, but would not do enough to overhaul the offline segment, which still represents 95 percent of royalty collections in Europe.

Among other things, the bill would let collecting societies keep funds held on behalf of rights holders who cannot be located — after five years.

“If that would change, the good life would be over for the collecting societies,” Mr. Smits said.

Europe Moves to Aid Digital Music Industry

PARIS — The European Commission plans to introduce legislation on Wednesday to bolster the digital music market in Europe by streamlining the methods of agencies that collect royalties on behalf of copyright holders.

Michel Barnier, the internal market commissioner, is expected to propose a bill aimed at resolving problems at the 250 collecting societies that operate in the European Union, some of which are holding back growth in digital music. The move follows the disclosure that some of these groups have lost money on risky investments or, in some cases, failed to pay royalties owed to rights holders.

“Collecting societies need to modernize their operations to meet the challenges of a fast-evolving digital economy,” the commission says in a memo explaining the proposals. “An underlying problem is the insufficient transparency and control of the way collecting societies are managed.”

It is not the first time that the commission has taken aim at the collecting societies, which gather about €6 billion, or $7.5 billion, annually from radio stations, restaurants, bars and other music users, and distribute the proceeds to authors, composers and other rights holders. In 2008, lawmakers enacted legislation aimed at breaking down national barriers in the digital music business, making it possible for rights holders to issue pan-European licenses.

Yet cross-border licensing of music and other media content has not developed as quickly as Mr. Barnier would like, limiting consumer choice, hurting rights holders and promoting piracy as listeners seek alternate ways to obtain the music they want, the commission says. Only one legitimate digital music service, Apple’s iTunes store, is available in all 27 E.U. member states and digital sales accounted for only 19 percent of recording industry revenue in the European Union in 2010, compared with 49 percent in the United States, according to the International Federation of the Phonographic Industry.

The commission acknowledged that there were several reasons for this, but singled out collecting societies.

“The ability of collecting societies to efficiently deliver their services is increasingly being questioned, leading to a loss of trust and confidence in their services,” the commission says in a written assessment.

Less than half the amount collected in royalties is distributed within the first year, and as much as 10 percent not until three years after collection, the commission says. Under the proposal, societies would have to disburse the money within one year.

In the interim between collection and distribution, rights holders complain, some societies have been making risky investments with the money. The commission says an Italian collecting society in 2008 lost €35 million in a “debt instrument” with the failed investment bank Lehman Brothers.

Véronique Desbrosses, general director of Gesac, a Brussels-based group that represents European collecting societies, said the organization “welcomes the E.U. directive.” But she disputed the notion that collecting societies were to blame for the problems of the digital music business.

She said European collecting societies gather more than 60 percent of the revenue collected worldwide by such groups, undermining the argument that the European societies are inefficient.

“We believe that we are already active in working to achieve the highest standards possible in transparency and efficiency,” she said. “In some cases, these standards are already higher than what the commission is proposing.”

Kelvin Smits, a spokesman for Younison, a group that represents artists, said the proposal would improve the workings of the digital market, but would not do enough to overhaul the offline segment, which still represents 95 percent of royalty collections in Europe.

Among other things, the bill would let collecting societies keep funds held on behalf of rights holders who cannot be located — after five years.

“If that would change, the good life would be over for the collecting societies,” Mr. Smits said.