In July of last year, I wrote about The New Apple Walled Garden. The post was about the irony of developers and advocates who were otherwise open standards and open source champions being absolutely pro-iPhone, a platform that is closed and proprietary in every sense. Since that post, the horror that was foreshadowed by some has been realized – rejected apps, rejected apps, rejected apps. We documented the troubles here at Techcrunch and the overall response was nothing more than long comment threads, complaints, and a few wise people changing their minds. The complaints to date are from some bloggers and a small number of application developers, incidents that Apple are able to write-off as being minor, as they have a dedicated fan base and growing market share to fall back on. That was, until yesterday.

Yesterday, a high-profile iPhone developer became fed up with the nature of the platform and decided it was time to call it quits. Joe Hewitt of Facebook not only pronounced that it was time for him to move onto ‘other projects’, but had the courage to state that his reason was because of the closed nature of the iPhone platform and his frustration with the approval process. Joe is not just the guy who wrote the Facebook application, within 12 hours of the first iPhone launching he released a library for app developers to create iPhone-like applications. This was back in the first generation, when iPhone ‘applications’ were nothing more than websites. Without any documentation from Apple, and with sheer enthusiasm for the new-born platform, Joe created a library for other developers that would help them build applications that would mimic native iPhone applications built by Apple.

As somebody who downloaded the very early releases of Joe’s library, I could immediately see that most, if not all, of the first iPhone applications were built on, or at least inspired by, the iUI library he released. The credibility that Joe has and the work that he did not only inspired developers, but it gave them an easy path to developing the first generation of software for the iPhone. With the statements that Joe made yesterday, Apple has not only lost another developer that it can write-off, but has lost somebody who was an early adopter of their platform and an impetus for others.

Most iPhone and Apple fans would retort that “Apple make great products, and it is winning in a market where the consumer has free choice”. I agree that they make great products, I am writing this post on a Macbook. I was beside myself with excitement when I found out about Rhapsody, about OS X, about the new Mach kernel, about FreeBSD code being used for userland (my code is in there, somewhere). I was so enthusiastic about the second coming of Jobs that I had an email exchange with him about incorporating OpenSSL, amongst other things, when the early dev previews were out. I was totally sold, because an operating system was being built and released that combined the best of UNIX with the best of great interfaces. Finally, the open source on desktops conundrum had been solved, I cheered. The biggest non-Microsoft company had adopted what we knew was good, as a way to compete against the standard. It validated my belief in the BSD license, and I was completely spellbound and a fan (although not in the more recent fanboi sense).

It was not until the iPhone was released that I felt let down. I felt betrayed. I wanted to hack, and I wanted to do so standing on the shoulder of a giant who was gaining market, a giant who was my old friend. I hold a very strong belief in the open market, a concept which at a theoretical level is difficult to argue against. The iPhone took advantage of a market where the competition was completely clueless. It took an intelligent and smart outsider to recognize that. What has shaken my belief in the open market is that an otherwise good company can enter a market, show them how it is done – but do it in a bad way for the overall ecosystem, and at the same time win the support of people who would otherwise philosophically disagree with them, completely on the basis of that company being not-Microsoft and, well, being sexy.

I never believed that Microsoft were evil, first because as a user and developer I had a choice. Second, Microsoft gave me free tools to learn how to code. And last, despite the position Microsoft were in on the desktop they never asked me to send them my code so that they could test it against their black-box of what is ‘compliant’. Microsoft never sent me a letter to say that speech bubbles can not be used in my application. Microsoft platforms let me run whatever-the-hell voice provider I wanted. Microsoft, as far as I can recall, also never told me that I could not have a sense of humor (the ironic 1984 reference has already been done, thanks Jon). Developers today also have a choice with mobile applications, and the sooner more developers raise their blinkers and realize that the popularity of the iPhone is built on the applications they are building, the sooner we can either get rid of this mess and see Apple change, or see a new more open alternative thrive.

Hewitt’s statements, as a model iPhone developer from a large company, can be the tipping point. The only thing holding this back right now are Facebook themselves, who seem keen on preserving a business relationship and casting Hewitt off as a rogue. Facebook came out today, and in a more official capacity (ie. somebody with ‘communications’ in their title, as opposed to ‘developer’), said that “Facebook’s relationship with Apple and our commitment to the iPhone platform remain strong”, and that “There’s been a fair amount of confusion and speculation about Joe’s comments” (chuckle, chuckle) and that “Facebook has a great team of engineers taking over iPhone related development”. Joe is probably taking some heat from his employer right now, and he probably knew he would before he made any comment. Facebook could have simply shifted Joe to another project (Android, I hope), and many wouldn’t have noticed – but he stood up for what he believes in, and what many have been thinking, and he deserves the full support and credit from everybody who believes in transparency and free opinion, regardless of which side of the iPhone debate your opinions may reside.

If it comes down to Facebook vs iPhone, Facebook wins. If Apple hold to their position on being the gatekeeper for everything on their platform, we only win if the developers say no. An iPhone platform with applications only from Apple and no third-parties is no longer a viable platform, and no longer a device that consumers will purchase because they are making decisions based on applications and access, not on the brand or suburb engraved on the back of it (I hope).

Facebook should recognize this and back Joe all the way. If they do, it will show that that interest of what they want to do takes precedence over what a handset manufacturer wants to do. Apple can squash small developers, but if a big developer were to set aside short-term business interest for a moment, they will win in the longer term. If only we could all do that and not be blinded, perhaps, well, the free market could work again.

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Location, location, location. With the growing ubiquity of GPS-equipped phones, there is a virtual land rush going on right now to put geolocation capabilities in every mobile app. Today, Mixer Labs, the folks behind TownMe, introduced the GeoAPI, aimed at developers who want to add geolocation features to their apps in a plug-and-play fashion.

The GeoAPI is built on top of what was previously called the TownMe GeoAPI, which offered a reverse geo-coder for lat/long coordinates and geo-database of 16 million businesses and points of interest. But now it is its own separate product, and with today’s release the GeoAPI now includes geo-coded Tweets and Flickr photos, improved search, a dedicated short URL (http//:geo.am) for location-specific links, an iPhone SDK, and better intersection data. You can find out more details here.

So a developer who wants to build their own Foursquare/Gowalla-type mobile app with check-ins and geo-Tweets can build it on top of the GeoAPI instead of assembling all the underlying data from scratch. Developers get up to 20,000 queries per day for free. They can also store their own data in the GeoAPI servers and run geo-queries against them.

To get a basic feeling for how this works, check out these simple demos for geo-coded Tweets and Flickr photos in San Francisco. You click on a neighborhood and it shows recent Tweets or photos taken from there.

Mixer Labs co-founder Elad Gil was the first product manager for Google Mobile Maps. He will find competition for creating a geolocation infrastructure for developers from SimpleGeo, founded by Matt Galligan (previously of Socialthing) and Joe Stump (ex-lead architect of Digg). Both Gil and Galligan will speak on the Geo Streams panel at next week’s Realtime CrunchUp, along with geo experts from Twitter, Foursquare, Google, and Hot Potato. (Tickets are still available). I’m sure we’ll be hearing a lot about which geo API is going to be better.

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How right he is.

Facebook’s VP of Communications Elliot Schrage has just left us a comment on our post from yesterday explaining that while Hewitt may be moving on, Facebook “has a great team of engineers taking over iPhone related development.” May an entire team blossom, apparently.

Schrage left the comment because there has been much brouhaha over developer Joe Hewitt’s decision to stop working on the Facebook iPhone app because he’s fed up with Apple’s App Store policies. Schrage obviously wants to make it clear that Hewitt’s stance does not in any way signify how Facebook as a company feels towards Apple. We don’t really think our story yesterday implied that, but okay, noted.

Here’s the full comment that Schrage left on the post from yesterday:

This is Elliot Schrage, VP of Communications at Facebook. There’s been a fair amount of confusion and speculation about Joe’s comments and whether they reflect the official position of Facebook. They don’t. Facebook’s relationship with Apple and our commitment to the iPhone platform remain strong. IIn fact, though Joe himself will be moving to new projects, Facebook has a great team of engineers taking over iPhone related development. More generally, our work bringing Facebook Connect to the iPhone and with iTunes, iPhoto and other great products over the past year should illustrate our commitment to expanding our relationship with Apple and finding new ways to offer new services and features to the people who use both our products.

A beautifully crafted (minus the typo, of course) piece of PR work there. Are you reading this, Apple? Facebook is asking nicely not to be put in the penalty box.

Seriously though, while Facebook may not be on the same page as Hewitt with regard to the App Store policies, we are. As much as I think Apple generally makes great products, the App Store continues to be rife with hypocrisy and heartache. And it’s only going to get worse as it continues to grow. It’s good to see a developer of Hewitt’s caliber take the stance.

[photo: flickr/appsara]

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It’s ScamVille, the lawsuit. And we’ve spoken to one other law firm considering a class action claim against these companies.

Will users be vindicated and get their money back? Maybe part of it. A recent class action settlement against WebLoyalty for post transaction marketing scams led to a $10 million settlement, just a tiny fraction of the total revenue pulled in by these offers. The law firms are the ones who get a payday.

Gawker, which broke the story, makes a good point though. That video of Pincus looks bad enough on a blog. Imagine what a jury will think of it. And services like Offerpal have now admitted that what they did was questionable. This will likely settle quickly.

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Twitter may be having trouble finding new users in the U.S., but its existing users in the U.S. seem to be putting out a majority of the Tweets, which are now averaging 27.3 million a day. According to data provided to us by Pingdom, the pattern of Tweets follows waking hours in the U.S. (see chart), even though comScore data suggests more than half of Twitter’s users are from outside the U.S.

While this data is only a snapshot of the Twitter activity in the three weeks between October 21 and November 11, it does show that the number of messages sent out over the service is approaching a massive scale.  Pingdom estimates that the average number of Tweets per hour is 1.1 million, with fluctuations between 567,000 and 1.8 million Tweets per hour over the period Pingdom sampled Twitter’s public timeline. At the current rate, people are sending out 10 billion Tweets a year.  It was only last month that the 5 billionth Tweet was sent out.

To put that into perspective, Yahoo recently reported about the same number of status update messages going through Yahoo Mail and Messenger, which has at least five times as many users. Tweets still don’t match email however. Yahoo members alone sends out 100 billion emails a month.

It still seems far-fetched now, but one day people may send out more Tweets than emails, a topic we will explore next week at our Realtime CrunchUp. How many of you already do?

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They aren’t saying much other than that the Gizmo5 team will join the Google Voice team, and that new Gizmo5 signups will be disabled.

One thing this gives Google – a much needed soft phone on the desktop for users to make calls through Google Voice. And integration with Google Talk is likely as well, which will let users of that service access the normal telephone system for inbound and outbound calls.

All in all this pits Google Voice nicely against Skype, which was also looking to buy the company. From the blog post:

Today we’re pleased to announce we’ve acquired Gizmo5, a company that provides Internet-based calling software for mobile phones and computers. While we don’t have any specific features to announce right now, Gizmo5’s engineers will be joining the Google Voice team to continue improving the Google Voice and Gizmo5 experience. Current Gizmo5 users will still be able to use the service, though we will be suspending new signups for the time being, and existing users will no longer be able to sign up for a call-in number.

We’ve acquired a number of small companies over the past five years, and the people and technology that have come to Google from other places have contributed in many ways, large and small, to all kinds of Google products. Since the GrandCentral team joined Google in 2007, they’ve done incredible things with Google’s technology and resources to launch and improve Google Voice.

We welcome the Gizmo5 team to Google and look forward to working together to bringing more useful features to Google Voice.

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Forbes Media has acquired FlipGloss and its Digital Glossy Insert photo publishing platform for an undisclosed amount. FlipGloss was fully funded by Forbes Media but was previously not considered a subsidiary of the media group. Founded by former Yahoo! digital music executives, FlipGloss has a host of prominent advisors, including Marc Bodnick from Elevation Partners, former Forbes publisher Jim Berrian, and the founders of Launch.com, Dave Goldberg and Bob Roback.

FlipGloss, which launched earlier this year, is a digital magazine focused purely on editorial and advertising photo content. The site features “lifestyle” based photography focused on fashion, design and travel and combines search engine capabilities with the experience of flipping through photo content of a magazine. Forbes just laid off a significant amount of staff but it still managed to pony up the funds for FlipGloss.

The FlipGloss’s patented Digital Glossy Insert slideshow technology lets users ‘Flip, Hover, and Discover’ editorial content and ads in an interactive image stream.Forbes says that FlipGloss’s technology already being implemented and is powering Forbes’ new ranking of “The World’s Most Powerful People.” It makes sense for Forbes to use FlipGloss to scale its multimedia capabilities. We were critical of FlipGloss’ ambitions to be a popular online destination in our initial review, but its technology is visually compelling.

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Flickr and Snapfish have struck a deal to make HP’s photo sharing site (and Flickr competitor) the go-to printing partner for the 40 million Flickr users in the US and international markets.

As Flickr’s “preferred printing partner,” Snapfish will let Flickr users to transfer, organize, and print photos, scrapbooks, and more. Yahoo says that this is the first time Flickr’s international users will have an option to print photos directly from their photostream thanks to Snapfish’s presence in 22 countries. And Flick users can also ship photos to anywhere in the world. But for now, you can only print photos from your account.

Flickr’s online photo organization features, such as Organizr, Sets, and Photo Page, are integrated with Snapfish as well. Members in the U.S. have the option to pick up their prints locally at any of Snapfish’s retail partners’ stores, including Walmart, Walgreens, Staples, Duane Reade, and others retail stores.

It’s unclear what the revenue share is between the two photo sharing sites. HP acquired Snapfish in 2005 days after Yahoo acquired Flickr.

Flickr also recently added people photo tagging and launched an iPhone app. But the popular photo sharing site has come under fire in the past few months for freedom of speech issues and Yahoo’s branding of Flickr. But Flickr has remained a dominant player in the photo sharing space, with more than 4 billion photos uploaded, growing at a rate of 100 million per month.

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It also pulls your name, and other details from your Facebook profile such as your career. For example, at one point, it flashes the following message to me, “you are squandering your potential as a writer.” Interesting.

I took a video grab below of it in action, but unfortunately, it doesn’t capture the sound. You need to watch this for yourself to get the full effect. Do it now. You are not your f*cking khakis.

Update: And in one of those awesome little moments of coincidence, commenter Ron reminds us that it is none other than David Fincher who is currently filming The Social Network, the new movie about Facebook, which presumably, the company isn’t too happy about.

[images: Fox]

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MySpace seems to be on a bit of a hiring spree. Over the past few months the social network hired Mark Rosenbaum as Chief Financial Officer, Alex Maghen as CTO (he was formerly CTO of MySpace Music), former AOL and Tsavo exec Mike Macadaan as VP Product, and former Facebook Director Katie Geminder as SVP of User Experience and Design. Now MySpace has recruited a product manager from LinkedIn, Christina Wodtke, to be the general manager of social.

Wodtke was previously a Principal Product Manager at LinkedIn and ran the activity stream (which recently got a little Twitter-happy), communication products, and the events application. She also built the search and marketplace design team at Yahoo, and helped to redesign search, shopping and local products. Wodtke will fall under the purview of chief product officer Jason Hirschhorn.

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Foursquare is teaming up with an org in New York City (where they are based), Techies Give Back, to translate checkins into donations. Ideally, this money would come from brands/organizers that would sponsor the Foursquare Leaderboard for a week, co-founder Dennis Crowley tells us. Money earned would be given to CampInteractive, a nonprofit that works with inner-city youth on both outdoors and tech projects, which Techies Give Back is working with to hold an event on December 13.

Here’s how this would work: When you checkin on Foursquare, you generate points that go towards your score on the leaderboard. These points differ based on a few factors. Generally, you get more points if you’re checking into a place you haven’t been to before, or in a long time. You also get more points for adding a venue that isn’t yet in Foursquare’s system. Based on these points, a sponsor would donate a set amount of money per point.

Foursquare is looking for a brand that will donate at least $0.03 to Techies Give Back for each point earned. In NYC, that means the charity would have raised over $4,500 last week. (For those keeping score at home, that means there were about 150,000 points earned from checkins in New York last week.)

The sponsorship would allow for a complete re-skinning of the Foursquare leaderboard, Crowley notes. The week they are targeting is December 7 through the 12. Ideally, they’d have a brand step up with a winning proposal by December 1. Those interested should email info [at] techiesgiveback.org.

While this will just be an experiment in NYC at first, Crowley hints that this is something the company is thinking about doing with its leaderboard going forward. And this extends upon the idea of using the game element of Foursquare for good. Last month, the service teamed up with BART, the public transportation system in the San Francisco Bay Area, to encourage people to check in more at BART stations to earn rewards such as free rides and a special badge.

Of course, none of this has to do with the business model Foursquare is also working on, which involves partnering with local venues to create incentives such as free meals/beer for users who checkin.

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Did LinkedIn more than double its U.S. visitors in October? A casual glance at the latest comScore data makes it look that way, with LinkedIn shooting up to 20 million unique visitors in October, 2009, from 9 million in September, 2009. The new estimate puts LinkedIn ahead of Twitter, which saw a decline of U.S visitors last month to 19.2 million.

Of course, LinkedIn didn’t really all of a sudden have a growth spurt in October. Rather, comScore was previously under-counting its reach. Now it does a better job of measuring Web usage at work, which apparently is where about half of LinkedIn’s users check in. It makes sense, since LinkedIn is a professional network and you are more likely to be looking for contacts at other companies during work hours.

While the fish-shaped chart above suggests that LinkedIn is now about as popular in the U.S as Twitter (or at least Twitter.com), the two are complementary. On Tuesday, LinkedIn gave users the ability to link to their Twitter accounts so that their Twitter stream shows up as status updates in LinkedIn as well. Since Tuesday, LinkedIn has witnessed a 25 percent increase in status updates. Long live the stream.

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To be clear, despite some of the wording ins its blog post, SPDY (pronounced “speedy”) isn’t about fully replacing HTTP, the standard web protocol since 1996, but it is about augmenting it, to make delivery faster. How much faster? After doing some initial internal tests with Chrome, Google claims that the top 25 websites in the world can load up to 55% faster with SPDY.

Of course, as Google notes, those tests were done in Google’s labs, likely under optimal conditions. SPDY in an average home during daily use may produce different results. But again, this protocol is still very young, so it’s entirely possible that things could get even faster. To that end, Google is asking for the development community’s help. They’ve posted some early documentation and code samples, hoping for feedback.

In the docs, Google lays out the difference between HTTP and SPDY:

SPDY is intended to be as compatible as possible with current web-based applications. This means that, from the perspective of the server business logic or application API, nothing has changed. To achieve this, all of the application request and response header semantics are preserved.  SPDY introduces a “session” which resides between the HTTP application layer and the TCP transport to regulate the flow of data. This “session” is akin to an HTTP request-response pair.

I reached out to Google just to confirm that they weren’t going to try and do something completely crazy like change the “http://” we all know and love with “spdy://”, don’t worry, they’re not. As stated above, SPDY will create a session of sorts that resides between HTTP and the data transportation.

What will be interesting about this protocol is if it’s optimized for Chrome over the other web browsers. It would seem Google wouldn’t do that, since its ultimate goal is to have people using the web through any means as quickly as they can (so as best to serve their ads more often). But when you’re developing both a protocol and a browser, it seems likely that Google will have an advantage to offer the best experience.

A few startups are also working on ways to deliver web content faster. One, FasterWeb, which we covered in July, is hoping to improve web surfing speeds tenfold next year. Their approach is different, optimizing content on the provider or ISP end.

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Ever since last summer, Twitter’s growth in the U.S. has been stalling. But in October, the number of people who visited Twitter.com from the U.S. actually declined for the first time by 8 percent month-over-month. Estimates released today by comScore put Twitter’s domestic unique visitors at 19.2 million, down from 20.9 million in September.

On an annual basis, Twitter is still going gangbusters with 1,271 percent growth from 1.4 million visitors in October, 2008. And on a global basis, it still seems to be chugging away with 58.4 million visitors in September. But a hypergrowth company like Twitter cannot afford to slow down in its home market.

CEO Evan Williams recently acknowledged the slowdown in the U.S., and hopes that a slew of new features will help revive growth to the site. Many of these features are already rolling out, including the new Retweet button, Lists, and Geolocation features.

Twitter is obviously committed to making its service better on its own Website (these numbers do not measure usage on mobile or desktop clients, which is easily half of all Twitter usage). But while it fiddles, rival Facebook keeps moving further and further ahead.

Will the new features be enough to bring back growth in the U.S.? If they don’t, Twitter’s troubles will really begin.

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Last January Warner Music Group forced YouTube to remove all of its music from the site, citing disputes over royalty payments. This led to an outcry from users, who created protest videos once YouTube started muting or pulling down any user-generated content that contained WMG songs as background music. Today, those songs are starting to make their way back to the world’s largest video portal: music videos for Madonna, Green Day, and Bee Gees, among others, are now live on YouTube for the first time in nearly a year.

That’s great news. But the new videos will look a bit odd to anyone who has used YouTube before — they’re all decked out with extensive branding, including colorful backgrounds and large links to the artist’s products. Warner alone has the ability to do this, because of a deal it negotiated that gives it far more control over its pages than other content partners have. Warner is allowed to control its own branding, and can sell its own ads against both its own music videos and the user generated content that features its songs, with the majority of the revenue from these ads going to WMG (YouTube will take a cut as well).

At this point the branding isn’t awful, but it’s a concession YouTube surely wasn’t eager to make. After all, now that Warner has the ability to brand their clips however they want, other content owners will want to do it themselves. If YouTube agrees to that, we’ll lose the relatively uniform layout on the site in favor of something that’s more reminiscent of (the old) MySpace. And there’s always the risk that Warner won’t be happy with its initial results and may try some more aggressive branding, which could get even more annoying.

At this point it looks like only a fraction on Warner’s content has been reintroduced to the site, though we can likely expect more of it to come online in the next few weeks.

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This tool, developed by Egghead Ventures, with the help of developer Sean Percival, who has been advising MySpace recently, uses MySpace ID to sync any RSS feed with your MySpace status. This is similar to the tool that MySpace’s recently announced that syncs your Twitter with your status. But instead of showing a tweet with a Twitter logo, it shows a blog post title with a link, and a RSS logo. This should make it clear to people looking at your profile that you’re highlighting a post of yours rather than just linking to some piece of content you think is cool. The blog URLs are shortened with MySpace’s lnk.ms shortener.

There are also options for this tool such as setting the time interval that dictates how often it will pull in new content. And you can set an into text to put in such as “New blog post:”

More here on Percival’s blog.

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Today Intel agreed to pay rival chipmaker AMD $1.25 billion to settle a raft of ongoing litigation going back decades. AMD accused Intel of anti-competitive practices, which sparked an antitrust investigation. By settling now with AMD, Intel avoids paying out billions more down the line and being branded a monopolist by the government for abusing its 80 percent PC-chip market share.

The size of the settlement is as close to an admission of guilt we’ll ever hear from Intel. It still maintains its innocence, as any prudent corporation would, but you don’t pay out $1.25 billion just to avoid the hassle of a trial. And while $1.25 billion is an enormous sum which will help shore up AMD’s balance sheet, it amounts to only 10 percent of Intel’s $12.9 billion in cash and short term investments.

Just to put the size of the settlement in context, last year Intel’s revenues were $38 billion. Last quarter alone, it was making roughly $104 million a day. At that rate, Intel brings in $1.25 billion every 12 days. It can absorb the settlement pretty easily.

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This morning, Google is making a slight update to Wave to help users unclog their inbox from public waves. Previously, you could see public waves in your inbox, which was fairly annoying. Now for a wave to appear in your inbox, you need to “follow” the wave.

When someone adds you directly to a wave, or if you contribute to a wave, you will automatically be following that wave. But when you see a public wave that you would like to get updates on and monitor the conversation, you can chose to follow it by hitting the follow button in the wave panel toolbar. You can also archive waves, which will removes waves from your inbox. When there is an update to an archived wave, it will appear in your inbox again. And you can switch between following and unfollowing a wave as much and as often as you like.

Google says the “unfollow” feature replaces the mute command. You can still find waves that you are not following by searching for them or if you have organized them into saved searches or folders. The feature certainly gives your more control over your inbox, which is always a good thing. Google needs to continue adding more intuitive features to help users better understand the innovative, but confusing communications product.

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As AOL prepares to spin off from Time Warner in an IPO, it wants to gussy itself up so that it looks as appealing as possible tp ublic investors. Today, AOL disclosed that it plans yet another restructuring which could cost as much as $200 million. The biggest cost savings from any restructuring is usually through layoffs, and the latest round has already started at AOL, with 100 let go this week and as many as 1,000 of its 6,000 jobs at risk of being eliminated.

Despite new leadership under CEO Tim Armstrong, AOL has yet to turn around financially.  Last quarter, revenues sank 23 percent to $777 million.  The biggest drop came from subscription revenues to its legacy Internet access business, down 29 percent, but advertising revenues also took a hit, down 18 percent.  AOL depends on display advertising, which has not yet rebounded like search advertising appears to be doing.

By cleaning up house and removing as many costs as possible before the IPO, Armstrong is trying to make AOL as lean as possible. But eliminating salaries and benefits can only go so far. He has to show that his new content strategy can create actual growth as well.

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Now, obviously, this link will be clearly labeled as “sponsored,” but that shouldn’t make it that much less of an enticing opportunity for some individuals who want to drive traffic to their site. Reddit says it sees anywhere from a 2% to a 10% click-through-rate on the ads that run in this area. At the very least, this should mean thousands of hits coming to your site that wouldn’t otherwise get.

So what’s the catch? The only catch is money. As long as you’re willing to pay the minimum of $20 a day, Reddit will enter you into a pool with everyone else willing to pay to determine how much face time you’ll get on the homepage. For example, if the total bids for the day equal $200, and you bid the minimum $20, you’ll get 10% of the day in this ad slot. It seems very likely that the daily bids are going to be quite a bit more than that, so $20 probably isn’t going to buy you much, but still, it will get you something.

With this beta, there won’t be the ability to target specific Reddits (the Politics Reddit, for example), but the plan is to eventually offer that option to better match individual advertisers with the audience they are trying to reach.

Adding your own self-serve ad is as easy as can be. Once you’re accepted into the beta, you simply fill out a title for you link, enter the URL, put in the duration that you wish to run your campaign, optionally disable comments, put in your bid amount, and then upload an image (if you choose). You then pay by entering your credit card information into a form.

What’s great is that just like regular Reddit items, users will be able to vote up or down on your ad, which means that if your content actually is good, you can even appear on the homepage for longer than you’ve paid for.

The company notes that users have tried to game the system for years attempting to get traffic, so this is a logical extension to allow them to pay to get it. It officially unveiled sponsored links for advertisers (big name ones) in January. Reddit’s main competitor, Digg, also has a advertising voting system, but so far, it’s only open to Digg’s advertising partners, not anyone willing to pay. Assuming they put guidelines in place (which Reddit has), it’s not hard to see this type of model eventually making its way to Digg as well.

Reddit’s founders, Steve Huffman and Alexis Ohanian, recently left the company three years to the day after Condé Nast purchased them. But they’re still clearly involved, as we spoke with Ohanian about this new launch, and he seems pretty excited about it.

As a part of the launch, Reddit has given us some invites to give to TechCrunch readers to check out the self-serve advertising system. The first 50 people to email MArrington [at] reddit.com will receive the invites.

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