The company, under the direction of publisher Ellen Archer, has been moving in this direction for some time. Last year, it hired former Hollywood talent agent Laura Popper as editorial director of franchise publishing. The goal is for Hyperion to be able to promote its books across multimedia platforms, and it is a lot easier to do that if a book’s author already has his or her own TV show.

The WSJ says that Hyperion will “look for books either linked to ABC television properties or that it believes can be extended to television or other corners of Walt Disney,” citing an unidentified source. Hyperion is already doing this to an extent, publishing books “written by” the main character on the show Castle. It also published cookbooks from the daytime show The Chew and by Jamie Oliver and tie-ins to the soap opera General Hospital.

Hyperion has also had plenty of non-TV-related bestsellers: It publishes Mitch Albom’s books, for example (The Five People You Meet in Heaven), Randy Pausch’s The Last Lecture and J.R. Moehringer’s The Tender Bar, among others. Those big names presumably won’t be sold off, but I’ve asked Hyperion for comment.

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The news, which Kilar announced Friday via a memo on Hulu’s company blog, comes after a year of uncertainty about the video site’s ownership and strategy. In the memo, Kilar describes the decision to leave as difficult and explains he and Tom will stay on for a while to manage the transition. He also cited what he sees as Hulu’s accomplishments:

We have grown from a few hundred thousand in revenue in 2007 to generating almost $700 million in revenue in 2012 alone. We have created a video subscription service that is growing unusually fast, adding over 200K new subscribers in the past 7 days alone (a new record). We have proudly generated over $1 Billion for our content partners since we excitedly entered private beta in October 2007.

As reported by my colleague Janko Roettgers, Kilar and Hulu’s corporate owners, including Disney and News Corp, have clashed over the future vision of the site. It’s unclear, for instance, whether Hulu wants to be become a wide open YouTube-type site or instead act as a TV-everywhere type extension that would only be accessible to those who could authenticate with a cable subscription code. These tensions also deepened after a buyout of co-owners Providence Equity Partner last summer.

We’ll have more on Kilar’s departure and the future of Hulu later today. The entirety of Kilar’s note to Hulu employees follows below:

Earlier today, I sent the below email to the Hulu team:

In what is an understatement, this email has proven difficult for me to both write and send.

I’ve decided to depart Hulu in Q1. I am currently working with the Board to ensure there is ample runway to manage this transition.

Rich Tom will be doing the same, with roughly the same departure date. Rich and I have been fortunate to build and innovate alongside each other these past 5+ years and our plan is to do more of that on the road ahead.

It is impossible to state in words how much this team means to me, how much Hulu means to me. But I’ll do my best.

For me, the journey started with a move to California and a walk into an empty office suite in early July 2007. In the weeks afterward, some brave souls that were willing to look past the many naysayers and ClownCo moniker jumped aboard and got about the business of innovating and building. Five and a half years later, thanks to the missionary work of this amazing 600+ worldwide team and courageous, prescient partners, we are fortunate to have collectively built a culture that matters, a brand that matters, a business that matters. Our convictions and our relentless pursuit of better ways have made the difference and will continue to make the difference. We have grown from a few hundred thousand in revenue in 2007 to generating almost $700 million in revenue in 2012 alone. We have created a video subscription service that is growing unusually fast, adding over 200K new subscribers in the past 7 days alone (a new record). We have proudly generated over $1 Billion for our content partners since we excitedly entered private beta in October 2007. Our video advertising service delivers world-class results and sets the pace for the industry. We have authored scores of inventions along the way.

And while the above outputs are impressive and laudatory, the things that have clearly brought the most joy to my heart (and what I believe to be the most important inputs in our business) have been this team and the values and principles we hold dear.

Perhaps the best way to express this is to let you in on a little routine I have followed these past 5+ years. Each day, as I enter the office lobby, I take the time to enjoy the many portraits of our team members that line the walls. From Damon gorging on a 2 foot high cold cut sandwich to Jesse showing off his sweet kicks. Portraits from Beijing to Boston and the other fine Hulu offices in between. Those portraits – along with the What Defines Hulu? document on those same walls – mean so much to me, as it is a daily and vivid reminder of how great this team is and how we bring such passion and principle to what we do. Without fail, I am reminded in those moments of reflection why we do what we do, why this work is a mission and never a job.

I’ve been so fortunate to play a role in this amazing, ongoing journey. My decision to depart has been one of the toughest I’ve ever made. Though the words will fall short of the intended mark, please know how much this team means to me and how very thankful I am to be able to innovate and build alongside you each day.

As dates and other items get solidified, I will update the team. But in the meantime and for much of Q1, I will be here as we get off to a very strong start in 2013…

Jason

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For there’s always a motive beyond keeping people entertained. For the Breaking Bad StorySync experience, the goal was to discourage DVRing your way through the episode broadcast. In the case of the Marvel’s The Avengers second screen iOS app, the goal seems to be driving Blu-ray and DVD sales.

I didn’t know the Avengers app existed until I opened the Blu-ray case, and even that was a fluke (like most people, I suspect, I tend to ignore the paper inserts tucked alongside shiny new Blu-rays or DVDs) — but in the long run, that fluke was most fortunate.

First off, this app is Hulk-sized: When I sat down to test out the app, I had to clear off several apps and a dozen podcasts to find a spare 435 MB on my iPhone. (I also tested it on iPad.) The home screen of the app, originally released this summer, emphasizes the Item 47 Comic-Con experience and dossier files on Avengers characters — you have to go one level deeper to get to the good stuff.

Through the magic of BD-Live and a shared wi-fi network, syncing my devices with the movie was almost instantaneous (for those whose Blu-ray players aren’t online, there are also audio and manual sync options). Once I hit play, the second-screen experience began flooding in: Photos, text and video from the film popping up on my devices fast.

By far the best feature of the app was the on-screen Pause button, which allowed you to stop the movie without reaching for your remote, followed close behind by the “Sync App to Movie/Sync Movie To App” buttons. That’s because the barrage of updates on the second screen was literally impossible to keep up with — and with few exceptions, it was all pretty compelling.

Trivia notes added extra insight about the production’s collaboration with NASA and director Joss Whedon’s decision to cast Mark Ruffalo. Still images included storyboard galleries and photos of the film’s extremely attractive cast, timed with their first on-the-big-screen appearances.

Between the two, the iPad version of the app was a whole lot prettier than the iPhone, thanks to the screen resolution — also, certain features performed better there.

And the video was especially great: Highlights include Tom Hiddleston goofing around during his wirework stunts and Scarlett Johansson’s stunt double practicing the fight choreography of Black Widow’s first scene.

All the clips loaded cleanly, and were soundless in case you hadn’t paused the film to watch them (though most of them were good enough to warrent my full attention). In short: That 435 MB was not ill-spent.

The only major bug I found came with the text-based updates, like actor bios or filmmaker notes: When the text fit into one screen, everything was fine:

But try though I might, I could not figure how to finish reading entries which were longer than the confines of the frame, on either the iPad or iPhone. I tried scrolling, swiping, zooming and even asking Siri — but no dice. If you know how to scroll the text in this app, please let me know — I’m very curious how some of these notes end.

Before you ask, it’s not the three boxes at the top of the text field (those are a design element), or that down arrow at the bottom right of the screen (that minimizes the timeline). Believe me, I tried.

I also couldn’t get certain links to load, such as links to comics — the app is not a bug-free experience in its current form. But what’s there is without a doubt great fun.

In fact, the only other caveat I’ll mention is this: I spent at least half an hour “watching” the first major scene of the movie — skipping back and forth through both the film and the app timeline, using the sync buttons to rewatch certain bits with a new perspective, or catch up with what I’d missed while looking at a device.

Seriously: It took 30 minutes for me to get to the opening titles, which appear 11 minutes into the movie. The Avengers were nowhere close to assembling before I had to go to bed. However, I’m looking forward to getting through the rest of the experience, slowly but surely.

You don’t need to purchase the film in any form to check out the second screen content — not only is the app free on iTunes, but there’s an “Explore on your own” option that lets you browse the timeline content without syncing. However, if you’re one of the fans who helped The Avengers set box office records this summer, you’ll enjoy having the experience as a viewing companion. I know I did.

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When it came to putting a big data platform in place, Arun Jacob, director of data solutions in the Disney Technology Solutions & Services group, told a room at the IE Group Big Data Innovation conference in Boston on Thursday that Disney chose to build something from scratch rather than buy software from a large vendor. Cost certainly played in a role, but really it was flexibility that made the decision.

Reduce, reuse, recycle

In order to provide the most value to the company, Disney’s big data platform has to be everything to everyone, which it turns out is a tall order. Initially, Jacob said, “We treated ourself like a small consulting organization and we had something to sell.” When a division wanted it to use the platform for a particular function, Jacob would say yes and then get busy actually figuring out how to build it.

Architecturally, it’s all about being able to recompose the path data takes through the platform and the components that are used for each particular purpose, or being able to easily replace pieces altogether if something better comes along. The Disney platform has a foundation of Hadoop, Cassandra and MongoDB complemented by a suite of other tools for particular use cases. The operations team uses the platform to view, analyze and index error messages, while another division runs a recommendation engine on top of it. Application developers get the high-throughput, low-latency data access they need, while the analytics team has the higher-latency data access it requires.

However, although Jacob wanted to keep costs down with open source software, he did have a luxury that most startups don’t — a budget for outsourcing and the occasional product. When he needed support with a Hadoop cluster, he could call Cloudera. When an implementation of Solandra (an open source search engine built atop Solr and Cassandra) tipped over under the weight of Disney’s scale, he bought the enterprise edition of DataStax’s Cassandra-based product (Solandra’s creator had since taken a job with DataStax and was expanding upon Solandra’s capabilities in DataStax Enterprise).

Flexibility isn’t free

The Solandra incident actually underscores the tradeoffs that come when you use free open-source software and don’t reach for the checkbook at any sign of trouble. “You pay for [open-source projects] late at night, you pay for them by learning to run them, you pay for them by reading people’s source code who even if you could read it, it still doesn’t make any sense,” Jacob said. But those things can be overcome if you’re willing to put in the time.

And at a company the size of Disney, those problems — and whole lot more — have to be overcome. For example, Jacob explained, you can fudge your way around things like fault tolerance, high availability and security when you’re standing up a deployment, but you do have figure out a way to achieve those things eventually.

Ready for mass consumption

You also have to make systems built on open-source software consumable by everyone who needs to use them. That means it’s not enough to just build a scalable and stable system; the system also has to be easy enough for thousands of internal developers of all types and all skill levels to use. In a six-person startup, Jacob said, it’s easy enough for everyone to just learn Hadoop in a month and then start using it, but that’s not the case in a large enterprise.

So his team made it easy.

In order to “remove the excuses” for business users not loading their data into the system, they just need to point the custom-built user interface at their files. (Disney’s platform is growing at 5TB a day, and there are still many other types of data it needs to house, Jacob said.) Because they’ve built wrappers around the technology, Jacob’s team doesn’t talk about Hadoop and MongoDB to internal users, only about analytics and queries. It built client frameworks in a bunch of programming languages so developers can interact with the platform without writing RESTful API calls.

In some cases, the team decided to hide the platform’s complexity from users; not to facilitate its use, but to keep loose-cannon developers from doing something crazy that could take down the whole cluster. It could show them all the controls and knobs in a NoSQL database, but “they tend to shoot each other,” Jacob said. “First they shoot themselves, then they shoot each other.”

Still, after all the work he put into building Disney’s big data platform, it’s not exactly a process Jacob is hoping to repeat as the platform evolves. The tools for managing big data are getting better, he said, so he still does a build-versus-buy analysis when it’s time to make a change. Building custom tools is fine when you don’t have a choice, but it’s not always wise when buying something could save untold man-hours and headaches.

Update: DataStax has informed me that the slides previously linked to here have been removed. If you want more technical details on Disney’s big data platform, a slide deck Jacob’s recent presentation at the Cassandra Summit is available here.

Feature image courtesy of Shutterstock user Scott Cornell.

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The media conglomerate reported a 24 percent second-quarter profit increase to $1.83 billion Tuesday, driven by strong cable and broadcast ad sales, affiliate fees, licensed Avengers toy purchases and theme park attendance.

Also read: Blame it on Mars – Rich Ross done as Disney studio chief

Revenue for the Burbank, Calif.-based company was up 4 percent to $11.08 billion in the quarter.

Driven by the powerful ESPN cable channel and the ABC broadcast network, Disney’s media networks division saw a 3 percent spike in revenue to $5.08 billion, with operating income increasing 2 percent to $2.12 billion

Revenue from parks and resorts was up 9 percent to $3.44 billion, with a earthquake-induced shutdown of the company’s Tokyo theme park last year making Q2 2012 compare favorably.

Also read: Disney avenges traditional media models

Even with the $1.64 billion theatrical performance of superhero movie The Avengers, revenue was flat in the quarter for Disney’s studio entertainment division. But operating income increased from $264 million to $313 million during the period, with the studio managing production costs on its films better these days.

Operating income in Disney’s consumer products division was also up 35 perent to $209 million.

Losses in the company’s interactive unit, meanwhile, narrowed 51 percent to $42 million, with Q2 comparing favorably with a 2011 quarter that saw Disney buy social game maker Playdom for $743 million.

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We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

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This article is the second in a four-part series that we’re publishing this week.

If you live on the East Coast, there’s a decent chance that when you log into Facebook, the photos, comments and Likes that you see are being served up from a data center in the quiet, rural town of Forest City, North Carolina. Three months ago, Facebook flipped the switch on the first of two buildings here.

Facebook isn’t the only Internet giant that chose the so-called North Carolina data center corridor as home for one of its most important server farms. Within a couple-hundred-mile radius, Google and Apple have also built mega data centers, as have Wipro, Disney, AT&T and others.

Deciding where to build a data center has always been a complex decision. “We consider probably 50 different factors when we pick a site for one of our data centers,” says Tom Furlong, VP of site operations at Facebook. According to a GigaOM Pro report (subscription required), Microsoft has 43 criteria for its selection process.

But that decision has become increasingly complex as companies begin to factor in access to clean power and a growing population of Internet users in developing markets. Add to that decision the notion that webscale computing is fundamentally changing how servers are built

Around the Apple data center, substations are needed. Data centers consume a lot of power.

and connected and the decision becomes even more complicated. The data center has blown up, according to execs at our recent Structure conference.

We interviewed executives at some of the biggest Internet companies, as well as hardware vendors, economic development groups, and utilities to find out why North Carolina has emerged as a hub for data centers. Here are the 10 biggest reasons:

1). Low-cost power: You need to be able to offer electricity at the price of 4 cents to 6 cents per kilowatt hour before the data center operators will even talk to you, says Duke Energy spokesperson Thomas Williams. That’s how much it costs in North Carolina and that’s far below the national U.S. average. Part of the reason why the power is so cheap in North Carolina is because the electricity mix is 61 percent from coal, 31 percent from nuclear, and only 4 percent from clean power. Coal and nuclear are some of the cheapest forms of electricity generation.

2). Reliable and available power: These data centers are huge — as big as 500,000 square feet for Apple’s — and it’s tough to find places that have enough power transmission capacity available, says Facebook’s Furlong. The area around Charlotte, North Carolina (Duke’s headquarters), already had much of this capacity built out. As the textile industry in the area has contracted, and the local manufacturing and furniture production industries increasingly moved offshore, that has freed up capacity.

Because of that, Duke had extra industrial-sized capacity that was ready to be connected to the data centers, which commonly require energy of anywhere between 20 MW to as high as 100 MW. To put that in perspective Apple says its 40 MW of solar panels, and 5 MW of fuel cell power, will provide enough power for almost 11,000 homes per year.

Maiden, NC

3). Rural areas: A significant amount of North Carolina is rural, and that land is relatively inexpensive and available for large buildings and huge power substations. Data centers and populated areas don’t tend to go together; when they do intersect, they tend to lead to ‘Not in My Backyard’ push back from the local communities. Even in Maiden, a town of just over 3,000 people, about 60 miles northwest from Charlotte, residents are starting to complain about the construction of Apple’s solar farm — particularly the leveling of some 200 acres (over two locations) for the solar panels.

4).  Incentives from counties and the state: North Carolina law gives the state the ability to reduce sales tax on servers, says Furlong. That was a factor for all the Internet players that chose the area. When you have to buy new servers every three to five years those savings can add up.

North Carolina’s legislature approved $46 million in tax breaks for Apple, and local governments slashed Apple’s real estate taxes by 50 percent and property taxes by 85 percent, according to Greenpeace. Google (which was the first in the area, back in 2006) scored about $212 million in savings over 30 years, reported Bloomberg a couple years ago. That included tax breaks, infrastructure upgrades, and other incentives. Bloomberg reported that Google received “more than $1 million for each of the 210 jobs Google said it eventually hoped to create in Lenoir.”

Facebook’s data center

5). Available water: Water is always a factor when picking sites for data centers, and North Carolina has an abundance of rivers and moisture, said Facebook’s Furlong. Water is more crucial for some projects than others, like if it’s a warmer environment and the data center needs extra water for cooling. At the Forest City, North Carolina, site, Facebook is deploying evaporative cooling, which requires a mist spray of water to cool the air as it’s entering the data center.

Google has said that evaporative cooling commonly can use “hundreds of thousands of gallons of water a day,” and that’s why Google is looking at using recycled waste-water at some of its facilities. At Facebook’s data center in Oregon, it built a well onsite to provide water for evaporative cooling and that helps the company mitigate its use of the city’s water resources.

6). Fast deployment: Apple’s data center in Maiden was built within about a year from the time the site was selected, according to Scott Millar, President of the Economic Development Group for Catawaba County, which includes Maiden. That’s because the county had already developed a plot of land for a data center park. Likewise, Forest City also had a ready-to-go business park that it made available to Facebook for its data center. When searching for a site, we’ll “find that there are places where it just takes too long to build it,” says Furlong. My response to them is: “I’m sorry, my development horizon is just not that long.”

7). East Coast traffic: Internet companies are choosing North Carolina because they need a location close to the East Coast. The speed at which a web page is delivered is a major competitive factor for giant Internet companies — a couple milliseconds too slow can rule out a location. North Carolina can provide a quick enough web-serving turnaround for East Coast customers, as could many other locations close to the East Coast.

8). Close to an airport, major city: Data centers, like many big infrastructure projects, need to be accessible for employees as well as for goods and services. Access to the Charlotte airport and the city of Charlotte was a significant driver for the Internet firms. During the height of construction of the data centers, some 600 to 800 workers are involved, and during operation there can generally be 50 to 100 workers.

Workers building out power lines around Apple’s data center and solar farm

9). The Lemming effect: Catawba County’s Millar says there tends to be a clustering effect with data center operators. When one or two big ones come in, the others feel more comfortable following. That’s because the executive, or team, that has to pitch the data center location to the rest of the company and the board feels safer choosing a spot that has already been validated as a successful site. When making hundred-million-dollar – or even billion-dollar – decisions, it’s not surprising that companies try to de-risk the decision by following other companies, says Millar. Other resources in areas can be shared between data centers, like fiber data links.

10). The climate: While North Carolina isn’t exactly cold, Facebook’s Furlong told me that it was one of the only areas on the East Coast where it wasn’t so hot and humid to preclude open air cooling. That allows companies to get rid of the bulk of the power-hungry air conditioners that cool most data centers, and instead use the outside air for cooling, which uses a lot less energy. At the Forest City data center, Facebook cools the air as it enters with a water spray. For the rare occasion that the weather gets too hot or humid, Facebook has built a set of coils that cool the warm moist air as it enters.

Here’s the rest of the 4-part series this week:

• The ultimate geek road trip: North Carolina’s mega data center cluster
• The controversial world of clean power and data centers
• The story behind how Apple’s iCloud data center got built

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Locating data centers in an energy-constrained world
• Connected world: the consumer technology revolution
• The future of mobile: a segment analysis by GigaOM Pro

New studio chairman Alan Horn arrives at Disney’s Burbank, Calif. headquarters as well-regarded as film business executives get, coming off a less-than-a-year retirement from the top post at rival Warner Bros.

Also read: Blame it on Mars – Rich Ross done as Disney studio chief

Under his watch, Warner was the top-ranked studio in global theatrical market share for three consecutive years from 2008-2011, while gestating a slew of multi-billion-dollar blockbuster film franchises that included Harry Potter and the Dark Knight.

For a studio coming off two of the biggest flops in history, with John Carter and Mars Needs Moms both losing around $200 million apiece, o
Iger’s selection of Horn certainly carries the aura of stability.

As for innovation, maybe not as much.

With DVD revenue drying up and the theatrical distribution business no longer growing in the U.S. and Canada, studios like Disney are under increasing pressure to drastically change how much they spend to produce and market their films, as well as how they strategize their release windows.

Also read: Piranha 3D sequel is first 3D film to get early VOD release

To a large extent, that’s what Iger and his constituents had in mind when Ross was hired in 2009. At the Disney Channel, Ross built low-cost TV hits like High School Musical into global properties that could be monetized across divisions ranging from home entertainment to consumer products.

And during his tenure, Ross replaced many of the old-guard film-business veterans working for Disney with underling choices who were equally — if not more — unorthodox than he was, such as short-tenured marketing chief MT Carney, a figure well known on Madison Avenue but a complete stranger to Hollywood.

Fair or unfair, Ross gained a reputation in the movie business as someone who cared less about the films than the marketing. The inevitable backlash in the creative community meant that he’ll be remembered more for the flops that were put into Disney’s production engine before he even arrived than for shepherding The Avengers, which became a massive hit in the weeks after his resignation in April.

As for Horn, he’s often described with what has become the gold-standard compliment in the movie business — “He has good taste,” is the oft-heard refrain.

Whether Horn can continue to parlay that accumen across a business that’s increasingly distributed digitally and marketed socially remains to be seen.

Related research and analysis from GigaOM Pro:
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