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In a deal that Business Insider is calling "awesome," Microsoft is acquiring Skype for $8.5 billion. It is Microsoft's largest acquisition ever, according to the Wall Street Journal . So what is the deal behind the deal? After all, while Skype has been growing and growing since it launched in 2003, it has struggled to make a profit. The Journal's Andrew LaVallee has some of the story, and he shared it with Kelly Evans on the WSJ AM Report :

We have spent a lot of virtual ink on examining the utility of Twitter as a business tool--especially for small business and marketers. But it is impossible not to lose sight of the adoption of Twitter as an overall tool for communication, especially with events across North Africa and the Middle East, where several key social media sites have been vital to pro-democracy protesters' ability to organize mass demonstrations. In an interview with Terry Gross of WHYY and NPR 's Fresh Air , Twitter co-founder Biz Stone shares his amazement at how important and widespread the microblogging service has become. He addresses events in Egypt, as well as rumors of Twitter's multi-billion-dollar evaluation and possible purchasers:

When it comes to the debate over which is more effective--email marketing or social media marketing-- Tyler Garns refuses to pick a winner. Weighing in at Small Business Trends , Garns, Vice President of Marketing for Infusionsoft , argues that both still matter. But it depends on your target , and your intent . For example, If your target is under 34 years old, you’re likely to be successful using social media. If your target is under 20 years old, you’ll probably need to reach them through social media almost exclusively. If your target is a business, email will likely get you results faster. If your target is a consumer, you’ll get better results through a social campaign where your target sees others singing your praises. With regard to intent, Garns writes, If you’re trying to sell directly, social media probably isn’t the place for you. Email can work better. If you’re trying to build a long-term relationship, start with social media (but the relationship may move to email). Read Social Marketing vs. Email Marketing: Is It War? here .

Tim Westergren changed the way a lot of Americans listen to music, and developed a successful business model for a digital media business when he started the online music service, Pandora . And the service has been growing this year, thanks, in part, to Apple. Westergren tells Charlie Rose that Pandora´s user numbers skyrocketed with the introduction of Pandora apps for the iPhone and iPad. Here´s an excerpt from that interview: Westergren also discussed Pandora´s revenue model with Rose. And it is interesting to consider whether there are lessons for other digital media companies (newspapers, video services) in how Pandora runs its two-tiered subscription service. Watch the full interview here .

After a decade of trying to stay afloat, Pandora --the internet radio service--had its first profitable quarter at the end of 2009. Nobody was happier with the news than the company's founder, Tim Westergren , who knew he had a good idea, and one that could make money, but his resolve was tested again and again. New York Times writer Claire Cain Miller profiles the rise of Pandora, and she writes how, from the company's start in 1999, funding was an ever-present issue: By the end of 2001, he had 50 employees and no money. Every two weeks, he held all-hands meetings to beg people to work, unpaid, for another two weeks. That went on for two years. Meanwhile, he appealed to venture capitalists, charged up 11 credit cards and considered a company trip to Reno to gamble for more money. The dot-com bubble had burst, and shell-shocked investors were not interested in a company that relied on people, who required salaries and health insurance, instead of computers. In March 2004, he made his 348th pitch seeking backers. Larry Marcus, a venture capitalist at Walden Venture Capital and a musician, decided to lead a $9 million investment. “The pitch that he gave wasn’t that interesting,” Mr. Marcus said. “But what was incredibly interesting was Tim himself. We could tell he was an entrepreneur who wasn’t going to fail.” Read How Pandora Slipped Past the Junkyard here . If you haven't spent time using Pandora, and have no idea what a "musical genome" is, this Jefferson Graham interview with Tim Westergren, for USA Today online, will help. And Westergren explains how the iPhone came along at just the right time for Pandora:

Amazon announced a new royalty option for authors of some Kindle books yesterday. From the news release : "Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books," said Russ Grandinetti, Vice President of Kindle Content. "We're excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books." This represents a significant change for authors, and potentially another blow to publishers. But it also makes us remember something noted tech guru/author Clay Shirky said in a speech at the 2008 Web 2.0 Expo in NY. The speech was titled "It's Not Information Overload. It's Filter Failure." It wasn't directly about pricing. But in the first few minutes of the speech, Shirky discussed how the invention of the printing press created "information abundance," because the cost of producing manuscripts dropped precipitously. Then with the advent of the Internet (550 years later), the cost of publishing changed drastically again. Anyone could publish. And the key change was that the risk attached to publishing all but disappeared. (Think about the Amazon announcement in this context: with digital platforms the "publisher" does not have to guess how many books to publish--so the risk of projection goes away. Thus the author gets more of the revenue). The rest of the speech may be less relevant, but still worth a look:

Time Inc. and The Wonder Factory are touting a prototype for a new digital version Sports Illustrated. This, presumably, is a glimpse of how Time Warner's magazines will look in tablet form (the actual tablet used is not an on-the-market product, as far as we know). Take a look: A dynamic prototype, for sure, but it raises a couple of key questions. Will this "save" magazine titles like Sports Illustrated? And where does advertising fit?