Daily Tech Snippet: Monday, September 28

• Facebook, eyeing TV dollars, rolls out new ad products: Facebook introduced a slate of new advertising products on Sunday, most of which are aimed at luring television advertisers onto the 1.5-billion user social network. The advertising options, most of which will also be available on Facebook-owned Instagram, are designed to take advantage of the social network's strengths on mobile devices. It has the world's most popular smartphone app and generates more than three-quarters of its $10 billion-plus in annual ad revenue on phones. On television, advertisers can buy ads based on how many people they will reach, an approach Facebook has adopted to ease the transition between television spending and digital spending. In addition, it can target highly specific audiences, such as women aged 18 to 35 years old who have shopped on a specific website, which TV cannot do. Among the new products are "brand awareness" ads, which aim to reach a large number of people to promote a company's name and brand, such as Coca Cola. Advertisers will also be able to poll users on mobile phones about whether they saw an ad -- a feature that used to be available only on desktop computers -- and they can use a format that allows them to display multiple videos at once that users can scroll through.

• YouTube Is Prepping Its Subscription Launch: Two Services, One Price: YouTube, which spent the first 10 years of its life as a free service, is getting ready to start selling tickets. Google’s video site appears to be finalizing launch plans for its long-in-the-making subscription service, and industry sources say they’ve been told to expect a launch near the end of October. A blast email from YouTube to content owners, telling them they have to agree to new terms by Oct. 22 or their “videos will no longer be available for public display or monetization in the United States,” helps support that timeline. But YouTube, which floated the idea of a new subscription service nearly a year ago, has never publicly committed to a timeline. Last spring, YouTube executives were telling content owners they were aiming for a mid-summer launch. It’s possible the launch could keep slipping, even beyond 2015. Note that we’re referring to a single service, not multiple ones. Sources say that’s because YouTube intends to bundle two different services into one offering: An update of its music service, which it launched in beta as YouTube Music Key last fall, and another service, yet to launch, that will give users the ability to watch anything on YouTube without seeing ads. Video industry sources say Google has told them it intends to charge $10 a month for the combined offering. It’s hard to imagine how YouTube will make money at that pricing, since its music service was supposed to cost $10 on its own, with the music labels and other copyright owners pocketing the majority of that.

• India Replaces China as Next Big Frontier for U.S. Tech Companies: Two years ago, India’s rise as a digital nation was hard to imagine. Internet penetration was modest, mobile phone networks were glacially slow, and smartphones were a blip in a sea of basic phones. Since 2013, however, the number of smartphone users in India has ballooned and will reach 168 million this year, the research firm eMarketer predicts, with 277 million Internet users in India expected over all. India already conducts more mobile searches on Google than any country besides the United States. Yet “we are barely scratching the surface of availability of Internet to the masses,” said Amit Singhal, Google’s senior vice president in charge of search, who emigrated from India to the United States 25 years ago.  India and its 1.25 billion residents have become the hottest growth opportunity — the new China — for American Internet companies. Blocked from China itself or frustrated by the onerous demands of its government, companies like Facebook, Google and Twitter, as well as start-ups and investors, see India as the next best thing. The increasing appeal of India, now the world’s fastest growing major economy, was underscored in recent days. During a meeting in Seattle on Wednesday with American technology executives, China’s president, Xi Jinping, was unwavering on his government’s tough Internet policies. India’s prime minister, Narendra Modi, on the other hand, was on a charm offensive during his own American tour. After a stop in New York City, he headed to Silicon Valley, where he visited Tesla and attended a dinner with tech chieftains like Satya Nadella of Microsoft and Sundar Pichai of Google. On Sunday, Mr. Modi participated in a town hall discussion with Mark Zuckerberg, Facebook’s chief executive. He also planned to drop by Google and Stanford University, mingle with entrepreneurs and address a sold-out arena of 18,000 people in San Jose, Calif., before heading back to New York to meet with President Obama on Monday. ”For India to keep making progress, it needs to be a leader online,” Mr. Modi said during the Facebook event. He acknowledged that tech companies like Facebook were not connecting people out of pure altruism, but he told Mr. Zuckerberg, “I hope this will not just be something to enhance your company’s bank balance.” The overall message to Silicon Valley from Mr. Modi, who posts regularly on Twitter and Facebook: Help India become an Internet powerhouse.

• Solving the Amazon Puzzle: In a battle of tech titans, some investors may have reason to prefer Bezos over Brin and Page. Which company is a better investment, Google or Amazon.com? Conventional wisdom suggests Google, which turns huge profits, enjoys better gross margins, and has a far lower price-to-earnings ratio. Yet Amazon’s stock has returned 62.6 percent in the past year, compared with 9.6 percent for Google. That’s a phenomenon Steve Hanke, an economics professor at Johns Hopkins University, and Ryan Guttridge, a fellow there, have named the “Amazon Puzzle,” and one they say they’ve figured out. The key is hidden in asset turns, or how effective companies are at getting revenue out of their investments. Asset turnover is defined as sales divided by total assets; the higher the number, the better. “Google is just abysmal, and Amazon is really good,” says Guttridge, who once worked for legendary stock picker Bill Miller at Legg Mason in Baltimore. How abysmal? Try 0.54 in 2013, 0.55 in 2014, and 0.53 so far this year, versus 2.05, 1.88, and 2.12 for Amazon, according to data compiled by Bloomberg. Guttridge and Hanke credit Amazon’s cash flow–focused CEO, Jeff Bezos. Bezos has a salary of just $81,840 a year, though he gets a further $1.6 million to cover his personal security. Beyond that, he receives nothing atop the return on the 18 percent of Amazon that he owns. It’s the same stock shareholders own. He makes money only if the stock goes up and must keep shareholders happy or be held accountable. Larry Page and Sergey Brin of Google, while they earn only $1 a year in salary, control classes of stock outside investors can’t touch. That puts Google’s lucrative search and YouTube services further out of reach of the little guy. And that’s why Guttridge is betting on Bezos. “You buy equities because you expect to benefit from the free cash flow of the business,” he says. “With Amazon, you have a clear line between asset turns and cash flow.”