Just after Facebook hit 500 million users last month, some analysts increased their 2010 forecasts for spending on social media advertising.

U.S. advertising is expected to increase 20% over last year to $1.68 billion, up from December's forecast of $1.3 billion, according to a study by digital research group EMarketer.

"That's primarily due to the strong performance of Facebook and somewhat due to the fact that we started adding Twitter to our analysis," said Debra Aho Williamson, an analyst.

The study, conducted every six months, also measures sites such as MySpace, LinkedIn and Classmates.com as well as popular sites in China, Japan and Russia for worldwide figures.

Half of that $1.68 billion spent by U.S. advertisers will go to Facebook, according to the study. By 2011, advertisers will spend $1.06 billion on the San Francisco company -- a 112% increase from 2009.

Worldwide, overall social media ad spending is leveling off -- except for on Facebook. Advertisers around the globe will pour an estimated $1.76 billion on the site in 2011, which is a 165% increase from 2009,  according to the study.

This means marketers recognize this is an easy way to reach consumers where they spend a lot of their time, Williamson said.

"Facebook has been one of the leaders in ways to advertise in social media," she said. "It's become one of the go-to places for marketers."

That's largely because of Facebook's self-serve advertising system -- EMarketer estimated that it accounts for at least half of the company's revenue, an increase from previous estimates. 

"We underestimated how big that success was," Williamson said. "I think it was a surprise for Facebook as well."

The system allows marketers to create and post ads without having to go through a salesperson, which is unique to social media sites, Williamson said. Once an ad is created, users also have the option to "like" or "become a fan" of an ad, which Facebook then posts as suggestions to mutual friends.

But although marketing dollars are increasing in the millions, Williamson said Facebook is far too big for users to worry about being bombarded with ads.

"There's plenty of opportunity and plenty of places to put advertising," she said. "It's been very minimalistic,  and that's on purpose."

Advertising on MySpace, which is refocusing on its roots in being a social media site for entertainment and music for youth, is on the decline. U.S. marketers will spend $323 million on the site, down from $445 million in 2009, EMarketer said. By 2011, U.S. and worldwide advertising on MySpace is estimated to decline about 38% from 2009 figures.

"It's a smaller targeted audience," Williamson said. "There are fewer advertisers who want to reach a youth market."

-- Kristena Hansen

Charts: U.S. advertising spending on social networking sites, by venue, for 2009 compared with 2010 forecast. Credit: EMarketer

Starbucks Inc., hoping to leverage its recent decision to offer free Wi-Fi at its stores, is working with Yahoo Inc. to create a website that would be customized for each location.

In addition to The New York Times, USA Today, Yahoo and Zagat, Starbucks announced on Thursday that publisher Rodale, Nickelodeon's Nick Jr. Boost and online charity DonorsChoose.org will also be contributing content providers for its Starbucks Digital Network. The website is expected to go live this fall.

Customers who access the Internet at Starbucks will encounter the website first before they can surf the web. Starbucks began offering unlimited, free Internet access last month at all 6,800 U.S. company-operated stores.

If customers opt to stay on Starbucks' home page, they'll have access to things such as free iTunes downloads and content on paid sites such as the Wall Street Journal. There’s also an optional "sign in" to the MyStarbucks account, a Yahoo search box and six channels of topics---news, entertainment, wellness, business and career, my neighborhood, Starbucks -- based on localized content for that store’s neighborhood.

“Because we know what store you’re in, we can give you hyper-local news,” said Adam Brotman, vice president of the Starbucks unit that oversees the company’s digital ventures. “We want to provide something of value they can’t get anywhere else.”

In the "My Neighborhood" channel, for example, users can connect with and donate to local charities, and the "Wellness" section will show maps of local running and biking trails that, of course, highlight nearby Starbucks locations along the way.

Other businesses have already tapped into such content-specific networks. Barnes & Noble, Inc., for example, offers a special Wi-Fi network for its Nook e-readers where users have access to special content while in one of its stores.

And then there’s Gogo Inflight Internet, which partners with nine airlines to give passengers free access to the Wall Street Journal and Frommer’s Travel Guides -- after paying a fee starting at $5.

But Ross Rubin, analyst at NPD Group, said Starbucks' network would be unique because it would not be restricted to a specific device or content.

And to the best of his knowledge, Rubin said, Starbucks is the first of any coffee shop to do this.

“They certainly have the impact and the national footprint to enable it on a scale that would be difficult to match by any other coffee chain,” Rubin said.

The Seattle-based company's move last month to launch its unlimited, free Wi-Fi access last month came at a time when many other coffee shops in the industry are now charging for service or taking it away altogether to prevent some customers from setting up their home offices in the stores.

Yahoo, the network's host, also benefits because it’s a strategic move in creating its own identity apart from rivals Google and Bing. Rubin said he wouldn’t be surprised if other Internet search companies such as MSN followed in Yahoo’s footsteps.

“The partnership represents a source of distribution for Yahoo and an opportunity for them to own the front door of the digital experience,” Rubin said.

--Kristena Hansen

Families typically know what to do with the belongings of loved ones who've died, but what do you do with their Twitter accounts? With 145 million users -- and adding 300,000 new ones each day -- a surprising number of families are left with this befuddling question, not only for Twitter but for other social networks.

Recently, Twitter took out the guesswork and posted its policy for handling accounts of deceased users on its website.

"It's always been our policy internally that people could write in about deceased users. We made it more public-facing last week due to user inquiries," said Del Harvey, a Twitter spokeswoman, in an e-mail to The Times.

The San Francisco-based company requires that family members send their contact information, relationship to the deceased and a news article or obituary for proof of death either by e-mail, mail or fax, which is similar to Facebook Inc.'s policy on the matter. Then, per their requests, Twitter says it will help family members obtain a backup of the deceased person's public Tweets, which are messages of 140 characters or less, or delete the account completely.

"If an account is removed from Twitter, it will no longer be publicly visible and will be automatically slated for complete removal from the Twitter system," Harvey said.

If family members decide not to delete it, the account will "exist in the same way" and people would still be able to follow it.

On Facebook, accounts of deceased users are identified as such.

Those accounts also could show up in the "who to follow" suggestion box, which is something that Twitter may not have much control over since it is based on a variety of automated algorithms, including who you follow and who those people follow.

But both Twitter and Facebook, which added its 500-millionth user last month, are clear about one thing: No one, not even family members, can access a deceased person's account.

-- Kristena Hansen

Photo: Ivy Bean, who died July 28 at age 104, was acknowledged as Britain's oldest user of Twitter. Bean started her Twitter feed in 2008 and amassed more than 56,000 followers. Credit: Associated Press

An executive who oversees hardware engineering for the iPhone is leaving Apple Inc., a company spokesman said Monday.

Apple did not say why the executive, Mark Papermaster, senior vice president of iPhone and iPod hardware engineering, was leaving the company. Papermaster couldn't be reached for comment.

But according to news reports citing unnamed sources, Papermaster apparently was being left out of the decision-making process and had lost the confidence of Apple Chief Executive Steve Jobs.

Papermaster's departure adds to Apple's public relations woes related to its new iPhone 4. The controversy has been dubbed "antennagate" because of reception problems that have plagued the device since its launch in June.

Steve Dowling, an Apple spokesman, said Papermaster's responsibilities will be assumed by Bob Mansfield, senior vice president of Macintosh hardware engineering.

"Mr. Mansfield already manages groups that create many of the key technologies for the iPhone and the iPod touch, including the A4 chip, Retina display and touch screens," Dowling said in a statement.

Before joining Apple last year, Papermaster, 49, had worked for IBM for more than two decades. He was heavily recruited by Apple, which led IBM to file a lawsuit against Papermaster when he tried to leave. IBM accused Papermaster of violating a noncompetition agreement and said it feared he would divulge company secrets in his new position.

IBM settled with Papermaster, letting him join Apple in April 2009. At Apple, he replaced Tony Fadell, who had a major role in the development of the iPod.

Under Papermaster, Apple had its most successful product launch with the iPhone 4, which sold 1.7 million units in its first three days.

Despite the iPhone 4's immediate success, users complained of significant signal loss and dropped calls when held in a certain way. Many said the issue was due to a defective antenna, which is a steel frame that wraps around the device and is a design unique to the iPhone 4.

At first Apple instructed users on how to properly hold the phone or suggested they purchase a rubber "bumper," which retail at about $30 each. It then blamed the issue on a misconfiguration of how the signal bars are displayed and subsequently issued an update to the operating system, iOS 4.0.1, as a fix.

Jobs later held a news conference in response to Consumer Reports magazine's announcement that it could not recommend the iPhone 4 because of a design flaw in the antenna. Jobs said Apple would offer owners a free rubber bumper that would resolve the problem.

-- Kristena Hansen

Photo: Apple CEO Steve Jobs discusses the iPhone 4's reception problems at a news conference in July. Credit: Kimberly White / Reuters

Apple Inc.'s own online support forum is heavy with user complaints that their iPhone 3GS and iPhone 3G models are slower, have a quickly drained battery life and overheat, among other glitches, after upgrading to the new iOS 4 operating software.

But on Wednesday, Apple said it was investigating iOS 4 issues only related to iPhone 3G user complaints, not the iPhone 3GS.

"We're not receiving any reports regarding it being an issue with the iPhone 3GS," said Natalie Harrison, an Apple spokeswoman. If customers are having problems, we advise them to contact Apple Care for assistance."

Chris Squires, of Bakersfield, said he called Apple immediately when his entire contact list was wiped out after upgrading his iPhone 3GS to the iOS 4, but the employee couldn't figure out what happened. And with all the other issues he's been having, he said he's been trying to find a way to revert back to his old operating system.

"It doesn't sync up to my Bluetooth anymore," Squires said. "If I'm in the middle of a text or e-mail or website, it'll freeze and then I'll have to power it down. I never really had to do that with the regular 3GS."

Users of both older models of the devices have been complaining on Apple's forum and various blogs since the iOS 4 rollout out in June, but the issue has been overshadowed by the "death grip" antenna saga that has plagued the new iPhone 4.

The new operating system, which is also compatible with the iPhone 4, has 100 new features for the iPhone 3GS, which came out last year, and the 2-year-old iPhone 3G.

Although Squires said the upgrade delivers the features it promises for the most part, there are so many new problems that he's now at a crossroads.

"I'm in a situation now where I don't even know if I want to keep the phone or not," he said.

-- Kristena Hansen

Apparently, Apple's iOS 4 issues aren't limited to the 2-year-old iPhone 3G.

Apple Inc.'s support forum is piling up with user complaints that their iPhone 3GS, which rolled out last year, is also experiencing slowness, drained battery life, intermittent crashes, rebooting during phone calls and other odd glitches after updating to the new operating system.

"My phone will freeze and I have to reboot and it takes a long time (4-5 min) for the Apple logo to disappear and the phone start to work," wrote one iPhone 3GS user on the forum on Monday. "Apparently a lot of users have the same problem after updating the software."

Apple has not returned phone calls or e-mails for comment.

Similar complaints from iPhone 3G users have been reported in Apple's discussion forums and various blogs since the iOS 4 debuted in June.

The iOS 4 is compatible with the iPhone 4, iPhone 3GS and iPhone 3G models and boasts more than 100 new features as well as improved battery life. Some of the features, however, are not compatible with the 3G model, including multitasking, which allows multiple applications to run at the same time.

Issues regarding updates to the iPhone 3G have already gotten the attention of the Cupertino, Calif.-based company, which said Monday that it was investigating the problem. It has not said anything about the iPhone 3GS.

Although it's apparently impossible to revert back to the older operating system, some users are wishing on the forums that they could do so.

-- Kristena Hansen

Apple Inc. said it's investigating complaints by some iPhone 3G users of bogged down speed, drained battery life and excessive heat when their device is updated to the new iOS 4 software.

The operating system, which debuted in June, boasts more than 100 new features for the new iPhone 4 and the prior model iPhone 3GS, but some of the features are not compatible with the iPhone 3G.

Since the software's rollout, iPhone 3G users have complained about various problems on blogs and on the Apple's support forum. The complaints have been overshadowed by the "death grip" antenna issues that have plagued the iPhone 4 since it was launched June 24.

"Launching something as basic as text messaging takes about four times as long -- up to nearly 20 seconds for something that should be instantaneous," Don Weiner, an iPhone 3G user, wrote in an e-mail to the Los Angeles Times. "Also, simply typing there is often a delay in characters appearing on the screen."

Tina Teng, an analyst with iSuppli, said the difference between an iPhone 3G and the most recent iPhone 4 is a big one.

“It’s like you’re running a 5- or 10-year-old computer and you want to run a really fancy program on it and that’s just going to exhaust your system," Teng said.

There are some new features on the iOS 4, such as multitasking, which allows multiple applications to run at one time, that aren't compatible with the 3G.

As Apple looks for a solution, some blogs and various websites have come up with their own concoctions and instructions to solve speed issues.

"Wouldn't it have made sense for Apple to notify customers about the problem and how to fix it rather than have them think they were stuck with a useless outdated iPhone that was no longer being supported?" Weiner said.

-- Kristena Hansen

In the beginning, there was cash.  Then we wrote checks for our purchases, which were quickly followed by credit and debit cards. And now there are -- smart phones?

The two largest U.S. wireless carriers, Verizon Wireless and AT&T Inc., are in talks to create a way for smart-phone users to pay for purchases with the wave of the device, according to a Bloomberg News article that quoted three anonymous sources who said they knew of the plan.

T-Mobile USA reportedly would have a small stake in the partnership too.

The touch-free technology would allow customers to make purchases in stores by way of embedded microchips in their smart phones and would be tested first in Atlanta and three other U.S. cities, but sources quoted in the Bloomberg article did not say when the trial would start.

More people are using their smart phones for online banking and tracking their finances, and 10% of U.S. consumers use them to make purchases on the Internet, double that of 2008, according to a recent survey of 5,000 consumers in 22 countries conducted by tax, audit and advisory firm KPMG.

"Mobile payments are the logical next step for consumers," said Mark Siegel, an AT&T spokesman, although he and company representatives of both AT&T and Verizon said there was nothing to announce on that issue.

The service poses a direct threat to Visa Inc. and MasterCard Inc., the two largest payment networks in the world, whose services currently account for more than half of U.S. consumer purchases, according to the industry newsletter Nilson Report.

The sources said transactions may be processed through Discover Financial Services and accounts  managed through Barclays Plc., whose spokesman, Kevin Sullivan, said in the article "facilitating mobile payments is a big part of the Barclaycards strategy globally."

Although the anonymous sources did not say how much each transaction would cost retailers, the Federal Reserve Bank of Boston said the new technology would cost $200 per reader, according to the Bloomberg article.

But the extra cost to retailers could be a trade-off if each transaction allowed them to upload advertisements and promotions directly onto people's phones.

-- Kristena Hansen

A multistate investigation is raising more questions about how Google Inc. may have improperly gathered people's private information through their unsecured wireless networks while collecting data for its Street View feature.

Connecticut Atty. Gen. Richard Blumenthal, who has been leading the month-old investigation, sent a third letter to Google on Wednesday asking, among other things, whether it had tested the feature's software before putting it to use. Doing so, he said, should have uncovered any glitches responsible for the unwarranted collection of e-mails, passwords and other personal data of those who failed to protect their networks with passwords.

"Google’s responses continue to generate more questions than they answer," he said in a statement. "Now the question is how it may have used -- and secured -- all this private information."

Blumenthal, who is running for Sen. Christopher J. Dodd's seat, also said that attorneys general from 37 states and the District of Columbia have officially joined the probe, including those from Texas, Florida, Kentucky, Illinois, Missouri and Massachusetts. Eight states would not be identified because their laws bar them from disclosing investigations, he said.

The office of California Atty. Gen. Jerry Brown has not yet responded to a question about whether the state is a participant.

"As we've said before, it was a mistake for us to include code in our software that collected payload data, but we believe we did nothing illegal," a spokesperson for Mountain View, Calif.-based Google said in a statement. "We're continuing to work with the relevant authorities to answer their questions and concerns."

The investigation, which follows similar probes in Germany and Australia, is also considering whether federal and state laws need to be changed or updated as a preventative measure.

The Street View function was launched in 2007 and since expanded to most major cities in the U.S, Europe, Africa, Asia and Australia. It uses vehicles to photograph street layouts in every direction to give Web users a 360-degree view of streets and roadways.

But the vehicles were also equipped to detect Wi-Fi access points, which Google hadn't disclosed until recently, in order to help computers figure out where they are without having to use a GPS system.

At the same time, Google said it mistakenly picked up 600 gigabytes of data from unsecured networks over the last three years.

-- Kristena Hansen

[Update 2:55 p.m.] Christine Gasparac, spokeswoman for Atty. Gen. Jerry Brown, said although the office has been in direct contact with Google on the issue, it has not joined the multi-state probe.

The biggest smart phone makers -- Research in Motion, HTC, Nokia, Samsung and Motorola -- are crying foul over assertions by Apple Inc.'s Chief Executive Steve Jobs that their devices also have antenna issues.

On Friday, Jobs claimed that the rival phones have similar problems that have beset its iPhone 4. In a video demonstration Jobs detailed how the competitors phones were also prone to reception problems when held in a certain way.

"Apple’s attempt to draw RIM into Apple’s self-made debacle is unacceptable," said the BlackBerry maker in a statement. "Apple’s claims about RIM products appear to be deliberate attempts to distort the public’s understanding of an antenna design issue and to deflect attention from Apple’s difficult situation." 

Apple held the iPhone 4 conference at its Cupertino, Calif., campus just days after Consumer Reports magazine said it could not recommend the company's newest phone because of an apparent design flaw in the antenna. Most smart phone's antennas are packed inside the device, while the iPhone 4's is a steel frame that wraps around the phone.

Kenneth Dulaney, an analyst with IT research company Gartner Inc., said it's understandable that Apple competitors would be upset and not want to be dragged into the controversy. Complaints would've surfaced within the first weeks of shipment if similar issues to the iPhone 4's were found in other companies' devices, he said. "We didn't hear that."

RIM said in the statement it even avoided antenna designs found in the iPhone 4 in its own products and pointed out that none of its Blackberrys need a case to assure optimal reception.

Apple is issuing free rubber cases, called "bumpers," to all of its iPhone 4 users until the end of September. The cases apparently alleviate any reception issues.

-- Kristena Hansen