I have an essay about music business models in the newest Portfolio, and I started it off with part of a conversation I'd had with MTV founder Bob Pittman in his office a few months ago.

Bob Pittman made music videos free for consumers when he found??ed MTV 27 years ago. And now he's pretty sure music in all formats should be free. No more $15.98 CDs. No 99-cent iTunes. Instead, he says, artists should use recordings to build a brand so that they can make money on concerts and T-shirts. Sitting in his New York office, a foot-tall MTV astronaut statue behind him, he says, "Maybe get a sponsor to pay a million dollars and just give the album away."

Pittman has nailed the future of music.

It's funny, the subtleties that a writer thinks he puts in but certain readers zoom past. I thought I was careful to use terms like "pretty sure" and "maybe." It's my voice, not Bob's, saying, "Pittman has nailed the future of music."

But I got a call from Pittman today saying he's getting toasted in some circles for declaring that all music must be free. And that's not what he said -- or, I thought, what I said he said. "The point is that there are a lot of things you could do," Pittman said on the phone today. "Music will always have to be paid for, it's just a matter of how -- whether it's advertising, sponsorships or something else."

He said in our original conversation that music might be better off if it's free to consumers, and suggested the sponsorship idea. "Suddenly other models are more attractive" than the current models of charging consumers for CDs and downloads, he said then.

And -- this is me talking -- he is absolutely right.

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Five years ago, if Hewlett-Packard bought EDS, everyone would've thought it was pretty much like when IBM bought PwC -- a play to create a powerful data processing consulting business that could co-exist with a computer hardware business. In fact, that's been a great model for IBM.

But with H-P today buying EDS for $12 billion, the smart thinking goes in a different direction. It's looking like a red-hot area going forward for IBM, Amazon and Google will be so-called cloud computing -- a.k.a. hardware as a service.

If you're a start-up or a corporate IT manager, you increasingly won't have to buy computers to run your business. You just rent capabilities from some computing giant and move the information there and back over the Internet. If something crashes, the data is always backed up and stored somewhere out there in the cloud. This is the ubiquitous computing idea IBM has pushed for a decade -- making computer power something like electric power.

If you tack together some of H-P's other purchases under CEO Mark Hurd -- as Om Malik did -- it seems even more obvious that H-P is at least as interested in cloud computing as consulting. And EDS is a solid cloud-computing play because a core business is owning and running giant data centers.

As part of the interview I did with Amazon CEO Jeff Bezos (the video is now on Portfolio.com), we discussed Amazon's push into cloud computing.

"We've been working on our Infrastructure Web Services for four years," Bezos said. "We launched our first one two years ago, the Simple Storage Service, and I am astonished - I rarely meet a start up company these days who isn't using our web services and now we're starting to get, you know, deployment inside Enterprise level data centers as well. So it's a very exciting."

Asked about Google's plans to get into a similar business, Bezos said: "Well, you know, the way I look at this and, you know, we don't - we really do have a practice of not talking about other companies. But this, like our retail business, is not going to be one winner, I don't think. I think there are going to be multiple winners pursuing different flavors or strategies, different kinds of products, you know, I think that this - I think our web services business is going to be part of what becomes an important industry. And I don't think important industry - important industries are rarely made by single companies."

So maybe there is room for H-P, Amazon, IBM, Google and others to play in the cloud computing space. The H-P deal is telling us that the concept is ready for prime time.

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Video of my interview with Amazon CEO Jeff Bezos at NYU is now here on Portfolio.com. You can watch a teaser below. And if you want to read the edited Q&A as it will appear in the June issue of Portfolio, that's here.

After Amazon's earnings came out, I published an excerpt from the interview here on the blog. It included perhaps my favorite comment of his from the session, about Amazon's failed search site, A9:

Bezos: Yeah, well, we are going to be bold with our experiments and some of them aren't going to work. If you know they're going to work they're not experiments. And if you decide that you are only going to do things that you know are going to work, you're going to leave a lot of opportunity on the table. Companies are rarely criticized for the things that they failed to try.

Maney: That's true.

Bezos: And they are, many times, criticized for things they tried and failed at. And that's one of the reasons, if you want to be a pioneer, you have to get comfortable being misunderstood. In some ways it's a much more pleasant life, probably, we wouldn't know from personal experience, to not - you know, once you have something good just to hone it and hone it and hone it and not try anything new.

Preview is below, but the whole hour-long video is on our site.

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OK, we've got, like, a stinkin' bacchanal of social networking strategery going on today, and I don't know about you, but most of the time I don't have ANY idea what these companies are talking about or how I'll use what they're offering.

Google's got this Friend Connect thing. "Visitors to any site using Google Friend Connect will be able to see, invite, and interact with new friends, or, using secure authorization APIs, with existing friends from social sites on the web," its press release says.

Microsoft has a new service that will "allow users to watch video clips at the same time as a network of friends and chat via Windows Live Messenger."

Facebook on Friday said it will make its user profiles portable. "Users will be able to connect their Facebook account with any partner website using a trusted authentication method," the company said.

Ultimately, I get that the idea is that everyone can have one profile that they can use no matter what Web site they're on. No more forgetting to delete the photos of you with your previous girlfriend on Orkut.

And I get that every Web site should eventually seem "alive." You're shopping on Amazon, reading news here on Portolio.com, checking how much value your house has lost on Zillow -- wherever you are, you should be able to see if any of your friends from any social network are also there at the same time, and if so, chat with them. It should be the Web equivalent of being able to visually see someone you know coming toward you down the aisle at Home Depot.

BUT -- I read these news items and have two personal reactions.

1. These baby steps are painful and I don't know what each of them means, where I'll encounter them, or how I'll use them. They come across as a whole lot of tech nerd gibberish. And it is obvious that every company that's behind in social networking (Microsoft, Google, Yahoo) is throwing everything it can think of at the wall and hoping something sticks.

2. I don't believe that the ultimate solution of a single portable profile and open access to all your friends on any Web site will ever happen. If that was ever going to be possible, it would've happened by now with instant messaging -- and in a better way than the only way it's happening now: with outsider Meebo grafting the different IM networks into a single site.

How about we lock Facebook, MySpace, Microsoft and Google in a room and not let them come out with any press releases until they have a working system figured out.

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Amazing how public awareness works. Ratan Tata is 70 years old. He's spent a long career growing Tata Group into India's version of General Electric and becoming one of the most influential players in India's technology, consulting and auto industries. Yet until about a year ago, hardly anybody in America knew who the heck he was.

Early this year, Tata unveiled its Nano car -- the little $2,500 machine that threatens to disrupt the global car business. I wrote about that in Portfolio. Then Tata bought Jaguar from Ford, and suddenly huge swaths of the U.S. population knew the Tata name.

We put Ratan Tata one of business's biggest brains in our last issue. And Time named him one of its 100 most influential people.

Now Indian publications are looking over here in wonder at Tata's popularity in the U.S. -- a local hero finally making it big in a far-off land. No doubt Ratan Tata is just the first of a wave of Indians who will become influencers in the U.S. tech industry. Although, in the latest twist on the world-is-flat theme -- Indian tech services companies seem to be pulling back in the U.S. market because of the staggering economy here.

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From way over in Indonesia, Microsoft Chairman Bill Gates let it be known that Microsoft never needed to buy Yahoo to make headway in search and advertising. It just kind of wanted to.

"We have always felt we could do very well on our own and now that's the path we are focused on," Gates told AP in Jakarta on Friday. "The standard strategy for us is to just hire great engineers and surprise people at how well we can compete, even with a company that's got a strong lead."

Actually, that may be the first bit of sense out of Microsoft since the Yahoo thing first emerged. That is exactly what Microsoft is good at: identifying market leaders in interesting new tech markets, then systematically destroying them. In fact, Microsoft is probably better at it than maybe any company in history. Netscape, Lotus, WordPerfect, Novell, Real Networks...there's a long list of companies that invented something that Microsoft then copied and took down. And Windows, of course, was a copy of what Apple and Xerox were doing. Now Microsoft's Zune is taking aim at the iPod.

Microsoft is at its best when it does this. It spends billions of dollars a year on Microsoft Research , but has yet to invent an entirely new business. (Microsoft did once get out in front of a tech development, creating travel site Expedia early on. So surprised was Microsoft that it did this, the company soon thereafter spun out Expedia -- perhaps so Expedia would not contaminate the Microsoft culture with actual market innovation.)

The thing is, though -- search so far is looking like Microsoft's Waterloo. Yeah, it's won every big battle so far, but Microsoft has spent vast amounts of time and money trying to crack search -- and so far has failed. Can it beat Google at Google's own game? That seems unlikely. Can it outwit Google and create an innovative new version of search that Google never thought of? That would be very un-Microsoftian.

So...now what?

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Reports, rumors and innuendos are bouncing around the Web that Google may not want to cut an advertising deal with Yahoo after all. This before there is actually substantiation that Google and Yahoo are crafting an advertising deal, which was something of a rumor and innuendo in the first place, allegedly planted to let Microsoft know that Yahoo had options.

Google is allegedly worried about ticking off Washington officials who might think that if Google is playing ball with Yahoo, Google has become an antitrust violator that must be terminated. Like, as if Google isn't already close to monopoly power in search. It gets 67% of all searches, and that share keeps growing. Google worrying that a Yahoo deal will push it over the brink in antitrust is like Kim Jong-il worrying that if he puts on a party hat he'll be considered crazy.

Then there's the other side: If Yahoo enters into this kind of crossroads deal with Google, it will be short-term gain for long-term pain. As I wrote in April when this idea was first floated:

You hand your search advertising to Google and you essentially belong to the Google camp for good. Google money is like heroin. This is what AOL discovered when it did the same. Now AOL gets so much revenue from Google, it has no other options. If AOL wanted to be bought by Microsoft, for instance, and start using Microsoft search, AOL's revenues would go off a cliff. Yahoo would similarly find itself penned in strategically. All its growth options would also help its chief rival, i.e. Google, grow. What kind of existence is that?

If Yahoo does a Google partnership deal...Yahoo truly will be the next AOL.

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If you hang around the tech industry long enough, you realize: It's just like high school. These grown men and women may have millions or billions of dollars, but it's the same old set of dramas on a bigger canvas.

Which seems exactly the way to view the action these days around the Microsoft-Yahoo ordeal. Today's news: Steve Ballmer has put out "feelers" about buying Facebook in the wake of ending his pursuit of Yahoo. Let's parse the Reuters story with this perspective in mind.

Microsoft gauged Facebook's interest in a possible acquisition after the software giant's failed takeover attempt of Yahoo, the Wall Street Journal reported Wednesday. Steve, frustrated and hurt after being spurned by Yahoo, got out the yearbook, found the most popular girl of the moment, and decided to go for her whether he really wanted to or not.

The newspaper reported on its website that Microsoft's bankers put out subtle signals to Facebook, the social networking website, to see if it would be open to a full acquisition. Steve didn't want to be rejected again, so he got his friends to feel out her interest.

The talks were first reported by website All Things Digital, owned by Wall Street Journal publisher Dow Jones. One of his friends told the school gossip, who of course blabbed to everybody.

Facebook spokeswoman Brandee Barker declined to comment on the report. Microsoft officials were not immediately available for comment. The girl's sidekick girlfriend wouldn't let on whether she knew this happened or not. When asked, Steve's friends also refused to say whether Steve was actually interested.

In October, Microsoft took a $240 million stake in Facebook, which valued the start-up at $15 billion. Citing an unnamed source, the report said there are no active discussions between the two companies. Steve, a senior and a BMOC, flirted with Facebook last fall, immediately raising her profile, but nothing much happened between the two of them after that.

The news came a few days after Microsoft dropped its unsolicited offer to buy Yahoo for $47.5 billion. The aim of that proposal was to build an online advertising powerhouse to rival Google Inc. Steve's interest in Facebook is seen as a rebound thing.

Facebook, founded in 2004 by Harvard student Mark Zuckerberg, has become one of the hottest properties on the Internet because of its rapid growth and the loyalty of its users. Facebook has more than 70 million active users. But Facebook has in the past year turned into a hottie, and Steve probably can't get her now.

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Last week Meebo landed a $25 million investment from a group led by Time Warner. I caught up with Meebo CEO Seth Stern Sternberg last night about what that means and where Meebo is heading.

As for the TW deal, Sternberg says there's still a lot to be discussed about how the two might partner. But he points to soon-to-be-launched Meebo chat rooms inside Time Warner's TMZ.com as one model. Meebo chat set up next to stories on Web sites for magazines such as Time or Sports Illustrated could let readers talk to each other about that story. "Media companies are really good partners for us" for that reason, he says. In some cases a media property would just pay to license Meebo for the site. But Meebo would rather sell ads to appear in the embedded chat rooms and split the revenue with the host site.

In the other direction, Sternberg is hoping Time Warner's New Line Cinema will be a big advertiser on Meebo. The studio could run a banner ad for a movie on Meebo, and if a user clicks on it, the ad will pop open and present the movie trailer alongside a chat box. The user could invite friends to see the trailer and talk about it.

I met Sternberg early in Meebo's life, and at the time it was pitched mostly as just an easier way to aggregate IMs from different providers, like AOL, MSN and Yahoo. But, Sternberg says, within about 30 days of launch, Web site owners started telling Meebo that they wanted Meebo-like capabilities inside their sites. "Widgets were not around yet," Sternberg says. "No one was doing anything like that."

As Meebo worked out how to insert itself into other sites, a strategy evolved that centered on creating the "live Web" -- i.e. bringing live conversation to previously static Web content. "It was clear we should be the people who try to do that," Sternberg says.

Meebo has gotten flak for not having a way to monetize its offerings, but that's changing. As Sternberg said, Web sites are licensing Meebo or setting up revenue sharing for advertising. And Meebo is starting to be seen as a place to advertise things that people might want to talk about -- like movies or hot new gadgets.

Meebo does seem to be the brand to beat in this space right now. And, usually, if you can get that kind of position on the Internet, the money eventually comes your way. At least Meebo seems to have that promise right now.

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Amazing how things change. We all hate wires now. Wires were OK back when people didn't mind moving themselves somewhere to do what they needed to do -- like, to make a phone call, you'd go to a room with a phone, or to work you'd go to the office. Just 15 years ago, pretty much everyone was programmed that way. And that programming has only been completely wiped out in the past five years, thanks to stuff like WiFi, mobile e-mail and cheap cell phone service.

In fact, now our expectations have gotten ahead of the technology. It's truly annoying to open a laptop and not find an Internet connection. Doesn't matter whether you're at a bus stop in a rural town, a friend's apartment in Manhattan or a busy airport gate. We want full-on wireless Internet all the time, everywhere, and we want it now. This is classic pent-up demand.

So let's dance a jig for Sprint Nextel's $12 billion partnership to build nationwide WiMax, called Xohm. (It is interesting to see who's funding it. There's Google, which will do anything to get people to use the Net more; Intel, which wants to sell more chips to go into more mobile gadgets; and Time Warner Cable and Comcast -- cable companies that only offer broadband via wires and understand that's not what we desire.) I'm not saying we should celebrate Sprint Nextel's offering itself. No telling whether it will be any good, get built quickly, or have price points we like.

But Sprint's WiMax should set off a competitive race. AT&T and Verizon this year bid gobs of money on new spectrum so they can allegedly build wireless broadband systems. Well, they better get moving, because with pent-up demand, whoever gets there first gets the biggest prize, at least in the short run.

WiMax may not be the panacea, but it's already working in many other countries. It has downsides. Your WiFi-enabled laptop won't connect to WiMax -- they're different standards. (You see -- so you'd have to buy another Intel-equipped laptop with one of Intel's new WiMax chips.) AT&T and Verizon are going with a competing technology called LTE. (Which stands for the bizarre official name, Long-Term Evolution. Is there such a thing as Short-Term Evolution?) LTE has won a lot of international support lately, and there's some fear of a standards war. There is some chance the standards could be converged, so the technologies work with each other.

All in all, let's hope a Sprint Nextel venture fires the starting gun, and we get an all-wireless, all-the-time world sooner rather than later.

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Ran across this MSNBC story about companies getting sick of employees spending time on Facebook, so they're blocking the social networking site. But it makes me wonder: Why hasn't Facebook created a product for internal company use?

I mean, I can friend Conde Nast people and be part of that network, but that's hardly what we're talking about. Couldn't there be a way for me to have a public Facebook profile and a more internal/business Facebook profile -- both accessible through my main Facebook page? Maybe everyone in the company who creates a business profile automatically becomes each others' friends -- almost a cross between a social network and company directory. Of course, then it would be important to wall off the corporate profile from the public profile. Wouldn't want the guy in accounting to see those pics from Mexico...

The whole idea of internal social networks makes a huge amount of sense -- what a great way to build relationships inside a company! But because the few networks like this are not Facebook or MySpace (i.e. not the ones people want to use) and are generally pretty lame anyway, they haven't caught on. Forrester Research expects companies with 1,000 or more employees to spend only $60 million for internal social networks this year. That's like pocket change.

Other companies, like Trampoline, are trying to sell enterprise social networks -- but good luck with that. If the networks aren't the ones employees want to use, they'll sit there, untended.

Wonder if Facebook is even talking about this. Or LinkedIn.

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It's amazing to see the news that Rearden Commerce -- a company most of the population never heard of -- has landed $100 million in funding. I first met and talked with CEO Patrick Grady about his dream of building a Web-based personal assistant back in 2003 -- when he informed me that he'd already been working on it for three years. Not many tech entrepreneurs are tenacious enough to stick with such a difficult project for so long.

Here's what I wrote about Rearden in 2005 for USA Today, and the company has stuck to this vision:

Rearden, a Web service for travel, has about 500,000 corporate users so far. The site acts a lot like a human travel agent. You tell it your preferences -- hotels downtown, non-stop flights and so on. Rearden also knows corporate preferences -- preferred airlines, hotel cost limits -- for the company as a whole and for every individual user.

When you want to book a trip, you say when and where, and Rearden can query thousands of airline, hotel and other travel websites and cross-reference them with individual and corporate settings. It could pull in non-travel items, too, such as listings from local jazz clubs during the time you'd be in that city.

Then Rearden can assemble all the pieces on a screen on your computer and let you make final decisions.

"The Web ought to be an always-on personal assistant," says Rearden's Grady. "It ought to know who you are and where you are and understand the context of what you're trying to do, and do things on your behalf."

Though Rearden, as are most Web services, is mainly a corporate offering today, look for the technology to race into the consumer market in 2006.

Rearden, it seems, has reached its tipping point. It sells services to 1,700 companies, up from 92 a couple years ago. After all this time, Grady is ready for take-off.

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The most unwelcome news of the day? That Jerry Yang didn't mean for Steve Ballmer to break off the engagement and go stomping away. Yang is now telling the press: "If they have anything new to say, we would be open. I am more than willing to listen."

Wow, this sounds like your friend who keeps breaking up with the same girlfriend/boyfriend. By this point in the game, we're sick of the back-and-forth will-they-or-won't-they. Move on, Jerry. Get over it. Do something nice for yourself. But -- you know that by now Jerry must have Steve's number on his cell phone speed dial -- so please, if you're out late this weekend and you've had a few Yahootinis, don't drunk-dial!

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I took a spin on ABC News Now to talk about my Q&A with Activision CEO Bobby Kotick and the interest it generated in how Activision will expand Guitar Hero.

Kotick has been particularly busy lately. He's on Yahoo's board.

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