In this past quarter, Amazon’s net sales increased 51 percent to $9.91 billion compared year-over-year with $6.57 billion in Q2 of 2010.

In the earnings call, chief financial officer Tom Szkutak supported the increase by saying, “The growth rate you see in Q2 really stems from investments we’ve made over a long period of time. These are investments that we’ve made in the past several quarters.”

Szkutak used Amazon’s Kindle as an example of one of those investments.

Kindle sales swelled compared to Amazon’s first quarter (although, as in the past, the company would not provide exact sales numbers for the Kindle). The Kindle 3G with Special Offers is Amazon’s best selling Kindle device. The product costs $139 and includes a limited amount of advertising. Amazon also recently announced textbook rentals would be available on the Kindle.

“We’re investing in the conversion from physical to digital,” said Szkutak. Amazon already has a number of digital media offerings through its Kindle products and Amazon Prime.

Prime customers can now stream CBS television shows in their browsers without extra cost. The addition of CBS’s digital library brings Prime’s watch-instantly offerings from 2,000 episodes to 8,000. Amazon Instant Video customers will gain access to the library this summer.

The company denied to comment on its rumored plans to produce a tablet in the future.

On the international front, sales were also up 51 percent this quarter, reaching $4.51 billion. Amazon is particularly interested in growing its business in China.

“We’re very pleased with our business in China, it’s growing very fast,” said Szkutak. “But we think it’s a very interesting long-term opportunity.”

Currently, the UK, Germany, Japan, France, China and Italy make up Amazon’s international reach.

At home in the U.S., Amazon dealt with affiliate sales tax issues during quarter two, culminating in its controversial decision to cut off California-based affiliates because of the company’s dispute with that state over paying sales tax. When asked about Amazon’s actions, Szkutak provided the blanket statement, “We think in the U.S. the federal solution is the right way to solve this.”

Amazon expects to see third quarter net income to sit between $10.3 billion and $11.1 billion. The company did not provide guidance beyond the third quarter.

Ivi

The Seattle-based company is launching a downloadable PC application that takes a live feed from TV channels and distributes that stream, uninterrupted and without delays, to viewers worldwide 24 hours a day. Ivi is offering a 30-day free trial for the service to watch major broadcast channels including ABC, NBC, CBS, Fox, The CW, PBS and other local affiliates.

The Ivi TV player transforms a computer into a television with multiple channel offerings. Users can select the channel by using a simple channel guide. The TV player can be downloaded to any Windows, Mac, or Linux computer. It will soon be available on platforms such as mobile devices, tablets and set-top boxes.

The company claims Ivi will make set-top boxes obsolete by allowing viewers to watch their TV shows anywhere, on any PC where they download the application. Todd Weaver started Ivi in 2007. He serves as chief executive.

One of the features that consumers have long wanted is a la carte TV channels. Most of the time, consumers may want only one or two channels. But they have to subscribe to a whole bundle of channels in order to get what they want. Ivi says it can enable such a la carte service.

The basic Ivi Air package contains over 25 major broadcast channels for $4.99 a month, after the 30-day free trial. More channels will be added each month for no additional costs. If you want time shifting, or digital video recording that allows you to watch a show whenever you want, you pay 99 cents a a month more.

Ivi hopes to create a bigger hole in the cable TV industry, which is losing lots of subscribers. Market researcher SNL Kagan reported that the cable TV companies lost 711,000 subscribers in the second quarter of 2010. Yankee Group said that pay-TV revenues are starting to decrease, partly due to rising cable service rates. Ivi claims that it has legal rights to run TV shows on the web and it will be paying royalties to copyright holders.

Ivi’s service does not require buffering, or a delay which occurs as a video downloads to a user’s system. You can watch the Ivi shows in any quality level you want. You can watch local content anywhere in the world. You can view New York City broadcast channels wherever you are. The company is one among many companies that are promising to disrupt the TV business. Others include Apple with Apple TV, Google with Google TV, Samsung with its TV apps, and Logitech with its upcoming Google TV set-top box.

CBS has bought music recommendation website Last.fm for $280 million, the extremely popular London-based company that lets users search for and listen to music based on their past preferences and recommendations of other users.

Last.fm says it has around 20 million active users each month, four million of which are in the US. The purchase comes at a time when services such as Last.fm are growing extremely quickly. Other private competitors showing growth are Pandora and iLike. The deal is significant because it gives Last.fm greater distribution, by integrating with other CBS channels.

The CBS deal is a win for London’s Index Ventures, which has been on a roll with investments in companies such as Skype and Tellme. Index invested a mere $5 million into Last.fm exactly a year ago. The deal nudges Index’s Danny Rimer, who is on Last.fm’s board, closer to the top of the VC pack, in terms of track-record — and most certainly seals his place at the top of those under 40.

CBS has been on a rampage lately, striking deals and partnerships with more than a dozen Web 2.0 companies to seek distribution through new Web channels in order to access younger viewers, including buying video site Wallstrip last week.

Viacom was earlier rumored to be in talks with Last.fm. (update: Investor Neil Rimer tells us this rumor was a load of crock.)

Last.fm focuses on user preferences, sorting music based on user feedback, whereas Pandora recommends music based on song characteristics that are similar to ones you have previously chosen. iLike is more similar to Last.fm, and is showing tremendous growth on Facebook‘s platform, heading toward 1 million new users within the first week of integrating with that service — though works only with iTunes recommendations. Last.fm also submits recommendations from music from other players, including on your desktop. There are more than 500 monthly track submissions on Last.fm.

Under the accord, Last.fm co-founders Martin Stiksel, Felix Miller and Richard Jones will remain in east London.

Last.fm, just four years old, has struck deals with with EMI and Warner Music.

Pandora, meanwhile, has raised more than $20 million from Crosslink Capital, Labrador Venture Partners, Selby Venture Partners and WaldenVC. iLike has raised $13.5 million from IAC’s Ticketmaster five months ago, giving Ticketmaster 25 percent of the company — a deal that may make Ticketmaster look pretty smart based on Last.fm’s $280 million valuation.

The deal will only add to the frenzy we’re seeing in M&A right now. In addition to iLike and Pandora, Santa Clara, Calif.’s Mercora, another music discovery site, is also in play.

Update: We just talked with Index’s Neil Rimer (Danny’s brother), who said Last.fm will be in an even better position to serve music, because of CBS’ range of partnerships.