VentureBeat

Uber, an also-ran social network turned microblog platform, closes down — Investors included Universal Music Group and Sterling Stamos Co-Investors fund. The company claimed that it closed down due to economic issues, as you can read on its site. More on PaidContent.

Mobile payment company Transaction Wireless raises $2.25 million — Funding comes from Mission Ventures and Okapi Ventures.

House debates about how its members can use web video, devolves into childish squabbling — The Senate has already avoided such squabbling and worked out its own rules.

Avigo Capital Partners is raising a $300 million fund — The New Delhi, India-based private equity fund plans to close this third fund by the end of the year.

Teen virtual world Habbo may be making up to $38 million in revenue a year? — Jeremy Liew looks at various rumors about how much the company could be making.

Yahoo president Sue Decker defends “Yahoogle” deal — More on All Things D.

Immunotherapeutics company Macrogenics raises $25 million — Investors include Nextech Ventures, Arcus Ventures, Innovis Investments and Eli Lilly and Company.

Half a million sign up for EA’s Warhammer Online — This comes a week after launch.

The Austin Game Developers Conference featured one of the first official public dissections of the Lively by Google virtual world (or virtual room), and I got a chance to sit down with the project’s creative director, Kevin Hanna in advance of that talk.

One of the news tidbits: Lively could be expanded into the casual game space as Google plans to release guidelines for more interactive components, meaning games, inside Lively spaces.

“We’re about to open up the API for interactive gadgets – meaning games,” he said.

He gives the example of walking into a room with classic arcade machines, and being able to play those games. The timeline for that is long term, but Hanna said that could eventually include larger scale games, “allowing users and developers to build games on top of the architecture.”

He said Google took a different approach to the project by creating a spin-off company in Seattle called X-Ray Kid.  They spent two years developing the content, and will continue to work closely with Google on Lively’s future.

The project was shrouded in secrecy from the start, and Hanna was previously at Disney and said that Google didn’t tell him what it was up to when he was interviewing for the job.
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“But I knew the type of people they were hiring,” he said.

Those early rumors – having something to do with Google Earth and Flight Simulators, said Hanna, were mostly inaccurate.  He describes Lively as a 3-D space to personify oneself through a cartoon-like avatar, or virtual character. In that respect, it’s a lot more like the 3-D avatar chat rooms of IMVU and the 2-D avatar chat rooms of Gaia Online and Habbo. The strategy resembles Sony’s Home virtual world for the PlayStation Network, available to PlayStation 3 users. Except Home, of course, is tied to the PS 3 only.

It’s different experience, he stresses throughout our talk.  It isn’t a replacement for MySpace or Facebook.  “Ours is designed to augment these existing ones.”  Nor is it supposed to be immersive like Second Life and it instead offers a more casual experience.

“We’re looking at a little more asynchronous things to do,” Hanna said, meaning that users can communicate without being logged into the room all the time, akin to exchanging text messages on a cell phone.

He said that as a way to answer critics who point out Google’s virtual world is deserted.  His example is a Facebook embed that let’s friends know about changes to a user’s Lively room.  “People who know each other are able to connect easily,” he added.

“This isn’t a fake beta – this is a very real beta,” Hanna continued, taking note of Google’s habit of starting things that don’t always get finished. “The Google model is ‘it’s finished when it’s done.’”  He referred to the Gmail beta, which simply went live one day.  The same will be true for Lively, he predicted.  “I think no one will even notice when it does.”

Internally, the company sees Lively as a rousing success, he said.  “Our user-base exceeded every number that we had put down,”says Hanna. “So, in that sense, our beta is more successful than most launched products.”

Hanna didn’t have current figures with him, and points out that there are many ways to parse the data, but he talks about how Google had data from similar and competing services, and what those retention rates were. The traffic pattern on Compete.com suggests that interest is starting to trail off already.

But Hanna said, “Our retention base is higher than what any reasonable expectations were.”

And going forward, this is all free, Hanna tells me, stating: “Google has no interest in virtual dollars.” That runs against the current business models of other players in the market, such as IMVU.

“It’s never been our intent to make money that way…we don’t want virtual dollars.” That doesn’t mean that the system is restricted.  “There is the architecture for user-to-user, peer-to-peer monetization.  There can be forms of peer-to-peer currency the users can develop themselves.”

But officially, the company has no plans or mechanisms for monetizing Lively.  Nor is Hanna able to speak about AdScape, the in-game advertising company that Google purchased in February of last year.

Gaia Online has raised $11 million in a third round of funding to complete its massively multiplayer online game as a supplement to its “hangout” site for teens and young adults.

Institutional Venture Partners led the round. In the past five years, the San Jose, Calif., company has built one of the largest worlds where teens can talk to each other via animated characters, or avatars, in a kind of virtual shopping mall. The company has more than 5.9 million active monthly users and Gaia Online is building a new massively multiplayer online PC game where those members can play starting late this summer.

The money will come  in handy as the company battles its newest competitor, Lively by Google, as well as its traditional “virtual room” rivals Habbo, IMVU and WeeWorld. Each of these rivals shares a common design. While Linden Labs’ has built a fully interconnected virtual world, these companies allow their members to create and decorate their own rooms and characters.

Gaia Online is in the midst of expanding its virtual hangout into a full-fledged online game, complete with an integrated continent, combat system, storyline and a campaign full of missions. WeeWorld, whose characters were used mainly to chat, also made the move to creating its own virtual world.

About 15 game developers have been working on that project for the past year. After that, the company plans to add virtual pets to the features that its users can enjoy, said Craig Sherman, chief executive of Gaia Online.

Gaia ranks as the second-largest virtual world, just behind Webkinz in terms of share of the U.S. audience, according to Hitwise data from May. Habbo is stronger in Euope. Sherman said that Gaia Online will invest the money to keep adding new features that will keep its users engaged. Previously, Gaia raised a second round of funding from Time Warner in January. The amount wasn’t disclosed.

Gaia Online has built one of the biggest online hangouts for teens over the past five years. Think of it as an online shopping mall full of kids who express themselves through cartoon-like avatars. Today, it is taking the hangout one step further by revealing the details of a more elaborate, connected virtual world with its own storyline and missions.

The company’s Gaia Online site already generates 3 billion monthly page views and has more than 5.9 million unique users a month. While there are a dozen different things you can do when you log into Gaia Online (like meet other teens and play casual games), the place is currently not a single, continuous world.

That’s going to change in the late summer as the company rolls out its “massively multiplayer online” (MMO) game, said Craig Sherman, chief executive of the San Jose, Calif.-based company. Users have been demanding this game as the top thing they want for a couple of years.

The pattern with Gaia Online’s evolution is similar to what happened with the evolution of competitor WeeWorld. At first, WeeWorld enabled teens to create their own characters, or avatars, which were called WeeMees. Last month, the company went a step further in unveiling a WeeWorld virtual world. Gaia Online’s other competitors, Sulake’s Habbo and IMVU, also operate a series of user-customized rooms where users can chat, but not continuous worlds. (See our IMVU coverage).

The evolution of these communities makes them difficult to classify. You can play games or you can watch a movie in a virtual theater. Hitwise said that Gaia Online was the No. 2 virtual world in May, next to Webkinz. But Sherman said that Gaia Online is more a cross of a social network and a game.

It’s more expensive to maintain such games. But it’s not as hard for Gaia Online to make the leap to an MMO because it has simple two-dimensional avatars and background environments, not high-resolution 3-D graphics as with IMVU or Second Life. Gaia Online’s software runs in a browser and is based on simple Adobe Flash animations.

“We think we did this the right way by starting it as a social experience first,” Sherman said. “Now we’re adding the world that goes with it.”

David Georgeson, senior producer at the company, heads a team of about 15 developers in San Jose who have been working for the past year on the PC-based MMO. Gaians, as members are called, can use their existing avatars as their characters in the virtual world

Characters can put on rings that they find in the world in order to gain special powers. The characters can then explore the world or engage in combat against creatures in the world, which is populated with inanimate objects such as mushrooms or lawn-ornament gnomes that have come to life.

The world has a number of towns where players can peacefully explore and interact. They can, for instance, gather around a fountain and listen to a melody and then try to replay it as a group, as in the old “Simon” game. The further they get away from the towns, the more they engage in combat. Players can take the items they win after successful combat and then sell them in the towns or use them to build virtual goods. (Virtual goods sales are one way that the company makes money on the free online hangout).

The characters can engage in deeper adventures and follow a storyline from beginning to end with groups of friends. But Georgeson views it as a “light MMO,” or one that is casual enough in its game play for people to play a little bit at a time and not all-consuming like fantasy role-playing games such as Blizzard’s “World of Warcraft.” Over time, Georgeson’s team will release more and more environments, goods and other content for the world.

Gaia Online started in 2003 as a place where kids could go to enjoy comics. The community has blossomed into a virtual community, with a dozen stores, 37 Adobe Flash-based games, and an eBay-like market for virtual goods. There are a half million new posts daily in the site’s community forums. And Sherman said Gaia Online is the No. 2 art community on the web with 100,000 virtual goods auctioned daily. On a dollar basis, about $1 million in virtual goods transactions take place each month. Sherman said those stats show that it is a more active place than many of the biggest social networks.

After the MMO launches this summer, Sherman said the company will move on to the next thing that its users want: virtual pets.

Here’s the latest action:

Google tests out a new, more functional iGoogle (with a friend update stream) — The company’s personalized homepage service is looking more and more like a — dare I say? — social network. The latest version has side tabs that can contain elements such as a Google Talk widget so you can instant message from the page and a Gmail widget so you can email from the page. Neither of these are new, but the layout of them is.

Most notable is the addition of an “Update” widget that looks like it will work exactly like Facebook’s News Feed, giving you updates of what your friends are doing around the Internet. In this regard it also seems a bit like the social content conversation site FriendFeed. (Which happens to be started by a bunch of ex-Googlers.)

Google appears to be making it so iGoogle is your main hub on the Internet. Facebook and MySpace along with the other social networks may have something to say about that.

Click on the image above for a slightly larger picture and notice the update stream on the right of that image.

Ahead of the iPhone 3G launch, Apple orders up more — The company’s stated goal for 2008 is to sell 10 million iPhones. However, with the excitement swirling around the iPhone 3G and its impending worldwide roll-out, most analysts are now projecting the number sold to be higher. Apple seems to agree, as it’s reportedly revised its build orders to more than 15 million iPhones by the end of the year, according to FBR Capital Markets analyst Craig Berger. Interestingly, the same report indicates that Apple ordered up two million of the original 2G iPhone as well. Maybe they’ll be stocking stuffers for the holidays?

Giant Interactive takes stake in Chinese social network 51.com — We noted last month that the site was closing in on $50 million or so in new funding, now we know the backer, thanks to Ogilvy China’s Digital Watch blog. Couldn’t they have made it $51 million just for kicks?

NIN continues to pioneer in the digital space — Rock band Nine Inch Nails has created an amazing layer for Google Earth that lets you see where exactly in the world people downloaded its latest work, The Slip, from.

Habbo hits 100 million avatars — The world’s largest virtual community for teenagers today announced the milestone. Since launching in 2000 the network has grown quickly, now attracting close to 10 million visitors a month.

The iPhone and iPod Touch: Your new remote control — You know that dinky white remote Apple gives away with many of its computers? Yeah, it’s about to get blown out of the water. A new application for the iPhone/iPod Touch will let you use either device to control iTunes remotely, according to MacRumors. Text indicating the feature is buried in the pre-release of the new iTunes 7.7, which is currently being seeded to developers to test.

BlogTalkRadio gets a $4.6 million first round — The social network lets users create their own radio stations on the web. The round was led by The Kraft Group, yes the same group that owns the NFL’s New England Patriots. Investor Scott Sipprelle also participated. The company is based in Lakewood, N.J.

We’re number one! (At predicting news…kind of.) — VentureBeat has risen to the top spot on the HubDub PunditWatch leaderboard, The Wall Street Journal’s Numbers Guy blog was kind enough to point out. The debate is still out as to what exactly constitutes a prediction, but we’ll take it and predict a long run at the top.

The Nintendo Wii may be getting a lot of attention. But the have you heard of WeeWorld and its WeeMee’s? They’re the kind of things that make you smile. Especially for teens and young adults.

A WeeMee is a virtual avatar that you can use as your identity in the WeeWorld virtual world (unrelated to Nintendo) or while you’re chatting with someone on an instant-messenger platform. More than 21 million WeeMees have been created in the past three years and about 600,000 a month are being created, says Lauren Bieglow, general manager of the London-based company’s North American division.

That has the company looking around for funding to expand its business, she said. Today, the company is announcing that RCA is doing a repeat promotional campaign with a musical artist, Alicia Keyes. Earlier, the music company tested a WeeMee-based ad campaign for singer Avril Lavigne. Keyes will release a new video which can be used as a background in the WeeWorld virtual world, where players can create their own rooms.

Beyond the WeeWorld site, users can use WeeMees as cutesy avatars on AIM, Skype, and Windows Live Messenger. They can use them on email signatures, blogs, or as their Facebook avatars as well. The company has been funded in the past by Accel in a $15.5 million round in 2006 and Benchmark Capital in a $5.5 million round in 2005.

The company started with avatars on the message systems and then created its own social network about a year ago. The service competes with other cute avatar virtual worlds such as Habbo Hotel or Gaia Online. The average age is 19 and the largest age group of users is 16. The company makes its money through advertising deals with companies such as Procter & Gamble. You can, for instance, use Cover Girl make-up on your avatars.

The company also makes money through virtual object sales. That will shortly include the purchase of Alicia Keyes pianos, T-shirts, or CDs. In the past two months, more than 400,000 items were downloaded in the Avril Lavigne promotion. The company has 55 employees. If the company raises money, Bigelow says that it will be used for a number of different avenues of expansion.

1. WSJ Digital Network hires Microsoft for ads
2. Paramount Pictures, live in virtual world Habbo
3. Tim Draper raising fund for entertainment startups
4. MPAA downplay claim of movie piracy at colleges
5. Southern Cross first Aussie VC firm to open Silicon Valley office
6. How to find private photos on SmugMug
7. Redpoint Ventures does well with Fraud Sciences
8. Sprint and Clearwire revive WiMAX plan
9. VCs showed best returns of 2007 in Q2

Wall Street Journal Digital Network hires Microsoft for ads — The Wall Street Journal Online, Barrons.com, MarketWatch.com, AllThingsD.com and other sites will have their contextual and paid search advertising ads provided exclusively by Microsoft’s adCenter. Strange that The Wall Street Journal isn’t using the advertising services of its parent company News Corp., which has also been experimenting with contextual advertising that makes use of Myspace user data (our coverage). Ashkan Karbasfrooshan’s explanation is that this is actually being orchestrated by News Corp’s Murdoch. By recruiting Microsoft, he’s playing the software giant off against Google. You’ll recall Google has already cut a $900 million deal to serve ads on News Corp’s other properties, Myspace and other Fox Interactive Media sites. So why not keep the two giants honest, creating a little competition for News Corp.’s business?. Meanwhile, Microsoft also places ads on Myspace rival Facebook.

More than 20 million unique users visit the Journal’s network of sites per month, generating monthly 330 million page views. Microsoft now claims to have one of the largest vertical ad networks focused on financial readers. Other properties it runs ads on include MSN Money, CNBC.com and EDGAR Online.

Paramount Pictures, live in virtual world Habbo — Habbo (sample, left), formerly Habbo Hotel, has won “merchandising rights” to sell virtual goods to its users in North America, that feature items from the movies Mean Girls, the forthcoming The Spiderwick Chronicles and Beowulf. Habbo’s eight million monthly visitors will be able to buy virtual clothes, virtual furniture and other accessories (press release here). Paramount is the latest movie studio to start inserting its content into a virtual world. Sony and Time Warner have been doing the same thing. Both of those studios have had their movies and other content playing in the background of virtual rooms in virtual world Gaia Online (they also both invested in that company).

Tim Draper is reportedly still raising a fund to focus on entertainment startups — Or so recent reports suggest. We heard the same thing back in August.

MPAA admits movie piracy by college students not as bad as previously claimed — The Motion Picture of Association of America has come clean. The MPAA’s 2007 study will show that motion picture industry losses due to college students pirating movies amount to 15 percent. That’s down from the MPAA’s 2005 number of 44 percent, which the MPAA now says was due to an “isolated error.”  For a brutal breakdown of this announcement, read this.

Southern Cross Venture Partners is the first Aussie VC firm to open up an office in Silicon Valley — The Australia-based firm has already made investments in four companies of Australian origin: Xerocoat, Mantara, M&MD and UIactive. It closed a $150 million (AUD$170m) fund in the middle of last year. It plans to deepen relationships with US VCs, to help fund startups that begin life in Australia and New Zealand, and introduce them to the US market. The firm’s new office is in downtown Palo Alto, so I’ll be keeping my ears tuned to overhear Aussie-accented conversations while I write articles at Coupa Cafe.

How to find private photos on SmugMug — Is the popular photo-sharing site keeping your private photos private? Google Blogoscoped and others have discovered it’s not, apparently. Read here for more.

Redpoint Ventures cashes out Fraud Sciences six months after investing in it — EBay is buying Fraud Sciences for $169 million, which had received $8 million in funding from Redpoint, BRM Capital and undisclosed investors last year. It tracks online buyers to pin-point suspicious behavior, and is supposed to be particularly good at detecting fraudulent overseas transactions, a particular pain point for Paypal.

Sprint and Clearwire revive plan to build high-speed wireless network using WiMAX — The mobile carrier and the internet service provider are looking at forming a joint venture that could include Intel, Google and even retailer Best Buy, The Wall Street Journal reports.

VCs showed best returns of 2007 in Q2 — That’s according to the latest private equity performance index put together by Thomson Financial and the National Venture Capital Association. Take a look at this table for more details.