VentureBeat

update: rumors are beginning to spill out; Alley Insider suggests the venture is a collaboration between IAC’s Ask and Digg.com, and will launch “very soon.”

With the bid by Microsoft to purchase Yahoo potentially reducing the number of major Web companies, other conglomerates may also come under pressure to sell or break up. IAC, the owner of sites such as Evite.com, Ask, Match.com, Citysearch and Excite, has seen its stock go nowhere despite several years of economic expansion, and has already announced it will spin off several divisions as part of a restructuring.

Yesterday, IAC posted this job position for a new general manager, saying it is “gearing up to launch an innovative, new content venture,” as part of its effort to identify “new business opportunities and incubating new concepts.” Any ideas what this venture will be?

It comes at a time when John Malone, of Liberty Media, a major shareholder, is in a public spat with IAC’s Barry Diller, and wants to bring in Liberty’s Greg Maffei to run the place.

Graph above is from Google Finance.

Citysearch, an online guide service about local US businesses, has partnered with MerchantCircle, in an effort to hold their own in the increasingly competitive area of local reviews.

The move comes as Citysearch is under attack from newer, fresher sites like Yelp, which offers reviews about locales and is appearing as high, if not higher than Citysearch in search engine results.

Citysearch, a division of IAC, has a large collection of local data that includes 14.5 million business listings, more than 600,000 user reviews, and ratings on more than two million business locations in the US. It has been growing through acquisitions, having purchased local review site Insider Pages earlier this year (our coverage).

MerchantCircle, which has already received funding from Citysearch, has been growing fast. It launched in June of 2006 with 5,000 merchants using its services — today it has 300,000. The Los Altos, California company lets businesses create a homepage with basic business information (including photos and videos), create online coupons, send email newsletters to customers and more. The company tells us its most successful feature is its reputation manager, a tool that automatically aggregates reviews and directory listings about a company from around the web.

The partnership will allow MerchantCircle to aggregate Citysearch data, and take advantage of Citysearch’s local ad network. Citysearch will use MerchantCircle’s software.

Of course, these companies are competing against many other also trying to provide local information more efficiently.

Google, Yahoo, Microsoft and AOL are all working on local search offerings. Google, for example, has both local search and local mapping services that many find useful. Then there are startups like local-review site Yelp and local search engine Grayboxx. Then, there are companies like accounting software company Intuit, which are trying to buy their way into local business. Earlier this week, Intuit purchased business web services company Homestead.

The Citysearch-MerchantCircle partnership will run deep. MerchantCircle will offer Citysearch marketing programs to its members, MerchantCircle will use Citysearch’s local and national ad-sales teams to help sell ads on its site to advertisers, and IAC will get a seat on MerchantCircle’s board.

Besides Citysearch, MerchantCircle has also taken on funding from Rustic Canyon Partners, Scale Venture Partners and Disney’s Steamboat Ventures.

Here’s the action that you missed over Thanksgiving break:

1. Silicon Valley becoming mobile innovation hub
2. Why Google bought Jaiku
3. LinkedIn drawing suitors?
4. IAC to spend $100M in China
5. NeoEdge launches ad network for casual games
6. Feds may subsidize broadband access

Silicon Valley becoming mobile innovation hub — Despite the U.S. being the laughing stock of the world for its backward mobile networks, Silicon Valley is becoming a center for mobile innovation anyway. Nokia, the large Finnish mobile phone maker, is boosting its activities in Silicon Valley, because of the action here. Nokia’s head of research here, Bob Iannucci, has even been promoted to Nokia’s chief technology officer. The Mercury News has a good story about the emergence of the valley’s strength in mobile, from Apple’s iPhone phenom to Google’s launch of its Android platform, to the surprising number of Finnish companies — BBS, Codenomicon, EB, Navicron and Tracker — that have established offices in the region. After its move to the valley, Nokia bought an intriguing company called Pixto, which lets consumers point a camera phone at an object — a building, an automobile, or a product in a store window — and with a single click call up Web data linked to the image. It uses GPS and image-matching algorithms to recognize the subject. The Mercury News argues Silicon Valley has become more important with globalization, not less.

Why Google bought Jaiku — Speaking of cool Finnish companies getting sucked by Silicon Valley, you’ll recall the Jaiku was recently bought by Google. Jaiku is like Twitter, in that it lets people post short messages about what they are doing. So why did Google chose Jaiku, instead of the homegrown San Francisco company, Twitter. Jonathan Mulholland says its because Jaiku offers location awareness, and that this fits in with its designs for its Android platform:

…when posting status updates Jaiku has the ability to capture and share the location information (neighbourhood, city, country) of the poster in real time. So in addition to a message post Jaiku can provide real time location awareness of users… And how does Jaiku do this? An integral part of the service is a client application for Symbian S60 platform mobile phones. The client uses location APIs within S60 devices to triangulate the handset (and the users) location based on nearby cellular network towers. The Jaiku client was in fact originally conceived as a ’status aware address book’, and as such integrates into compatible S60 phones to the extent that it also shares the phones (and again the users) status availability (General, In Meeting, Outdoor etc). So in addition to a message post AND location awareness you also have deep mobile integration sufficient to identify the status of a user as well…Jaiku potentially gives Google the Holy Grail - time relevant, location based targeting of information, personalised to a very high degree. Google + Jaiku is not a million miles away from being able to push appropriate advertising to individuals based on their profile, their location and their availability.

LinkedIn growing quickly, attracting suitors — LinkedIn is growing quickly, seeing 189 percent growth over the year through October, faster than the other top ten social networks, according to Nielsen. Now there are rumors that News Corp is looking at buying LinkedIn. Both parties told us “no comment,” though LinkedIn Chairman Reid Hoffman’s response to Techcurnch was one of the most bizarre “no comments” we’ve ever seen.

IAC to create a new business in China — IAC CEO Barry Diller said Saturday that he’ll spend $100 million on a new business in China, and he’ll  also take its search engine, Ask to the fast-growing country. It’s little wonder such initiatives are being taken now that U.S. economy may be slipping into zero growth, or even recession. Diller admits that IAC screwed up eLong, a travel site in China. The initiative will raise IAC’s China investments to $300 million. Details in Wall Street Journal.

NeoEdge launches ad network for casual games –Mountain View, Calif.-based startup NeoEdge, officially launches its ad network for casual games this week, according to GigaOm, but the company doesn’t make clear how its offerings are any different from competitors. We mentioned the company raised $3 million back in June.

Feds may subsidize broadband access — Policy makers overseeing the federal Universal Service Fund have recommended that it be used to offset costs of deploying broadband Internet services in rural areas of the U.S., according to the WSJ. This is something Democratic Presidential candidate Barack Obama’s campaign also supports (see our coverage here ).

Here’s the latest action:

1) IAC splitting into five companies
2) Sea change ahead for Time Warner
3) Google’s merger plans may be foiled by the EU
4) Synthasite launches website creation
5) Whrrl opens local opinion site
6) Internet users like their free stuff
7) Andersen exacts revenge on PR flacks

IAC to split properties into five companies — IAC, the large parent company of Ask.com, is splitting into five separate publicly traded companies: Home Shopping Network, IAC, Interval International, Lending Tree and Ticketmaster. CEO Barry Diller characterized the move as a strategic one, intended to allow the disparate units to concentrate on their own respective businesses. He will remain on as chairman of IAC, which will control a number of well-known web properties including Ask.com, Citysearch, Evite and Match.com.

Sea change ahead for Time Warner with new CEO — The media firm’s leader of the last six years, Dick Parsons, is no longer at the helm. A recent board meeting resulted in the ouster of Parsons and nomination of Jeff Bewkes, the president and chief operating officer, as a replacement. Both moves have been expected at the company for some time; Parsons is commonly described as a diplomat who helped keep Time Warner in one piece through difficult times and smoothed the process of merging with AOL, but is no longer helping the company grow. Bewkes, on the other hand, has a more aggressive management style. Time Warner is notorious for being a slow-moving behemoth, and AOL is mostly known for failing at everything it puts its hand to. Whether Bewkes can change the institutionalized culture at the $75 billion company remains to be seen.

Google acquisition of DoubleClick faces biggest hurdle in EU — The European Union, which famously hounded Microsoft for years over anti-competitive practices, may well set its sights on Google as the next giant up for kneecap-bashing. We’ll skip the legal details here, but this insightful post on ClickZ covers most of them, concluding that “the parties cannot complete the deal unless both EU and FTC approve it.” The European commission is set to decide DoubleClick’s fate a little over a week from now, on November 13.

Synthasite launches beta, but is late to the table – The do-it-yourself website creation company now allows you to publish the sites you build with it, offering free hosting. Synthasite had an early start when it came onto the scene in the beginning of this year, but has since lagged behind its competitors, Y-Combinator graduate Weebly and Germany’s Jimdo, which both have simpler interfaces and offer more ways to customize your site. Synthasite’s big ambition — to open a platform for third-party developers — is likely to collide with similar efforts from the competition, but the market is still anyone’s game. Synthasite generated some controversy (and a spike in traffic) when it offered stock to users (scroll down) in exchange for website templates.

Whrrl, a mobile social network for sharing opinions about locales –Like Yelp, users can find information about restaurants, bars, and other retail joints and share reviews with other Whrrl members or your friends. You can download the application on your mobile phone or use it with SMS. It carries maps, too, so that you can scan your screen and pull up reviews from the dots on it representing your favorite places. You can select only those places recommended by your friends, for example. You can also filter for places based on type of restaurant or other keyword. It will soon let you track friends by GPS, and so is a lot like Loopt. There’s tension here. Loopt is backed by Sequoia Capital. Whrll, meanwhile, is backed Sequoia’s chief Silicon Valley rival, Kleiner Perkins.  KP led a $7.4 million investment last year, joined by Amazon’s Jeff Bezos and Trilogy Equity Partners. Seattle PI first wrote about the company last year. Techcrunch also reviews it here. Robert Scoble interviews the CEO of Whrll parent company, Pelago.

Most internet users still expect to freeload – At first blush, it appeared that an experiment by popular band Radiohead to offer their music for donation-only download had resulted in most users choosing to pay. Oh, really? A comScore study begs to differ: Only 38 percent of downloaded decided to lay down any dough, and on average it was only $6. The upshot: Don’t expect big media companies to stop the fight to charge full rates and stop free downloads on the internet.

PR flacks get spammed following Andersen post – The New York Times has a good retrospective on last week’s scuffle between Wired editor in chief Chris Andersen and 300-plus press relations people he claims spammed him. The latest: Since Andersen posted the email address of every one, the accused spammers are now, themselves, being spammed.

Here’s the latest (updated) action:

Six Apart’s headaches — The blogging software market is highly competitive, so small differences in quality can make a difference in user adoption. Six Apart, a Silicon Valley start-up that offers several blogging software platforms, including Movable Type, has released a product after acknowledging internally it could make developers mad. [Six Apart's Anil Dash has since responded in comments, saying the company took time to fix the bugs for the release. The references in an internal memo before the release that caused concern were the following: The need for "PR to stay ahead of the curve" with people who say "we rushed the release" and to developers who "will be very mad" for not having the resources to upgrade their plugins.] Moreover, chief architect Brad Fitzpatrick has left the company. We asked Six Apart for comment, but they did not respond. Frankly, the various bugs are one reason VentureBeat moved to embrace Wordpress, dropping Movable Type. Wordpress, owned by Automattic, also seemed swifter and more flexible. Separately, Wordpress’ hosted version (Wordpress.com) is more secure than Six Apart’s hosted versions. Wordpress has three different data centers, so you wouldn’t see it crash like Six Apart did when an SF data center melted down several days ago. Wordpress is run by a Swiss named Toni Schneider, who is obsessed with scaling the company without hitch or server meltdown. Lead developer Matt Mullenweg goes to bed thinking about scaling problems, Schneider adds. Related: I cited Toni in a piece I just did for Forbes about “when to hire an IT guy.”

Clicktale records what happens when a user hits your Web site — Today, Clicktale launched to show things like the number of mouse hovers over a link (in other words, showing how a link may be attractive, but not enough for people to click), how many mouse hovers eventually convert to mouse clicks and other interesting behavior measures. Techcrunch has a good review here. The Israeli start-up has competitors, including RobotReplay and TapeFailure.

Zhanzuo.com, a Facebook clone in China, has acquired Yoolin.com, a campus social networking site targeted at Chinese students abroad — Yoolin was founded in June 2006 by Chinese students from Stanford, UC Berkeley, Harvard and MIT, but according to Alexa data cited by this blog (which reported the acquisition), their traffic didn’t grow much.

Another news site, Newser.com — Journalist Michael Wolff has started a news Web site called newser.com that aggregates news articles for convenient reading. New York Times has the story. We don’t understand the company’s model. The cater-to-all destination site is a dead horse fairly beaten.

Non-profit music industry agent conflicted? — Wired reports that Sound Exchange, a nonprofit that administers copyright licensing and license-fee collection is funding a group called musicFirst, which is lobbying for the enforcement of extra broadcasting fees on terrestrial radio stations. According to Wired: “Whether or not SoundExchange’s lobbying efforts prove to be illegal, its presence as an advocate in this debate undercuts its role as neutral administrator of royalty fees set and approved by the Copyright Royalty Board.”

GoFish’s acquisition of Bolt, dead in water — Details here.

Microsoft testing ad supported Microsoft Works — Details at Ars Technica.

Advertisers in UK yank ads from Facebook when they realize the ads are posted next to the group page of a far-right-wing political party — Details here. Slowly but surely, advertisers are beginning to realize how dangerous it is to run campaigns in social networking sites. Tod M. Sacerdoti, founder of BrightRoll, which inserts advertising into videos for clients, told us recently he has all but abandoned serving social network sites, after seeing multiple examples of advertising networks exposing major advertising brands to lewd, quasi-porn video content.

Answers.com loses 28 percent of its viewers due to a change by Google’s algorithm — GigaOm points to the story.

IAC bags Google, chooses Microsoft - It will use Microsoft’s aQuantive’s ad network over Google’s Doubleclick.

Thomson Financial finally releases VC data — Like the data released last week by VentureOne, it shows venture capitalists are investing at the highest levels since 2001. VCs poured $7.1 billion in 977 deals in the second quarter of 2007 - the largest number deals since the third since Q3 2001. A Thomson spokeswoman said the week’s delay in the survey was caused by a server crash, and then a week’s worth of verification with its partners in the quarterly MoneyTree Survey: PricewaterhouseCoopers and the National Venture Capital Association. We asked whether a reported 61 layoffs at Thomson in recent months had anything to do with the snafu, since some of the VC reporting department has been replaced by outsourced labor in places like the Philippines. Or perhaps caused by distraction caused by Thomson’s pending merger with Reuters? A spokeswoman did not address the layoffs, but said the Reuters deal hasn’t closed yet, and so that played no role.

Vibrator maker Jimmy Jane might get real VC? — Individuals such as Tim Draper have backed Jimmy Jane, the sex-toy company, with about $1 million, but now the New York Times’ Matt Richtel says the company is about to get a real VC round. We contacted Jimmy Jane for comment, but no response thus far. Draper, for his part, suggested something is coming: “I don’t think I am allowed to answer that,” he said, when asked about a pending round. “We don’t make comments on financings until they are done.”

Yahoo advised to… go after social networking — An analyst report by Bear Stearns recommends that Yahoo more aggressively pursue social networking, saying it is a high growth opportunity, and noting that Facebook could be worth $6 billion or so. Yahoo had reportedly sought to buy Facebook last year for $1 billion.

Yahoo advised to… pursue open source — Tim O’Reilly says Yahoo is grasping open source as a competitive advantage and commends it, writing off the news Yahoo is now supporting something called Hadoop.

WiMax notebook computers coming by late next year — So says Intel, a leading provider of the technology, which will operate many times faster than WiFi technology used by most laptops. (Mercury News story)

Silicon Valley’s WiFi network project shifts from free, to paid — A Mercury News story shows the Silicon Valley Joint Venture Wireless Project looks shakier than ever.

(Update: IAC’s venture arm will be called Primal Ventures)

IAC, the New York media conglomerate run by Darry Diller, and owner of Match.com, Ticketmaster and Evite.com, is opening up a venture capital investment arm in San Francisco.

It will be run by Match.com’s chief executive Jim Safka, according to the Mercury News. Safka will focus investments on companies in the wireless, video, recruitment and consumer health areas — all fairly predictable areas, given that they are hot. Indeed, we should point out that corporate venture activities such as this tend to be momentum driven: They are last to enter venture capital game (IAC has never invested alongside other venture firms) and first to leave when things get rough. Who knows whether IAC will break the mold, but the Merc points out reasons why start-ups may want to take caution before playing with a giant that can be controlling and aggressive. More skepticism here.

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area.

Anne Raimondi, vice president of marketing at Redwood City’s Insider Pages, just informed VentureBeat of the purchase, which will be announced tomorrow. We mentioned the rumor last week.

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.