VentureBeat

Summary:
*Eons, social network for 50-plus, cuts a third of staff
*Mercora, music sharing service, changes name
*New technology to allow searching images with different languages
*Lendingclub, the people-to-people lending service, launches Web site
*Facebook is roughly breaking even
*Microsoft announces student promotion for Microsoft Office 2007
*Advertising spending is down for second quarter in a row
*Video giant Hulu purchases Chinese company Mojiti to power its video platform?

Eons, social network for 50-plus, cuts a third of staff — This is a surprising move, for such a young company. Xconomy has details.

Mercora, music sharing service, changes name — It is now called Social.FM. The service lets you share your songs with friends, chat with friends, and access the music on your PC, or on your mobile phone. It’s not clear, though, how the company plans to differentiate itself from the vast range of other similar services.

New technology to allow searching images with different languages — The University of Washington has developed a way for people to search for images using words in their own language, and find images on Google that may have indexed with words of a different language. Search engines such as Google look for images by detecting the search term in captions and other nearby text. But since the process looks for a string of letters, the results are limited to the seeker’s mother tongue — at least, until now (more here).

Lendingclub, the people-to-people lending service, launches Web site – The LendingClub.com, which lets people borrow money from other people through an online application process, has opened to the general Web. Until now, it has been solely a Facebook application. It has closed $1 million in loans since launch. We’ve covered the company before. In assessing whether someone is eligible for a loan from others, it considers factors such as where a person grew up, went to school or what they do for a living, and credit scores. However, it joins a crowded field of other companies doing something similar, from Prosper, to Zopa, Circlelending, Wonga and Globefunder.

Facebook is roughly breaking even — It may have 38 million users, but it’s still not a cash cow. Peter Thiel, an investor, says the company is cash-flow break even.

Microsoft announces student promotion for Microsoft Office 2007 — It’s selling the software at $60, or 90 percent less than before. Microsoft must recognize that students, above all, are prone to falling for Google’s free online application offerings.

Advertising spending is down for second quarter in a row — A new report released today by TNS Media Intelligence, shows ad spending has declined 0.3 percent during the first half of the year, compared to the same period a year before. That’s worrying, given that the economy is supposed to be growing. This could have something to do with the credit crunch crisis, with consumers holding back, and advertisers deciding to pull back to. Those of us focused on the Web can take solace in the 18 percent jump seen in Web advertising (most of the decline came in print), but even Web advertising could take a hit if the credit crunch doesn’t clear up.

Video giant Hulu purchases Chinese company Mojiti to power its video platform? — Hulu, the joint venture between NBC and News Corp, is rumored by Techcrunch to have acquired Bejing-based startup Mojiti. The founder, Eric Feng, was previously at Microsoft Research Asia. Mojiti also allows users to annotate videos at specific time points, somewhat like Motionbox, Viddler and Click.TV. Pluggd is doing something related. (See our coverage here ).

Updated

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.

PixSense, latest start-up to offer video compression, is hiring! — This Santa Clara start-up claims no one has been able to compress a video by 85 percent to share it via mobile phone.

It is offering such a feature to consumers and carriers. Some 90 percent of cell-phone users don’t have a set data plan, meaning they pay for bandwidth they use while sending pictures. PixSense will lower costs. It will also sell its technology to carriers, a spokesman told us. It has angel funding of $1 million and is a raising a venture round. The start-up has 30 people, and here’s the kicker: It plans to employ 150 by next year.

Veeker buys Thumbdrive, to pursue mobile video messaging — Veeker, a San Francisco company building a mobile video-message sharing service targeting young users, told GigaOM that it has acquired San Francisco-based mobile software development company ThumbJive, which also has employees in China.

Mercora, that Santa Clara radio song-sharing service, launches service for smart-phones — Mercora says its wireless music service “beat Steve Jobs to the iPhone…And we’ve beat Microsoft to the Zune.” Dubbed “M,” the service allows smart-phone users to listen to music that sits on their PCs. Further, M subscribers can share music with each other — by accessing each other’s PCs.
We wrote about Mercora here.

Piczo, another sleeper social site? — The San Francisco social networking site, which focuses on teens and photo-sharing, is boasting 17 million registered users. It has raised a total of $7 million, according to GigaOM’s Liz Gannes, who brings us an update on the relatively closed, privacy-conscious site. (We’d reported earlier only $4 million raised). Sierra Ventures and Catamount Venture are the backers.

PayPal prepares a way for users to store files — Techcrunch has the skinny on the yet-to-be released service, called DropBox, which creates a secure storage area within a user’s account. We called PayPay, and there is no intent to create a digital distribution platform of any kind. It is merely offering what most mainstream payment providers do, including a way to batch-process payments instead of settling one payment at a time, said spokeswoman Sara Bettencourt. She declined to provide more details.

Cynical blog Dead20, which has covered the valley’s Web 2.0 companies with scorn, is down — It has an error message saying “Bandwidth limit exceeded,” after the author, who has been writing in anonymity, is all but outed.

Facebook founder puts Microsoft on hold — The WSJ, in its recent story about Facebook, reported how Facebook executives told their Microsoft peers “they couldn’t do an 8 a.m. conference call because the company’s 22-year-old founder and chief executive, Harvard dropout Mark Zuckerberg, wouldn’t be awake, says a person familiar with the talks. Microsoft executives were incredulous.”

No surprise here. We, too, remember showing up for an interview at Facebook last year at 10am, and having Zuckerberg show up late. Only Facebook co-worker Matt Cohler was in the office, who told us some engineers had only just left after working through the night.

Remember Imeem, the company that lets you share your desktop contents directly with others? — It is raising money. It has also changed its business strategy. We’ll report more soon.

AdMob, a company that sells advertising on mobile devices, said it raised $3.6 million in its first round of venture funding — We reported earlier on the funding, but the SF Business Journal has the exact amount.

This story about ITU is a tragic one, and a lesson for us taxpayers in California to be vigilant about how the state deals with venture capital firms.

A few weeks back, we reported on the failure by the Southern California-based venture firm ITU to raise a new fund. The failure, we reported, was sparked in part by Harvard’s decision to pull its money from the firm.

Now a story in the LA Times tells us why Harvard took that step. ITU had suggested its portfolio companies, including three in California (the start-ups aren’t mentioned by name), give donations to political candidates the firm was friendly with, including California Controller Steve Westly. This is tragic, because by all appearances, it was an effort to manipulate Westly to be friendly to ITU, which was dependent on large pension funds where Westly was influential as a board member, and even more influential had he won the election (i.e., as governor, you have a role in picking board members for the funds). More importantly, it is state money that would be supporting ITU.

The guys at ITU, defending themselves, say they merely made suggestions that the portfolio companies make donations, and no pressure was intended. This is silly, because there was enough pressure on the companies for them to start griping about it. They even approached us about it.

The LA Times should be commended for reporting this story. The tipster who gave us the original story about ITU’s problems stayed on the phone long enough to suggest we look into “political donations” made by its portfolio companies. We sniffed around a bit, but without any further leads, we couldn’t get very far and let it drop.

But the LA Times did not make explicit, except for a brief mention at the bottom of the story, the real reason this story looks like a scandal. ITU was dependent on investors such as the huge California state pension funds (CalPERS, CalSTRs) for its money. This is significant because we, the Mercury News and others fought hard, and successfully, in 2003 for appropriate disclosure rules — including a demand that the financial performance of companies like ITU be disclosed. This helps ensure that only good-performing firms receive state money, and not mediocre ones dependent on political contacts for their money.

Disclosure of performance results may not be enough. The LA Times references to political relationships at the bottom of the story are concerning, and makes you wonder:

TU’s principals and associates have given $19,500 to Westly and $20,000 to state Treasurer Phil Angelides, who defeated Westly in the June gubernatorial primary. These donations are not in dispute.

Westly spokesman Russ Lopez said the controller has met with Brownstein privately — including meetings in New York, where Brownstein introduced the controller to other potential donors…