VentureBeat

updated

The back-story on Jangl’s slow death — Yesterday, we reported on Jangl’s asset sale process. A tipster tells us that Seattle-based WhitePages had offered to buy Internet phone company Jangl for $20 million, but then kept the company in diligence for more than a month and walked away at the last minute — giving Jangl no choice to but throw in the towel when it ran out of time and options. Whitepages flew down from Seattle for regular meetings, and Jangl’s execs flew up to Seattle, but then WhitePages caught wind that Jangl was running out of money and that investors had given Jangl’s team a deadline to sell by May 15. WhitePages whittled down its offer first to half, then cut off a severance agreement to those who would be laid off, and then lowered the offer even more: “They had us over the barrel,” said one Jangl employee. [Update: There are always two sides to the story. WhitePages is denying they ever offered $20M. And that's partly what happens in these sorts of negotiations: There's verbal dancing, and there's written, signed legal offers. If there's no deal, there's no deal.]

Virgin Mobile USA considering merger with Helio — While many MVNOs have simply collapsed or been closed by their parent companies, Virgin Mobile USA and smaller rival Helio have scraped by, if not flourished. The two may solve some mutual problems by undergoing a merger, which would create a bulkier combined company and add to their respective plan and phone options. However, mocoNews suggests that they might still look for a private equity buyout afterward.

VC investment continues to move overseas — Limited partners say they’re still wrestling with the implications of more and more venture capital activity moving abroad. The comments came during the LP panel at the recent meeting of the National Venture Capital Association. VentureWire was there to note some of the most interesting facts and figures. There’s definitely a lot of activity — almost 20 percent of domestic funds were deployed outside the United States in 2007, compared with 7 percent in 1998, according to Bob French of Adams Street Partners. And David York of Paul Capital predicted that within the next decade, as much as 50 percent of global venture capital activity will take place outside the United States.

Yahoo launches regional search variant – Yahoo’s Indian team has put together a search product called “Glue Pages” that integrates traditional search with results pulled from Yahoo’s portal business, including content like recipes, medical information, images and restaurant listings. The feature is undergoing testing on Yahoo India, with no plans as yet to offer it in the United States. More at CNET News.

Warner Music may invest again in imeem — In an encouraging turnaround for the music industry last year, Warner Music dropped a lawsuit against music sharing social network imeem, then followed up with an investment in the company. It may tag along with Sequoia Capital and make another investment this year, according to the Silicon Alley Insider.

RealNetworks spins off game studio — RealNetworks, maker of the most irritating media player ever created, has spun off its games division, which includes recent acquisition Trymedia. The gaming business is one of RealNetworks’ most profitable; it will retain an 80 percent ownership stake, but will allow the new company to forge its own path.

Real Goods Solar prices IPO real low — Solar installer Real Goods Solar, which recently announced plans for an initial public offering, has priced its 5.5 million shares at the bottom of its $10-12 range. Most cleantech companies have held off from IPOs this year due to the current market troubles.

Google achieves coveted “brain drain” status — The BBC has a report on the steady stream of executives away from Google, many of whose departures we’ve also noted, including Chris Sacca, Gideon Yu and Elliot Schrage. Many are headed to Facebook, which is described in the article as “the Google of yesterday, the Microsoft of long ago,” while Google is called a “behemoth” that is “no longer the firm it once was.” Google’s current position, of course, is precisely where Facebook aspires to be.

Forbes.com launches business social network — Following in the footsteps of BusinessWeek, Forbes.com has launched its own social network, the AnswerNetwork. As might be expected from the name, users are expected to ask questions and share answers with each other, in return gaining competence rankings based on their expertise. LinkedIn, which is BusinessWeek’s partner, has a similar feature, although it seems to be only moderately popular with users.

Social networking site MySpace and music have worked well together in the past. New bands got recognition, popular bands gained new fans. Now MySpace is looking to extend that relationship by launching a full-scale music store. This launch will be happening sometime within the next 5 days, according to Reuters.

The service will be appropriately titled “MySpace Music”, and is said to have the support of at least 3 of the major labels. Sony BMG Music Entertainment, Vivendi’s Universal Music Group and Warner Music Group Corp. would each have a stake in the new service along with MySpace parent News Corp. It is not clear if the other big label, EMI, is involved.

None of the companies are talking, so details are scant at this point, but the service is said to be a direct competitor to Apple’s iTunes. It’s well known that the record labels have long thought that Steve Jobs has held too much over their industry. Their slowness in delivering DRM-free music to iTunes while giving it to AmazonMP3 may be helping that service grow (our coverage). MySpace Music could well be an attack on another front.

The fact that EMI is not known to be involved in the MySpace Music partnership makes sense as well — EMI is still the only major label giving Apple DRM-free music, so they presumably have a pretty good relationship.

MySpace Music is launching now because News Corp. and Universal Music have finally settled a longstanding lawsuit, according to Silicon Alley Insider.

[photo: flickr/orange beard] 

Here’s the latest action:
1) Warner CEO praises Apple, DRM-free music
2) VMWare is after your engineer blood
3) Berners-Lee warns of walled gardens
4) Microsoft completes $47M acquisition
5) Another VC speaks in favor of taxing himself
6) Joost rolls out new ads
7) Billeo raises $7M for easy payment

Warner Music CEO now supporting DRM-free music, iTunes – “We used to think our music was perfect just the way it was … of course, we were wrong,” said Warner Music CEO Edgar Bronfman at a recent conference. The media chief is now singing praises for iTunes and Apple, and the Warner online music store has also begun selling DRM-free tracks. These supportive comments and others from Bronfman, who just a few months ago was spouting rhetoric against online music sharing, may herald the way to a new era of cooperation between record labels and online retailers.

Silicon Valley engineering talent getting ever scarcer – VMWare is prepared to battle it out with Facebook and Google for the Valley’s top engineering talent, according to GigaOm. Combine the boom in the number of local startups with the growing companies’ endless thirst for talent, and you’ve got serious shortages — all the more reason to relax H1-B visa rules for skilled workers from other countries.

Microsoft closes $47M MusicWave acquisition – The Redmond giant paid $47 million for the French mobile music company. Not a bad deal, when compared to the $121 million that Openwave paid for the same company two years ago.

Yet another VC backs VC tax – First it was Fred Wilson. Now it’s another one, though with smaller name. William Stanhill of Trailhead Ventures testified in front of Congress that the carried-interest tax rate should go up, against the objections of his partners. The bill passed Congress, but will reportedly be be blocked in the Senate. Stanhill is unapologetic; of course, at the age of 71, he has every reason to be straightforward, and even calls himself a “depreciating asset.” Score one for the “nothing to lose” crowd. For more on why VentureBeat thinks the tax should pass, see this post.

Joost gets creative with the ads – A new “advertising widget” called Coke Bubbles has debuted on Joost, which has so far only run pre-roll ads on its videos. Advertising advocates are pushing for more creativity online, and that’s what Joost appears to be after. Whether the widget is particularly creative is another matter; it’s essentially a video sharing app with Coca-Cola branding. The reception in the blogosphere was lukewarm at best, with CNET’s Caroline McCarthy comparing it to “those Pop-Up Video shows that VH-1 did back in the ’90s, except not quite as customizable.” Ouch.

Berners-Lee speaks out against walled gardens in the mobile space – Mobile phones are in danger of being locked into walled gardens, says Tim Berners-Lee, one of the inventors of today’s Internet. “An open platform means using standards,” Berners-Lee said. “The mobile internet must use the same standards as the Internet.” More from the New York Times here.

Billeo raises $7 million for online payment – Billeo offers online bill payment software for use by consumers and small businesses. It assists by auto-filling forms for online shopping, offering single-password logins, saving receipts, and helping organize finances. The funding is the Santa Clara, Calif. company’s second, and was led by ATA Ventures. Altos Ventures, Claremont Creek and the Pacifica Fund also participated.

Here’s the day’s action:
1) CNET sells its photo-sharing site Webshots at loss, may be ready to try again
2) Comcast isn’t the only ISP manipulating traffic
3) Apple may lose Warner Music, too
4) Yahoo’s Cammie Dunaway goes to Nintendo
5) Trusted Opinion, social recommendations, raises $1.3 million
6) JackBe, enterprise mashup software, raises $9.5 million
7) EchoSign, electronic signatures, takes $6 million

CNET sells Webshots to American Greeting for $45M – CNET bought Webshots, a photo-sharing site, for $70M in 2004, so the purchase apparently didn’t do much for the company. CNET itself is losing money, and also recently took on a $250 million loan, which may signal a desire for more (but hopefully better advised) acquisitions of internet properties.

Comcast isn’t the only ISP interfering with P2P — This post by Om Malik points out that other ISPs are probably also interfering with Net traffic. So much for Net Neutrality. Companies that rely on P2P traffic may have to count on lawmakers for relief if ISPs become bolder in their efforts to minimize certain traffic. Luckily, they’ve got congressmen like Rick Boucher, who has put the issue at the top of the House tech agenda.

Apple’s iPod aura wearing off with music labels — Last month it was Universal Music Group, this month it’s Warner Music. As record label’s contracts with Apple run out, the companies are deciding they don’t really want to be in a controlling relationship, and would prefer to see other distributors. Both Universal and Warner are shifting to a month-to-month contract with Apple that will allow them to strike deals elsewhere. If the companies have figured out yet that they don’t have to be in constant control of their own content, that might even mean a few crumbs for startups.

Yahoo-er Cammie Dunaway has indeed left for Nintendo – The New York Times confirms the rumor that Valleywag had the other week.

Recommendation-focused social network Trusted Opinion raises $1.3 million – More here.

JackBe, enterprise mashup software company, raises $9.5M more – The company, based in Fremont, Calif., raised the third round of financing from Harbert Venture Partners, Core Capital Partners, and existing investors Intel Capital, Darby Technology Ventures and Blue Chip Venture Company. The company’s Presto platform allows users to create applications by pulling in data from various sources, and faces numerous competitors, including Nexaweb and Xignite. It had previously raised $9.5 million.

EchoSign takes $6 million for signature automation — A month ago today, we reported that competitor DocuSign had taken $12.4 million to continue developing its electronic signature technology. We wouldn’t say they’re copying, but does anyone else hear an echo? (OK, sorry for that one.) This is EchoSign’s second funding, led by Emergence Capital and also participated in by previous investor Storm Capital.

YouTube, the two-year-old San Mateo start-up that raced ahead to become the leader of online video sharing, is facing the fight of its life.

Microsoft’s launch of its YouTube clone, called the Soapbox, made official today — see announcement with an offering of a way to sign up for a beta account, is only the latest challenge. (The dancing man with MSN colors strikes us as somewhat unhip, but then what can we expect a corporate giant to do? In fact, when looked at again, we see it is a cute metaphor for an old fogey getting with the program.)

Its fate may really lie in excruciating talks taking place with the Universal Music Group, which must decide whether to take YouTube to court or instead embrace and even invest in it.

The YouTube story is significant because there’s more confusion about YouTube’s prospects, its inherent uniqueness and its legality than ever before. Moreover, there’s more at stake in the world of online video than most of us realized just a few months ago. It is where movies, music and advertising meet — and billions are at stake, and anxious incumbent music giants are angry. The proliferation of broadband, new technologies making loading videos dead easy, and the high price of buying music compared to simply sharing it free on YouTube, is giving that upstart the edge. –>

Here in Silicon Valley, the buzz is all about video, music and then more video — and throw in some talk about how to take it mobile. There’s a new announcement every day. (Just yesterday: Silicon Valley chip giant Intel announced a deal with AOL to place AOL Video onto Intel’s Viiv home computers. SanDisk, the Milpitas maker of music players competing with Apple’s iPod, signed a deal with Seattle’s RealNetworks, owner of music service Rhapsody, to imbed that service direclty into its Sansa e200 MP3 player. And Google is reporteldy talking with Apple about having Google vidoes downloadable to the iPod).

On the plus side for YouTube, the company announced a deal with Warner, whereby Warner will open its music library to YouTube users to integrate into their videos. But public details of the deal are few, and Warner still has the right for veto, and the royalty and revenue split agreement is unknown.

That deal came a few hours after entrepreneur Mark Cuban wrote an aggressive but notable piece titled “The coming dramatic decline of YouTube,” and outlined why YouTube is going to get sued and will implode just like Napster did in Web 1.0, even though Napster eventually cut deal with Bertelsman. In a bizarre coincidence, the Napster remnant company is losing money and just yesterday put itself on the block, as mentioned). The problem, Cuban said, is that you can search for songs on YouTube, and have them play, while minimizing the video screen — even those songs are copyrighted and no one is getting paid. If you read the comments on Cuban’s blog, you will see that outright confusion prevails about YouTube’s prospects.

YouTube’s fate may really lie in talks it’s having with Universal Music Group and Sony BMG. Fresh reports say these are talks about distribution deals. YouTube has long said it is engaged in talks, so it is difficult to say how real these reports are. Just last week Universal threatened to sue. Now apparently YouTube has offered to sell an equity stake to the labels, though that’s an easy offer to make when you are against the wall.

Finally, as Rafat at PaidContent points out, the filtering technology YouTube has to implement by the end of this year, to meet the accord with Warner Music, is significant. It is similar to technology already offered by both Audible Magic and Snocap, which works on audio — the main area of concern right now. If YouTube implements this rigorously and agrees to take down any infringing content that somehow slips past those filters, it has a pretty good defense, no?

This will be a drama to watch.

Warner Music has agreed to make its library of music videos available to YouTube, and to license its songs to the millions of users who upload their videos to the site.

This could be a huge deal for the San Mateo video sharing start-up. It is the first time that an established record company has agreed to such a deal. YouTube has been shunned in part by fears that YouTube videos have been infringing on copyrights. Universal Music, the largest record company, last week even threatened to sue YouTube.

Warner and YouTube will share advertising revenue sold in connection with the video content. However, there are many unanswered questions. Apparently, Warner has the right to veto the use of some videos, and the revenue share details are uncertain. Royalty fees are also being discussed. More details later today.