VentureBeat

ImageSpan hopes to make a mint by counting up the pennies that artists and media companies are owed every time someone downloads a song or plays a video over the internet.

One of the nightmares of the digital age is how to track what an artist is owed by all of the people who use that artist’s work online. Currently, that problem of tracking usage and royalties is solved using an army of attorneys. It often takes a year to settle the books.

Now, Sausalito, Calif.-based ImageSpan promises to automate that process so that royalties can be calculated in seconds instead of a year using internet standards such as XML to track content usage. Its product, LicenseStream Creator, is available for a subscription of $40 a year; a pro version is $99. The improvement in efficiency explains why one of the world’s biggest media companies, Bertelsmann, has led an $11 million second round of investment in ImageSpan.

Bertelsmann Digital Media Investments, a subsidiary of Bertelsmann AG, led the deal. Existing investors also participating included Greycroft Partners (headed by Alan Patricof) and Village Ventures. Also joining were the New York City Investment Fund, City Light Capital Management and Ackerley Partners.

Iain Scholnick, chief executive of ImageSpan, said in an interview that the company was built for the age of Web 2.0 and mashups of media content, where multiple copyright holders and licensing schemes make it extremely difficult to calculate royalties for things such as digital photos, illustrations, and videos.

“We help media companies get their arms around their intellectual property and who is using it,” Scholnick said. “This is getting so complicated it’s like managing an air traffic control system.”

The problem is a big one. Contestants on TV shows such as “American Idol” aren’t always shown singing songs in part because the songs they choose aren’t licensed ahead of time. When someone buys a song for 99 cents on Apple’s iTunes, the number of people who get a piece of that pie is astounding, Scholnick said. The result is that not nearly as many transactions happen.

Michael McGuire, an analyst at market researcher Gartner, believes that many content companies are holding back because they don’t understand the unfamiliar world of distribution on the internet. While they want to distribute content widely to reach consumers, that often means a loss of control of content to pirates, hackers and consumers who simply want free stuff. He said the recent Hollywood writer’s strike focused on this problem of how to pay directors, screenwriters and actors for content distributed on the internet. The challenge for ImageSpan will be in convincing media companies — and their many byzantine departments — that it has a real solution to a longstanding problem.

Scholnick contends that ImageSpan can cut anywhere from 40 to 90 percent of royalty settlement costs. Customers include Omnicom’s Zimmerman Partners, Sports Illustrated, Takkle, Dealer.com, and Visible World. To date, ImageSpan has raised $16 million and it has 25 employees. The company was founded in 2002. McGuire said there are competitors who do pieces of the puzzle, but ImageSpan is looking to replace those vendors with an end-to-end solution.

Travel Ad Network has raised $15 million in a first round to fuel its growth in the travel vertical market. The round was led by Rho Ventures, Village Ventures and individual investors.

The investment will help TAN target travel advertising dollars and marketers who are seeking upscale consumers. TAN can deliver 12.5 million monthly unique visitors to advertisers through its partners. Among its 50-plus sites are BBC’s Lonely Planet and Rand McNally.

Habib Kairouz, managing partner at Rho Ventures, will join TAN’s board. So will Rho Ventures partner Doug McCormick, former CEO of Lifetime Networks and Chairman and CEO of iVillage. Another new board member is Benjamin Wolin, the co-founder and CEO of Waterfront Media, the largest privately held online health company. In the past year, the company said it surpassed Yahoo Travel in audience and launched its first video ad campaign. It also expanded to Canada and the United Kingdom.

Savvian Advisors served as the exclusive financial advisor to Travel Ad Network for the transaction. Travel Ad Network was founded in 2003 and is based in New York.

Women on the internet are hot.

First we had the women-centric ad network, Glam, raising $200 million and signing a $1 billion deal, then we saw the woman-centric publisher, Sugar Inc, acquiring the woman-centric sites, ShopStyle and Coutorture.

Now, New York’s Makeover Solutions, a site that lets you upload your headshot and adorn it with a variety of hair-styles, accessories, and makeup combinations, has raised $7 million to expand its offering. The impressive technology automatically and accurately fits hairstyles to your head and applies makeup to your face, answering some of the big questions modern women face: “What would I look like with blond bangs?” or, more gravely, “what if I had Angelina’s hair?”

With Makeover Solutions, these answers and many more like them can be yours, but if you want to dig deep, you’ll pay a price. While a basic membership is free, it only gives you access to 100 regular hairstyles, 25 celebrity hairstyles, 48 cosmetic colors and 33 accessories. An “all-access membership,” on the other hand, comes with more than 3000 regular hairstyles, 350 celebrity hairstyles, 1600 cosmetic colors and 300 accessories. You can also upload unlimited photos of yourself, instead of just one. Prices range from $14.95 for three months to $29.95 for a year.

Wisely, Makeover Solutions is not banking its future on a destination site, and licenses its technology to InStyle.com, iVillage.com and cosmetics companies like Revlon and Finesse, and the company says it is close to being profitable.

The funding was led by Village Ventures, with Rho Canada and Borealis Ventures contributing.

Featured companies: Bioptigen, Echo Therapeutics, Forest Laboratories, Intrinsic Therapeutics, Microbia, Phreesia, Sontra Medical, TransMedics, Xanthus Pharmaceuticals

[NOTE: This is a catchup briefing, posted on 9/28/07. I've adjusted the item's timestamp to keep the briefings in chronological order. --D.P.H.]

Patient-info digitizer Phreesia takes in $10.3M — Phreesia, a New York company that claims to offer a “100% free” — but ad-sponsored — digital patient check-in application to doctors, raised $10.3 million in a second funding round. Investors included Polaris Ventures Partners, HLM Venture Partners, Long River Ventures and Village Ventures.

Phreesia offers doctors wireless touch-screen pads and related software designed to replace the traditional check-in clipboard in doctors’ offices. Among other claimed benefits, the technology is designed to provide legible patient information and to conduct patient interviews — along the lines of those endless rows of checkboxes that ask you to recall your own medical history and sometimes that of your immediate family as well. The catch is that the devices will then beam sponsored “educational” content at patients, although Phreesia claims doctors can first review it and that patients can skip it if they want. (Any guesses on how easy people will find to do that?)

I hope to return to Phreesia before much longer — among other things, they plan to present at Demo this year. (UPDATE: They’ve done so, and apparently were named one of the best presentations at the conference.) And there are certainly plenty of cool things about this idea, not least the fact that returning patients can merely confirm their information instead of filling it all out again. Still, the service raises lots of questions, not least among them the consequences of letting “sponsors” — read: “drug companies” — have direct access to patients in waiting rooms. Anyway, this looks interesting enough that I’ll definitely take a closer look.

Xanthus aims for $30M to support leukemia treatment — Cambridge, Mass.-based Xanthus Pharmaceuticals, a biotech with a small-molecule drug against acute myeloid leukemia, intends to raise $30 million in a third funding round, VentureWire reports (subscription required). The company would aim to complete the funding by late this year or early next.

The leukemia drug, which the company calls Xanafide, has completed mid-stage human tests (PDF) that Xanthus claimed “associated” the drug with complete remissions. The trial wasn’t blinded or randomized, which in short means it’s almost impossible to draw such sweeping conclusions from it. Xanafide isn’t a particularly exotic drug, either; as a topoisomerase II inhibitor, it shares the same basic mechanism of action as many traditional chemotherapy drugs. Still, this is why companies carry out blinded, randomized late-stage trials, which Xanthus says it intends to begin with Xanafide before long.

Spinal-device maker Intrinsic raises $21M — Intrinsic Therapeutics, a Woburn, Mass., device maker focused on minimally invasive spinal-disc repair, raised $21 million in a fourth funding round, VentureWire reports. Investors included New Enterprise Associates, Spray Venture Partners, Sprout Group and an unidentified institution.

The company’s been close-mouthed about its progress, although VentureWire reports that it recently began selling its disc devices in Europe. The financing is intended to fund future clinical trials and the costs of applying for FDA approval.

Live liver transplanter TransMedics files for $86.3M IPO — In case you’re not a Monty Python, that headline is a joke — although not by much. TransMedics, an Andover, Mass., medical-device company, aims to develop a box that can keep living, transplanted organs alive. They’ve filed to raise $86.3 million in an IPO. This is another fascinating-sounding company I’ll have to come back to once I’ve caught up on these briefings, but in the meantime feel free to check out their S-1 and their Web site. Also, I should note that TransMedics is actually focused on heart transplants, not liver.

Eye imager Bioptigen gets $500K infusion — Durham, N.C.-based Bioptigen received a $500,000 convertible financing as it prepares for a second funding round. Investors included the Piedmont Angel Network Two and other existing investors. Bioptigen is developing a real-time imaging system for ophthalmic indications.

Microbia strikes deal worth up to $330M for GI disorders — Microbia, a Cambridge, Mass., biotech with a focus on gastrointestinal and heart disease, struck a partnership with New York’s Forest Laboratories worth up to $330 million to develop its first GI drug. Microbia gets a $70 million upfront payment and milestone and licensing payments worth much more if the development is successful. Microbia has already raised $231 million in venture equity. See the company’s release here (PDF).

uPlayMe, the latest in a ever growing pile of companies offering a desktop application to let you connect with people through shared tastes in music, said it has raised a “multi-million” round of funding.

The New York company uses a recommendation engine, looking at the music you’ve played and letting you contact other users who have recently played the same music. It also works for videos, including those watched on YouTube, and other digital content, such as movies and TV shows.

The music feature is like a number of other companies, from Last.fm to Mystrands and The Filter, the latter two also having a download that searches your music including your iTunes library, and a player, like uPlayMe. uPlayM offers an IM service too, so you can chat with the people you befriend. A dashboard shows the music you’re listening too, and the music being listened to by others. It lets you sample or buy the music.

To get things humming, the company says it’ll give you $10 worth of iTunes if you invite five friends to join uPlayMe.

The investment comes from Warner Music Group, a major music label, Village Ventures, and other investors. Here’s the announcement. The specific amount was undisclosed.

The company was co-founded last year by Dan Pelson, a senior vice president at Warner Music Group, and Bo Peabody, a managing general partner at Village Ventures.

Getty Images has acquired Pump Audio, of company that has built up a catalog of 100,000 songs from musicians not signed with traditional labels, for $42 million, according to the Wall Street Journal.

Getty, of Seattle, Wa., says it is the largest provider of still and moving images. Earlier this year, it bought MediaVast for $200 million, which added more images to Getty’s huge archive. Its acquisition of Pump, based in New York’s Hudson Valley, extends its reach into other forms of digital media at a time when the industry is in midst of massive change caused by Internet distribution.

The deal also shows how licensed music continues to hold considerable value. The digital media industry is hot for investors. Just last year, three investors — Greycroft Partners LP, Village Ventures and High Peaks Venture Partners — invested an undisclosed amount of cash into Pump, and presumably the rapid sale gives them a quick profit, though this hasn’t been confirmed. The company was six years old.

From the Journal:

A key to Pump’s business is the way it lets clients search its database. The service offers a menu of simple search criteria, such as whether the song has lyrics or not, the kind of instruments used, as well as its genre, tempo and mood. “It opens up the production community to people who play the ukulele,” says Pump Chief Executive Steve Ellis. “Which the major labels don’t offer.”

…Rates range from $25 for use in a podcast to hundreds or even thousands of dollars for a theatrically distributed film or network television show. Pump splits the licensing fees evenly with its artists.

PayPerPost, the site that pays bloggers to write content about advertisers, and then gets paid by those advertisers, has raised $7 million more in financing.

This is a controversial site (see our earlier coverage. Bloggers writing rave reviews about products can sway readers into thinking that a product is actually good, but in reality it may be terrible.

In response, PayPerPost later implemented a policy forcing bloggers to disclose whether or not they’ve received money for their post.

Some five to seven percent of PayPerPost’s users dropped the service after that change, but these were replaced by ten times as many people who welcomed the change — both advertisers and bloggers, said Ted Murphy, chief executive officer of PayPerPost.

ReviewMe is a competitor. That company’s latest numbers suggested it had 750 posts, compared to PayPerPost’s 7,500 posts around the same time, according to Murphy. That’s why he’s taking so much cash: “We intend to keep it that way,” he tells VentureBeat.

He says he expects to meet this year’s revenue target of $5 million dollars, and possibly even exceed it. The company has 28,000 bloggers participating and being paid, he said. It has signed up 6,500 advertisers, he said.

Leading the latest round is Draper Fisher Jurvetson, which also led the company’s first $3 million round a few months ago. Additional participants included existing backers Inflexion Partners and Village Ventures as well as new investor DFJ Gotham. With this investment, DFJ Managing Director Josh Stein also joins PayPerPost’s Board of Directors.

Indianapolis-based BioStorage Technologies, a provider of biological-material storage services, raised $8.3 million in a first round of funding. The company’s statement is here (PDF).

BioStorage claims to be a “worldwide leader” in the outsourced storage and management of all manner of biological materials, ranging from tissue, bone and blood samples to forensics material to manufactured biological products. It initially raised $5 million (PDF) in its first round last August, then added a second tranche in late 2006. The round was led by Radius Ventures, joined by Spring Mills Venture Partners, Village Ventures, and Twilight Venture Partners.

Bar Harbor BioTechnology, a Bar Harbor, Me., developer of DNA and RNA analysis equipment, raised a “multimillion dollar” first round of funding, VentureWire reports. The round was lead by Borealis Ventures, and also involved Village Ventures.

Bar Harbor Bio is a spinout of the Jackson Laboratory, a research institute known for its large collection of genetically engineered mice. The company is developing lab equipment and software for quantitative polymerase chain reaction, or qPCR — a method for identifying and measuring the prevalence of genes and their activity, or “expression.”

Updated with full list of names of angel investors

How do you build the perfect local community Web site — with news, events, comments and more?

If you manage to, it will be a grand slam. It becomes the talk of the town, people spend more time going there, and local advertisers spend money there.

A wave of companies have tried, but failed. But Outside.in, a new Brooklyn, NY start-up is looking very good — as good, if not better than any we’ve seen so far. Its visual presentation is nice and simple (see screenshot at bottom). It uses AJAX and other technologies to improve upon efforts preceding it.

Here’s the background: Newspapers have largely dropped the ball. A dozen or so Internet companies have tried to adapt the community concept online, but none have nailed it. There’s Yelp, which specializes in reviews of bars and restaurants. There’s Judysbook, which began with a broader community feel, but has since moved toward shopping. There’s Insiderpages, which is struggling, and focused on business listings. Smalltown focuses on local business, too. Topix gives you community news. Backfence gets closer, as does ePodunk to coverage of wider community events — but their execution and user interfaces have remained unimpressive. Craigslist provides a local marketplace, but stops there.

Outside.in takes both existing content (from local bloggers, city governments, movie listings) and user generated content, and packages them into local sites.

For each town, Outside.in lets you see stories, comments, places and “neighbors,” or registered users. It has one useful, powerful feature we haven’t seen before: You can switch the focus of your region easily — using a map feature at the top left of your region. This lets you zoom in or out to include more or less surrounding regions or cities — and the information, news, events and comments all adjust in real time.

So you can limit a search for crime to Park Slope, a neighborhood in Brooklyn, NY. Then you can search for Italian restaurants across the entire city. Or you can look for poetry readings in Park Slope and surrounding neighborhoods. All by just scrolling within a map.

There’s a lot to look at here. Outside.in provides a URL for each city (it adds a +1 to the URL if you zoom out and see a mile of surrounding area, etc), but also for each place. For example, there’s an entry for the Whole Foods in Brooklyn, which is under development, and creating considerable community debate. People can go to the URL and see the latest stories by local bloggers, and can submit their own comments.

In this way, Outside.in wants to be a Wikipedia for local places. How does it monitor the comments and entries? Well, like Wikipedia, it has the crowd controllers. Of its eight full-time employees, three are chaperoning the site, and 12 more freelancers are helping out.

It is early days, and it is a little buggy. For example, in Palo Alto, Calif., some “top places” are actually based in places like Mountain View (in part, because Outside.in is still figuring out how to deal with regions like the Bay Area where cities merge into each other, and because it wants to show places with buzz within ten miles from you).

Founder Steven Johnson gave us a demo today. He was the co-founder of the online magazine FEED and community site, Plastic.com.

Hollywood producer Andy Karsch, and John Seely Brown seed-funded the company with $200,000. Yesterday, the company announced it raised $900,000 more from Union Square Ventures, Milestone, Village Ventures and individuals Marc Andreessen (Netscape co-founder), Esther Dyson, George Crowley, John Borthwick and Richard Smith.

This will be fun to watch. We’ve been waiting for a decent site to come along. While Outside.in has a long way to go, it is looking very smart.