Digital Media

In July 2008, two months before start-up SpiralFrog's aspirations were shredded by the souring economy and a series of management gaffes, the long knives were already drawn in the music service's executive suite.

In a private meeting, CEO Mel Schrieberg was stripped of most of his power after SpiralFrog's board grew tired of his heavy spending on salaries and ineffective marketing strategies. Even worse for Schrieberg, the man intent on driving him out was an old friend and one of his main allies at the company, founder Joe Mohen.

"The board wants him removed now," Mohen wrote in a July 21, 2008, e-mail exchange with Amir Khan, an executive at 3V Capital Management, SpiralFrog's biggest financial backer. "He adds no value at this time. The management will be very demoralized, if he remains."

The start-up's short, troubled history saw other clashes among managers. At the center of most of them was Mohen. He butted heads with his handpicked CEO, as well as SpiralFrog's board of directors and financial backers.

To Mohen, SpiralFrog "was all about him controlling the company, no matter who was in charge," Schrieberg, who maintained his CEO title from January 2007 to October 2008, told CNET News in a phone interview. But Mohen, who had founded the pioneering voting site Election.com, hardly deserves all the blame for what went wrong.

Schrieberg, a former IBM executive, had no operational experience in advertising or in music. In e-mails sent to several SpiralFrog employees, Mohen called some of Schrieberg's decisions "insane."

Adding to the management dysfunction was Scott Stagg, who managed 3V (now called Stagg Capital), the company that loaned SpiralFrog $34 million. For nearly two years, Stagg paid all of SpiralFrog's bills. Only sumo wrestlers are more likely to throw their weight around than Stagg, former employees have indicated, and even Mohen says management couldn't do much without first checking with Stagg.

On March 13, 2009, the music service was forced to turn over assets to creditors and shut down. To find out how a company that some called a potential iTunes killer so quickly turned into yet another dot-com flameout, CNET reviewed numerous documents and interviewed 13 people formerly associated with the company, including former board members, executives, and employees.

Certainly, SpiralFrog, which was trying to succeed with an unproven business model, wasn't exactly in an ideal position from the start. But former insiders, most of whom requested anonymity, say inexperienced managers who allowed petty squabbles to cloud their judgment didn't do themselves or their company any favors.

Could have been a contender
In December 2008, cash-strapped SpiralFrog appeared doomed. Entertainment conglomerate Viacom had expressed interest in acquiring a minority stake in the start-up three months beforehand, but the deal fell through. Yahoo would also eventually kick the tires on SpiralFrog but it also passed. Stagg, in a December 11, 2008, e-mail to SpiralFrog's board, from which he had recently resigned, sized up SpiralFrog's bleak financial situation.

"At this time, the company is out of money, all employees have been terminated, (and) over $8 million of payables remain outstanding," Stagg wrote. "There are multiple lawsuits with pending judgments, and the major music publishers, including Sony/ATV, Warner Chappell, and Harry Fox are expecting $550,000 of long overdue payments. Sony ATV is demanding a payment of $100,000 by Monday, December 15, which, if the company fails to meet, might force SpiralFrog to remove all of Sony ATV's content from the site."

Stagg may have overstated the situation a bit. Money would eventually trickle back in--virtually all of it from him--to help the company limp along while the board searched for an acquirer. There's no doubt, however, that at that time, SpiralFrog was nearing collapse.

Mohen, 53, acknowledges that mistakes were made. But, he added, what else could you expect? SpiralFrog was breaking new ground as it attempted to become the first service to offer music downloads free of charge to the public. In his version of the company story, everyone did their best and came close to turning SpiralFrog into a hit service, which attracted more than 2.5 million register users before closing.

What really killed SpiralFrog, according to Mohen and Schrieberg, 66, was the collapse of the investment-banking industry in September and the nation's subsequent financial meltdown. "There is not much you can do when funding and advertising sales go down precipitously due to economic conditions," Schrieberg said.

Until the economic meltdown, Mohen said SpiralFrog was on track. "It was all going to happen for us in October," he said. "We came a lot closer than people will ever know."

Although Mohen declined to specify how SpiralFrog's prospects might have changed in October, records show that company executives believed that a Viacom investment, which to them seemed imminent, would save the start-up.

The terms of drawn-up contracts, copies of which were obtained by CNET, called for Viacom to give SpiralFrog $100,000 in cash and $6.5 million worth of advertising on its MTV Networks unit. In exchange, Viacom would receive 4.3 million shares of preferred stock. The deal, if closed, would have valued SpiralFrog at about $120 million.

In September, at about the time the economy was becoming unglued, Viacom backed out of investment talks, and SpiralFrog's chances to survive the recession soured. One executive who did business with SpiralFrog and had seen the company's books said it's hard for him to conceive that anyone would have bought it. The source said the company's debt was just too big and complicated.

Who is in charge?
Headquartered in New York, SpiralFrog was a different kind of start-up from the get-go. It funded operations through loans. The company issued secured notes, essentially a contract whereby a company promises to repay at a certain interest rate.

After receiving $9 million in traditional equity funding in 2006, Stagg's investment firm began loaning SpiralFrog money in May 2007. Eventually, Stagg would lend the music service $34 million in convertible notes, which gave him the option of converting the loans into stock. Stagg said he never recouped the money.

So why go that riskier route, borrowing money? Most companies that can attract venture capital do. Taking out loans is less attractive because loans typically have to be repaid with interest, regardless of how the company fares.

Another way SpiralFrog differed from most start-ups was that it spent lavishly on salaries. Start-up CEOs typically ask for more equity in their companies rather than a big paycheck. It's common to see Silicon Valley managers earn less than $150,000 a year.

Not at SpiralFrog, which paid Mohen $360,000 a year in annual "consulting fees," documents show. Before he departed, former CEO Robin Kent was paid a $340,000 salary. Schrieberg's salary was $279,000.

A power struggle between Kent and Mohen paved the way for Schrieberg's appointment as CEO. In December 2006, Kent nearly drove Mohen out of SpiralFrog in a failed takeover bid. Mohen barely had enough board votes to keep control, and Kent, who had become CEO only seven months earlier, was sent packing. Just days after that, Mohen handed SpiralFrog's CEO position to Schrieberg, whom he had known for 11 years, Schrieberg said.

It was a questionable call. According to several former employees, to entice users of illegal peer-to-peer sites to SpiralFrog's legal and free music service, the company needed a CEO with a strong background in advertising and music. Schrieberg, who spent most of his career as a sales manager at companies like Xerox and IBM, had neither.

Power struggle
In early 2008, Schrieberg spearheaded a massive search engine- and affiliate-marketing campaign that would eventually cost the company $11 million, records show. The strategy was successful at drawing visitors but failed to generate lasting interest. Most people stayed a few minutes, viewed a few Web pages, and moved on. The practice of paying for traffic was supported by the board of directors and Mohen, but eventually, they lost faith in the strategy and in Schrieberg.

Perhaps not surprisingly, by the summer of 2008, it was becoming apparent that Mohen, Schrieberg, and Stagg were competing for control of the privately held SpiralFrog, former employees say. SpiralFrog was dependent on Stagg's money, which gave him considerable influence. Schrieberg had the board behind him at least until July. Mohen's personal financial troubles and feuding with fellow board members, meanwhile, sapped much of his power.

Despite his significant consulting fees and the private sale of some of his SpiralFrog shares, Mohen took out a personal loan of $115,000 in 2007 from a financial-services firm that was doing business with SpiralFrog, records show. He acknowledged to CNET News that he has not yet repaid the loan.

Schrieberg said Mohen asked him to be the guarantor of an American Express card that Mohen would use for business expenses. And since it was Stagg covering those expenses, he could deny any charge. That made Mohen beholden to Stagg as well as well as Schrieberg, who said he was never reimbursed for more than $40,000 that Mohen rung up on the credit card.

As for how he got into financial trouble, Mohen suggested that it was because of SpiralFrog's collapse. "I risked everything on the company," he said, adding that he invested $400,000 of his personal wealth, an amount he says he never recovered.

But why would Schrieberg share his card with Mohen? Schrieberg said he was just trying to help him out. Several former employees said, however, that Schrieberg went to great lengths to ingratiate himself with board members, including Mohen.

During the two years Schrieberg was CEO, the company hired the sons of board members Steve Norcia, Tom Mackell, and Bob Gordon. Schrieberg confirmed this but said the board member's sons were well-qualified.

Hiring relatives of board members can be problematic, according to corporate-governance experts. Employees can file discrimination suits, if they believe that a board member's relative was given a promotion that rightfully should have gone to them. Schrieberg said all the hires were cleared by the company's legal counsel. He also denied that such decisions made him unpopular with SpiralFrog employees. On the contrary, he said, "I was revered."

Click on the image above to see a full AOL invoice that led SpiralFrog's board to strip CEO Mel Schrieberg of most of his authority.

Nonetheless, Schrieberg lost the board's backing on July 21, when a $974,000 invoice from AOL, for affiliate-marketing services, reached the desks of Mohen and other board members. The bill was a shock; Schrieberg had told the board that the costs add up to about $600,000, according to 3V's Khan. In an e-mail exchange between Mohen and Khan, who was also a board member, Mohen lobbied for 3V to oust Schrieberg.

"(Schrieberg) needs to be kept out of the office," Mohen wrote. "When I saw the invoice today, I realized how serious this is...At this point, the majority of the board and senior-(management) team find him incompetent...Make him vice chair, and pay him for his cooperation."

Khan replied that Schrieberg was "CEO only in name. His duties are all gone to me." But Khan stopped short of agreeing to remove Schrieberg. "We can't have another CEO leave," he wrote.

Schrieberg said he resigned of his own volition in October. But he acknowledged that Mohen came to him sometime around July 21 and told him that Khan would be taking over most of the CEO duties. He said he agreed to go along with the plan because Stagg and 3V were already calling most of the shots. But Schrieberg strongly maintains that he performed well at SpiralFrog and that the board and senior management were aware of "every penny" he spent as CEO.

Starting over
In an interview, Khan and Stagg said Schrieberg was kept around because of the ongoing Viacom negotiations. Stagg said he and the rest of the board believed that removing Schrieberg would have rattled the entertainment conglomerate, which had expressed interest in obtaining a minority stake in SpiralFrog. With Stagg's blessing, Khan and some of his lieutenants at the hedge fund tried operating the start-up for several months without any official titles. In an interview, Mohen called this effort a disaster.

Click the image above to read our story on how SpiralFrog's founder, Joe Mohen, enabled a former employee to sell customers' e-mails.

"The management team to a person was alienated by Stagg's people," Mohen said. "That was because they tried to operate a business, and they didn't have the skills to do it."

In mid-September, the wheels came off. Viacom declined to invest in SpiralFrog. Stagg continued to provide some funding, but only a small percentage of what he once did. In November, Mohen gathered employees still left and told them that the company would not make payroll.

The situation was tough, but there was a brief upside for Mohen: without Stagg's money, SpiralFrog's management no longer had to placate him, former employees said. Mohen was named interim CEO and began looking for new investors. He tried convincing 3V to continue funding the company by threatening to steer SpiralFrog into bankruptcy and start all over with a new company.

Still, everyone knew that such an endeavor would be impossible, according to Stagg, because the licensing deals that SpiralFrog had with Universal Music and EMI were nontransferable. If SpiralFrog went bankrupt, Mohen would have to renegotiate for new music licenses.

Stagg made several unsuccessful attempts to take control of the board but always failed. "The truth is, we never had control (of the company) because we never had control of the board," Stagg said.

Click the image above to see copies of some of SpiralFrog's correspondence.

Proof that Stagg and 3V did control SpiralFrog could potentially cost the investor more than he's already lost over it. Antaeus Capital, a financial-services firm that began working with SpiralFrog in 2006, has asserted in a lawsuit that the start-up breached several agreements. The complaint, filed last November, alleges that SpiralFrog was really Stagg's property and that he should make good on the money the company owed. The case is still moving through the courts.

In the end, the current suit is a fight over the bones of a dead company. SpiralFrog's domain name was sold in May to MyMojo, a mobile-content site, for $20,000, sources say. After three years' worth of turf wars, more than $40 million worth of loans and investments, and a long list of unfulfilled promises, that's pretty much all that was left.

Much is being made this Friday over Amazon's move to essentially forcibly recall two e-books that some customers had purchased.

According to multiple reports, Amazon removed the books from users' accounts after the publisher decided to pull its e-book. (My favorite headline, by the way, was Seattlest's "Amazon's Kindle: Now with new take-backsies feature".)

(Credit: Amazon.com)

The publisher is certainly within its rights to stop selling the e-book and certainly Amazon needs to honor those wishes. But its hard to understand by what rights the retailer can remove the book from those who have already purchased one of the titles.

The added irony is that one of the two books in question is George Orwell's "1984." The other is Orwell's "Animal Farm."

The New York Times David Pogue quoted one reader that likened the move to "Barnes & Noble sneaking into our homes in the middle of the night, taking some books that we've been reading off our nightstands, and leaving us a check on the coffee table."

Peter Kafka at All Things Digital cites Amazon's terms of service, which don't seem to permit the move, noting that once users buy a book, they get "the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use."

Even if there are contract terms somewhere that permit this, it sets a terrible precedent for the company, as it plays into some of customers' worst fears around digitally protected content.

One of the things I value as a customer of digital content is the idea that I can keep a book and have it with me whenever I want. It's one of several reasons that I own one of the e-book readers.

The idea that at any point Amazon can take it back and give me a refund is disturbing, to say the least. I've asked Amazon for comment and will let you know what I hear back.

SpiralFrog's traffic over the past year.

(Credit: Siteanalytics.compete.com)

Update: To note that SpiralFrog users did not purchase music.

Controversy trailed SpiralFrog while it existed and continues to hound the company, even after closing down.

Some shareholders of SpiralFrog, the ad-supported music download store that shuttered its site on March 19, are unhappy with how the company's assets are being sold. Separately, several site users have complained that they weren't warned they could lose their music if the site closed down.

New York-based SpiralFrog offered free downloads to users who agreed to be served advertisements with their songs. They never purchased the music outright and conditions of use always included watching ads and returning to the site once every 60 days. In August 2006, the company announced that it had acquired the rights to offer Universal Music Group's vast library of songs. SpiralFrog managers proclaimed that ad-supported music would defeat illegal file sharing. The New York Times wrote SpiralFrog could be an iTunes killer.

After that, however, the company suffered through management shakeups and cash crunches, and failed to cut partnerships with two of the four largest music labels. When it finally closed down, SpiralFrog owed at least $34 million.

Some of the people who lost money when SpiralFrog went down have spoken to CNET News about whether some of the company's assets are worth more than they are being sold for. For example, MyMojo.com, a mobile content service, acquired SpiralFrog's domain name for $20,000, sources told CNET News.

John Ferber, who co-founded Advertising.com, also started MyMojo. Ferber declined to comment on the price he paid for SpiralFrog's name, but did confirm that the firm handling the sale, Gottbetter & Partners, didn't contact him. Once Ferber, who sold Advertising.com to AOL in 2004 for nearly $500 million, heard about SpiralFrog's collapse, he went to Gottbetter.

So, did Gottbetter advertise the sale of assets or contact SpiralFrog's biggest competitors?

Representatives from such music services as Imeem, RealNetworks' Rhapsody, and Qtrax say they were never contacted about any potential interest in SpiralFrog's assets. Scott Rapfogel, the Gottbetter attorney handling the sale has not replied to numerous interview requests.

One question is why wouldn't the agent in charge of selling SpiralFrog's assets try to drum up interest with a few phone calls to SpiralFrog's competitors or interested reporters?

Switching to the question of SpiralFrog's DRM; some of the site's users are bitter about losing the music they downloaded. When SpiralFrog went dark, CEO Joe Mohen said that SpiralFrog's music would be available for an additional 60 days. What Mohen meant was that if users visited the site on the last day the service operated and updated the DRM on their songs, they would have access for two months from that day.

SpiralFrog's songs required users to visit the site at least once within a 60-day period or the music would be locked down.

"I understand I'm whining and bitching about ostensibly free music," wrote a former SpiralFrog user in an e-mail to CNET News. "However, my point is it was never stated anywhere on their Web site that we would lose the rights to the music if the site went under. Nor was it ever clearly stated about what us listeners had to do to keep the 'rights' to the music."

The question about DRM-restricted music and what happens to it when a company stops doing business has come up often in the past year. Yahoo, Microsoft's MSN, and Walmart.com are three services that stopped issuing DRM keys for their music when they wanted to alter or shut down operations.

In contrast with SpiralFrog, customers of each of the companies would not lose their music totally. They still would be able to hear songs, but would be prevented from moving them to new devices.

Correction at 11:10 a.m. PDT: Lala's patent filing is an application. And Lala says it has made no promises to music labels regarding piracy in order to offer 10-cent "Web Songs."

Michael Robertson, the gadfly of digital music, is once again pestering rivals about their business practices.

Robertson--the controversial founder of MP3.com, Linspire, and MP3tunes.com--has accused Lala of attempting to transfer control of its users' music to the recording labels.

Robertson claimed last month on his personal blog that Lala had developed an "insidious new plot" to entice its users to upload music to the company's servers and then trap the music there by embedding digital rights management into the servers. This would enable Lala and the big music labels to exercise greater control over the tunes. He compared Lala's plan with a "roach motel," where songs check in but they can't check out.

Robertson's accusations generated little attention, possibly because he operates a competing site, MP3tunes.com. Both companies enable customers to access music from the cloud, and one competitor badmouthing another won't stop the presses. But in regards to Robertson's accusations about Lala and DRM, the best support for the claims comes from Lala itself.

Robertson directed CNET News to a Lala patent application filed last year and titled "Network Based Digital Rights Management System." In the filing, Lala describes what it is hoping to patent.

"A network-based DRM system manages digital media assets stored in the network," Lala, which has been praised by music labels and has financial backing from Warner Music Group, states in the document. "The system provides consumers with access to the digital media from any device connected to an electronic network such as the Internet, while enforcing the intended uses by the copyright owners."

"The Web restricted nature of the offering," Lala writes elsewhere in the filing, "means that the digital assets are at all times controlled by the system and thus result in minimal piracy."

The patent application proves Lala is trying to develop a new type of DRM, according to Robertson. Instead of wrapping individual songs in DRM, Lala's plan calls for a network to act as a fortress that surrounds an entire music ecosystem.

Lala CEO Geoff Ralston confirmed that Lala filed for the patent but denied the company is trying to wrest control away from users.

"It's a patent around Web Songs," Ralston said.

Web Songs are one of the cornerstones of the company's latest business model. Lala, which has switched focus from two prior models, now offers three main features. In the first, MP3s unprotected by DRM can be purchased and download for rates comparable to iTunes'. A second option offers users unlimited, ad-free streaming access to music they already own. The way this works is that users allow Lala to scan their hard drives and preserve a list of the songs the person owns. Lala's system will then stream its own copies of the songs to the user. This way users don't have to worry about losing their music to hard-drive meltdowns or misplaced music players.

Lala's last feature allows people to listen to streaming music--that they don't already own--for 10 cents per song. Lala calls these "Web Songs." One of the ways Web Songs are different from MP3s is that they can't be downloaded to a portable device.

"A Web Song by definition has a limited set of rights associated with it," Ralston said. "One right you don't have is the right to take it with you. It's not a portable song. Another right you don't have is to copy it. Everything has limited rights, even an MP3. You're not allowed to take an MP3, copy it, and sell it."

Lala said Web Songs offer people a chance to obtain streaming access to a song for the price of a grocery store gum drop. If customers later want to upgrade and buy an MP3 version of the tune, the dime is counted against the price of the download.

Michael Robertson found Lala's DRM patent filing and says it proves the company is taking orders from record labels.

(Credit: Michael Robertson)

While Ralston said the filing only deals with Web Songs, the patent document itself, under a section titled "Overview of Present Invention," lists the many applications of its invention.

The patent filing indicates that Lala's DRM invention is designed to lock down music that its users already own. Lala's system doesn't allow people to listen to their own music via anything but a Web browser and the songs cannot be downloaded. Ralston argues that people can do all these things with the original music files they own.

But if Lala's users own the music the company stores, why does Lala restrict it this way? Are these restrictions rooted in some technology limitation or do the major labels require them?

"We're trying to provide a way so that users can have more access to their music than they had in the past," Ralston said. "Look at the iPhone. I can't easily throw brand-new graphic cards into it. It's all closed up. But it's a much better consumer proposition. We're not acting as an agent of the record companies in any way except that we resell their goods. There's nothing nefarious there at all. We repackaged some stuff that we think provides a better consumer proposition."

Music sales have been falling for years, and piracy is at least one of the main causes. Nonetheless, the four top record labels over the past year have appeared to give up on DRM as a piracy-busting strategy. This trend culminated in January when Apple announced it would strip DRM from the entire iTunes library. So, why then is Lala attempting to come up with a new DRM strategy?

In the patent application, the company offers some clues.

Lala notes that DRM produced by Microsoft and Apple "suffered from lack of interoperability caused by competitive and licensing issues." Most DRM, Lala points out, can also be cracked or broken. Lala says in the patent filing that its DRM approach avoids these issues.

"A network-based approach protects against rampant piracy," Lala writes. "By delivering the product directly from the network, only authorized users and devices can access the media. Access by users and devices is controlled on the Web and can be constantly adapted to changing technologies and market pressures."

Robertson claims that network DRM is simply the latest attempt by the recording industry to jerk control of music away from consumers. He said what may be most alarming about Lala's system is its potential to snatch away someone's songs.

"The system also allows for the 'revoking' of ownership of digital media," Lala writes in the patent filing. "For example, if a user is known to have illegally shared a file, the copyright owner may choose to revoke their ownership of the digital media in the system, limiting the rights of such user to the media."

When asked about this, Lala's CEO was unapologetic.

"Is it controversial that a store has the right to terminate someone that steals from them?" Ralston asked.

A copy of Lala's patent, titled Networks Based Digital Rights Management System.

(Credit: Faqs.org)

This was originally published at ZDNet's Between the Lines.

Facebook's photo storage system holds 850 million photos and costs a lot of dough. Niall Kennedy has a nice overview of what Facebook is doing to minimize its storage costs.

Facebook's system, dubbed Haystack, is custom-built but relies on content delivery networks and NetApp. Facebook is trying to minimize the custom stuff and use commodity hardware.

Kennedy does a nice job of synthesizing Facebook's storage system. In a nutshell:

• Facebook's previous system relied heavily on Akamai and Limelight to improve latency.
• That Akamai and Limelight use costs money.
• Facebook has invested in its own "blob" storage system designed to cut the total cost per photo on the social network's systems.
• The company hired a former NetApp engineer to redesign the storage system.

A lot of this storage architecture is complicated--and frankly over my head--but for the engineers in the house here's a presentation on Haystack from last year.

Microsoft has hired Dayne Sampson, a Yahoo vice president of operations since 2006, the software giant said Monday.

"We're very excited to have Dayne Sampson join the team, reporting to Debra Chrapaty, corporate vice president of Global Foundation Services (GFS). Operations and foundation services are key to delivering the Microsoft software plus services vision, and Dayne's extensive operations and industry experience will be a strong asset for GFS and the company," the company said in a statement.

GFS, which runs Microsoft's data centers, is an important part of Microsoft's effort to expand from software to online services to better compete against Yahoo, Google, Facebook, and other Net powers. Microsoft has hired a number of Yahoo notables, including Qi Lu, Sean Suchter, Larry Heck, and Scott Moore.

Sampson has long history at Net companies. Before working at Yahoo, Sampson was senior vice president of IT and operations at InterActive Corp. (IAC), and before that, vice president of IT and operations at Ask.com.

(Via All Things D.)

Wall Street executives feeling harassed by taxpayers outraged at their pay might take note of how Google's ruling triumvirate fared in 2008: $1 in salary each, no bonus, no stock grants, and no stock options.

Google has offered co-founders Larry Page and Sergey Brin and Chief Executive Eric Schmidt "market-competitive" salaries every year since 2005, but once again in 2008, the three turned it down, according to a company regulatory filing Tuesday. "Due to their own preferences not to receive salary compensation, Eric, Larry, and Sergey each rejected these offers and continue to receive base salaries of $1," the company said.

Also in 2008, the company decided that the stock-based compensation it had awarded to top executives in 2007 was "sufficient to help us meet our retention and business objectives through 2008," so no new stock compensation was awarded to them except in the case of new Chief Financial Officer Patrick Pichette, who was set to receive compensation worth more than $2 million along with thousands of shares and stock options in his first year.

Schmidt received perks totaling $508,764 in 2008, up from $480,561 the year before. That covered $402,562 in personal security costs and $106,201 Google paid to fly his family members and friends on paid chartered flights.

Of course, Page, Brin, and Schmidt are certainly not paupers. The 29,148,614 shares of Google's Class B common stock Page held at the end of 2008 are worth $10.1 billion at Tuesday's closing price of $347.17; Brin's 28,611,862 shares are worth $9.9 billion, and Schmidt's 9,372,740 shares are worth $3.3 billion.

PALM DESERT, Calif.--If a major earthquake hits San Francisco, where CBS Interactive (CNET News' parent) is based, how would everyone in the company communicate with each other in the aftermath?

If the folks at Transformyx, a Baton Rouge, La., company, have anything to say about it, we'd all be using their technology, an online service called RallyPoint.

The idea behind the service is to make it possible for everyone in an organization to stay in touch with each other and to get all the relevant information they need after any kind of significant disaster strikes, be it an earthquake, a tornado, a flood or anything else.

Being from Louisiana, Transformyx was inspired to create RallyPoint by 2005's Hurricane Katrina. But the lessons learned in that crisis were that companies need to be able to get their employees--especially managers--as much information as possible about what's going on, both with the people involved, and with any mission-critical data.

Transformyx, which presented Monday morning at Demo 09, is positioning RallyPoint as the first end-to-end crisis recovery and communications system. The idea is that by using the online system, anyone in a company affected by a disaster can get simple access to whatever he or she needs to ensure that everyone is accounted for, and to disseminate communications to relevant people.

The service is designed to handle a wide range of data: text, voice, video, and even communications from government agencies.

In any company using RallyPoint, all employees would be given a card they can carry around that provides instructions on how to use the system, meaning that no one has to memorize instructions. That's important given that in a crisis, people are often unable to remember even the most mundane details of their lives.

The system provides employees with a way to check in, notifying managers of their whereabouts, and similarly, gives those managers all the information they need to know about the discrete group of people they're responsible for. Employees and managers alike can upload messages to the system. Managers using the system can use up to 1GB of storage for documents or video.

Like many Web-based services, RallyPoint has a dashboard interface, and one of the things managers handling a crisis will like is that that interface shows the real-time status of their employees, and even a map showing their locations.

Furthermore, any two members using the system can communicate with each other once they've signed in, meaning that no one has to remember any phone numbers or any other ways to get in touch with each other.

Certainly, this system seems valuable, though it obviously relies on everyone using it to have power and Internet access. In a real disaster, like a Katrina-level hurricane or a major earthquake, that kind of access may not be available.

Still, communications are often available even in a crisis, and even when power disappears. And with most people using laptops, it's likely that people would have enough battery life to at least log in to the system.

What would be nice to see with RallyPoint is a personal widget, allowing family members to use it for their own purposes as well.

Chief Executive Carol Bartz announced how she reorganized Yahoo in a blog post Thursday, but she shared a bit more about the priorities in an internal memo to Yahoo employees. Here's the full text of the memo.

From: Carol Bartz

Date: Thursday, February 26, 2009

To: All employees

Yahoo CEO Carol Bartz

(Credit: Yahoo)

Subject: Our New Organization

Yahoos,

As I've gotten to know Yahoo! over the past several weeks, I've developed a point of view on how our organization should be structured to set us up for success.

Our goal is simple: to consistently deliver awesome consumer and advertiser experiences, everywhere in the world we do business. Delivering great customer experiences is everyone's job at Yahoo!--and each part of our organization will have a clear role in making that happen every day.

The timing of this announcement is important. As soon as decisions were made, I wanted you to know about them--even if that means we don't have all the details nailed down yet. Yes, there's been a lot of speculation in the media over the past few days...that's been a little frustrating, but I'm not willing to speak publicly about decisions before they're final. Today, they are--so I'll lay out our new organizational structure for you now.

I know you guys have reorg fatigue. Hang in there--our intention is to leave this structure in place for two to four years. We'll continue to make adjustments as needed, but we expect this core structure to stay put.

The structure outlined below will enable us to make big improvements in our product quality and operational efficiency. Part of that is simplicity--I'm frankly amazed at how complicated some things are here! We'll have much clearer decision making and accountability. Product and regional teams will share responsibility for revenue targets and expense management, but we'll have one P&L, for which I'm accountable.

We will also be in a better position to really listen to and understand our customers --both consumers and advertisers. I think we've gotten into the habit of focusing internally too much and we sometimes forget who we're here to serve. You'll notice that our management structure puts a renewed focus on the customer, with stronger feedback loops across the company...and they all come through me.

Also, as you know, no organizational structure is a substitute for collaboration, communication and trust. We'll all need to evolve our behavior a bit--as teams and as individuals--to make this structure work the way it's designed.

So here's the overview, with the roles that will report directly to me. As you'll see, some of our leaders are still to be determined. I know you'll want more detail than what's below--you can learn more on Backyard: http://backyard.yahoo.com/ourorg.

Products: We've combined Tech and Product groups under one roof, led by Ari Balogh as EVP Products & CTO. Ari's charter is to deliver global products that enable extraordinary consumer and advertiser experiences. Ari's direct reports now include one leader for each product group--we've taken care of the "two in a box" problem.

One important note: The Connected Life team has been integrated into various parts of the new organization. Our mobile strategy remains a key part of Yahoo!'s focus going forward and all of our product groups will own mobile innovations. After leading Connected Life for four years, Marco Boerries has resigned from the company to spend more time with his family in Europe. We thank Marco for his important contributions at Yahoo!.

Regions: There are now two: North America and International. As I've said before, international growth is critical for Yahoo!, which has become too reliant on its U.S. business over the years.

The regions deliver Yahoo!'s products, programming and services to consumers, partners and advertisers in local markets. They will partner closely with the newly formed Regional Solutions & Products group in Ari's organization to help drive a significant shift in how Yahoo! develops products for different geographies. The goal is to have global platforms on which regional product offerings are based.

The North American region--comprised of the U.S. and Canada--is led by Hilary Schneider. The leader of our International region, to be hired soon, will be responsible for a cohesive Yahoo! global strategy and seizing our international growth opportunities. Until we determine who'll lead the International region, Rose Tsou (Asia), Rich Riley (Europe) and Keith Nilsson (Emerging Markets) will continue to report to me.

Marketing: Elisa Steele will be joining Yahoo! as our Chief Marketing Officer (CMO), effective March 23. Elisa joins us from NetApp where she was SVP, Corporate Marketing. Previous to NetApp, she held executive positions in marketing at Sun Microsystems. Elisa will oversee our global marketing strategy and provide direction for our marketing function. She'll bring together the various Yahoo! marketing teams that have been spread across the company. Reporting into Elisa will be Brand Marketing, Audience Marketing, Corporate Communications, Insights, Policy & Privacy, Community Affairs and related central teams. I'm delighted to have Elisa joining the team.

Customer Advocacy: As I said, we can do much better in hearing the voice of the customer across Yahoo!, and incorporating what we hear into all of our work day-to-day. We have opened a search for a leader, who will oversee Customer Care and Ad Operations globally with the goal of improving how we support Yahoo!'s users and advertisers. In the interim, these teams will continue to report to Hilary.

Service Engineering & Operations: This new team is responsible for delivering common technology services at scale, including application management and infrastructure. No matter how cool our products are, the customer's experience won't be great unless our applications consistently deliver. Note that we're bringing Service Engineering together as one group because these engineers bring expertise that is best applied horizontally. Leading this organization is David Dibble, who joined Yahoo! in December. David's team also will be accountable for delivering more effective corporate IT systems.

Corporate Functions: Blake Jorgensen will be leaving Yahoo! and I am searching for a new CFO. Blake will remain through a transition with his successor, and I want to thank Blake for all of his great contributions to Yahoo! over the past two years. Mike Callahan will continue to lead our Legal team, and David Windley leads our Human Resources function. Joel Jones joins the team as my Chief of Staff.

So that's the high-level view. These changes are effective immediately, but we've got more work to do in filling out the structure of each group. In the short term, this transition will be challenging for many of our people. My executive staff will be working with their organizations as quickly as possible to create further clarity. For example, we'll need to recast budgets and adjust work areas so we have the right people working side-by-side.

I want to thank all of you who've shared your ideas and views with me since I arrived. Several leaders across Yahoo! came together to design this new structure--I've been very impressed with their dedication to the right outcomes, particularly how they've embraced the need to eliminate the silos that have been a drag on this organization for so long.

I think this organizational structure has the potential to solve many of the issues you've helped me better understand. Of course, new issues will emerge. But I know we'll be aligned and nimble in tackling them together.

This is a tremendous, proud company with a powerful brand, great products and a bright future. Now's the time to get more focused than ever on delighting our users and advertisers. Let's show them how great Yahoo! can be.

Carol