Digital Media

MySpace on Wednesday acquired social-networking site Imeem for an undisclosed sum, but sources with knowledge of the deal say is worth about $8 million.

The News Corp.-owned MySpace has agreed to pay $1 million in cash, but the total figure also includes money for accounts receivable and employee earn outs. Regardless, the price is a big loss for investors who poured upwards of $30 million into the pioneer ad-supported music service.

(Credit: Imeem)

An Imeem spokesman declined to comment.

Imeem will continue to operate as a standalone site, at least initially, according to the sources. One source said that Imeem's brand will unlikely live on as they expect Imeem's assets will be folded into MySpace Music.

At least half of Imeem's staff will likely lose their jobs, according to the sources.

One interesting note is that Imeem was once backed by all four major music labels, but one of the record companies dissolved its position in Imeem weeks ago, the sources said.

Imeem is the fourth ad-supported site either to go bust or sell for peanuts. The sector is starting to look like a graveyard; Ruckus and SpiralFrog shut their doors earlier this year, and iLike was acquired--also by MySpace--for a song.

Backers launched these risky ventures hoping that if the services could attract large enough audiences, ad-money would follow. It hasn't worked that way.

The ad-supported services couldn't generate ad rates high enough to cover the licensing fees the record companies charged--even as in Imeem's case, the labels reduced their fees. Sure, a soft ad market and ailing economy didn't help, but the information that's surfaced about these sites is that they struggled to convince advertisers that streaming music was a good vehicle for delivering ads. It's not.

Internet users don't want ads and don't look at them when listening to songs. That's the dilemma.

Against this backdrop, all eyes should now be on MySpace Music. The question it must answer is how does acquiring Imeem and iLike help turn the lackluster and underachieving site around?

When MySpace Music launched in September 2008, big promises were made. The site was supposed to sell concert tickets and merchandise and branch out overseas. The site hasn't come close to living up to the hype.

While it's difficult to see what Imeem assets might give MySpace an advantage, It might not be a bad idea to tap into the experience of Dalton Caldwell, Imeem's CEO and his top lieutenants.

Sure, they couldn't make Imeem's iffy model work but they know where all the mines are buried. My music industry sources said the labels were always impressed with Caldwell and guys like Ali Aydar, Imeem's chief operator officer as well as Matt Graves, the company's vice president of communications.

They won kudos for helping to keep keep Imeem going when a a cash crunch threatened the company last spring.

In the wake of acquiring smaller digital music services iLike--and now, it looks like, Imeem--MySpace continues to attempt to align itself as the foremost player in the digital music industry. On Wednesday, the News Corp. division rolled out a music charts page to track the most popular music getting listened to on the social site.

It's fairly self-explanatory. There's a prominent "movers" section featuring artists that have seen an uptick in activity recently, and music can be filtered by genre, country, and label category (indie, unsigned, or major). Then there are links to "friend" an artist, buy songs, and watch music videos on MySpace's recently launched music video portal.

(Credit: MySpace)

The design, regrettably, isn't very user-friendly and requires quite a bit of scrolling. And in a world of finely tuned "music discovery" and personalized recommendations, charts can seem a little bit static. A blog post from MySpace Music head Courtney Holt assures that it's "just the beginning of a product and platform evolution that reinforces the key messaging, vision and direction of the new MySpace Music."

MySpace launched its music service last year as a joint venture with major and independent record labels, and has received a mixed response as the industry continues to grapple with the fact that no non-iTunes digital music service has proven to be a huge moneymaker yet.

Woo wee, did Hulu's fortunes flip-flop fast.

Jason Kilar, Hulu CEO

(Credit: Greg Sandoval/CNET Networks)

The Web's deepest stockpile of full-length TV shows and feature films is seeing some very public infighting over its future. The disagreements are over how Hulu should generate revenue and even how to sell ads, according to a report in Mediaweek.

Things were going so well. Since Hulu's October 2007 launch, the Web video site founded by NBC Universal and News Corp., has grown its audience, generated big ad revenue, and been bathed in positive press.

Hulu has mounted the only serious challenge to YouTube. The site also enables its TV network backers to offer viewers an alternative to pirate sites. But the indications are Hollywood is dismayed over Hulu's earnings. On the issue of Web revenue, the studios seem to be saying: "Is that all there is?"

The first signs that Hulu may not be the cash cow that everyone involved had hoped for came earlier this year. Instead of ballyhooing the selling out of ad inventory like it had done a year earlier, Hulu's managers hushed up.

Then, NBC Universal CEO Jeff Zucker and News Corp. Chairman Rupert Murdoch said publicly that Hulu may charge for some content. In an interview with Dow Jones last week, News Corp. COO Chase Carey said it's important that Hulu have "a real subscription aspect," but added some content will always be free.

Want to bet that the content you'll have to buy will be the latest and most popular TV shows and films?

Hulu's management is wrestling with these issues at a time when the public increasingly develops an appetite for high-quality Web video.

The number of U.S. households with broadband access that watched full-length movies and TV shows online doubled in the past year, according to research firm, Parks Associates. According to the firm, 45 million households regularly watch either TV shows or films via the Internet.

Jayant Dasari, a research analyst at Parks, said people like the control that sites like Hulu give them. If they miss a favorite TV show, they can get caught up on Hulu.

"If they're on the road or don't have access to a (Digital Video Recorder) they are more than willing to consider the option of broadband video," Dasari said. "This is a trend that can no longer be ignored."

(Credit: Greg Sandoval/CNET Networks )

Dasari said Web video's growth is being stifled by the lack of content available at Hulu and other sites. For example, there are only a handful of feature films available at Hulu. Crackle.com, Sony Pictures' Web service, only posts a fraction of its vast library of films on the Internet, but there's not another studio even offering that.

So what? What does it mean if the studios hobble Hulu? Consumers have watched TV for over half a century. They can still go back there. Right?

Big Champagne CEO Eric Garland, whose company tracks traffic on peer-to-peer sites--where most illegal file sharing occurs--told me recently that consumers are heading online for video entertainment and he doesn't expect them to return to their traditional viewing habits ever again. Garland's data shows that Hulu is the first legal Web service to snatch market share away from the pirate sites.

He also said that the lords of video, with their rejection of Internet businesses, are behaving much the same way the music industry did when confronted by the digital age. If network and film studio executives are dissatisfied with the returns they see from Hulu and similar sites, they should consider the possibility that this is all the new media landscape will yield, Garland said.

Rupert Murdoch is threatening to pull his content from Google. Is this a bluff?

(Credit: Dan Farber/CNET)

Update: 11:15 a.m.: To include comments from Google.

Rupert Murdoch, the media tycoon who has long accused Google of ripping off content from his newspapers, said this weekend that his sites may soon disappear from the search engine's listings.

Murdoch is chairman of News Corp., the newspaper, TV, and Internet empire that includes The Wall Street Journal, The New York Post, 20th Century Fox, Fox News, and Hulu. He made the comments in an interview late last week with Sky News Australia.

After Murdoch accused Google, Microsoft, and others of "stealing" his company's content, he was asked why he just doesn't pull his Web sites from Google's search results.

"I think we will," Murdoch responded. "But that's when we start charging."

Murdoch and other News Corp. execs have said that they intend to charge readers and viewers. In the past, the company's sites have relied on advertising revenue.

Murdoch made it clear he's no fan of the ad-supported model. "There are no news sites or blog sites making any serious money," he said.

"What's the point of having someone come occasionally who likes a headline they see in Google," Murdoch continued. "The fact is there isn't enough advertising in the world to go around to make all the Web sites profitable. We'd rather have fewer people coming to our Web sites but paying."

When asked why he would buck the trend of offering free content, Murdoch said: "(The public) shouldn't have had it free. I think we've been asleep."

Google has said that it feels obligated to help media companies because it needs their content. That hasn't stopped Murdoch and his staff from continuing to make hostile comments about the search engine. What News Corp. hasn't done much of is follow up with action.

Is News Corp. trying to scare Google into making more concessions? Or is it just afraid to pull the trigger?

On Monday morning, Google responded to Murdoch's quotes in a report by the British publication The Telegraph.

"Publishers put their content on the Web because they want it to be found," Google said in a statement. "Very few choose not to include their material in Google News and Web search. But if they tell us not to include it, we don't."

LOS ANGELES--Already the far-and-away leader in search, Google wants to be a big player in music discovery, too.

The pop-up MySpace player that will appear when clicking the 'play' button in a Google search.

(Credit: MySpace)

The search giant teamed up with News Corp.'s MySpace and streaming service Lala for the Wednesday debut of the new Google music search feature at the historic Capitol Records building in Hollywood. With the new music search, which had been internally code-named "OneBox" when news of the project broke earlier this month, search queries pertaining to something like a song, artist, lyrics, or album will bring up links to streaming songs from iLike and MySpace, as well as links to artist information on Pandora, Imeem, and Rhapsody. The lyrics search is provided through a partnership with Gracenote.

"It is directly embedded and integrated into Google search. There's no special button to push," R.J. Pittman, director of product management for search properties, said in a phone interview with CNET News. Currently, due to licensing and availability issues, the music search is U.S.-only.

There also won't be direct download links in Google: those will be handled through Lala and MySpace. "We push all the music engagement and commerce down through the partners," Pittman said.

Additionally, if a relevant music video is available, the MySpace window that pops up when someone clicks on the "play" button in search results will display a link to that video through MySpace's new music video portal. That's interesting, considering music videos are some of the most popular content on Google's own YouTube--but YouTube video results will continue to show up independently of the new music results in Google searches.

Financial terms of the partnerships aren't yet clear. "Everyone's keeping their own revenues and we're not messing with anything," Lala founder and Chairman Bill Nguyen told CNET News. But MySpace Music President Courtney Holt was a bit more tight-lipped, saying "we're not discussing the financial details."

The MySpace deal is a little more complicated to begin with, though. Google had been in talks with music start-up iLike about integration into music search, but then iLike was acquired by MySpace in a deal that closed earlier this month. Indeed, a statement from Holt says that "this relationship was secured and implemented by the iLike team." But iLike founder Ali Partovi (who's currently on board MySpace's music team) explained that the partnership now has "MySpace branding, (and) MySpace content licensing." Through the integration of iLike's technology, it'll also have concert notifications if someone searches on Google for a band that's currently on tour.

"I think MySpace, along with (Apple's) iPod, is one of the most trusted brands in music, one of the most resonant to consumers," Partovi said. MySpace is also reported to be in talks with Microsoft to power a music feature on MSN.

Music search is something that Google could really dominate. According to traffic firm Experian Hitwise, 6 percent of Google's top 1,000 search-related terms deal with music, and already 30 percent of traffic to sites that Hitwise classifies under the "music" umbrella comes from Google.

Considering Google's reach, it's a big win for both MySpace, currently struggling to redefine itself as a pop culture powerhouse rather than a social network through its MySpace Music service, a joint venture with major and independent record labels, and Lala, which also has a new song-gifting deal with Facebook. "We think (Google's music search) going to have a thousand percent increase in our sales, an order of magnitude more," Lala's Nguyen told CNET News.

This also means that music-related search results are getting a sheen of legitimacy on Google. With official partnerships, Google's most prominent music search results will be from sites that have licensing deals in place with the major labels, rather than potentially pirated content. Google's history with the music industry is spotty at best: it's had to strike its own deals with the major record labels, and relations haven't always been positive. Music search puts it all into order, partners in the deal say.

"Instead of ending up with a pirate site and a page with a bunch of ads or random lyrics sites, you wind up with a play button," Nguyen said.

Updated 4:30 p.m. Just after Google and Lala made the announcement official (in what was probably not a coincidence) Yahoo released a blog post designed to point out that they've been offering this kind of music search for a while. "We've made it easier to find music videos, artist information, and play full length songs from within the search results page. This is just one of the many ways Yahoo! is enhancing the search experience for music lovers," said Larry Cornett, vice president of consumer products for Yahoo Search.

On Thursday came more signals from News Corp. that Hulu will charge for at least some of its films and TV shows.

Chase Carey, News Corp.'s deputy chairman, suggested in comments he made at the OnScreen Media Summit that it's just a matter of time before Hulu, the video service founded by News Corp. and NBC Universal, launches a subscription service.

"I think a free model is a very difficult way to capture the value of our content," Carey said, according to a report Broadcasting & Cable, which co-hosted the conference. "I think what we need to do is deliver that content to consumers in a way where they will appreciate the value...Hulu concurs with (the notion) that it needs to evolve to have a meaningful subscription model as part of its business."

Asked when Hulu would roll out its pay model, Carey, who has been to only one News Corp. board meeting since his recent arrival at the company, was less sure. According to Broadcasting & Cable, Carey thought the move would likely be made in 2010. He acknowledged however, that no timeline had been set.

Carey's comments follow similar statements made by other News Corp. decision makers, including Rupert Murdoch, the company's chairman. Murdoch has talked about charging for content at the online units of many of his media properties, including The Wall Street Journal.

If Hulu charges, it's a big deal. The video site, which offers full-length TV shows from NBC Universal, Twentieth Century Fox Film, and other top entertainment companies, is a pioneer. It's the first online ad-supported video service to successfully offer long-form content. If it retreats from the ad-supported model, then what consumers get is the cable business model transplanted on the Web.

And charging for content online may not solve Hulu's revenue problems. Subscription video-on-demand services have to compete with a score of sites that offer pirated content free of charge.

The reason that Hulu is considering a pay wall is presumably because the site isn't generating the kind of money the studios have grown accustomed to. Advertising experts have said that it's not possible to insert enough ads without ruining the viewing experience on one end and on the other, it's not possible right now to obtain the kind of ad rate that will generate big money.

It's interesting to note that while News Corp. appears to be dissatisfied with the ad-supported model, Sony Pictures Entertainment appears to be doubling down on ad-supported Crackle.

There isn't another major studio distributing as many full-length feature films online on an ad-supported basis than Sony Pictures. In February, Crackle began offering catalog film titles from its vast library on Crackle. Recently, "Taxidriver" made its ad-supported Internet debut.

Since Sony Pictures relaunched Crackle--formerly a user-generated video service--in February, the site's premium monthly streams have grown to nearly 10 million, 27 percent of which were in the site's core demographic (men, ages 18 to 34), according to statistics provided by ComScore. Time spent on Crackle has increased sevenfold in that period, to 13.4 minutes per unique session. In the core demographic, that number rises to 16.7 minutes.

Here's another benefit that Crackle offers Sony: the site will post premium films when they aren't under contract to a cable or broadcast TV station. Before Crackle came along, movies like "Taxidriver" would gather dust during the periods when they weren't being aired.

We don't know what kind of money is being made by Hulu or Crackle, but regardless of whether Hulu charges for its content, there is still hope for ad-supported movies and TV shows on the Internet.

SAN FRANCISCO--With both MySpace CEO Owen Van Natta and News Corp. chief digital officer Jonathan Miller taking the stage at the Web 2.0 Summit this week, there was naturally plenty of talk about the social site's attempt to reverse its ill fortune of late. Once the biggest name in social networking, it's long since lost that title to Facebook and is trying to reinvent itself as a destination for music and entertainment.

"I think that what you see in the space more than anything else is if you don't keep innovating and moving forward you get in trouble," Miller said in his talk on Thursday morning. "You can't stop, you have to keep going, and (MySpace) didn't keep going, it kind of stopped."

And in that time, he added, "we had two fantastic competitors emerge in Facebook and Twitter."

The previous day, Van Natta made his first big appearance on the conference circuit since he joined MySpace and was tasked with a major turnaround. Van Natta unveiled a new music video hub as well as an enhanced set of marketing tools for music artists--some of which were built in with technology from iLike, which MySpace acquired this summer.

And on Wednesday night, the "new" MySpace was out in full form: a line snaked down three city blocks when music fans caught wind of the fact that the company had booked rock band Weezer for one of its "secret shows" concerts.

"MySpace started with an essence around certain things, and one of them was music, and meeting new people," Miller, a former AOL exec who also joined News Corp. this spring, said on Thursday. "We're going back to basics in that sense, but you've got to make it relevant to today and going forward."

It's obviously too early to tell whether the "reinvention" will work. Some critics say that it's too big of a task, especially given the state of the advertising market. But Miller spent a big portion of his talk at the Web 2.0 Summit hyping up the Fox Audience Network, or FAN, the digital advertising division that News Corp. first announced last spring.

"We kind of broke it out of MySpace and gave it a life of its own," Miller said. "We're just at the beginning of a coming-out party for FAN."

FAN just inked a deal with agency giant Omnicom, and more are on the way, he added. Miller also said FAN is the fifth-largest ad network on the Web, after the usual suspects--Google, Microsoft, Yahoo, and AOL--and that it's hoping to get into fourth place soon.

SAN FRANCISCO--He's not kidding about making changes.

MySpace CEO Owen Van Natta took the stage at the Web 2.0 Summit event on Wednesday and paraded out a whole slew of announcements related to turning the flagging social network into a music and media powerhouse. He showed off a massive catalog of music videos--coming from all the partners in the MySpace Music joint venture--and an enhanced set of tools for bands using the site as a marketing and promotional hub. Plus, the MySpace Music service now syncs up with Apple's iTunes, not just Amazon MP3.

It was former Facebook exec Van Natta's first big public appearance since becoming CEO of the News Corp.-owned MySpace in April.

The "artist dashboard" for MySpace Music is a free product that offers a suite of analytics for bands and artists that operate MySpace profiles so that they can get details on who's listening and interacting with them within the MySpace community. It's also baked in features from iLike, the music service that MySpace acquired this summer. iLike operates social apps on a variety of platforms, including Facebook, and artists using MySpace can now access that data too.

"We're giving people things like geographic breakdowns, where exactly their friends are not just in the U.S. but in the world," Van Natta explained. "This is literally getting pushed live as I'm sitting here talking to you."

For the fans, there's the music video portal, which started rolling out on Wednesday, offering the entire catalog of music videos from all the labels that offer their music on the MySpace Music streaming service. It'll compete with Vevo, the Universal Music Group-founded music video hub that features YouTube-created technology and investment backing from Abu Dhabi oil money. But it sounds like Universal's music videos will be on MySpace, too.

CNET News reported earlier this month that MySpace was working with video hub Hulu--in which News Corp. is a stakeholder--to launch a new video service. It's unclear whether there is any connection to the new music video hub.

MySpace launched the MySpace Music operation last year and hired former MTV executive Courtney Holt to head it up. But things haven't been altogether sunny. Earlier this year, word got out that the major labels who've put a stake in MySpace Music were dissatisfied with its performance.

Plus, earlier on Wednesday, it came to light that rival Facebook was making its first big move in the music space. The massive social network announced a partnership with music service Lala as part of its revamped virtual gifts marketplace, allowing members to buy songs for one another.

Van Natta shrugged off concerns that MySpace, with a significant portion of its traffic eaten away by Facebook's rocketing growth, is having trouble pulling in advertising revenues.

"We're really good at monetization," he assured the audience. "There's a lot of different avenues that we can take."

This post was expanded at 4:54 p.m. PT.

(Credit: Ustream)

Twitter was bombarded on Thursday afternoon by the shocking news that a six-year-old boy had climbed into a homemade hot-air balloon and taken off over Colorado--the microblogging service's timeline temporarily slowed to a crawl and its trending topics were filled with tags like Colorado, Denver, and #balloonboy.

He was never actually in the balloon, apparently: CNN reported later on Thursday that he was found, safe, hiding in a box in the attic of his family home.

Live video streams from news outlets' helicopters showed the saucer-shaped balloon speeding through the air and then making a relatively soft landing. But then those same news outlets began to report that there was no one inside--sparking even more debate and speculation on Twitter.

My colleague Stephen Shankland ran a test and found that in a 30-second span, 836 tweets mentioned the word "balloon."

The boy reportedly lives in Fort Collins, Colo., and the balloon was built by his parents, who are avid storm-chasers.

It surfaced somehow amid the Twittering mess that the family had appeared on reality show "Wife Swap," and a video of its three sons singing a rap song has begun to rack up views on YouTube (mildly not-safe-for-work due to lyrics).

This post was updated at 3:17 p.m. PT.