Perhaps plow it into more start-ups like Aviary, a Long Island-based design software company.

Bezos, via his Bezos Expeditions fund, has followed up an investment in the company earlier this year with another slug of cash. It’s part of a $7 million Series B round led by Spark Capital, best known in these parts as the guys who made a very big bet on Twitter, which Bezos also invested in.

If you’re sick of hearing about Web start-ups with just the vaguest sense of a business plan, Aviary may be a refreshing change. It is trying to make money by selling cheap, Web-based alternatives to popular, expensive design software, primarily the stuff that Adobe (ADBE) sells, like Photoshop and Illustrator. Granted, it doesn’t make much money yet: The company only began selling $24.95 subscriptions to its software suite earlier this year.

Down the line, Aviary also imagines it will be able to create an online marketplace where the creative types who use its software can bid on work assignments. Sort of like eBay (EBAY) meets Craigslist meets Etsy meets Amazon’s (AMZN) own Mechanical Turk.

Here’s the full press release:

Aviary Secures $7 Million in Series B Financing Led by Spark Capital

Provider of Creative Application Suite in the Cloud Makes Creation Accessible to All and Advances the Growing Digital Economy

LONG ISLAND, New York (October 26, 2009) – Aviary, Inc., a pioneer of a creative application suite in the cloud, today announced that it has received $7 million in Series B financing led by Spark Capital, with participation from existing investors, including Bezos Expeditions, a personal investment company of Jeff Bezos. With a suite of digital creation and editing software available as an online service, Aviary offers a simple and cost-effective solution for creators of all genres–from graphic design to audio editing – to express their creative talents and participate in the burgeoning market for digital goods. In conjunction with the investment, Mo Koyfman of Spark Capital will be joining Aviary’s board of directors.

“Aviary’s robust suite of online creative tools is fundamentally democratizing digital creation. Whereas the market for digital goods was once reserved exclusively for creators using proprietary desktop software, Aviary is delivering creative applications that allow anyone with a browser to participate,” said Koyfman. “And by doing so in the cloud, Aviary allows for seamless online creation, collaboration, distribution and ultimately monetization previously not possible. The Aviary model has the potential to exponentially increase the number of creators and collaborators contributing to the digital economy.”

Until now, the digital creation market has been largely dominated by desktop software solutions which are often cost prohibitive and involve complicated interfaces. By contrast, Aviary offers a powerful creative toolset in the cloud that enables professional and amateur creators alike to easily create their own digital works. The basic Aviary suite is available for free to users and includes an image editor, vector editor, audio editor and more. Users can also upgrade to the pro suite to gain commercial features such as unlimited private storage, as well as collaboration and community enhancements. For more information, visit http://aviary.com/.

“We are disrupting the status quo by eliminating the long-held barriers to digital creation and giving creators the tools they need to create, market and monetize their vision,” said Avi Muchnick, founder & CEO of Aviary, Inc. “We are extremely excited to have Spark Capital on board. Their broad-ranging internet, software and consumer experience will be a tremendous asset to us in furthering our mission to make creation accessible to creators of all genres.”

The deal puts Skype’s overall value at $2.75 billion, a bit more than the $2.6 billion eBay paid for the company in 2005. That current value is about five times the unit’s 2008 revenue of $550 million.

Skype’s new owners: Silver Lake, the Silicon Valley-based private equity group; Index ventures, the London-based VC firm; Internet entrepreneur Marc Andreessen’s new Andreessen Horowitz fund; and the Canada Pension Plan Investment Board.

Here’s the press release.

Wal-Mart is adding three outsiders to its sales mix, which it says will add an additional one million items to its inventory, and the company plans to add more in the future. Is this a problem for either Amazon (AMZN), which features some third-party sales, or eBay (EBAY), which offers nothing but?

Maybe one day, but not in the near future. That’s primarily because Wal-Mart is so far behind the big guys. The $1.7 billion Wal-Mart did in Web sales last year makes it the 13th biggest online store in the U.S. Chart via JP Morgan’s Imran Khan:

And even if Wal-Mart’s new partners do boost sales significantly, the ecommerce market is likely to grow even faster. Bernstein analyst Jeffrey Lindsay expects U.S. online retail to grow by $13 billion in 2010 and another $19 billion in 2011. So don’t expect to see Wal-Mart’s Web foes wiping their brows just yet.

[Image credit: PinkMoose]

In letters to sent Monday to 90,000 developers who work on eBay’s Developers Program, the company warns about a security hole that could cause problems, but hasn’t yet. It also takes pains to point out that the security flaw doesn’t affect eBay customers themselves. eBay says third-party software now accounts for 25 percent of its listings.

An eBay spokesman tells me that eBay came across the weakness itself not because a hacker had exploited it, and that the company is acting “out of an abundance of caution,” which is a term the eBay folks seem to favor (see email text below). “The information that *may* have been compromised consisted of basic contact information that could potentially be used in a phishing attack. At this point, we have not identified any unusual patterns in our developer accounts and we are notifying them and requesting they change their developer passwords out of an abundance of caution [sic].”

Here’s the complete text of eBay’s heads-up letter:

Hello [redacted], this is Kumar Kandaswamy, and I manage the eBay Developers Program. I’d like you to read this important message about account safety. The safety and security of the eBay Developers Program is a top priority. While we believe that people are basically good, we also must live with the reality that there are fraudsters out there who have made it their illicit “profession” to find ways to exploit others on the Internet.

Occasionally, fraudsters attempt to gain unauthorized access to the eBay Developers Program. eBay has recently identified a means by which someone could gain access to eBay Developers Program account information. This type of access DOES NOT allow the capture of financial or other sensitive information, such as credit card or bank account information or Social Security numbers.

Fortunately, we have not detected any unusual activity with any Developer account. Out of an abundance of caution and to help ensure the security of the eBay Developers Program, we are requiring that all developers take the following steps:

* Take advantage of our new, stricter password standards and change your eBay Developers Program (developer.ebay.com) passwords. It is not necessary to change eBay (www.ebay.com) passwords. If you believe you or your customers have been the victim of fraudulent activity, contact us immediately at apifeedback@ebay.com.

Sincerely, Kumar Kandaswamy

But that’s the transaction video-chat firm Paltalk and Softbank have completed. Paltalk, which sold off 20 percent of its equity to Softbank for $6 million in 2004, has bought the shares back. No one has spelled out a purchase price, but I’m told the deal will be considered a “single” for Softbank–it gets its capital back, plus a return, which in this economy ought to be a home run.

This is different from the “baby buybacks” we’re seeing as the economy sputters, in which founders reclaim all or part of their companies at distressed prices after their investors give up–think eBay (EBAY) and StumbleUpon (and perhaps Skype) or more recently, ManiaTV.

Paltalk can afford to buy its shares back because it’s an Internet video company that actually makes money, which it does via a “freemium” model. Most users can hop on the service for free, but about five percent pay for some extra features, like virtual conference rooms. People familiar with the company tell me it should be on track to throw off $4 million in cash this year from revenue of $20 million. It also has extra cash on hand these days as a result of a settlement it extracted from Microsoft (MSFT) in a patent lawsuit in March.

There are lots of Web companies–let alone Web video or Web chat companies–that would like those financials. But Paltalk is a steady grower, not a rocket ship. And while the company has supposedly gone down the road with potential acquirers in the past, it’s unlikely to get acquired at a huge premium.

So, it makes sense for Softbank to take money off the table; I’m told Paltalk was its last open investment from an Internet fund it raised way back in 1999. Paltalk CEO Jason Katz says he now owns 80 percent of his company.

But while that distinction made him one of the early breakout stars on Google’s (GOOG) YouTube, it hasn’t made him rich. Or at least, not wealthy enough to afford the customized airplane he bought last year for $140,000. He’s auctioning it off on eBay (EBAY) at a fire sale price. UPDATE: Maynard  notes, good naturedly,  that his auction has an unmet reserve price. So it’s not fair to call this a fire sale without knowing what that amount is. My apology.

As I type this, the high bid for Maynard’s 2008 AMD Zodiac XLi is $22,6000. Maynard told Wired that he has put about 150 hours on the customized two-seater.

Wired makes reference to Maynard encountering “turbulence” at his day job as a computer programmer and notes that being “Tron Guy” has brought him notoriety but not much money. It seems the only paying gigs the distinction earned him were multiple appearances on “Jimmy Kimmel Live.”

I’m not sure if this is the original “Tron Guy” video that launched Maynard into YouTube fame. But it is the first one that pops up when you Google “Tron Guy YouTube” (and tellingly, the “related” videos that populate the right side of the screen star a who’s who of YouTube celebrities: The “Numa Numa” guy, “afro ninja,” “Asian Backstreet Boys,” etc.

Big winners so far include Blue Nile (NILE), up 73 percent; Expedia (EXPE) up 68 percent; and Amazon (AMZN) up 44 percent. Moderate winners, comparatively speaking, include Google (GOOG) up 27 percent; eBAY (EBAY) up 21 percent; and Yahoo (YHOO) up 22 percdent.

Here’s the full breakdown of the 16 Internet stocks Mahaney covers (click table below to enlarge):

I usually steer well clear of opining/guessing about stock prices and the like, but I think it’s worth considering Mahaney’s note, both for his explanation and for the potential impact of the stocks’ run.

The explanation: Part of this is basic what-goes-down-must-go-up market yo-yoing–Internet stocks got pummeled worse than the rest of the market last year so it’s easier for them to bounce back. But Mahaney also thinks that most of the stocks he follows are going to turn in the worst performance, earnings-wise, in the quarter we’re in now. Investors like that because it means that things can only get better.

The impact: Remember the old days when public companies could use their shares as currency to acquire smaller companies? Well, we’re not headed back there quite yet. But a sustained rally sure could kick-start the M&A market, which will make things more interesting for the likes of me, at the very least.

[Image credit: joshmadison]

That’s the possibility floated, albeit in an offhand way, via Bernstein Research’s Jeffrey Lindsay in a note published this morning: “We would likely expect further divestments of non-core businesses, possibly including StubHub.”

I understand why the auction site dropped StumbleUpon, a Web 2.0 publishing business with a novel and unproven revenue model. And it makes sense to stop carrying Skype, a telecom business that requires a lot of time, money and maintenance.

But Stubhub, which eBay bought for $307 million a little more than two years ago, seemed like a bona fide fit: The ticket resale business mirrors eBay’s (EBAY) core auction in pretty obvious ways. I’ve asked Lindsay to tease out his thinking for us, and will update if he does.

UPDATE: Here’s Lindsay, via email: “It seems that eBay is going right back to basics, and is dispensing with the ‘we are an auction company’ ethos that got them into so much trouble. We see StubHub as coming out of that era. We think the market in tickets is changing rapidly and there is a chance to sell StubHub at the very top. They might well take it and pursue a much more pure play retail/second hand portfolio and go back to geographic expansion of the marketplaces/PayPal core.”

Meanwhile, if eBay does decide to jettison StubHub, now would be a very interesting time to do so. TicketsNow, its primary competitor, is likely to go on the block in the near future: Parent company Ticketmaster (TKTM), which acquired the business for $265 million a year ago, has said it would dump the business in order to mollify antitrust critics (and Bruce Springsteen fans) who want to stop the company’s proposed merger with Live Nation (LYV).

Anyone want to corner the market on the ticket-scalping industry?

[Image credit: Hyrck]

But there are still investors willing to place some bets, even on the most nascent companies. Via the angel-investing program he’s running for the Founders Fund,
Dave McClure is one of those guys.

Founders is a VC fund run by Valley bigshots like Peter Thiel, most of whom made a lot of money when they sold PayPal to eBay (EBAY) many moons ago. Last year, they brought on McClure to handle smaller investments than they would normally make.

Founders Fund, which already owns a piece of Facebook, has already made bets on the burgeoning Facebook app ecosystem via the “fbFund,” so McClure is particularly interested in those types of companies. Which explains why I found him at the Facebook “Developer Garage”–a Facebook-sponsored mini-convention held on the outskirts of SXSW.

But McClure chatted with me about non-Facebook investments as well, and why it’s easier to find interesting deals now that he isn’t competing with amateur angels who made their money at Google (GOOG) and Yahoo (YHOO).

Bonus footage: Want to see what I look liked during this interview? I don’t recommend it, because grooming standards got a little relaxed over the weekend. But for diehards, here’s a (sped-up) version of our chat, from a different angle, via The Interwebs, which filmed me filming McClure. Down the rabbit hole we go:

I still haven’t heard back from FriendFinder Networks or Andrew Conru, who appears to be the founder who sold his company his car in 2006. But MediaMemo readers tell me the car in question is a Ferrari 360 Modena, similar to this model on sale, via eBay (EBAY), at Excel Auto of Boca Raton, Fla. (click image to enlarge):

I thought this car might actually be the same one that FriendFinder owns, since it says the car in question is being held for sale, and because FriendFinder is also based in Boca Raton. But a manager at Excel tells me that’s not the case.

Disclaimer: I need to note that while I appreciate the tips MediaMemo readers have passed along, they remain unconfirmed. So it could be that FriendFinder owns a different kind of car that it purchased for $125,000 two years ago and now values at $95,000.

The bigger question: Why would FriendFinder buy a Ferrari (or any other kind of car) from its founder a couple of years ago? And what has it done with it since? Did employees of the month get to take it for a spin? Has it been mothballed? Did it sit parked in front of the company’s HQ as an incentive to work harder and longer?

(UPDATE: A partial answer — the car was supposed to have been given away as a contest prize.)

As always, if you’ve got thoughts on the matter, you can comment below, or reach me directly at peter@allthingsd.com. If you want to be completely anonymous, you can use the blind tip box here.

This is all about expectations: In any other setting those numbers would be a calamity. But given that online sales for the rest of November have been lower than the previous year, this constitutes good news for the likes of Amazon (AMZN).

Thursday’s numbers were even better: Thanksgiving day sales increased six percent over the previous year (click image to enlarge).

But two days of data aren’t enough to make comScore (SCOR) or anyone else rethink their overall predictions for the holiday season, which remain dour. ComScore thinks overall sales will be flat.

Separately, eBay’s (EBAY) PayPal reported that transaction volume on Friday increased 34 percent over the previous year and that overall sales increased 26 percent. PayPal claims that its numbers represent 12 percent of U.S. e-commerce, but I don’t think those numbers will be nearly as heartening for most big retailers, which aren’t depending on the online payment service.

MasterCard Advisors, a unit of the credit card company, says sales in categories like apparel and electronics have dropped more than 19 percent in the first two weeks of November compared to the same time a year ago. E-commerce sales are comparatively better, but they’re still grim–down 7.5 percent, the company says.

Bad news, obviously, for Amazon (AMZN), eBay (EBAY) and everyone else who sells stuff online for a living. If you’re looking for a sunnier take, you can cling to more optimistic predictions from the likes of eMarketer, which thinks that e-commerce will eke out a four percent gain in November and December. UPDATE: Fresh prognostication from Barclays Capital (i.e., the investment bank formerly known as Lehman): three percent growth during the holiday season, which is down from the eight percent the research group had previously predicted.

Too unpleasant to contemplate early on a Monday morning? Agreed. Let’s think about something more upbeat. I’m pretty sure, for instance, that I am going to be able to buy a very nice television for not much money in the next couple months. I just hope I have a wall to hang it on.

[Image Credit: woohoo120]

EBay (EBAY) sellers are still trying to sucker buyers into paying extra for a copy of the Nov. 5 copy of the New York Times, but prices have come way down. This likely has to do with the fact that the Times (NYT) printed an extra 50,000 copies after the first run sold out.

Meanwhile, a MediaMemo correspondent reports from Washington D.C. that commemorative copies of the Washington Post’s special edition–which people stood in line to buy last week–are mounting up, unsold, throughout the city:

There are a lot of week-old commemorative edition newspapers available for the buying. I was at one Safeway and two 7-11s in Washington, all three flush with copies of the Post. And in NW DC there are side vendors–different guys from the news kiosks–selling stacks of them.”

But don’t gloat, Web publishers. Your Obama bump is diminishing, too. Take a look at this Hitwise data, via 24/7 Wall Street, that show what happens to political sites like Huffington Post, Slate.com and Politco in the aftermath of an election–their audience starts melting away.

All of the sites will tell you they’ve planned for that, of course. But they were probably also planning on an expanding market for Internet ad dollars. And that’s no longer a given.

Barron’s Eric Savitz summarizes the notes from Citigroup’s Mark Mahaney, Collins Stewart’s Sandeep Aggarwal and Stanford Group’s Clayton Moran. So I’ll just highlight one part of Mahaney’s argument: A check of four big online e-commerce companies–Amazon (AMZN), eBay (EBAY), Expedia (EXPE) and Priceline (PCLIN)–indicates that they’ll be making dramatic cuts in the amount they spend on Web advertising this quarter (see chart below).

“These companies are staring into what could be an ecommerce abyss and appropriately cutting back on their marketing spend, certainly including their spend with Google,” Mahaney writes.

To recap: Dollars are continuing to move from traditional media outlets online, and Google is capturing the lion’s share of that move. But even Google isn’t impervious to what’s ailing the economy right now.

New York has three dailies (four if you count The Wall Street Journal, even more if you count specialty papers like the Spanish-language El Diario) and it’s impossible to buy any of them at newsstands today, according to an informal channel check conducted by … me.

Capitalism/speculation to the rescue: eBay (EBAY) seller jel2maine has 15 copies of today’s New York Times, and is asking for a mere $19.99 plus $3.99 shipping.

That’s a 1500 percent markup over the paper’s street price of $1.50. Any takers?

UPDATE: You may want to hold off before bidding. Dave Martin, a media watcher based in Madison, Wis., says a Times employee tells him the paper is rushing out an additional 50,000 copies this afternoon.

Confirmed–here’s New York Times spokeswoman Catherine Mathis:

Yes, we are going back on press to print 50,000 copies of today’s paper for distribution at Grand Central, Penn Station, Port Authority and other select locations.

We had increased our print run for single copy sales today by about 35%. In 2004 we saw an increase in sales of around 50,000 copies the day after the election and based on what we’ve seen today, we expect to significantly surpass those sales.  We also plan to increase our print run for single copy sales tomorrow, although not as much as today.

I’m sure you know that today and tomorrow we have a special election section in the paper and, of course, on NYTimes.com, we have all sorts of features including, interactive graphics with all the presidential, senate and congressional election results by state and county, live updates on the blogs on the contested Senate race in Minnesota and the uncertainty of who will fill one of Alaska’s Senate seats. We also have a video of this campaign, going back to the primaries, called ‘Choosing a President,’ which is quite extraordinary.

According to our internal numbers, yesterday was a record day for NYTimes.com. There were 55.1 million page views, shattering the previous record by 29%.  We don’t have numbers yet for today. We’ve had record mobile page views of 2.7 million at NYTimes.com.”

[Image Credit: specialkrb]