The voluntary layoff program begins Dec. 4, a few days before the company spins off from Time Warner (TWX). If AOL doesn’t get enough volunteers, it will ax people on its own.

This is lousy news for employees, who are faced with a “jump now or wait to be pushed” decision, but it is designed to cheer investors: AOL says the cuts will drop its annual operating expenses by $300 million. Through the first nine months of this year, AOL’s operating expenses ran around $1.8 billion.

Meanwhile, AOL is looking to shed some parts of its business altogether. It has hired bankers to sell off its ICQ messaging service and is considering dumping MapQuest, among other assets.

Armstrong’s (expensive) goodwill gesture: He is giving up his 2009 bonus, which was to be at least $1.5 million. His explanation to employees: “As a member of our team and the person who takes accountability for the results of the company, I am making the decision to forego my 2009 bonus. That decision is a personal one and is not a sign for the future payout of the overall bonus plan for employees.”

Here’s the text of the company’s filing with the Securities and Exchange Commission:

On November 19, 2009, AOL Inc. (the “Company”) informed its employees of proposed restructuring activities as part of its continuing cost reduction initiatives aimed at aligning the Company’s organizational structure and costs with its strategy (the “Restructuring”). The Restructuring is conditioned upon the successful completion of the Company’s previously announced spin-off from Time Warner Inc. (the “Spin-off”), as well as the approval of the Company’s new Board of Directors that will begin service in connection with the Spin-off. It is anticipated that, if approved, the Restructuring will include the reduction of approximately a third of the Company’s current employee base, which will be conducted on a voluntary and involuntary basis. The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the Spin-off through the first half of 2010.

For the record, the deal theoretically values Imeem at something like $8 million, but most of that comes in the form of accounts receivable and debt obligations, and isn’t relevant to MySpace, which won’t be dealing with that stuff. And it’s not relevant to investors like Sequoia and Warner Music Group (WMG), which pumped at least $25 million into the venture.

In retrospect, Warner’s move to write off all of its Imeem investment in May was 100 percent accurate.

In September, I visited Caldwell in his San Francisco office. He looked like a guy who has had a very hard year, but he was confident that the company had gotten through the worst of it. If Imeem executed on plan, he argued, it would be able to survive. It wouldn’t be a home run, but it could at least sustain itself–no mean feat for a digital music start-up.

So what happened? “Things can change very quickly,” a person familiar with the company’s story told me yesterday. The short version of the story is that Imeem quickly and unexpectedly ran out of cash. Here’s the longer version of that story, which I’ve pieced together from various sources:

• As Om Malik reported, the company was hit with a copyright lawsuit by music publisher Orchard Enterprises (ORCD). Fighting the suit or settling it would require significant resources.
• Efforts to raise another funding round fell flat. If you want, you can blame the fact that Sequoia declined to pour more money into the company, which acted as a blinking red warning light for other potential investors. Or you could point to the fact that Web music start-ups of all stripes have been flailing for a couple of years.
• Ad sales, which had been perking up throughout the year, fell short of Q4 targets.
• All of the above meant that Imeem was struggling to meet payroll and payments on its debt, which it racked up when it built out its own content-delivery network.

So in retrospect, it’s easy to see why the company sold: It had no choice. And it’s sort of easy to see why News Corp.’s (NWS) MySpace bought Imeem: It’s hard to pay less for talent.

Some perspective: As I noted last week, AOL has already spent $83 million on separate restructuring efforts through the first nine months of this year. And parent company Time Warner has said it will spend $100 million on its restructuring/mass layoffs at its Time Inc. publishing unit.

That won’t help employees at Time Warner’s Time Inc. publishing unit: The company confirmed that it will make big cuts this quarter and spend up to $100 million on restructuring charges. This is different from the $100 million in cuts that had been previously reported, but it will still mean hundreds of layoffs at the publisher.

Time Warner also boosted its guidance for the remainder of the year and confirmed once again that it wants to spin off AOL before the end of the year. As well it should: The company said it has already spent a staggering $24 million on the spinoff so far this year, which includes $9 million in “pretax direct transaction costs (e.g., legal and professional fees).” It has spent another $83 million in restructuring charges at that unit in 2009.

As usual, Time Warner said ad sales have been lousy, but that its cable networks and film divisions had done okay. The breakdown:

• Cable networks: Revenue up five percent, because subscriber fees were up nine percent. Ad revenue was down one percent.
• Warner Bros. movie studio: Revenue down four percent, because of slumping DVD sales.
• Time Inc.: Revenue down 18 percent; advertising down 22 percent. Adjusted operating income down 42 percent. Hence the coming cuts.
• AOL: Revenue down 23 percent. Subscription revenue, which will continue to shrink, was down another 29 percent, and ad revenue, which is supposed to improve one day, was down 18 percent.

That works out to less than $15,000 for each of the magazine’s 400+ employees.

That doesn’t exactly synch up with the reporting we’ve seen about the sale. BusinessWeek, among others, has pegged the sale price at somewhere between $2 million and $5 million, plus the assumption of liabilities, which could be tens of millions. Anyone with accounting expertise want to weigh in?

It’s possible that McGraw-Hill will discuss the sale during its earnings call this morning, though I wouldn’t bet on it: BusinessWeek is one of the company’s most visible brands, but it’s barely material to its business.

UPDATE: There was indeed a bit of discussion about the sale. The company confirmed the $5 million sale price, and said Bloomberg “will assume certain liabilities including our unfulfilled subscription liabilities”. I still don’t understand how it gets to the $9.3 million and $5.9 million numbers, but that’s mostly academic at this point.

How will McGraw-Hill fare without BusinessWeek? Pretty well, it seems. The company will lose around $100 million in revenue next year, but still end up saving $20 million to $25 million without having to foot the magazine’s bill, executives said.

That’s the high end of the range Bloomberg will be paying for BusinessWeek, reports BusinessWeek, which has done an excellent job of covering its sale. One important note to make about the price: Those liabilities could total up to $32 million, although it’s not clear whether Bloomberg will assume all of them.

Can’t call this one a surprise, as Bloomberg has reportedly been the lead bidder for some time now. BusinessWeek employees spent most of the day waiting for an announcement to that effect, and finally heard one, via Bloomberg’s wire service, shortly after 5 pm EDT.

Shortly after, BusinessWeek Editor Stephen J. Adler gathered his troops for an informal meeting to discuss the news and to discuss some blocking and tackling: No news on rumored (and expected) layoffs. But he did tell staffers that those who are cut after the deal closes later this year will receive the same severance package they would have gotten if they were still employed by McGraw-Hill (MHP), the magazine’s parent company.

There most certainly will be cuts: McGraw-Hill is selling the 80-year-old magazine because it’s a money pit that was losing between $20 million and $40 million a year, depending on your accounting. And the publisher’s bankers promoted a layoff plan as part of the sales process.

What exactly deep-pocketed Bloomberg intends to do with the publication, however, is unclear. The company, which makes its money renting its namesake terminals to Wall Street traders, is thought to be running its magazine and TV news operations at a loss as it tries to grab a footprint in consumer media. It may ultimately be willing to run BusinessWeek at a loss for a while, as well.

And now a tiny bit of context: At the beginning of this year, there were four major business magazines. Now one, Condé Nast’s Portfolio, has been shut down and another sold at a fire-sale price. Meanwhile, my former colleagues at Forbes expect to hear about yet another restructuring round in the near future. And while Time Warner (TWX) CEO Jeff Bewkes was careful to list Fortune magazine among the core assets at his company’s Time Inc. unit at an industry event today, that can’t assure the queasy souls who work there.

Here’s the memo to BusinessWeek staff from the magazine’s BusinessWeek publisher, Keith Fox:

All,

Moments ago, McGraw-Hill announced that Bloomberg L.P. has agreed to acquire BusinessWeek. This is exciting news on many levels. Joining forces with another of the world’s leading news organizations enhances BusinessWeek’s ability to further serve our global audience and our valued customers. And Bloomberg will gain a powerful brand with a history of editorial excellence and strong reach among business professionals.

While the ink is barely dry and the long-term plans are being worked out, we do know that Bloomberg is committed to and values our brand, our editorial integrity, and our ability to drive advertising, circulation, and new digital revenue.

BusinessWeek will strengthen Bloomberg’s online, television and mobile products and creates an opportunity for Bloomberg News to reach decision makers in the c-suite. Online, BusinessWeek.com and Bloomberg.com will have more unique visitors than any non-portal business and financial site. In addition, Bloomberg expects to build television content around the powerful BusinessWeek brand and our world-class journalists.

I am tremendously proud of the work all of you have done in the past few months. Despite the uncertainty, we have continued to produce first-class products for our readers and advertisers, and I want to thank you deeply for your efforts. I also want to thank Steve Adler, Jessica Sibley, Tania Secor, Roger Neal, and Linda Brennan, for their extraordinary ability to personify the best of BusinessWeek during the deal process while leading their respective organizations.

I know that while this announcement answers some of the questions you’ve been asking over the past few months, it raises others. The sale is expected to close by the end of the year and we will be working on transition plans in the coming weeks. I can tell you that all BusinessWeek staffers will remain employees of The McGraw-Hill Companies until the transaction closes, and that it will be business as usual–producing the magazine and the website, and serving our advertisers–through the close. We will give you more details when we can.

We’ll be holding a town hall meeting later today at 5:45 EST, after which a Q&A will be provided to all employees; you will receive more details shortly. A call for the Asia teams will be scheduled shortly.

Again, I want to thank you all for your professionalism and dedication during a challenging time. I look forward to working with you on the promising next chapter in BusinessWeek’s history.

Keith

For the record: Disney (DIS) says it always intended to move the company, which offers “bite-sized ideas for green living” via email and a Web site, from its corporate strategy group to its interactive division, which will happen later this year. At that point, “it will still continue in some form,” says spokesman Michelle Bergman.

That doesn’t sound good. Disney says it plans to conduct a review of the unit, so it’s not ready to answer some basic questions about the email newsletter company. Like: Are co-founders Heather Stephenson (who lives and works in San Francisco) and Jennifer Boulden (who until this summer lived and worked in Bozeman, Mont.; she’s now in Los Angeles, I’m told) staying on? Will Disney have to take a write-down on the property? Will there be layoffs? “It’s too early to say. I can’t tell you,” Bergman says.

Okay. But If I had to bet, I’d say at least some of the dozen-plus employees will be hitting the job market.

Disney paid a reported $20 million for the property a year and a half ago, and the plan was to create a big green-centered business around it, but that hasn’t panned out, sources said. The company, founded in 2005, is one of the many lifestyle newsletter businesses backed by Bob Pittman’s Pilot Group.

Comcast (CMCSA) bought DailyCandy, the best known of Pittman’s stable, for $125 million a little more than a year ago. That was surely one of the last “pre-Lehman” Web 2.0 M&A deals, but grunts and murmurs out of Philadelphia and Pilot indicate the business has held up during the recession. And Thrillist, a “DailyCandy for dudes” effort that has yet to sell, seems to be booming.

Today’s example doesn’t come from a magazine per se, but from the company’s digital group, which let go of “more than” 15 people, MediaWeek reports.

You should see a trickle of these reports in the weeks to come, and from other publishers as well: Employees at Time Warner’s (TWX) Time Inc., for example, are bracing for cuts this fall, or in early 2010, and my former colleagues at Forbes expect to hear about another set of layoffs in the next week or so. And whoever wins the bidding for BusinessWeek will almost certainly take an ax to that company’s payroll.

Schmidt added a bit of nuance to that message today, noting that the company had been surprised to see its European business bounce back as quickly as it has. Here’s my transcript of his opening statement.

We are clearly seeing aspects of recovery, and what is notable is that we’re seeing aspects of recovery not just in the United States but in Europe. I had been in error in assuming that there would be a lag, that it would the U.S. first and Europe second. Asia, of course, was never significantly hit in the first place.

So that means from a Google perspective that…we never stopped hiring, but we told our team internally and again, we’ve said to many other people that we are increasing our hiring rate and our investment rate in anticipation of a recovery.

Schmidt and Google co-founder Sergey Brin covered a lot of ground in the hour-plus press conference, and I’ll try to go back and break out out some of the other highlights. A few items worth noting in summary:

• Brin expressed contrition over recent Gmail outages and said the company was working both to prevent future failures and to react more quickly if and when they do happen. But he reiterated the argument, common among cloud-computing fans, that conventional email systems fail much more frequently.
• Schmidt repeatedly defended the proposed settlement Google had reached with authors and publishers regarding its book archive. Recurring theme: It’s not a perfect settlement, but it’s workable.
• Schmidt stressed the importance of porting Google’s Chrome browser to Apple’s Mac platform and said this would happen within months.
• Schmidt said Google was working on ways to help publishers sell their work on the Web (via one-offs or subscription). But he said he had no interest in promoting one publisher’s results over another, as Associated Press officials had recently suggested: “We have to be very very careful not to favor one media organization over another, with regard to speed or latency.”
• Schmidt, who’d previously noted that he expected Google to start making an acquisition per month, said that these would likely be small, five-to-ten-person companies. He added that it was unlikely the company would be in the market for something the size of a YouTube acquisition, which cost Google $1.65 billion. Translation: Don’t expect us to pony up billions for Twitter.

Earlier: My live coverage of the press conference:

Google (GOOG) co-founder Sergey Brin is sitting down with about a dozen reporters in Google’s New York City headquarters for a Q&A session. Tune in for live coverage. This should be a wide-ranging conversation, which I’ll attempt to cover live as well as I can. Please consider everything below to be a paraphrase unless it’s in quotes.

Brin is joined by Google CEO Eric Schmidt. Brin gives an unofficial intro.

Schmidt adds his own informal introduction.

Schmidt: We’re here because we have a global sales meeting in New York, and we’re winding that up right now. A series of internal talks, and the mood was “very, very positive.” We told them that “the worst is behind us” (which Schmidt has said before). We’re seeing recovery not just in the U.S., but in Europe as well. I had been in error in thinking it would be U.S. first, then Europe second. Asia is less important, obviously. We’re increasing our hiring rate and investment rate in an anticipation of a recovery.

Brin discusses some tweaks to search. Do you feel that Microsoft’s innovations with Bing will cause you to accelerate your innovations?

Brin: Competition is healthy. Microsoft (MSFT) has made its contributions. So has Cuill. Many of the tweaks in Bing we’d already seen from Microsoft Live earlier in the year.

Schmidt: I agree!

But do you think Bing is really different? Or just a rebranding.

Brin: [Demurs]

Schmidt: You guys should judge us and our competitors. We’ve been criticized for having a self-referential view of the world. But I’d argue that our success so far proves that’s been a good strategy.

Please talk about Android and other mobile plans.

Brin: We started with Android because it was a problem for us, as an end-user and a developer, that phones lacked powerful browsers and the ability to install powerful apps. I think Android has addressed this very well, but it has also pushed the market. It has pushed Apple (AAPL) with the iPhone and RIM (RIMM) and Windows Mobile. I’m pretty excited about the future; they’re getting increasingly capable browsers, and you can now write native applications across five platforms that will cover most smart phones. I think that having the software platform has freed the hardware makers from spending time on that, and they can rejuvenate their efforts on hardware.

Please talk about enterprise efforts.

Brin: We started in enterprise, like mobile, to address our own needs. When we started with mail in ‘04, Web email was like a toy. We really focused on something that would work in an enterprise and then made it available to consumers. We feel we’re farther ahead (than competitors) both in email and in collaborative document-editing. We’re moving toward eventually having everything (all our applications) available everywhere. “I just think the cloud model is a better model….I do think this install-less model of a cloud is better….It’s definitely made me more productive.”

More on enterprise from Brin: We’ve been successful with both SMB [small and medium business] and increasingly with enterprise. We’ve got a big implementation with Genetech (DNA), and in Washington D.C. We’re specifically adding features for enterprise. That’s part of the Postini acquisition–to add some of those email features for enterprises. You’d be surprised to hear some of the things businesses ask for.

Please talk about recent Gmail outages.

Brin: Certainly we’re not happy with any outages. With those outages we’re at the “three nines” level, which is not where we want to be. Targeting “four nines” by end of quarter. We’ll let you know how we do. Focusing not only on outages, which we don’t like, but recovery time. Second outage could have been resolved in five or ten minutes, but we made errors in handling it, and it extended over an hour. But if you look at a typical enterprise today, those outages tend to add up to more than even these kinds of outages that we had in Q3. Also, we’re working on the number of people affected by outages. Trying to group people into pods so that if one goes down it doesn’t affect others.

You’re adding more complexity to search. It’s more confusing than it ever was. Same thing with site links. Is that an issue (it is for Danny Sullivan)?

Brin: I’d like to see all the options, available in all the corpuses. We don’t have all the same options in each offering. In terms of the links and snippets that we’re offering, we’re trying to experiment with that.

On Google book deal: If the judge asked you why he shouldn’t be concerned by the concentration of Google’s power, what would you say?

Schmidt: It’s an error to answer a theoretical question from a journalist. But anyway, we won’t get that kind of question. With respect to book search, we were doing something that we thought was appropriate. We were sued, and after three years of discussion, we’ve come to a settlement. This is perfectly normal. From our perspective, this is a settlement we like, it’s a settlement we think they’ll like, and we’ll hear what the court says, within minutes. Let me reframe your question: There’s nothing particularly exclusive about what we’re doing. The rights registry we’re doing is for the benefit of orphan works. “It’s not a particularly good business for us. We’re going it because we think it’s the right thing to do.” We don’t think the settlement is perfect, but we think it’s good.

What are plans to expand book search?

Schmidt: We’re already huge. There are millions of books that have never been read, and we’re going to deliver readers to those books.

Brin: We want as many works as possible in some form, because that’s of tremendous value.

Schmidt: This doesn’t cover all international books, all books in the world. [Some disagreement about this between Brin and Schmidt]. It will take time to get the registry up and running, so for the near future I think that’s all we can achieve.

Back to the economy, please.

Schmidt: We’ve tried for a while to figure out if Google is an accurate predictor of the economy, and we can’t prove it. If we could, we’d brag about it. Last early in the year we saw a decline in U.K., which surprised us. From our perspective, the low point was somewhere in the spring. Which is why I said worst was behind us in May, June. We noticed a recovery “June-ish.” The conventional wisdom is that U.S. recessions are 18-24 months. Bernanke sees a recovery too, which we agree with. Conventional wisdom was that Europe would lag by three-five months, which we’re not seeing. Europe is not one country, and it varies a great deal depending on which country we’re in. I won’t go in to specifics but it’s the obvious stuff–the countries that didn’t have a big bump did not have a big fall. More on being a leading indicator: Obviously we’re a leading indicator in advertising.

Brin: And we’re good indicator for consumer spending, and you can see for yourself by looking at Google trends.

It seems as if Chrome isn’t having the impact with consumers that you would like.

Brin: [Starts, then stopped by Schmidt]

Schmidt: Some of your premise about Chrome is incorrect, in terms of adoption, and we’re going to get that message out.

Brin: It’s actually exceeding our benchmarks.

Schmidt: I see a lot of Macs in this room, and a lot of very sophisticated people are using Macs now and we need to get a version of Chrome out for that, which we’ll have in a couple of months. Key to browser strength is speed. In general, we announced Chrome OS and Chromium product. Everything is linked together: Cloud, chrome, etc.

At one point do Android and the Chrome OS come together or not come together?

Schmidt: Current definition of use platforms has to do with use patterns. Android for mobile, delivered via telecom store, heavily integrated with telco offerings, like our Verizon (VZ) deal, which we’re enormously excited about. The analog for Chrome is that it’s designed for a 10, 12-inch form factor. They both use Linux, etc. But they’re designed for different uses. [Netbooks?] May be some overlap there.

Is Google being too nice? Is there a rethinking of relationships with aggrieved groups?

Schmidt: In many ways we’ve always wanted to be this Google as opposed to the way we were perceived a few years ago. We’re particularly proud of the way we’re working with advertising agencies, which is very important to us. With the media industry, we’re having success with YouTube and YouTube monetization, and we’ll have more on that coming forward….”We have always wanted to have these partnerships….We’re learning how to do them in a way that they win, too.”

Brin: People can now differentiate between us and the Internet.

Schmidt: Google is an innovator. The Internet is causing collisions. Innovation plus collisions equals opportunity. For instance, the fact that Verizon has embraced most of the open principles that we put forth five years ago is shocking. “It’s pretty amazing. This is Verizon. It’s not some itty-bitty telecom start-up.”

Are you uncomfortable with Google employees’ sense of entitlement? [Per new Ken Auletta book]

Brin: [Refers to layoffs--Schmidt corrects him: "We did not have layoffs."] [Addendum: Schmidt was talking about Google closing engineering offices in Phoenix and other locations; Google did have layoffs last winter.] You’re right:

What do you think about publishers requiring pay walls, and how will you help surface that.

Schmidt: We’re starting with that YouTube. Overall, “there’s clearly a market for free content, and that market is the size of the Internet.” Also a market for subscription/paid. The analogy I would offer is TV. We all grew up with “free” TV. Now almost everyone pays for cable, and some people pay for pay-per-view, “which is ridiculously expensive,” but people will pay for particular events, like boxing. I think all three of those uses will emerge. We’re working on payment models, subscriptions, to enable that.

But what about surfacing paid content in search [this comes from WSJ.com editor Alan Murray]? Will you factor the desire of someone to pay for content into results?

Schmidt: We’re not going to use the price you use as our ranking in results. That’s not going to be our signal. But we’ll incorporate the price people are paying for your content into results. But I’m not going to answer this precisely because I don’t want to discuss how we produce results. The most interesting improvement you could make is that to the degree that we have more of the marketplace data available, we could take that information and reflect some of that in our rankings.

The AP CEO said Google or Microsoft might be willing to pay a premium for an advance look at the news.

Schmidt: We have a deal with the AP, and I don’t want to talk about any specifics of any deal. I don’t think that’s proper. “We have to be very very careful not to favor one media organization over another, with regard to speed or latency.” We are staying out of the media business. “You guys are very good at it, and we’re not.”

[Apologies for tech error; I missed the specific question and part of the following exchange, but the subject is entitlement.]

Brin: We cut down on snacks, etc. to “reset expectations” regarding entitlement.

Schmidt: “Google pays very well. Google is clearly a growth company. People at Google don’t work for those reasons at Google. We don’t want them to come to work for Google for those reasons. We want people to come to Google to change the world. Life is short.” The tightening in the last year has been good for this, by the way, the controls put into place by Patrick Pichette, who is our hero, have been very helpful.

Please talk about M&A plans and goal of one acquisition per month.

Schmidt: That’s been our historic pattern. I think we will be buying small companies–five, ten people. That’s where some of our best stuff has been. One day Larry and Sergey bought Android, and I didn’t even notice. Think about the strategic opportunities that has created. Sergey found Google Earth one day while he was surfing on the Web. And then he walked into my office and told me he bought them. “And I said, ‘for how much, Sergey?’ And it turned out to be a few million.”

Would you buy a YouTube?

Schmidt: Is there another one to buy? The problem with that size of acquisition is that you have to make your money back. I think that DoubleClick and YouTube will be two of our best acquisitions. DoubleClick is already close to paying back, and YouTube will get there soon. But bear in mind that any major acquisition now will involve a regulatory review, because of our size and because our competitors will make sure of that.

[Sorry, missed another question]

Do you anticipate making large upfront commitments for new or renewed search deals [as you did with MySpace and AOL]?

Schmidt: I’d rather not comment on search deals. We are in discussions with both of those companies. “Some of our best friends are in those companies.”

[Missed yet another one]

What will new tablet machines [like Apple's] mean for you? And to content producers?

Brin: Hardware is getting amazing with regard to cost. Used to be that display was expensive. Now that’s cheap, and so are chips, etc. Now, the main cost is broadband connection, or cellular, or however you get to the Internet. That’s why wide broadband availability is important to us. Think about how much you spend on access costs compared to the amount you spend on your handset. The phone cost is negligible.

Schmidt: Not sure how to answer question. We provide the infrastructure below what you’re talking about [touch interfaces, etc.]. Kindle is a good example. Don’t think about current one, think about one two or three years out. I think there will be many kinds of things like Kindles, and that’s a material change in the way people will interact with hardware, media.

Brin: I think it’s better if hardware isn’t locked down to specific platforms.

[Long exchange between Schmidt and Danny Sullivan that I'll have to pick up later]

Should Google be required to lease servers and access to Google checkout numbers to deal with “lock-in” issues that broke up the telcos?

Schmidt: Google Checkout isn’t interesting. But I think your analogy is wrong and that there are no data to support your theses.

[I missed the next question on the book settlement about orphan works, etc.]

Schmidt: A lot of these complaints are being made by people who don’t want a solution.

What are the reasonable book settlement proposals you’ve seen?

Schmidt: Goal is to get all the books to everyone and to get all the authors compensated properly. Some of the proposals make sense to me, but I don’t want to characterize them. Not a perfect solution, but the best one we can do.

How will book settlement affect international users?

Brin: It won’t. We’d love settlements that work across a range of countries.

Why won’t you be like Microsoft with regard to antitrust?

Schmidt: Many reasons. Culture, for one. Another reason is that majority of users are one click away from moving away from us. Third: If we went into an “evil room” and had an “evil light” shined on us, and we then behaved in an “evil way” we would be destroyed….There is a fundamental trust between Google and its users.”

Schmidt walks through “ludicrous” thought experiment whereby Chrome takes 80 percent of market share and then tries to lock consumers in, noting that it wouldn’t work due to open source.

Do you think you’ll take another stab at moving into radio, print?

Brin: We are quite optimistic on the TV front. Radio and print didn’t pan out as well as we thought initially. One of the reasons is that those mediums are moving online and consumers are moving online and the publishers/producers want to work with us there. “We were kind of at the dock where the ship had already left.” But TV is quite similar to the Web in terms, potentially, of measurability, so we’re excited about those prospects.

Is page rank broken? People are gaming it, etc.

Brin: No. We have to continually develop. Part of the issue is span, but the main issue is that everything changes. We’re doing a much better job of ranking than we did a decade ago. If we just rested on our laurels with what we wrote in paper from 1998, we’d be in big trouble.

Maybe, says CNET’s Greg Sandoval. He reports that Viacom’s attorneys have unearthed emails that indicate that YouTube employees uploaded copyrighted material to the site and that “managers” knew there was copyrighted stuff on the site but didn’t do anything about it.

Those allegations happen to be key parts of Viacom’s (VIA) suit against Google (GOOG) and YouTube, and a good part of what the company has been looking for in the discovery/deposition process that has stretched on for more than a year and is slated to extend through the end of 2009.

Viacom has argued that senior YouTube employees, including cofounders Chad Hurley and Steve Chen, knew full well that their site was full of copyrighted material and not only didn’t try to prevent it, but at some point even encouraged it.

So what exactly do the emails say? I don’t know. Sandoval is summarizing the documents, not reproducing them. And if I’m reading his story correctly, he may not have seen them either, but may be relying on someone else’s description of them. (That said, in a separate story, Sandoval does reproduce parts of Google CEO Eric Schmidt’s deposition from the same case.)

Here’s his description:

Lawyers working on a $1 billion copyright lawsuit filed by Viacom against Google’s YouTube may have uncovered evidence that employees of the video site were among those who uploaded unauthorized content to YouTube.

In addition, internal YouTube e-mails indicate that YouTube managers knew and discussed the existence of unauthorized content on the site with employees but chose not to remove the material, three sources with knowledge of the case told CNET.

The e-mails, according to the sources who asked for anonymity because of the ongoing litigation, surfaced during an exchange of information between the two sides of the legal dispute.

I’ve asked Sandoval for more information about the emails he’s referring to, but I don’t expect him to say much; anyone who released documents from discovery would be violating a court order. Viacom had no comment. Here’s YouTube’s comment, via CNET: “The characterizations of the supposed evidence, made in violation of a court order, are wrong, misleading, or lack important context and notably come on the heels of a series of significant setbacks for the plaintiffs. The evidence will show that we go above and beyond our legal obligations to protect the rights of content owners.”

TechCrunch, which first reported the funding, says CEO Evan Williams informed his employees about the new deal at a recent companywide meeting. I’m told the round is all but finished: “If the money isn’t in the bank yet, it will be soon,” a source tells me.

No word on who has invested in the company in this go-round, but it’s almost certain Twitter was able to entice new backers to join its existing investors: Silicon Valley logic dictates that each successive funding round should attract new money.

In February, Twitter raised approximately $35 million in a round led by Benchmark Capital and Institutional Venture Partners that valued it at $250 million.

And just to spell this out–Twitter’s new investors, along with older investors who have reupped, believe the company will ultimately be worth much more than $1 billion. In order to get a return on their money, they will expect it to hit $3 billion or more.

Feel free to debate the merits of Twitter’s growth prospects, and its chances of creating a real business out of all of those 140 character messages its users create.

But in retrospect, this funding round seems obvious: Twitter’s founders have insisted that they want to build the company on their own instead of selling it to the likes of a Google (GOOG) or Microsoft (MSFT), and they’ve already turned down Facebook. And if they weren’t going to sell, raising yet more money to give the company time and resources to build out a real business is the logical choice.

Here are Williams and co-founder Biz Stone talking to Walt Mossberg and Kara Swisher at the D: All Things Digital conference in May. Discussion of the company’s future as a standalone business kicks in around the 31-minute mark.

]]> http://mediamemo.allthingsd.com/20090916/twitter-goes-for-broke-if-broke-means-a-lot-of-money-new-funding-round-at-1-billion-valuation/feed/ 2 http://mediamemo.allthingsd.com/20090915/another-aol-org-chart-shuffle-coo-partoll-search-boss-kannapell-out/ http://mediamemo.allthingsd.com/20090915/another-aol-org-chart-shuffle-coo-partoll-search-boss-kannapell-out/#comments Wed, 16 Sep 2009 01:46:02 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=11011 This isn’t the long-rumored round of mass layoffs, but AOL boss Tim Armstrong did let go of two executives today: COO Kim Partoll is out, as is John Kannapell, SVP of search and local media.

Armstrong, who took over the Time Warner (TWX) unit earlier this year and is prepping it for a spinoff that’s supposed to happen by the end of 2009, doesn’t plan on replacing either executive, say people familiar with the matter. Instead, their work will be divvied up among other Armstrong lieutenants.

Partoll’s mobile responsibilities, for instance, will be given to new hire and former Yahoo (YHOO) exec Brad Garlinghouse, while Kannapell’s responsibilities will be handed to newish hire and former Google (GOOG) exec Jeff Levick. Armstrong himself will handle international duties, previously assigned to Partoll.

Kannapell’s departure isn’t a total shock, since he was listed as “acting head” of local during a reorg that Armstrong oversaw in June. But Partoll is a head-scratcher, since she was promoted to her new/old position during that same exec shuffle.

And what about those layoffs? Armstrong is almost certain to make some cuts at some point–and has told employees as much. But people familiar with the company say he hasn’t been focused on cost structure (i.e., cuts) until recently.

]]> http://mediamemo.allthingsd.com/20090915/another-aol-org-chart-shuffle-coo-partoll-search-boss-kannapell-out/feed/ 0 http://mediamemo.allthingsd.com/20090909/new-york-times-tells-the-boston-globe-it-doesnt-have-to-sell-the-boston-globe/ http://mediamemo.allthingsd.com/20090909/new-york-times-tells-the-boston-globe-it-doesnt-have-to-sell-the-boston-globe/#comments Wed, 09 Sep 2009 18:32:06 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=10803 The cash-strapped New York Times (NYT), which has put the Boston Globe and its other New England properties up for sale, wants you to know that it’s in no way having a fire sale.

That’s the message Chairman Arthur Sulzberger Jr. and Chief Executive Janet L. Robinson tried to deliver to the Globe’s employees this morning, reports…the Boston Globe.

Given that the Times engaged in some white-knuckled negotiating to get the paper’s unions to agree to big pay cuts and other concessions, repeatedly said that the Globe is bleeding red ink and has extended the bidding deadline for prospective Globe buyers, that seems like a hard message to deliver. Especially if you’re delivering it to crabby, ink-stained wretches.

The Globe, however, says the meeting was “largely civil.” But not entirely:

Today’s meeting, which lasted just over an hour, marked the first time Times Co. executives have met with Globe employees in more than a year. A common complaint among Globe employees was that the most senior Times Co. executives did not travel to Boston for a face-to-face meeting with employees at which they might have explained the paper’s financial condition and made the case for sacrifices.

The meeting today was contentious at times, as classified sales employee Jeanne Shimkus drew a smattering of applause when she attacked the Times Co. executives for imposing cuts on employees and questioned their credibility. “I have no respect for anything you say. And I don’t believe a word you say,” Shimkus said.

Sulzberger quickly moved on to the next question. “If you have no respect for anything I say, and you don’t believe anything I say, then we don’t have the basis for a conversation and a dialogue,” he told her.

]]> http://mediamemo.allthingsd.com/20090909/new-york-times-tells-the-boston-globe-it-doesnt-have-to-sell-the-boston-globe/feed/ 0 http://mediamemo.allthingsd.com/20090716/google-revenue-in-line-earnings-a-pleasant-surprise/ http://mediamemo.allthingsd.com/20090716/google-revenue-in-line-earnings-a-pleasant-surprise/#comments Thu, 16 Jul 2009 20:45:43 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=9343 Waiting for the economy to come roaring back? So is Google. The search giant had a decent quarter, but not one that’s going to blow away Wall Street, or convince anyone that the economy is roaring back. But it’s an okay performance for a media company in a recession.

Top line for Google’s Q2 earnings: Net revenue of $4.07 billion and earnings of $5.36. The Street was looking for net revenue of $4.05 billion and earnings of $5.05.

CEO Eric Schmidt isn’t overly effusive: “Google had a very good quarter, especially given the continued macro-economic downturn. While most of the world’s largest economies shrank, Google’s year-over-year revenues were up 3%. These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs.”

Meanwhile paid-click growth was up 15 percent, and the company continues to clamp down on expenses: Google’s headcount actually shrank in the last three months, from 20,164 to 19,786 full-time employees.

I’ll be listening in on the call and occasionally updating here.

• Schmidt: “Youtube is now on a trajectory we’re very pleased with.”
• “Too early to tell when the recovery will materialize.”
• CFO Patrick Pichette: Still hiring, but decrease in headcount came from previously announced layoffs.
• Product SVP Jonathan Rosenberg: We’re focusing more than ever on power users.
• Mobile monetization picked up, driven by smart phones. YouTube’s monetized views have tripled in the last year.
• Sales boss Nikesh Arora: Small advertisers have stayed consistent during downturn, and larger advertisers who have been on sidelines are coming back.
• Schmidt on Chrome OS: We’re talking to manufacturers about designing “products that are very, very exciting.” Will Chrome run on existing hardware? Available for download? Still to be worked out.
• Was June soft? Schmidt: We generally don’t parse interquarter trends. On YouTube: Monetizing “billions of views” per months. [Nothing approaching real numbers or real context].
• Arora: “Significant sellthrough” in markets where Google has YouTube homepage for sale. Next phase of YouTube sales emphasis will be preroll ads on short-form videos.
• Arora on YouTube “trajectory” comment: We’re excited about getting pieces in place to drive this forward [i.e., not talking about numbers]. Customers accepting YouTube ads: “It’s becoming accepted user behavior where they’re going to watch premium content that people have invested in, they’re going to watch pre-roll ads.”
• Is YouTube profitable? Pichette: We don’t give out economics. But in the not-too-distant future, we see it being very profitable.

Here again, per Citigroup’s Mark Mahaney, is a crib sheet for interpreting the results (click to enlarge):

And here are the slides from Google’s investor presentation:

2009Q2_google_earnings_slides –

]]> http://mediamemo.allthingsd.com/20090716/google-revenue-in-line-earnings-a-pleasant-surprise/feed/ 0 http://mediamemo.allthingsd.com/20090630/here-comes-the-video-shakeout-joost-scales-down-ceo-mike-volpi-steps-out/ http://mediamemo.allthingsd.com/20090630/here-comes-the-video-shakeout-joost-scales-down-ceo-mike-volpi-steps-out/#comments Tue, 30 Jun 2009 15:49:51 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8803 Here’s the beginning of the inevitable online video shakeout: Joost, the once-hyped video service that was supposed to rival Google’s (GOOG) YouTube, is restructuring to focus on “white label” services, i.e., a back end for other video players.

The service is laying off the majority of its employees, and CEO Mike Volpi (pictured right) is out, replaced by Matt Zelesko, who had been SVP of engineering. The Joost.com portal site will stay open, but best to think of it as an ad for the company’s hosting and distribution services, which it will try to sell to cable companies and the like.

A Joost spokesperson declined to say how deep the layoffs will be; but I’m told that the company, which had more than 100 employees last fall, will be down to a couple dozen after the cuts are done. In a post on Joost’s Web site, Volpi said the company “will say goodbye to many of our colleagues and friends.”

This isn’t a shock: Joost’s fate has been the subject of whisper and rumors for the last year or more. The service made an initial splash in 2007 by raising $45 million from the founders of Skype and an array of high-profile investors and media companies, including Sequoia Capital and Viacom (VIA), and was initially supposed to deliver copyrighted content via a peer-to-peer distribution system and a player that users downloaded to their desktops.

But YouTube, and later Hulu, conditioned users to watch video via their browsers, and Joost’s software never caught on. By last fall, the company had retooled and began offering video via the browser like everyone else, but it has never been able to generate a significant audience. In November, a month after the company launched its Web browser, it said it was attracting 2.1 million unique users world-wide, a fraction of YouTube’s audience, and well behind rivals like Hulu, MetaCafe, Veoh and DailyMotion.

Here’s the service’s unique visitor count, per Comscore (SCOR); Joost’s unique viewer count, which is the more relevant metric for video sites, is considerably smaller (click to enlarge):

Joost has been a frequent candidate for buyout rumors, and the company hasn’t gone out of its way to deny them. The supposed buyers would be cable companies like Comcast (CMCSA) Time Warner Cable (TWC) or telcos like AT&T (T) and Verizon (VZ), which would presumably use Joost’s technical team to help build out their own Web video plays.

But some of the cable guys and telcos insist that they’re fine with the people they have. And if they do want to buy a video player, they have plenty of options: Just about all of Joost’s peers have been on the block, formally or informally, for the past few months.

JOOST TO PROVIDE WHITE LABEL ONLINE VIDEO PLATFORM

NEW YORK AND LONDON – June 30, 2009 – Joost, the online video startup, announced today that, along with Joost.com, it will focus on providing white label online video platforms for media companies, including cable and satellite providers, broadcasters and video aggregators. This technology and service offering will support content owners’ efforts to build comprehensive branded environments online.

Media companies around the world are embracing internet-based video portals as a key path to distribute their premium video, but building a world-class video portal is increasingly difficult and expensive. Joost will focus on this issue and provide the market with a cost-effective, end-to-end solution for media companies to publish video under their own brands.

As a part of this new direction, Joost will reorganize and restructure its business. A core team in New York and London will work on providing these solutions, as well as operating and supporting Joost.com and its associated video applications. Joost also will wind down operations in its Leiden development center.

Matt Zelesko, currently SVP of Engineering at Joost, will take over as CEO while continuing to lead the engineering organization. Stacey Seltzer, currently SVP of international business development and content acquisition at Joost, will run the business operations. Mike Volpi has stepped down as CEO of Joost but will remain actively involved as Chairman of the Board.

Joost plans to make its white label video platform commercially available to media companies around the world. This offering will provide a solution for companies looking to build a branded experience for their content on their own site as well as other sites and platforms in their distribution networks.

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