Depends on who you ask, of course.

Executives at Veoh say Judge A. Howard Matz has given them a new lease on life, and at least some of the company’s investors are doing some chest-beating. Universal, the world’s largest music label, says it’s confident it will win an appeal.

You can get the same split opinion by asking two different companies that happen to be locked in a similar fight. Executives at Google’s (GOOG) YouTube, which is trying to fend off a copyright suit filed by Viacom (VIA), say the Veoh ruling bolsters their case. You can guess what Viacom says.

The gist of the fight: Universal says Veoh didn’t try hard enough to keep illegally uploaded material off the video site; Veoh says it made a good-faith effort. Matz agreed with Veoh and tossed out Universal’s claims.

Even if you disregard the posturing, it’s fair to say there’s a genuine debate over the ruling’s meaning. Veoh, along with some of my bloggy colleagues, is treating the decision as the final word on Web copyright disputes, or at least those that involve the Digital Millennium Copyright Act.

And Matz certainly slapped Universal around. But it’s worth noting that copyright owners have lost Web cases in the Ninth District before, but ultimately won on appeal. Ask Grokster, the now-defunct file-sharing network that dissolved after a 2005 Supreme Court ruling.

You can read all of Matz’s judgment at the bottom of this post. But this excerpt, in which he argues that simply having illegal material on your site isn’t a crime, and neither is knowing about it (at least, in a general sense), gives you a good idea of Matz’s thrust and tone:

No doubt it is common knowledge that most websites that allow users to contribute material contain infringing items. If such general awareness were enough to raise a “red flag,” the DMCA safe harbor would not serve its purpose of “facilitat[ing] the robust development and world-wide expansion of electronic commerce, communications, research, development, and education in the digital age,” and “balanc[ing] the interests of content owners, on-line and other service providers, and information users in a way that will foster the continued development of electronic commerce and the growth of the Internet.”

Legal debate aside, the ruling does give a practical benefit for Veoh. It allows the company to fetch a higher price on the auction block.

CEO Dmitry Shapiro has been shopping the site to bidders over the summer, and as of a few months ago, he was willing to accept less than the $70 million investors like Time Warner (TWX), Goldman Sachs (GS) and former Disney (DIS) CEO Michael Eisner have poured into the site.

Selling a Web video site in 2009 is a tough challenge without a handicap, but the lawsuit was a big one. It was a huge time-and-money suck–Veoh may have spent as much as $6 million fighting the case in the last two years–and more important, the unresolved case was a huge liability. Who wants to buy a lawsuit?

Now, Shapiro says, Veoh’s options include not selling at all. He insists that some of Veoh’s existing backers are willing to recapitalize the company and that new investors might join in as well.

I’ll take him at his word, but if I had to bet, I’d wager that Veoh ends up getting acquired sooner than later. Maybe quite soon–the company has a board meeting today.

Wonder what they’ll talk about?

VEOH –

Still here? How about that? You get a bonus video! (But be warned: Pacino chews up a lot of scenery here, and there is some impassioned cursing.)

Goldman Sachs (GS), which is running the auction for the Times, had originally told bidders to submit their offers by July 8. But as of last night, that deadline has been pushed back, with no new deadline to replace it, reports…the Boston Globe.

The Globe doesn’t know what the extension means, but it does have a concise roundup of potential bidders:

Three local businessmen have surfaced as potential Globe bidders: Stephen Pagliuca, co-owner of the Boston Celtics and managing director at the Bain Capital private equity firm; Jack Connors, a former advertising executive and chairman of Partners HealthCare; and Stephen Taylor, a former Globe executive and member of the family that sold the newspaper to the Times Co. for $1.1 billion in 1993. Connors and Pagliuca, who initially were considering separate bids, requested and were given permission by Goldman Sachs to join forces and submit a common bid.

The other big question. How much will the winner end up paying for the paper? A lot less than what the Times paid for it 16 years ago, obviously.

The Times has already told bidders that they should expect to assume $59 million in pension liabilities if they walk away with the paper, but beyond that, it’s anyone guess. The paper’s own David Carr went through this exercise last month and elicited guesstimates that ranged from $1 to $250 million.

A good bet: Veoh, one of the best-funded would-be YouTubes. Multiple sources tell me the company is aggressively marketing itself in hopes of finding a buyer.

And if a deal does go through, it will result in a loss for the company’s high-profile backers, who include former Disney (DIS) CEO Michael Eisner and Goldman Sachs (GS). I’m told that CEO Dmitry Shapiro has been shopping the company at prices below $70 million, which is the amount investors have sunk into the portal since 2005.

What happened to Veoh? The same thing that happened to almost every other Web video portal that isn’t Google’s (GOOG) YouTube or Hulu: Not enough audience, not enough ad revenue, too many costs.

Veoh claims an audience of about 25 million users, which is less than auditors like comScore (SCOR) report, and is, in any case, an order of magnitude smaller than YouTube’s. Sources tell me the company lost money on revenue of about $6 million last year. Sales are up and executives are optimistic it could break even this year, but the trajectory isn’t high enough to keep Veoh afloat as an independent company.

Complicating matters for Veoh is a costly court battle with Vivendi’s Universal Music Group, which accuses the company of copyright violations. That two-year-old fight has cost the start-up millions in legal fees.

The fact that Veoh’s backers include media-savvy players like Time Warner (TWX); former Viacom executives Tom Freston and Jonathan Dolgen; and Spark Capital, one of the primary investors in Twitter, hasn’t been enough to help the company extricate itself from the suit.

In April, Veoh laid off a good chunk of its staff, replaced CEO Steve Mitgang with Shapiro, the company’s founder, and focused its energy on a new “Video Compass” player that users are supposed to download and install in their Web browsers.

At the time, Shapiro said that the company’s Web portal business was a success but acknowledged that “quite frankly, there are a lot of things like that.”

So who would buy Veoh? Theoretically, at the right price, the company could be attractive to a large Web player like a Yahoo (YHOO), which used to be a big player in video back when video was a small market. Or the company could try marketing its technical expertise to a cable/telco company like Time Warner Cable (TWC) that hasn’t done much with online video but says it will soon.

But rival Web portal Joost tried making the same pitch to various buyers over the last few months and couldn’t get a deal done. Last week Joost laid off most of its staff and said it would try to go it alone as a services company.

This kind of flux is now par for the course among the big Web portals that thought they could rival YouTube, or at least secure second place. But Google’s lead over everyone else in video gets bigger every day, and its primary competitor is now Hulu, which has the advantage of premium content from its Hollywood owners–Disney, GE’s (GE) NBC Universal, and News Corp.’s (NWS) Fox.

In addition to Veoh and Joost, France’s DailyMotion has swapped out CEOs in recent months and is reportedly looking to raise money. Meanwhile, Metacafe, yet another video hub, has hired boutique investment bank Think Equity to look for “strategic investors to provide expansion capital.”

Metacafe CEO Erick Hachenburg says his company doesn’t need the money and can survive on its own if it doesn’t go ahead with a deal. “You would expect in this marketplace that you’re going to have a shakeout, and the stronger players are going to make it,” he says.

That sounds right. The question is whether we’ll have more than two players left when this is all over.

DST will not get a board seat or “special observer rights” in return for its money. The two companies are holding a press conference shortly, so we may be able to extract a few more details.

The $10 billion valuation is comedown from the $15 billion figure that accompanied Microsoft’s (MSFT) 2007 investment, but no one expected that figure to hold up–in large part that deal was driven by a bidding war with Google (GOOG) and not much else.

Facebook and its newest investors are conducting a conference call to discuss the deal; I’ll be covering the call live.

FACEBOOK RECEIVES INVESTMENT FROM DIGITAL SKY TECHNOLOGIES

Passive Investment Includes Stake in Preferred Stock, Common Stock and Support for Facebook’s Continued Global Growth

PALO ALTO, Calif. — May 26, 2009 — Facebook today announced that Digital Sky Technologies (DST), one of the leading internet investment groups globally with significant stakes in Eastern European and Russian internet businesses, has made a $200 million investment in Facebook in exchange for preferred stock, representing a 1.96 percent equity stake at a $10 billion valuation.

In addition, DST has indicated that it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders that would facilitate liquidity for current and former employees’ vested shares in the company. The details of the plan are expected to be announced to eligible participants during the summer. Consistent with Facebook’s practice with other recent investors, DST will not be represented on the Facebook board or hold special observer rights.

“This investment demonstrates Facebook’s ongoing success at creating a global network for people to share and connect,” said Facebook CEO Mark Zuckerberg. “We’ve worked hard to bring more than 200 million people — 70 percent outside of the U.S. — onto Facebook to share with friends, family and co-workers. A number of firms approached us, but DST stood out because of the global perspective they bring — backed up by the impressive growth and financial achievements of their internet investments. We’re looking forward to working with the DST team.”

“Our investment experience in other regions reveals the tremendous value social networking companies create as they redefine how people communicate and interact,” said Yuri Milner, chief executive of DST.  “By every important metric — user growth and engagement, technological innovation and financial performance — Facebook is on a similar trajectory, though on a much more global scale. We’re delighted to invest in Facebook, Mark and his management team as they make the world more open and connected.”

Based in London and Moscow, DST is a well-respected investor in a number of successful internet companies, holding significant interests in Russia and Eastern Europe, such as Mail.ru, Forticom and vKontakte.  DST’s main assets account for over 70 percent of all page views in the Russian-speaking internet and its social networks are the market leaders in more than 13 countries, addressing a combined population of more than 350 million.

DST is run by its three partners who have complementary backgrounds in operations, investments and finance: Yuri Milner, previously CEO of Mail.ru, the #1 Russian language website; Gregory Finger, previously head of the Moscow office of NCH, a multi-billion dollar hedge fund; and Alexander Tamas, previously co-head of internet and software coverage in EMEA for the Investment Banking Division of Goldman Sachs. With its advanced understanding of opportunities in technology and social media, DST is a good fit for Facebook and an insightful partner that can help unlock additional growth opportunities.

Shapiro says the company, which has been primarily focused on playing video and selling ads on its own site, will now be concentrating on a new “Video Compass” player that users will have to download onto their Web browsers.

Shapiro says the company is laying off 25 people and will have a staff in “the mid-40s” when the restructuring is over. That’s less than half its size in June of last year, when the company raised another $30 million, bringing the total capital it has raised to $70 million. At the time, Veoh’s investors–which included Goldman Sachs (GS), Intel (INTC), Time Warner (TWX) and Spark Capital–valued the company at about $125 million, pre-money. VentureBeat first reported the layoffs and restructuring last night.

But Veoh’s video Web browser is one of several players in a field dominated by Google’s (GOOG) YouTube, and now Hulu seems to have established itself as a clear second place.

Comscore (SCOR) says Veoh’s audience peaked in March of last year, when four million viewers watched 33.7 million videos on the site. It says that by February of this year, Veoh’s audience had shrunk to two million viewers watching 16.5 million videos. Every Web publisher disputes third-party measurements, but in this case, Veoh says Comscore’s data are way off: It says it has 23 million unique users watching 200 million videos.

Shapiro insists that the company will continue to support its original video site, but argues that there are more opportunities with its new browser plug-in, which suggests videos to users who are searching for things on other sites. So if a Compass user was searching for, say, “CSI” on Google, it’s possible that the Compass plug-in would offer up a clip or episode of the CBS (CBS) show, via a player that would launch on top of the site.

“The website is extremely mature. It’s been around for 3 and a half years. It’s extremely successful,” Shapiro said. But “quite frankly, there are a lot of things like that. We love it and will continue to invest in it. It’s just that we also see that we have something that no one else has in Compass, and we’re saying we are going to be investing in and supporting that.”

Mitgang came to Veoh in July 2007 from Yahoo (YHOO), and shortly after that the company became enmeshed in a high-profile copyright lawsuit with Universal Music Group. The suit is still ongoing, and though Veoh has won several recent points, people familiar with the company tell me that the legal bills have been significant. I asked Shapiro if the cost of the suit had anything to do with the restructuring, but he declined to comment.

Here’s the press release:

VEoh NETWORKS TO Intensify FOCUS ON ITS SUCCESSFUL
VEOH VIDEO COMPASS™

Company to Streamline Efforts around Omnipresent Video Discovery

SAN DIEGO, CA (April 1, 2009) – Veoh Networks, one of the leading innovators in the online video arena, announced today that the company will be focusing its efforts around its highly successful Veoh Video Compass™ application.  Video Compass is a browser plug-in that makes video discovery a truly seamless experience, enabling video to be played while on every major search engine, portal and commerce site.  It enhances the browsing experience by surfacing recommended videos that are relevant to a consumer’s search terms.  These video recommendations – based on the viewing behavior of millions of online video users – make it easy for consumers to discover and watch videos from an index of millions of videos from around the Internet.  Veoh adds over 25,000 new Video Compass users daily and supports millions of recommendations each day on major web sites such as Google, Yahoo!, YouTube, Ask, MSN, Amazon, IMDB, Craigslist, eBay, Wikipedia, etc.

Meanwhile, Veoh.com, the company’s popular video portal, continues to generate more than 200 million video streams each month from a wide range of independent and traditional content publishers such as ABC, CBS, ESPN, Viacom, and Warner Bros.  The site reaches over 23 million unique users each month with average engagement time at more than 100 minutes per user, and helps dozens of blue chip advertisers reach a broad and highly targeted audience.

As part of Veoh’s continued focus on innovation, Dmitry Shapiro, Veoh’s Founder and Chief Innovation Officer, will be stepping in as CEO.  Shapiro replaces Steve Mitgang.

Shapiro stated, “Veoh was founded in early 2005 when video on the Internet was at its very beginnings.  Today after four years of being a pioneer in the online video space, we know a tremendous amount of what viewers, publishers, and advertisers want.  We have always believed that video discovery and personalization are ultimately the important problems to solve in the world of billions of videos, and have invested heavily in technologies to support that belief.  Video Compass is the latest innovation from Veoh that makes video discovery omnipresent.”  Video Compass can be downloaded at http://www.veoh.com/videocompass/.

As part of this new concerted effort, Veoh will be streamlining its organization to better enable the company to focus on providing compelling offerings to consumers, partners, and advertisers.

About Veoh Networks
Veoh Networks is an innovative Internet Television company that delivers broadcast-quality video programming via the Internet. Veoh has more than 100,000 content publishers – from CBS, Viacom’s MTV Networks, ABC, Warner Bros. Television Group, ESPN and Lions Gate to thousands of independent filmmakers and content producers.  For advertisers, Veoh offers compelling ways of engaging with a targeted audience and measuring performance of their ad buys.

Veoh Networks is a privately held company that is backed by leading technology and media investors, including Shelter Capital Partners, Spark Capital, Michael Eisner’s Tornante Company, Goldman Sachs, Time Warner Inc., Intel Capital, Adobe Systems Incorporated, Gordon Crawford, Tom Freston and Jonathan Dolgen. The company’s principal offices are in Los Angeles and San Diego, California.

FBN is describing the chat as an “exclusive,” which is true in the sense that it is the only one running an interview with Buffett at 4 p.m. Eastern today–he tends to be fairly visible these days. Still, there’s some good stuff here, and not all of it is depressing. Excerpts follow:

On Unemployment:

“There are going to be more people unemployed…but I’m not worried about how we come out in the end. I mean, I’m not worried about five years from now. Five months from now, can be very painful…it will be considerably higher…. It will happen eventually [surpassing 8%], and we will go on to new heights, but it will not turn around by mid-year next year.”

On Berkshire Hathaway’s Stock Plummeting:

“No, it doesn’t make any difference. I mean, if you don’t own it on margin, you own a business…. I look to the business to determine my results. I’ll say it’s happened to me three other times in my life, too. It happened when it went from 90 to 40 back in 1974, and it happened in 1987. It went down 50 percent in 1998 to 2000. I mean, I hope I live long enough so it happens a couple more times to me.”

On the Auto Bailouts:

“I would drive a deal like I would drive myself if I were buying a business. And I think, I would say there’s plan A or plan B.  And if you don’t want to do it this way, you know, then…take bankruptcy.

“I would make the CEOs buy in. I would say, you know, the United States government is willing to put in X dollars, but we’re going to have you put in a certain percentage of your net worth right along with us.  We’ll give you more upside, but you’re going to lose if we lose.”

On the Future of Goldman Sachs:

“Their businesses are all tough now, but they’re going to get around it…. This time, the institutions got very, very leveraged, and when the whole world tries to be leveraged at one time, I mean, there is a lot of pain that goes around. But you know, the Goldman’s of the world, they’re going to be around. Some of them needed, I mean, not Goldman specifically, but some of them needed the help of the TARP.”

On the President’s Role in the Bailouts:

“I think really only the president can do that effectively. I think it’s very difficult for the Congress, where you’ve got 535 people where each–you know, one guy has a plan for Chrysler and somebody else has another–and I think that–and you have to have somebody who can deliver, who can say, if you do these things, we will come up with a solution. But if you don’t have a business solution, they’ll just be putting money in every year for the–you know, as long as the federal government’s around.”

On Being the Next Treasury Secretary:

“Well, I haven’t been asked. And I won’t be asked. But the answer is I wouldn’t give up my job. I’m glad to help in any way I can, but I would not do it.

“So I think, you know, we’ll know in a few days, perhaps, who the Treasury secretary will be. And we’ll go from there.”

On President-Elect Barack Obama:

“I think that Barack–I think that Hillary would have made a good president too, and I think Barack will make a terrific president. I think he’s the right person for this time…you need a strong, decisive, smart leader, who can communicate very well with the American people at a time like this. They need somebody they believe in, and I think that he has the qualities that are right for this time.”

On Selling Investments:

“…I do sell stocks. Not very often…if we’re going to put the money in the Goldman Sachs preferred or the General Electric preferred, the Mars-Wrigley deal, to some extent, if we have the money around we’ll use the money that is in cash. But I like to keep a lot of money around, so I will sell some things if I need to sell them in order to buy something else…. We don’t sell businesses, though. Businesses we own we keep.”

On His Next Investment Pick:

Not right now.  But that could change tomorrow. Both GE and Goldman Sachs happened on a phone call I got in the morning and I said yes.  It was–that’s that, something like that.

On Henry Paulson:

“I think it’s a very, very tough situation. There are no silver bullets here. It’s not like some one idea or three ideas that’s all of a sudden going to turn around the economy and the markets. We are in a negative feedback cycle. It’s going to last for a while. I don’t know how long it’s going to last…. And I don’t think I could have done a better job, and I don’t think most of the congressmen could do a better job…. I think that putting the capital in the various financial institutions, probably you’ll get more mileage out of that dollar spent than in the mortgage repurchase program.”