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.

Dish has rung up the tab while fighting one of the many patent suits Tivo has brought against cable and satellite providers, accusing them of ripping off its DVR technology. Tivo has won an initial series of rulings against Dish, forcing the company to hand over a slug of cash, but more could be coming, the satellite company noted today. What would that mean? In Securities and Exchange Commission legalese:

Depending on the amount of any additional damage or sanction award or any monetary settlement, we may be required to raise additional capital at a time and in circumstances in which we would normally not raise capital. Therefore, any capital we raise may be on terms that are unfavorable to us, which might adversely affect our financial position and results of operations and might also impair our ability to raise capital on acceptable terms in the future to fund our own operations and initiatives. We believe the cost of such capital and its terms and conditions may be substantially less attractive than our previous financings.

Gulp. On the other hand, as Barclays Capital’s Vijay Jayant notes this morning, if Dish were really worried about a coming legal bill, the company probably wouldn’t want to hand its shareholders a $900 million dividend. Let’s see how investors react today.

Via Reuters/Billboard:

Guns N’ Roses and Universal Music Group’s Interscope-Geffen A&M label were sued by British label Independiente and the U.S. arm of Domino Recording Company, who own the licensing rights to songs by German electronic musician Ulrich Schnauss.

Singer Axl Rose and Guns N’ Roses band members and album producers copied portions of two of Schnauss songs–”Wherever You Are” and “A Strangely Isolated Place”–for a song used on the band’s last album called “Riad N’ the Bedouins,” according to the lawsuit.

The lawsuit, filed on Friday but made available on Monday, seeks $1 million in damages. A spokesperson for Interscope-Geffen A&M, owned by Vivendi’s Universal Music Group, was not available for comment.

You might have thought the labels suing the band and Universal Music would have done so last fall, when there was a biggish to-do about the album and when the band and Universal Music were siccing the federal government on bloggers who posted links to unauthorized MP3s from the album.

Anyway, it’s another good opportunity to remind the young people of today why the young people of 20 years ago were really into Guns N’ Roses: They used to be great!

Also, I am still trying to track down a recording of any of the songs from the Axl Rose-inspired “White Trash Wins Lotto,” the best musical I’ve ever seen (the version I saw featured a pre-“Ratatouille” Patton Oswalt, I think). Any help greatly appreciated…

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.”

The not-so-sexy video clips, which Gawker published last month, involve “Grey’s Anatomy” star Eric Dane; his wife, Rebecca Gayheart; and former beauty queen Kari Ann Peniche. How did Gawker get their hands on them?

“Well, obviously we paid our contributor (and from the traffic, you can suppose quite handsomely!),” Denton told the the New York Times’s David Carr this morning.

I followed up with Denton, via IM, and he wasn’t much more forthcoming than that. But he did confirm that his blog network gave the money to Mark Ebner, who describes himself as an “award winning investigative journalist” who “has repeatedly positioned himself in harm’s way.” Ebner also runs the gossip site, Hollywood Interrupted.

Denton wouldn’t say how much he paid Ebner for the video, and I haven’t been able to reach Ebner himself. But I have a hunch that Ebner hasn’t received as much as, say, a Condé Nast freelancer can get for a feature piece.

The math: In the old days (last year) Denton was paying $7.50 for every 1,000 views, but he has likely reduced that rate as Gawker’s traffic has grown. Even if he kept that rate the same, Ebner would be getting $22,500 for the three million views the clip has generated to date. That’s nice money, but not life-changing.

But Denton is paying above and beyond that for the clip: Rather than posting it on the likes of Google’s (GOOG) YouTube, which likely would have taken down the video by now, he’s serving up the clip himself. Which means he’s paying every time someone views it. And now, he has legal bills, too.

What’s Denton in for, so far? He won’t say. But here’s the half-serious quip he used to conclude our IM chat: “Hey, this news business is expensive!”

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.)

A couple of years ago, it was Britney Spears wobbling across the stage; this time around, it’s Kanye West interrupting Taylor Swift on behalf of Beyoncé and…pfft.

I can’t work up the enthusiasm to describe it, but happily for Viacom (VIA), MTV’s corporate parent, there are plenty of people who will do that for you: The story is dominating Twitter and Google (GOOG), and it’s the lead story on Yahoo’s (YHOO) front page.

You can also see the incident on Google’s YouTube, of course. But you’ll have to do a little bit of hunting since Viacom clips aren’t supposed to be on the most popular video site in the world–because Viacom is still suing Google and YouTube for $1 billion.

Remember that copyright case? It’s still motoring along, slowly but steadily: Executives from both companies are still being deposed, and if things keep moving forward, there will actually be a trial in 2010–some three years after Viacom filed its first complaint.

In any case, here’s the official version, served up by MTV, which says it has generated more than 1.1 million views of the clip since last night.

But if you’re pressed for time, you might prefer this parody version, which only requires 13 seconds and even manages to incorporate some political commentary.

A reminder of the site’s outlaw status is splashed up on the site’s front page right now, in the form of a feature promoting “DJ Joel’s $675,000 Mixtape,” which is supposedly “Approved by the RIAA,” the U.S. lobbying/litigating arm of the big music labels.

It’s not approved by the RIAA, of course. Instead, the feature steers visitors to a page that where they can illegally download 30 songs that just cost grad student Joel Tenenbaum $675,000. That’s the amount a federal jury decided he owed the RIAA after being found guilty of copyright violations for sharing the tunes via a filesharing network.

It’s the kind of cheeky move The Pirate Bay revels in and one of the reasons the Web site has such a large and devoted base of users. The main reason, of course, is that The Pirate Bay is a huge repository for free, illegal copies of movies, music, games.

That’s supposedly going to stop after August 27, when Global Gaming Factory X, a Swedish software/Internet cafe outfit, says it will go through with plans to buy the site, and then try to make it legal.

As I’ve explained before, there’s no chance that will happen.

Even if the deal really goes through, the only way The Pirate Bay’s users will stick around is if they can continue to grab whatever they want, whenever they want. And there’s no way the big music labels and movie studios and videogame companies, et al, are going to go for that.

But it will be interesting to watch!

In the meantime, here’s the track listing for the 30 songs that landed Tenenbaum in trouble. I’m pretty sure most of them are available at Apple’s (AAPL) iTunes store:

01 – Incubus – New Skin
02 – Green Day – Minority
03 – Outkast – Wheelz of Steel
04 – Incubus – Pardon Me
05 – Nirvana – Come As You Are
06 – Green Day – When I Come Around
07 – Green Day – Nice Guys Finish Last
08 – Nirvana – Heart Shaped Box
09 – Nine Inch Nails – The Perfect Drug
10 – Blink 182 – Adam’s Song
11 – Limp Bizkit – Rearranged
12 – Limp Bizkit – Leech
13 – Linkin Park – Crawling Hybrid
14 – Deftones – Be Quiet And Drive
15 – The Fugees – Killing Me Softly
16 – Red Hot Chili Peppers – Californication
17 – Red Hot Chili Peppers – By The Way
18 – Red Hot Chili Peppers – My Friends
19 – Beck – Loser
20 – Eminem – My Name Is
21 – Eminem – Drug Ballad
22 – Eminem – Cleaning Out My Closet
23 – Beastie Boys – (You Gotta) Fight for Your Right (To Party)
24 – The Ramones – The KKK Took My Baby Away
25 – Monster Magnet – Look To Your Orb For The Warning
26 – Aerosmith – Pink
27 – OutKast – Rosa Parks
28 – Rage Against The Machine – Guerrilla Radio
29 – Goo Goo Dolls – Iris
30 – Aerosmith – Water Song/Janie’s Got A Gun

Judge Leonard Davis of the U.S. District Court for the Eastern District of Texas ordered a permanent injunction yesterday that will ostensibly prohibit Microsoft (MSFT) from selling Word within 60 days. It’s the result of a lawsuit filed by Toronto-based i4i, which claims that Microsoft violated a patent it owns regarding XML files. Microsoft is also supposed to hand over $290 million in damages.

There are more details from SeattlePi.com (still extant!) and TechDirt. But the most salient point here is that this is a ruling on a patent lawsuit filed in eastern Texas, which generally exists in its own orbit when it comes to patent lawsuits. So odds that this one will stick are awfully low.

Other equally important news: This footage of a guy in a wetsuit zipping down a giant water slide, up a wooden ramp and flying hundreds of feet through the air before landing in a kiddie pool is not real. It’s just a viral ad for Microsoft Germany.

But it’s pretty cool.

Of course, it’s a decent bet that if you’re reading this site, you’ve already heard of iFart. And perhaps the iFart v. Pull My Finger lawsuit. And maybe the entire array of flatulence apps now available for iPhone users.

Which is, actually, a serious story for Apple (AAPL): At some point it risks having the App store, and thus the iPhone, defined by novelty items.

The issue came up during the company’s earnings call yesterday, when Needham and Co. analyst Charles Wolf worried about a “race to the bottom” at the App store, and wondered if there was a way to “enable consumers to separate quality apps from the garbage.”

Apple COO Tim Cook’s response: “We realize there’s opportunity there for further improvement and are working on that.”

In the meantime, here are all of Apple’s fart apps in one handy link.

This is the second time Jammie Thomas-Rasset has been ordered to pay the music labels for her use of file-sharing services. In a 2007 trial, a jury originally decided that she would owe $9,250 per song.

It’s unclear what prompted the jury to bump up her tab in the retrial, but it’s going to be academic anyway. The industry is making noises about settling, and 32-year-old Thomas-Rasset, who lives in rural Minnesota, doesn’t have $2 million lying around. In her words: “The only thing I can say is good luck trying to get it, because you can’t get blood out of a turnip.”

Lawsuits like the ones the labels filed against Thomas-Rasset haven’t worked: Music piracy has continued unabated, and while Apple (AAPL) sells about $2 billion worth of songs a year on iTunes, the overall market for digital music is flattening. That’s why the lawsuits are supposed to be relics of the past, replaced by a new strategy whereby music labels convince Internet service providers to help them police piracy.

But while the industry floated the concept six months ago, it has yet to get a single cable company or telco to sign on. And even if they do, there’s not a whole lot of incentive for the likes of Comcast (CMCSA) or AT&T (T) to really crack down on music pirates, who don’t take up much bandwidth and don’t steal anything the pipe guys care about.

My story about EMI’s lawsuit against Web music start-up Grooveshark elicited this email from Ben Patterson, who runs indie Web music distributor DashGo, about his experience with the service.

I think Patterson’s remarks are useful because they spell out Grooveshark’s business plan, or at least part of it: Charge labels to promote their acts on the service’s search engine. And I think it’s also helpful to hear an obvious but little-voiced argument about the “free Web music = valuable promotion” thesis: It works best when the act or label is playing along. With Ben’s permission, I’m publishing his entire email.

I’ll caveat this by saying they are nice guys and big music fans and I’m always rooting for new music services that work for bands and music fans alike.

Back in 2007 DashGo signed a deal with Grooveshark that basically amounted to a digital download service delivered via P2P. Users who used Grooveshark’s P2P service to search for songs would be presented with a download / buy link and the revenue would be split between fan hosting the file, Grooveshark and the band.

A couple months later we got a nice packet–a t-shirt, letter and wax-sealed, yes, wax-sealed, envelope with a check for $0.59 in royalties. (Coconut Records “West Coast” I think)

Then I didn’t hear much for 6 months. No checks, no real action. At the end of 2008, they reached out and told me about their new music search engine at listen.grooveshark.com–basically Seeqpod / Songza / all other stream song aggregators…not what we licensed for, but not egregious enough to get huffy.

Of course, that was before they offered to sell me advertising for my bands as the default search keyword. For $0.05 per search, I could make the default phrase “DashGo Band Name” instead of “Search here.” I had to ask–am I getting paid per play? No of course not. Because “[they] are not profitable and can’t afford to share that advertising revenue.” So I’m paying, not even for a play, but for a search term on a service where they have users and can sell ads ONLY because people can listen to music, and because it’s free, what incentive is there EVER to buy the song?

So we don’t deliver there anymore.

I’ll tell you why all these free streaming music services are broken–because they rely on music advertising to pay the rent but give away the advertisers product. If I got free McDonald’s and Budweiser by watching the Super Bowl, why would I buy the food? As an advertiser, why would I pay a CPC to advertise streaming music and promote listens when the per stream rate a existing subscription services is AT BEST $0.02 per play?

It sucks to get sued. I’m sorry Grooveshark, but really..what did you expect? You’re soliciting labels and bands to pay your bandwidth, rent and operating costs and giving away the product.

While I’ve got this soapbox out, let me preach one more gospel; offering free music accessible via a search engine is NOT promotional if the band hasn’t opted in.

If a user SEARCHES for the music and listens to it for free in an environment where someone ELSE has posted the music and the band doesn’t have the option to ask for an email address or even pitch a tour or merch or actual album; then the service is just ripping off the band by giving free content to someone who asked for it–not promoting it to a new fan or adding a filter that helps expose and distinguish music.

[Image credit: Mrs. Logic]

Digital music start-ups seem to come in two flavors these days: Those being sued by the major music labels and those with expensive licensing deals they can’t afford.

But for some reason, plucky Grooveshark, which runs a very nice, free streaming music service, has stayed out of both of those buckets until now. I’ve confirmed that EMI Music Group is suing the site–whose motto is “Play any song in the world, for free!”–for copyright violation.

The label filed suit against Gainesville, Fla.-based Grooveshark in a New York court on May 8. I don’t have a copy of the complaint yet, but if you feel like sharing, hit me at peter@allthingsd.com or use the blind tip box here. No comment from EMI, but Grooveshark sent me a very long statement, which I’ve printed at the bottom of the post.

The takeaway: Grooveshark says it was working on a licensing deal with EMI and now finds itself in court instead. The company does refer to deals with “many artists, labels and publishers,” but as far as I can tell, it doesn’t have deals with any of the other three majors–Warner Music Group (WMG), Universal Music Group, or Sony (SNE)–either.

Grooveshark started out as a peer-to-peer file-sharing start-up in 2006, and has since morphed into a streaming model. When I talked to marketing VP Joshua Bonnain in May, he told me the company was primarily funded by friends and family–most of the company’s employees are either students at or graduates of the University of Florida, he said. But he also said the company had received a “substantial investment from a large party” that he wouldn’t identify.

Bonnain said the site, which generates at least some ad revenue, planned on splitting half of it with the copyright owners of the music it played. But I was never clear about how that was going to work since Grooveshark doesn’t have deals with the majors. Then again, Bonnain didn’t tell me that the company had been sued a few days before we talked, either.

In the music world, negotiations don’t preclude suits and vice versa; Warner was, at one point, suing iMeem, but then became an investor in the site. Same thing with Universal and News Corp.’s (NWS) MySpace. The only real question I’ve had is why the big guys haven’t gone after Grooveshark yet. I’ve been asking label folks about the start-up since November and I’ve only gotten shrugs for an answer.

Anyway, as I said, it’s very nice service, and it would be a shame if the labels can’t figure out a way to work with it or help it survive. But the odds of that happening, based on the unpleasant history of digital music start-ups to date, are very low. So enjoy this themed playlist I created with the site’s help, which features music from all four majors, while you can. Grooveshark’s statement is below.

For the past year, Grooveshark has been in talks with EMI Records and other copyright holders to negotiate licensing agreements for the use of their content. We are pleased to announce that over the past few months Grooveshark successfully concluded mutually beneficial agreements with many artists, labels, and publishers that we hope to be a template for other such agreements with additional copyright holders.

Recently, EMI Records chose to abandon the template we’ve built with the help of other major copyright holders and opted for their traditional intimidation tactic of filing a lawsuit as a negotiating tool. We find the use of this negotiating strategy counterproductive, as Grooveshark has been willing to conclude an agreement with EMI Records that is economically sustainable for both EMI Records and a start-up company the size of Grooveshark.

Grooveshark is run by a group of young and passionate musicians. We love music, we make music, and we believe that the use of all music should be paid for. We adopted this core philosophy at our inception and to date have concluded agreements with hundreds of record labels, major US performance rights organizations, and thousands of independent artists who support Grooveshark’s business model. (See: Grooveshark Artists)

As musicians, we support the rights of copyright holders and strive to sign sustainable agreements with all content owners, ensuring that all artists get paid– or we agree to remove content from our system in accordance with our DMCA Takedown Policy. We hope that EMI Records eventually follows the lead of the many forward-thinking labels we are already working with, who would rather get their artists exposure and a fair share of our revenue than block content access and force customers to illegal networks.

We understand that the economy of the digital music business is in a state of flux, and we hope to help ease this transition by providing the required new tools and services that lead to the next generation of the music industry. We respect the ownership rights of the major labels and publishers, and our core mission has always been to compete with piracy by offering a service that is genuinely better than what illegal networks offer, while also ensuring fair payment to copyright holders. Our next important step on our road to success is to conclude a mutually beneficial agreement with EMI Records that is sustainable for both EMI and Grooveshark.

That could turn out to be a business opportunity for the Twitter guys, who have talked about selling corporate clients a “verified account” say a Dunkin Donuts could prove to Twitter followers that they are indeed Dunkin Donuts and not somebody else.

And it’s also a problem that has finally manifested itself in a lawsuit: St. Louis Cardinals manager Tony LaRussa has sued the site for allowing a meanspirited impersonator to claim his name. The suit, which I’ve embedded below, is fairly straightforward: LaRussa his trademark rights have been damaged and that he’s “suffered damage to his reputation, and damage to the goodwill of his mark.”

The only question I have is whether LaRussa or his people asked Twitter to take down the account before filing the suit in a San Francisco court last month. This report says that’s the case, but there’s no mention of that in the complaint.

I’ve asked Twitter for comment, and will update if I get one. It will be interesting to see how they handle this one: In theory,  the company should have been  ok with the fake LaRussa, because its terms of service allows for parody accounts, and this one was labeled as such.

Then again, its hard to see the company going to bat for someone who makes drunk driving jokes about former Cardinals pitcher  Josh Hancock, who died when he drove into a truck a couple of years ago. Here, via LaRussa’s complaint, is a copy of a screenshot of the page:

tony larussa twitter – Get more Business Documents

[Image credit: cupcakes2]

But the lawsuits have yet to be resolved.

Confusing? Of course.

Here’s Project Playlist’s description of the deal, which references layoffs at the company to eliminate redundancies with the new acquisition, but doesn’t specify how many folks are being let go. Given that Total Music only employed about 30 folks at its peak and was essentially shut down last winter, it’s hard to see how many Total Music employees are coming aboard–I’m guessing fewer than a dozen, and am trying to confirm.

We recently acquired assets and employees from TotalMusic LLC, a digital catalog management and reporting system. This acquisition is an important platform that will allow us to host a streaming music service, help us with e-commerce solutions and provide a set of application programming interfaces that will be invaluable to us as we offer next generation digital music services to our users.

Today we are integrating the assets of TotalMusic into our Playlist operation. As a result we have to address some overlap in certain areas and let some employees go both from Playlist and Total Music. This is no reflection on the talent of the people we had to release, rather a responsibility we have to run a lean organization with no redundancies and clear lines of reporting.  This often happens when two companies merge, but it is never easy.

On a positive note, we are very excited about the progress we are making. With the Total Music acquisition and our recent licensing agreements with Sony ATV and EMI Publishing, we are developing new features and services everyday that will form an even deeper bond with our 45 million loyal users and create new revenue opportunities for our company as well as our music content partners. More to come, watch this Space!!

Total Music, which Universal started in the fall of 2007 and shut down this February after joining up with Sony along the way, was supposed to be a subscription music service that got bundled in with devices or with ISPs/cable guys/telcos, etc. Given that it never, to my understanding, streamed a single song or collected a penny in revenue, it’s interesting to see that Project Playlist thinks there’s something there worth buying.

The bigger picture: It’s hard to see how this company can move forward until new CEO John Sykes, who replaced Owen Van Natta when he decamped to run MySpace for News Corp. (NWS), can clear up lawsuits with Universal and Warner and then get Facebook and MySpace to let it back onto their respective sites. The social services were crucial to Playlist since they generated the majority of its visitors, but they cut them off last fall, presumably under pressure from the labels.

Given that Van Natta is now running MySpace and that Playlist was at least able to negotiate an asset purchase from Universal, perhaps there’s a shot at getting all of that accomplished. Then the service could concentrate on the even tougher task of trying to make money in digital music.