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.

Anyway, now it’s not. The cash-strapped publisher has sold WQXR-FM for $45 million, carving up the asset into two packages for different buyers–local NPR affiliate WNYC and Spanish-language broadcaster Univision Radio, a unit of Univision Communications.

The money will be used to chip away at the paper’s $1 billion debt (the terms of the $250 million loan it took out from billionaire Carlos Slim pretty much require that the paper do that whenever it sells off anything significant). It’s not much, but it may end being more than the paper gets for the Boston Globe, which it bought for $1.1 billion in 1993.

The Times has owned the station since 1944; it sold off its AM sibling to Disney (DIS) in 2006.

The deal involves a swap of licenses and equipment between multiple stations, but that won’t be of interest to you unless you listen to classical music or Spanish-language programming on New York City radio stations. If you do, the details are in the release.

Both messages are a result of long and tortured negotiations with record labels that have finally come to a close with a deal Pandora says it can live with, though it’s different than the one founder Tim Westergren said the site had nailed down in November. The flip side is that the service will now require users who listen to the service for 40 hours a month to pay 99 cents if they want to hear any more tunes that month.

And the big picture is that Pandora, which has been warning of its doom if it was required to pay steeper royalty rates, can switch gears and brag about its growth. Westergren tells me the service is motoring at a great clip–he says it is on track to generate $40 million in revenue this year, almost all of it from advertising, up from $19 million in 2008–and it can now accelerate.

“I think that this is going to have a really huge impact,” he says. “We’ve been talking about going out of business for the last two years, and that’s not good for growth.”

The new arrangement might also convince investors to cut the service a big check. Earlier this year, multiple sources told me Pandora was looking to raise a very big round, perhaps in the $40 million range, and was talking to private equity shops about a deal. Westergren wouldn’t talk to me about fund raising, but it’s fair to assume that his company looks more attractive now than it did in January.

As for the deal itself, I’ll spare you the details, but in essence it’s a straightforward rate cut. The deal requires a lower per-song fee than Pandora and other Webcasters were supposed to pay under the terms the Copyright Royalty Board signed off on in 2007. It’s retroactive to 2006 and calls for an increase every year up through 2015.

The new deal means Pandora will be spending more than 25% of its revenue on royalties, but it will still be paying less than it would have under the old rules. Under the original terms, for instance, Pandora was supposed to shell out 14 hundredths of a penny ($.0014) per song streamed, per listener. Now it won’t pay that rate until 2015. Meanwhile tiny sites with less than $1.25 million in annual revenue will have a different structure.

The downside is that the deal will require Pandora to tax its heaviest users since it is still paying a per-song fee. “There’s a very small percent of listeners who are using it a ton, and that’s great, except when you’re paying per song,” Westergren says. He estimates the 99-cent fee will apply to a a “single digit” percentage of its 11.5 million monthly users.

UPDATE: I’m told the trio will stick around for a few months to help out with the transition. But to what? First priority is finding a replacement for CEO Miller.

Miller announced the deal in a short blog post today.

Last.fm, which provides free, ad-supported music streamed over the Web, was the first major acquisition the broadcaster made after bringing on digital M&A pro Quincy Smith, who is making plans to set up shop on his own. CBS (CBS) sends out a steady flow of press releases touting the site’s growth–the most recent one I have, from last month, pegs its audience at 30 million monthly users, while Miller’s post says they’re up to 37.3 million–but turning online eyeballs and ears into dollars has been hard for every Web music start-up, and Last.fm is no exception.

The unit saw its headcount cut significantly during CBS’s reorg of its interactive group late last year, and last month the company combined Last.fm with the online stations from its CBS radio unit.

Here’s text of the post announcing the founders’ departure:

After two years running Last.fm within CBS we feel the time is right to begin the process of handing over the reins. This is the latest stage in a long journey for us founders, which began in a living room in East London in 2002, and took us to the headquarters of one of the biggest media companies in the world.

It’s been a privilege working with the incredible team here in our London office, and we’re extremely proud of what we’ve achieved together. Last.fm’s users have more than doubled in the last 12 months (we are now at an all-time high of 37.3M monthly unique visitors), and we’re confident the site will continue to go from strength to strength. Being a part of CBS, and the recently formed CBSi music group, continues to open up many opportunities for Last.fm. Recent product releases such as the new visual radio, and the Last.fm on XBox announcement, are an indication of how much more Last.fm will achieve.

A huge “Thank You!” has to be said to all of you in front of your computers. With your contribution, enthusiasm and scrobbles you have helped to make Last.fm into what it is today: the best place for music online. Big up yourself for that, as we say here in East London.

That’s all folks, we are going to miss you!

Sources say Time Warner is likely to promote Mark D’Arcy, Partilla’s second in command, to fill his post, which reports into CEO Jeff Bewkes. The company is in the midst of corporate slimdown — it has already spun off its cable business, plans to do the same with AOL, and may end up (finally) doing the same thing with its Time Inc. publishing unit. Here’s the release announcing Partilla’s move:

Clear Channel Names Advertising & Marketing Veteran John Partilla as Corporate EVP and
President, Global Media Sales

Partilla to Lead National Business Development Across
Radio and Outdoor in Newly Created Position

SAN ANTONIO – June 8, 2009 – Clear Channel Communications, Inc. today named John Partilla, 44, to the newly created position of Executive Vice President and President of Global Media Sales. Partilla will lead national business development across the company’s radio and outdoor businesses, reporting to CEO Mark Mays.

“We’ve driven a tremendous increase in the value of our radio and outdoor platforms to national brands over the past five years and now is the time to accelerate and expand our attention to chief marketing officers and brand managers,” said Mays. “John is widely respected as a creative and ‘intrepreneurial’ leader with a deep understanding of client needs. His success in crafting differentiated solutions makes him the ideal strategic sales executive for us at this important time.”

Major brands including Disney, Verizon, Kellog’s and others already engage directly with the company on cross-platform and multi-property ad buys.

Partilla joins Clear Channel from Time Warner, where he lead Time Warner’s Global Media Group in its mission to work with major advertisers and help drive the growth of advertising and marketing revenue across all of Time Warner’s businesses. Prior to overseeing Global Media at Time Warner, John was President at Young & Rubicam, and founder and Chief Executive Officer of Brand Buzz. Launched in 2000, Brand Buzz is an “agency within an agency” at Young & Rubicam designed to provide solutions for smaller advertisers. Partilla spent eighteen years at Young & Rubicam and in that time amassed an extensive roster of strategic sales and brand development experience, having worked across many of the agency’s core accounts.

“We’re entering a new era for advertising and marketing, and the strides that Clear Channel has made in digital platforms across both the radio and outdoor businesses are an outstanding match for the new demands being placed on marketers,” said Partilla. “Realizing that potential will require adding strategic and creative value for our best advertising partners – helping them solve their most critical business problems. The result will be more revenue across all of Clear Channel’s businesses. I’m incredibly excited to begin this new chapter with Clear Channel.”

Partilla, who will be based in New York, holds an MBA from Columbia University and a B.A. in Business Administration from University of Delaware.

The  TV advertising market is $70 billion, give or take a few billion. So when peeling off a few million dollars from that constitutes progress, you can see just how far Google (GOOG) has to go.

In fairness, Google’s TV business isn’t really designed to get ad commitments, at all–the whole idea is that advertisers can buy spots on the fly, the way they can with its core Web business. So this at least constitutes a willingness on the part of ad buyers to give the platform a shot.

But that platform is still pretty small after a couple years of work: Advertisers can use Google to reach viewers using Echostar’s (SATS) service, and some of GE’s (GE) NBC Universal cable networks, but that’s about it.

After factoring out one-time charges and write-offs, Bob Iger and company earned 43 cents a share on revenue of $8.1 billion. Wall Street had been looking for 40 cents and $8.15 billion, respectively.

Iger: “We had a difficult second quarter due to the weak economy and other factors.”

The bright spot for the entertainment conglomerate is the same one you see at every media giant these days: Disney’s cable business. Revenue at ESPN and the Disney Channel was up four percent and operating income was up five percent. That’s because those powerhouse channels have locked in payments from cable operators that show up regardless of the economy’s state.

And that’s why you won’t see (much) programming from those channels on Hulu–there’s no way Iger is going to rile up the cable operators who pay for that programming by running it for free online.

Disney’s interactive group, which includes videogames and sites like Club Penguin, but not revenue from ABC.com and sales from Apple’s (AAPL) iTunes store, saw revenue decline 17 percent, and operating income drop two percent.

Here’s the breakdown by segment (click to enlarge):

Write-down watch: Disney took $203 million in “impairment charges”–accountant-speak for “the stuff we bought back then isn’t worth much now.” That includes “$108 million related to radio FCC licenses and $46 million related to an investment in an Indian media company.”

This follows on the heels of a lousy February quarter in which the company didn’t hit expectations.

Disney (DIS) is the first of several big media companies to report this week. News Corp. (NWS) weighs in tomorrow, followed by CBS (CBS) on Thursday.

The Disney earnings call is starting now. I’ll listen in and update as warranted.

Disney CFO Tom Staggs on ad market, economy: “While we believe the pace of decline has generally stabilized, we believe ad buyers and consumers remain cautious.”

During Q&A, Iger has a long monologue about online philosophy, Hulu, etc., but my Webcast cut him off before he was finished. Don’t know whether to blame Disney or Time Warner Cable (TWC) for that one….

In any event, here’s my paraphrase of what I could get down, with a smattering of quotes:

“We found that as we move product to the Web…at least [with regard to] piracy that we’re aware of, there’s been a stabilization….We feel that if we don’t put it online…it will be demanded by consumers, and they’ll find ways.”

Research on cannibalization and piracy in general is inconclusive and some research conflicts with other research we’ve seen. “Some of this is instinct, by the way. It’s not all based on research.”

We feel media consumption is moving to the Web and that media consumption may be expanding. We think we’re better being online than not being online. We realize that Web monetization doesn’t exist yet, at least not at TV-like levels, but we believe that eventually it will.

A lot of the consumption that we’re seeing is incremental because it’s a different demographic. The average age of consumers watching ABC.com and itunes is younger than the average age of those watching network TV. The Hulu demographic is generally younger than prime-time network demographics. So we don’t believe it’s cannibalization.

Does that sound like progress to you? It should.

That’s because Carolla’s old gig, which ended in late February when CBS Radio (CBS) pulled the plug on his show, made him just another guy trying unsuccessfully to fill Howard Stern’s shoes.

But the comedian’s podcasts are something else, and they don’t sound like anything else on the radio: Unedited, rambling conversations with a single guest that often sound more like monologues than an actual interview. They’re profane, they run an hour or more, and they make me laugh out loud. (You can get a small taste of what they’re like via the video clip at the bottom of this post. Be warned: There is a smattering of R-rated language in that one).

I’m not the only one. Carolla has been podcasting every weekday for the past month and a half, and an average show finds an audience of about 400,000 people. His most successful ones have nearly doubled that total.

That’s nothing compared to his last radio job, which was broadcast out of Los Angeles and syndicated in a dozen other markets. But in the world of podcasting, that qualifies as an instant hit, and it’s enough to keep his show at or near the top of Apple’s (AAPL) most popular podcast list at its iTunes store.

The other top podcasts, by the way, are all spinoffs or repackagings of shows made by big media companies–NPR, Time Warner’s (TWX) HBO and Discovery Communications (DISCA). But Carolla’s show is created from scratch: It’s just him and a handful of assistants who help him record the show and upload it to the Web. He started off taping the shows in his house in the Hollywood Hills; now he’s moved it to a garage he rents in an unlovely industrial stretch in the San Fernando Valley.

All in all, Carolla estimates he’s spending about $3,000 a month to produce the show, primarily on bandwidth bills. Revenue: Zero.

That’s primarily because Carolla can’t make any money from his show until the end of the year. He’s still getting paid–very well–by CBS, and his contract has a noncompete. But it’s also because it’s unclear how Carolla could actually go about making money from his podcast even if he wanted to.

The basic options: Try to charge his listeners or try to sell advertising. The former hasn’t been done before, and the latter hasn’t made other podcasters much money so far.

“I think that he’s going to have a tough time,” says Marc Horine, VP at ESPN Digital Media, who oversees a stable of podcasts that were downloaded about eight million times a month last year. Even at that volume, Horine says, ESPN has only been able to turn that into a “7-figure-plus” business–and that’s with a large sales staff and the ESPN brand name.

The problem is that podcasts are still considered “experimental” buys for advertisers. And until podcasts can aggregate bigger audiences–and provide marketers with better ways of tracking their ads’ performance–they are probably going to stay that way.

But I’m going to be slightly more optimistic than I usually am on this one: I think that Carolla’s profile, combined with a dedicated audience, could convince a handful of advertisers to take a flyer and sponsor the show. That still won’t come close to replicating his radio money or the money he’ll make if CBS decides to pick up the sitcom he’s working on for the network.

But as Carolla notes in the interview below, entertainers don’t have any choice but to be on the Web. And figuring out how to make good stuff people like is much harder than figuring out how to make money from it.

Apologies for my stammering and stumbling midway through this interview, by the way: Sounding cogent while you ask questions is a lot harder than it looks.

And here’s a sampling of what a Carolla podcast is like: A snippet of his recent podcast with writer Dana Gould. Again, be warned that there’s a light dusting of cursing here.

Google (GOOG) has some 20,000 employees, so the scale of the sackings isn’t earth-shaking news. And these aren’t Google’s first cuts: In January the company got rid of 100 recruiters. In February it announced it could cut up to 40 jobs as it folded up its radio group.

But the fact that these cuts come from sales and marketing, which just lost its high-profile leader, Tim Armstrong, to Time Warner’s (TWX) AOL and replaced him with Google veteran Dennis Woodside, is interesting. As is SVP Omid Kordestani’s note explaining the cuts, in which he says Google simply made hiring mistakes as it grew its sales group.

Here’s the complete text of Kordestani’s post:

Google has grown very quickly in a very short period of time. When companies grow that quickly it’s almost impossible to get everything right–and we certainly didn’t. In some areas we’ve created overlapping organizations which not only duplicate effort but also complicate the decision-making process. That makes our teams less effective and efficient than they should be. In addition, we over-invested in some areas in preparation for the growth trends we were experiencing at the time.

So today we have informed Googlers that we plan to reduce the number of roles within our sales and marketing organizations by just under 200 globally. Making changes of this kind is never easy–and we recognize that the recession makes the timing even more difficult for the Googlers concerned. We did look at a number of different options but ultimately concluded that we had to restructure our organizations in order to improve our effectiveness and efficiency as a business. We will give each person time to try and find another position at Google, as well as outplacement support, and provide severance packages for those who leave the company. Finally, I would like to take this opportunity to thank everyone affected for all they have contributed to Google.

Right? No, says Bonin Bough.

Admittedly, Bough has a bias here, since he gets paid by a big company–PepsiCo (PEP)–to oversee its digital and social media. But for the time being, at least, Pepsi is still letting Bough spend time and money on newfangled outlets, even though it’s not exactly clear how the company is going to able to use them to sell more soda.

Example for the day: Pepsi’s sponsorship of BlogTalkRadio, an Internet radio start-up that is Webcasting from South by Southwest this week (Pepsi is also sponsoring SXSW in general). Like lots of other Web media, radio/streaming audio is challenging for marketers to get their heads around since the traditional metrics they use to measure their campaigns don’t really exist. But Bough says his company is willing to experiment anyway.

Bough and I talked about Web radio, video, and Twitter yesterday  (note to Twitter guys–the “authentication/verification” strategy some of you are talking about doesn’t seem that appealing to Pepsi) on BlogTalkRadio. I’ve embedded the conversation below. Apologies for meandering, amateurish aspects of the chat, which are entirely my fault. Talking on the radio, it turns out, is really hard.

So my gut is that there’s little chance that Congress will pass something called “The Performance Rights Act,” which would force radio stations to pay musicians–or at least, music labels–whenever they play one of their recordings.

Mind you, I think the musicians and their labels have a good argument here. Radio stations already pay songwriters whenever their songs are played on the radio–it’s one of the reasons that the music publishing business hasn’t fallen off a cliff even though CD sales have. But the people who actually recorded the song (or who own the recordings) don’t get anything.

The radio stations argue that this is OK because they’re providing free promotion for the industry. But U.S. terrestrial radio stations are just about the only ones who get away with this.

All of the of Internet Webcasters have to pay performers something, and so does Sirius XM Satellite (SIRI). And as Warner Music Group (WMG) boss Edgar Bronfman Jr. likes to point out, there’s only a handful of other countries that give radio a free ride as the U.S. does, and those include North Korea and Iran. Meanwhile, the industry needs the dough more than ever since its primary revenue source keeps falling away.

But… while there are less sympathetic lobbies than the music business, it sure would be easy for the radio stations, which have a pretty good handle on Washington, to knock this one down, no?

Slap up an ad with that shows Britney Spears driving with her kid on her lap or staggering around an MTV stage or cavorting with K-Fed, and run a simple tag line: “Britney wants more money. Tell Congress not to give her any.”

All that said, there are plenty of optimists who think the music industry is going to end up with some kind of extra dough in the end. Industry watcher Glenn Peoples is a smart guy, and he thinks that’s the case. From his Coolfer blog:

“One of two outcomes will come from todays’ three-and-a-half hour hearing on the Performance Rights Act: Either the committee will approve the Performance Rights Act or the National Association of Broadcasters and labels will reach their own agreement. It is very clear the committee members understand the promotional value of radio but think it is unfair that only radio stations get to decide what the amount of that value. The issue of whether there should or should not be a performance right is all but decided. The issue to now be resolved is the value of the right and the timing of its introduction.”

Glenn has comprehensive coverage of the House’s hearing about the issue today. Note the industry’s designated musician: Billy Corgan, best known as the angry bald dude who sang for the Smashing Pumpkins. By all accounts, he turned in an excellent performance today.

[Image credit: Britneyspears.com]

Last month, Google killed its print advertising business, a move that didn’t result in layoffs. But in a blog post, VP Susan Wojicki says that the decision to close down Google Audio Ad and to sell off its Radio Automation business may result in up to 40 firings.

This is the second time in less than a month that Google (GOOG) has announced it’s getting rid of full-time employees. In January, the company said it would sack as many as 100 recruiters.

Google got into audio in 2006 via the acquisition of dMarc, a deal that involved a $102 million upfront payment and potential earnouts of more than $1 billion. It’s doubtful that Google ever paid more than its initial fee, however: The start-up’s founders left fairly quickly after the acquisition, and the company never made real headway in radio.

That leaves TV as the remaining Google foray into traditional ad formats. It’s the one the company has spent the most effort on, but there’s not much to show for it so far: basically, a deal to sell some ads via EchoStar (SATS) and  a pact signed with GE’s (GE) NBC last fall.

Just like everyone else who racked up lots of loans when the banks were giving cash with almost no strings attached, big media have a debt hangover. Clear Channel, whose private equity owners took on $17 billion in debt to acquire it last year, is getting hammered by investors who think it won’t be able to pay that money back.

Next up for scrutiny: CBS, which has a big debt payment due next year and not that much cash on hand.

The Wall Street Journal outlines Clear Channel’s situation: The company’s debt is trading at pennies on the dollar because investors worry that its radio and billboard businesses won’t generate enough cash to satisfy certain loan covenants, which would then jack up the rates on the existing debt. The company tapped a credit line on Monday, but that’s not making anyone feel more comfortable:

Drawing down the remaining $1.6 billion in its $2 billion credit facility injects more cash into the struggling company’s balance sheet, but the move has analysts wondering whether Clear Channel may be choosing to access those funds now for fear it won’t be able to later. If the company trips certain financial covenants–conditions a company must meet to satisfy lenders–it may not be able to tap that credit, analysts say…

If the debt ratio worsens rapidly over the next few quarters, eventually hitting 9.5 or more, debt holders have the right to ask for higher interest payments or other fees from the company. They also could demand their funds back immediately, potentially sending the company into bankruptcy proceedings.”

No one is mentioning the B word in connection with CBS (CBS). But Barclays analyst Scott Shiffman, in a note published last week, does make ominous sounds (title of his report: “CBS–The Slippery Slope Has Begun”).

The gist: CBS has a $1.6 billion bond that matures next year, and about $500 million cash on hand. In order to make that payment, the broadcaster has several unappealing choices, including cutting its dividend or drawing down a revolver loan.

Any of those options, Shiffman argues, in conjunction with a weakened TV business, could prompt the newly vigilant credit rating agencies to downgrade CBS’s debt below investment grade–i.e., junk. S&P may be the first to make a call, perhaps by the end of the month, he says.

No comment from CBS. But the company does report earnings next week; expect to hear lots about this from Les Moonves and company during the Feb. 18 conference call.

By the way: I’d like to show you the CBS News interview of the month–not Katie Couric’s “60 Minutes” interview with Hudson hero pilot Chesley Sullenberger, but her pre-Grammy chat with Lil Wayne. Which included Couric’s instant classic line “You also, reportedly, like…like your weed.”

Alas, CBS has yanked all the usable versions off of YouTube and isn’t showing them anywhere on its vaunted CBS Audience Network. What gives Quincy?

Fortunately, Gawker Media’s Jezebel taped the thing, so you can head over here to watch it, as some 19,000 other people have. Well worth a couple minutes.

UPDATE: CBS Interactive head Quincy Smith graciously points out that his network does indeed have a short clip of Lil Wayne interview, and says that licensing issues prevent the network from letting us see the whole thing. But still–surely, there was some way to include the weed line in the excerpt! That’s the best part!

Here’s what they’ve got:

Watch CBS Videos Online

I do, actually. I’m a big fan of The Current, the alternative but not-too abrasive (I’m old) public radio station that broadcasts out of Minnesota, but apparently has lots of listeners in Brooklyn. And we’re not the only ones listening to old-school radio on the Web. CBS Radio’s (CBS) network, which consists primarily of news-and-talk outlets, is seeing big increases in online listeners. Mediapost:

CBS Radio’s network of radio station Web sites saw its total number of unique visitors increase 30% in December 2008, compared to the same month in 2007, according to Web analytics service OneStat.com, reaching an all-time high for CBS Radio. The online measurement company also noted that unique visitors grew 7% between November and December 2008.

Among the biggest growth stations were KRLD-Dallas, which jumped 133% between December 2007 and 2008; KNX-Los Angeles, up 113%; and WBBM-Chicago, up 104%. Major increases were also seen at WCBS-FM-New York and WPGC-Washington.”

So there’s a rare bit of good news for the radio business, which is losing listeners and ad dollars, courtesy of competition from devices like Apple’s (AAPL) iPod and iPhone. And that’s also good for enterprising companies like Targetspot, a New York-based start-up that’s dedicated to online radio advertising.

There’s still not a whole lot of money in online radio ads–the entire “off air” ad category, of which the Web is only a subset, makes up about nine percent of the radio ad market. And like the other media industries being pummeled by digital, its unlikely that the new online markets will make up for the decline in their existing businesses–that’s the now cliché-but-true “analog dollars to digital pennies” adage. But better to have pennies than nothing at all.

Barclays now says U.S. advertising will decrease 10 percent next year, and will rebound to one percent growth in 2010. In October, the bank’s analysts were projecting a five percent drop for 2009. It figures there will still be some Internet ad growth, pegging spending at $28.3 billion. That would be a 6.1 percent increase, and would be mostly driven by search ads. Per usual, that’s good news for Google (GOOG), and lousy news for most everyone else who is trying to build a business based on selling Web display ads.

Like seeing unpleasant forecasts? Read on for a sector-by-sector roll call of gloom:

Broadcast Television Networks: We are lowering our Broadcast Television Network advertising revenue estimates for 2009 and 2010 to down 10.0% and up 3.0%, respectively. Our previous estimate was for down 8.0% in 2009. We expect the national broadcast advertising marketplace will hold up better than local.

TV Stations: We have lowered our broadcast TV local and national spot estimates for 2009 and 2010 and now estimate a decline of 15.5% in 2009 and a decline of 1.1% in 2010. Previously, we were anticipating a decline of 8.9% in 2009.

Cable Networks: We are lowering our estimates for 2009 and 2010 Cable Networks advertising revenue to down 3.0% and up 5.0%, respectively, given the deteriorating consumer economy. Previously, we estimated revenue growth of 1.8% for 2009.

Newspapers: We are cutting our 2009 and 2010 newspaper advertising revenue forecast to down 17.0% and down 7.5%, respectively, vs. our prior 2009 estimate as of one month ago down 14.0% and down 12.0% as of our ad forecast report in October. Specifically, in 2009, we estimate retail down 11.0%, national down 17.6%, and classified down 27.9% (help wanted down 44.7%, auto down 37.5%, and real estate down 28.8%). In 2010, we estimate retail down 5.0%, national down 7.0%, and classified down 13.5% (help wanted down 15.0%, auto down 12.5%, and real estate down 12.5%).

Radio: We estimate radio advertising revenue to decrease 13.0% overall in 2009, below our prior estimate of a 7.4% decline, and now expect down 1.7% in 2010.

Yellow Pages: We have lowered our expectations for 2009 to down 13.0% vs. our prior estimate of down 9.0%, and now expect down 7.0% in 2010.

Outdoor: We are lowering our estimates for 2009 and 2010 Outdoor advertising growth to declines of 6.0% and 4.4%, respectively. Previously, we estimated flat revenue growth in 2009.

Direct Mail: Given mounting cyclical pressures, we are expecting direct mail to decline 8.5% in 2009 (vs. our prior down 6.0% estimate) but increase 2.5% in 2010.

Magazines: We estimate magazine advertising revenue to decrease 15.0% in 2009 (vs. our prior down 12.5% estimate) and decline a further 5.0% in 2010.”