We’re seeing lots of that as the last bubble shakes out (see: MySpace and iLike, Facebook and FriendFeed). But that strategy also raises plenty of eyebrows from other buyers, who figure that they’re happy to let a struggling company fold, then pick up the talent piece by piece.

Did that just happen with Joost and Time Warner Cable (TWC)? Looks like it.

The cable provider has snapped up former Joost CTO Jason Gaedtke. The company tells Cable Digital News that Gaedtke will report to Mike Hayashi, the multiple system operator’s executive vice president of advanced engineering.

The assumption is that Gaedtke will be helping the company build out its own version of “TV Everywhere,” the Web-video-for-subscribers scheme that everyone from Comcast (CMCSA) to AT&T (T) is trying out.

Not an earth-shattering hire, but I’m noting it here because prior to Joost’s decision to all-but-pull-the-plug, the start-up was trying to peddle itself to buyers like…Time Warner Cable.

The theory: The Web video company hadn’t been able to generate much business, but it had a lot of smart people who could help, say, a cable company build out its own Web video strategy.

So, given that the Web video industry is in the midst of a long-awaited contraction, is Gaedtke’s hire the kind of thing that could undermine other potential deals? We’ll see.

If you’re a media mogul, you might note the symbolism of a Google (GOOG) co-founder boosting a group dedicated to overhauling intellectual property law.

If you’re a cold-hearted cynic, you might note that at least this is a bonafide donation made by private individuals, as opposed to the $6.5 million that Brin’s company has invested in his wife’s “personal genetics” start-up.

But since I don’t fall under either category, I’ll just make this note, directed at other nonprofits looking for a billionaire’s donation: It helps if you can leverage family ties.

In this case, very close ties–Wojcicki’s mother, Esther Wojcicki, chairs the Creative Commons board of directors.

In fact, co-founder Ivan Kirigin’s first day at Facebook was last Monday–four days before he and his wife, Abby, announced that they are shuttering their start-up.

Confused? You should be: This is one of the odder M&A stories I’ve seen in a while. Not surprisingly, the tale differs depending on who’s telling it.

Some basic, undisputed facts: Sometime this spring, TipJoy, a year old start-up that lets Web surfers “tip” bloggers and publishers, shopped the service to multiple parties, including Twitter and Facebook. By July, Facebook had offered, via a term sheet, to buy the company. Facebook then pulled its offer, and shortly after, offered Ivan a job. Now he and his wife are shutting TipJoy down and returning what’s left of the $1 million they had raised to their investors.

Also undisputed: No one has accused anyone of violating any laws, or contracts. Facebook’s offer was nonbinding and nonexclusive. And it’s not unheard of for companies to walk away from an M&A deal late in the process. That’s what happened, for instance, when Google (GOOG) bailed out after deep talks with Digg a year ago.

You could see why some of TipJoy’s backers, which include BetaWorks, the Accelerator Group, ex-Googler Chris Sacca and the Y Combinator start-up factory, might cry  foul. The argument would be that Facebook’s actions effectively prevented the company from finding another buyer. But even if that was true, it doesn’t mean that Ivan Kirigin had to accept Facebook’s job offer and/or shutter his company.

Facebook spokesman Larry Yu declined to discuss the negotiations in detail, but offered this statement via email: “We take pride in operating in a transparent and ethical manner. We can’t offer any specifics here, but to suggest anything untoward occurred on our part simply ignores the facts.”

I’ve sent the Kirigins repeated requests for comment but haven’t heard back. Their statement announcing the decision to close their company doesn’t mention Ivan’s new job. But it does hint, obliquely, at their future plans:

When we evaluate why there’s been so much hype about payments on Twitter, and yet so little traction for us (and even far less for our competitors) it is clear to us that the reason is that a 3rd party payment service doesn’t add enough value. We strongly believe that social payments will work on a social network, provided that they’re done within the platform and not as a 3rd party….the only way to get around this is for the platforms themselves to control payments–then all people wanting to operate on that platform would have to play along. We believe that a payments system directly and officially integrated into social networks such as Twitter and Facebook will be a huge success.

UPDATE: Y Combinator founder Paul Graham, commenting on this story on his Hacker News site, says Facebook hired Ivan at his urging:

Facebook didn’t do anything wrong. Tipjoy was out of money. They’d been talking to several potential acquirers, including Facebook, but those deals all fell through. So the Tipjoys were going to have to get jobs somewhere. Since they were worried about money and Ivan admired the hackers at Facebook, I asked FB if they’d offer him a job, and they did.

It doesn’t portend anything for the future of startups, as this story seems to imply. If your startup tanks, you have to get a job somewhere, and lots of hackers get jobs at Facebook. There are several other YC alumni working there.

Ivan Kirigin also weighs in within the same comments section, and says that my report “completely doesn’t tell the whole story.” Ivan, I’m all ears, so either drop me a line or leave a comment below.

Note: I’m assuming that the commenters identifying themselves as Paul Graham and Ivan Kirigin in the comments section are indeed Paul Graham and Ivan Kirigin. But I’ve sent emails to both men so I can verify that. Update: That is indeed Paul Graham.

Now Twitter, which has suffered multiple security breaches in the past, has been punctured again. Someone has gotten into the personal Web services accounts of co-founder Evan Williams, his wife and at least one other Twitter employee, and used that access to make off with a pile of confidential company documents. He’s now distributing them on the Web, and TechCrunch promises to publish many of them.

The media ethics colloquy is well underway and will go on for a while (Boomtown’s Kara Swisher is holding her session, appropriately enough, via Twitter). Beyond that, I’m pretty sure Twitter is going to be okay when this dies down.

Based on Williams’s description of the attack (see the bottom of this post), as well as both TechCrunch’s and the hacker’s descriptions of what got pilfered, this looks roughly akin to having your underwear drawer rifled: Embarrassing, but no one’s really going to be surprised about what’s in there.

The hack certainly will be worrisome for people who are using, or thinking about using, any kind of “cloud computing,” whereby work data/documents are stored on servers accessed via the Web. Google (GOOG) in particular is going to get some scrutiny, both because it’s Google and because it appears that a lot of this stuff was stolen after the hacker used Google’s “password recovery” system to root around. UPDATE: Twitter is now going out of its way to say that the attack isn’t Google’s fault, but Twitter’s fault for using passwords that are easy to guess.

Albert Wenger, a partner at Twitter investor Union Square Ventures, says in a post that his shop is currently considering moving its systems to Gmail and Google Docs, but notes the big problem: “The threat of access by a third party increases exponentially with the move to the cloud, because the machines that now contain the documents and the links to those documents (as sent by email) are accessible to the Internet at large.”

But cloud computing isn’t going away, so someone’s going to need to figure out how to make security better, yet still practical. There’s a reason no one follows the standard advice about having a different, impossible-to-remember password for every account you have. Wenger takes a stab at it in post–he suggests something tethered to a mobile phone. But whoever figures it out is going to have a lot of fans.

Williams’s description of the hack, via TechCrunch:

Yes, we did suffer an attack a few weeks ago and are familiar with this list of stuff. This is unrelated to the hack of twitter where someone gained access to user’s accounts. This had nothing to do with the security of twitter.com, and there were no user accounts compromised here.

Some notes:

- He did not actually gain access to my @ev Twitter account (or any Twitter accounts) nor any administrative functions of the site.
- There is also no evidence that he gained access to my email. There was one administrative employee who’s email was compromised, as was my wife’s Gmail account, which is where he got access to some of my credit cards and other information.
- He also successfully targeted a couple other employees personal accounts (Amazon, AT&T, Paypal…)

In general, most of the sensitive information was personal rather than company-related. Obviously, this was highly distressing to myself, my wife, and other Twitter employees who were attacked. It was a good lesson for us that we are being targeted because we work for Twitter. We have taken extra steps to increase our security, but we know we can never be entirely comfortable with what we share via email.

[Image credit: Wikimedia Commons]

The buzzy microblogging service has just grabbed its highest-profile Google (GOOG) exec to date: Alexander Macgillivray, a deputy general counsel at the search firm, is coming aboard as Twitter’s top lawyer.

Macgillivray is best known as the lead Google attorney on high-profile intellectual property cases like its fights with book publishers, the Associated Press and Viacom (VIA). Twitter has yet to find itself mired in that sort of thing, but give it time.

Macgillivray is just the latest Googler to land at Twitter. Earlier this year, the start-up nabbed Doug Bowman, the search giant’s lead designer, to join the ranks of several other Googleplex veterans, including, of course, co-founders Ev Williams and Biz Stone.

There are lots of reasons to leave a big company for a scrappy start-up, but just to spell out one obvious one: If you’re into risk, there is a whole lot more upside at Twitter these days.

The company’s last funding round pegged its value at $240 million, and if it ends up being acquired in the next few years, that number could be much higher. But Google shares stalled long before last fall’s stock market collapse (click chart to enlarge):

[Image credit: Doc Searls]

Warner, which told investors last month that it had written off the $16 million it had invested in the Web music start-up, plus another $4 million in debt, has made a new deal with the company and will get another slug of equity. The big difference: This time, Warner isn’t cutting Imeem a check.

Instead, Warner will get more equity in Imeem in exchange for a renegotiated licensing deal that is supposed to 1) give Imeem a better chance of being able to pay Warner for use of its music and 2) reduce the amount of cash Imeem does pay out to Warner every quarter.

Both companies declined to comment. But multiple sources familiar with the transaction say it was tied to a funding round that Imeem just closed, a follow-up to the emergency money it took on earlier this spring. In total, I’m told, Imeem will have raised an additional $6.5 million this spring. No word on which investors ponied up cash.

But I do know that it wasn’t Warner Music Group (WMG), which already had to tell investors that the $20 million it put into the company previously was worthless. Warner still holds the shares it has written off, but it wasn’t going to pony up any more cash in the recapitalization.

So why make another deal with Imeem at all? The positive spin is that Warner’s earlier write-down was simply an accounting requirement, and that Warner really does like the streaming music company. I’m not sure how much enthusiasm Warner really has for Imeem, but at this point, taking a flier on the company is a no-risk bet: Instead of throwing good money after bad, Warner only has to give it access to its digital music catalog, which doesn’t cost the company a cent, and won’t show up on its books.

Best case scenario: Imeem survives and Warner’s stake is worth something again some day.

And if you want to be optimistic, the really good news here could be for the battered online music business in general, which has struggled to figure a model that works. Up to now, no one except Apple (AAPL) and Amazon (AMZN) has been able to figure out how to make a business out of providing music over the Web–in large part because of the music labels’ insistence on unworkable payment structures.

You could argue that this isn’t the labels’ problem, it’s the start-ups’ problem, and they shouldn’t have gotten into the business in the first place. But now that they’re in it, the labels can try to keep them alive or pull the plug entirely. Looks like they think they’re better off keeping them around.

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!

Today’s example: StockTwits, a day trader-meets-Twitter site that just raised $800,000 from venture capital firm True Ventures. It’s not a ton of money, but StockTwits doesn’t need a ton of money. The site, which launched last fall with an $800,000 angel round, employs all of four people.

And it’s yet another bet that investor Howard Lindzon has made in Twitter: He’s also put money into bit.ly, a Twitter-centric url-shortner, and Tweetdeck, a useful Twitter client, alongside incubator Betaworks, which in turn invested in the StockTwits angel round. Cozy! (Cozier: Lindzon was an early investor in Silicon Alley Insider, my former employer).

Like all of those companies and just about every other company that’s trying to make money from Twitter, StockTwits doesn’t have any kind of formal relationship with Twitter. It doesn’t need one: If you want to take advantage of Twitter’s data and users, you can just plug right in for free via its open API.

As a wise man once said: “All of [these companies] are part of the burgeoning ecosystem that revolves around Twitter, which powers all of their companies by letting them plug into its data stream. In exchange, all of these companies make Twitter more successful, by bolting on frills and features to its bare-bones service.”

Name aside, StockTwits may be less dependent on Twitter than any of the other Twittery start-ups. StockTwits users employ Twitter to pass along investment ideas, but beyond that, it’s a fairly straightforward stock message board, the kind we’ve seen since the first Web boom.

Lindzon and co-founder Soren Macbeth plan to make money via ads and by publishing newsletters/blogs on behalf of some StockTwits users, (two of whom are already selling their investment advice for $60 a month). Basically, Twitter is a lead-generator for the site.

Come to think of it, that could be a business for the Twitter team. Right?

Here’s a video interview I shot with Lindzon last week in which he declined to hand out any stock tips of his own. Presumably he’ll rectify that today.

]]> http://mediamemo.allthingsd.com/20090518/twitter-app-investors-still-writing-checks-stocktwits-raises-a-round/feed/ 0 http://mediamemo.allthingsd.com/20090508/vevo-aka-youtube-music-gets-a-ceo-universal-digital-boss-rio-caraeff/ http://mediamemo.allthingsd.com/20090508/vevo-aka-youtube-music-gets-a-ceo-universal-digital-boss-rio-caraeff/#comments Fri, 08 May 2009 20:13:15 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7183 There are plenty of question marks surrounding Vevo, Universal Music Group’s new music video site that’s scheduled to launch later this year with a big assist from Google’s YouTube. But here’s one answer: The venture will be run by Rio Caraeff, who currently oversees UMG’s digital business.

Caraeff is already heading up Vevo on an interim basis, but right now he’s still holding down his old job as executive vice president of UMG’s eLabs unit. At some point later this year, he is “99.99 percent certain” to be named president of the video site, according to someone familiar with Universal’s thinking. No word on who will get his old job.

That’s a good start for Vevo, which you can think of as either a “Hulu for music,” or more practically, “YouTube Music,” since the project will move videos at the world’s biggest music company from the world’s biggest video site and onto the new venture.

Running a start-up will be a new role for Caraeff, but at least he knows digital music and UMG specifically–he’s been working there since 2005. Prior to that, he ran wireless for Sony’s (SNE) movie arm.

Just as important, the appointment means Vevo will at least have cleared one hurdle that tripped up News Corp.’s (NWS) MySpace, which announced its plans to start a music site in the April 2008 but couldn’t land a CEO for the venture until MTV vet Courtney Holt took the gig in November–a couple months after the site launched.

There’s plenty for Caraeff to do: In addition to overseeing the launch of the site itself, he’ll need to staff it–while Google (GOOG) is helping Universal build and power the site, Caraeff will need to hire a “couple dozen people,” says a source familiar with his plan. A big priority: Assembling a sales force to sell the video clips.

And then? Plenty of other questions, which I raised a month ago when the deal was first announced. Forgive me, but I’m just going to quote myself here:

And even if Google’s technical expertise makes it easier for UMG to get a decent site up and running, neither company has a real track record when it comes to getting big brands to pony up for video ads, which is supposedly the whole point of the site.

Lots of people made similarly disparaging remarks about Hulu, of course. There was no way that GE’s (GE) NBC and News Corp.’s (NWS) Fox were going to be able to launch a decent site, let alone provide a challenge to YouTube. But they did, and they are. So the Vevo folks have that example to inspire them. (News Corp. is the owner of Dow Jones, which owns this Web site.)

But even if UMG gets the site off the ground, there is a considerable risk for both the label and for Google. Because if it works, Vevo will be diverting a lot of eyeballs away from YouTube–yesterday’s press release boasted that UMG’s YouTube channel has racked up 3.5 billion views.

The idea is to provide advertisers with a clean, well-lit space that will make them feel comfortable enough to spend money. But part of YouTube’s appeal is that is a riot of  the good, the bad and the WTF? You may start out watching a U2 video, and 20 minutes later end up watching a clip of a doped-up seven-year-old after a visit to the dentist. If you end up at Vevo, you’re going to have be very interested in music videos–and, at least for now, just the ones that Universal owns.

Are there enough video watchers out there to justify a business with some 50+ employees, which is the number I’ve heard Vevo/Universal is looking at? And can Universal figure out how to turn those eyeballs into more money than they’d generate on YouTube itself? Got me. Can’t wait to find out.

]]> http://mediamemo.allthingsd.com/20090508/vevo-aka-youtube-music-gets-a-ceo-universal-digital-boss-rio-caraeff/feed/ 0 http://mediamemo.allthingsd.com/20090507/warner-music-group-walks-away-from-digital-startups-lala-imeem-and-loses-33-million/ http://mediamemo.allthingsd.com/20090507/warner-music-group-walks-away-from-digital-startups-lala-imeem-and-loses-33-million/#comments Thu, 07 May 2009 11:44:06 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7139 It’s par for the course for big music labels to boast about their digital music sales as their CD sales tank. And that’s just what Warner Music Group (WMG) did that this morning, pointing out that its digital revenue was up six percent this quarter.

Less boast-worthy: Warner has written off almost all its investments in lala and imeem, two digital music start-ups it once thought would help save it from the slump in CDs.

In 2008, Warner invested $20 million in lala.com and $15 million in imeem.com. Now the label is taking a $33 million charge on the two start-ups.

The company’s 10-Q, filed this morning, spells it out: It wrote off $16 million in imeem–its entire investment–and half of its investment in lala. It also threw away $4 million via a “receivable write-off” related to imeem–that is, the start-up owes Warner money the label doesn’t expect to see again.

This appears to explain why Warner wasn’t bothering to renegotiate its streaming rights deal with imeem earlier this year even though it owned an equity stake in the company: It looks like the label had already concluded the company wasn’t worth saving. UPDATE: A person familiar with the situation says Warner may yet hammer out a new agreement with imeem.

Asset write-downs–acknowledgements that the stuff you bought back in the boom is worth a lot less now–have been par for the course for big media companies following last fall’s crash. If anything, Warner is a little late to the game here–many of its peers took their lumps last quarter.

But it is unfortunate for imeem, which has just raised an emergency funding round–something in the single-digit millions, I’m told–and is still out trying to land more cash.

For the record, Warner said music sales were down 17.6 percent in the last quarter and that the company lost 45 cents a share on revenue of  $668 million. Analysts had been looking for revenue of $730 million. Warner attributed a loss of 22 cents a share to the write-downs.

And as far as Warner’s digital revenue goes, that six percent increase is worrisome since it shows continued deceleration: A year ago, digital revenue had increased 48 percent over the previous year. And Warner’s digital total was up just one percent over the previous quarter.

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