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September 10, 2007

In This Update:

Time Warner Invests in ScanScout
NEWTEEVEE
Time Warner has invested an undisclosed amount in online video ads startup, Scanscout, joining other investors General Catalyst Partners, First Round Capital and Angel Investment Partners. Scanscout, which is sometimes described as the AdSense for video, says the link with the media giant should help open up industry connections and pave the way for cooperation with other Time Warner video platforms, such as Truveo. Scanscout focuses on contextual advertising and in-roll ads, like those recently rolled out by YouTube, instead of other forms of advertising such as pre- or post-roll adverts. The Time Warner investment adds to a funding round in May, in which Scanscout raised USD7m from General Catalyst Partners, angel Ron Conway and First Round Capital. Scanscout serves some 25 to 30 video ad campaigns on about a dozen sites, including blip.tv and Next New Networks.
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Music Industry Betting on ‘Ringle’ Format
REUTERS
As the recording industry wakes up from its summer slumber and starts thinking about what will motivate the consumer for the holiday selling season, the major labels are getting ready to launch the “ringle,” which combines the mostly defunct single format with ringtones. Each ringle is expected to contain three songs — one hit and maybe one remix and an older track — and one ringtone, on a CD with a slip-sleeve cover. The idea is that if consumers in the digital age can download any tracks they want individually, why not let them buy singles in the store as well? It also enables stores to get involved in the ringtone phenomenon. Sony BMG Music Entertainment, which came up with the ringle idea, and Universal Music Group are going to be the first out of the box with ringles. The former will unleash 50 titles during October and November, while UMG will have anywhere from 10 to 20 titles ready. The Recording Industry Association of America has approved the “ringle” name, and there is an industrywide logo to help brand it. But except for Sony, each major still needs to cut a deal with a digital aggregator to allow consumers to redeem the ringtone.
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WPP Buys LA Interactive Agency Schematic
PAIDCONTENT
WPP, the advertising services group, is buying Los Angeles-based Schematic for an undisclosed amount. Led by Trevor Kaufman, Schematic has an impressive list of big-name clients across a range of digital media and also has offices in Boston, New York, Atlanta and San Jose, employing 255. It developed CNN’s Pipeline video player and the new-look ITV.com, which the British broadcaster unveiled this summer with on-demand TV catch-up video and live streaming of its four TV channels. Schematic pulled in annual revenue of $29.6 million by this March. WPP has of late acquired MySpace China investor China Broadband Capital Partners, Pennsylvania-based digital agency Refinery and, in the biggest deal, bought ad network 24/7 RealMedia for $649 million. It’s also an investor in VideoEgg. Sir Martin Sorrell’s company posted 10 percent better digital revenues for the first half in August; the CEO has this year stated his desire to see that 25 percent of WPP revenue comes from digital within five years.
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DivX Sues Universal Over DMCA Takedowns
ARS TECHNICA
After months of hearing about Universal Music Group’s displeasure, DivX yesterday filed a preemptive federal lawsuit of its own that asks a judge to exorcise the “specter of litigation” currently haunting DivX. At issue is DivX’s Stage6 video hosting service, which is a bit like YouTube but requires the DivX codec instead of Flash. According to a copy of the complaint, Universal has told DivX that the site is “knowingly involved in the infringement of UMG’s copyrighted materials, and exploits that widespread infringement for its own commercial gain.” In response, DivX points out the obvious: it complies with the DMCA and Universal has an easy method to request the takedown of any music video that infringes its copyrights. According to DivX, Universal has been not interested in supplying actual DMCA takedown notices and instead “has chosen to posture and threaten DivX in the hopes of extracting an unwarranted windfall.”
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Google Plans to Put Video Ads Into Search Results
WIRED
At CitiGroup’s Technology Summit in New York this week, Google’s Business Product Manager for Ads Quality Nicholas Fox said the company will be moving ahead with integration of video and image ads within sponsored search results. Google, of course, has already made steps in this direction with universal search, blending listings from its images, news and video search engines among those it gathers from crawling web pages. In the case of universal search, however, the images and video it supplies are search results, not ads. The trick for the company, as Fox notes, will be finding a way to capitalize on the information element of such ads without alienating users.
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MTV Networks to Launch Two Dozen More Sites
REUTERS
MTV Networks said on Friday that it would launch two dozen new Web sites based on its shows, including the entire video archives of Comedy Central’s “The Daily Show” with comedian Jon Stewart. The new sites, which debut this month and in the fourth quarter, are part of a strategy to expand MTV Networks’ digital media businesses, which the company expects to generate well above $500 million in revenue this year. In August, the Viacom Inc division said it planned to invest more than $500 million in developing online and console games and make games a part of any shows development process. With the slate of new development, MTV Networks will have more than 300 sites by the end of the year.

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Warner Shifts Web Course, Shouldering Video Costs
NEW YORK TIMES
In the race to become a major supplier of original video programming to the Web, Warner Brothers has decided to reverse its direction. The studio, part of Time Warner, plans today to introduce 24 Web productions in a range of formats including minimovies, games and episodic television shows. But for this latest online push, Warner Brothers has discarded its initial strategy of insisting that advertisers shoulder production costs from the start. Instead, it has decided to finance most projects itself and worry about lining up advertisers to recoup costs later. “In trying to get the business off the ground,” said Craig Hunegs, executive vice president for business development, “we ended up in a bit of a dance with advertisers about what various projects would look like.” The shift underlines a growing realization among the big Hollywood studios: Web entertainment is evolving so quickly that they must take on more financial risk to keep up.
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Apple Eyes the Wireless Auction
BUSINESS WEEK
Talk of the government’s pending auction of valuable wireless spectrum has focused largely on one intriguing newcomer to the bidding: Google. But another tech powerhouse has considered joining the bidding as well: Apple. Two sources tell BusinessWeek that Steve Jobs & Co. have studied the implications of joining the auction, which will be held Jan. 16. The winners will get rights to use the spectrum that analog TV broadcasters are handing back to the government in 2009, given their mandated move to digital television.
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Physicians’ Social Network, Sermo, Receives $25MM Series C
MASHABLE
Physicians’ online social network, Sermo, is receiving a further USD25m in Series C funding. No deal terms were disclosed. Legg Mason led the funding round with current investors Softbank Capital and Longworth Venture Partners participating. The Sermo site is designed solely for physicians to post comments, share knowledge, post stories and other content as well as enabling them to vote on content posted by other users. The idea behind Sermo is to develop a community of physicians to allow them to communicate with colleagues outside their local networks. It is not known how the funding will be used. The latest funding brings the total received so far to $37.5MM
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Social Networking Application Market Growing 120 Percent This Year, Says IDC
TEKRATI
The social networking application market is experiencing significant growth and change this year — setting the tone for the next three years, according to a market forecast and analysis by IDC. The social networking application market will grow from $46.8 million in 2006 to $428.3 million in 2009. Along the way, three social networking market segments will emerge. These include: self-service applications used by groups and marketing campaign teams; brand applications that focus on persistent customer engagement; and enterprise applications that provide more effective ways of working with customers, partners, and other external parties. Social networking functionality will be built into core communications platforms, and used for many purposes other than consumer socializing.
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Greylock Partners Invests In Stealth Search Engine Cuill
TECHCRUCH
Techcrunch is reporting that pre-launch search engine Culli has raised a $4 million Series A round from Greylock Partners, with partner David Strohm taking a board seat. Cuill, which was founded by husband and wife team Tom Costello and Anna Patterson, can supposedly index web pages at 1/10th the cost of Google (a significant competitive advantage) and has claims of relevance improvements over existing search engines. Patterson was until recently the architect of Google’s TeraGoogle, and the team also brought on Russell Power from TeraGoogle as well. The rumor is that they’ve continued to hire senior search experts away from Google.
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