News Bytes: May 20

MICROSOFT’s recent search ads proposal would split YAHOO’s assets and fracture the company. The deal would break up Yahoo’s Asian assets and give Microsoft a minority share in what was left of Yahoo. Yahoo executives are weary of the deal, believing that it is Microsoft and CARL ICAHN’s way of pressuring Yahoo not to pursue a search deal with GOOGLE. Regardless, a former FCC chair said a Google-Yahoo deal is likely not to pass Federal scrutiny.

8 former AOL executives are being sued by the SEC for allegedly inflating AOL’s online advertising revenue by more than a $1 billion. The violations spur from a 2000 announcement in which the SEC believes AOL lied in order to appear stronger than than it really was. The lawsuit is just another reminder of the failed merger between TIME WARNER and AOL, which Time Warner dropped from its corporate name five years ago.

DELL CFO Donald J. Carty will resign from his position in June. Hired a year and a half ago to turn around Dell’s slumping sales, Carty’s time at Dell was not advantageous as the computer manufacturer fell behind HEWLETT-PACKARD in units shipped last year. Carty will be succeeded by Brian T Gladden, CEO of Sabic Innovation Plastics, formerly GE Plastics.

GOOGLE will launch Google Health today after months of private beta testing. The system will help Google users manage doctor records, prescriptions and test results. To sign up for the service all you need is a Google account, which are easy to come by. However, because Google accounts have no minimum password requirements, the accounts are easily hackable, which raises concerns about private medical information becoming public.

CBS Gets Backdoor Into Hulu, Sort Of; Hulu Expands Distribution
During the TV upfront period, which began last week, online publishers have realized they have to try a little harder to capture advertisers’ attention. With that likely in mind, Hulu says it has expanded its distribution network to CNET’s (NSDQ: CNET) TV.com video guide and viewing site (which eventually will be owned by CBS (NYSE: CBS) once the deal goes through). The announcement comes a few days after the CBS Audience Network updated its own site for advertisers and added some classic TV programs under its umbrella as well.

-- Hulu’s new partners: In addition to putting its videos on TV.com, which is also a member of the CBS Audience Network, Hulu plans to add a few more sites to its syndication chain, including TVGuide.com, Break.com, Zap2it.com, BuddyTV.com, Flixster.com and MyYearbook.com sometime in the next few weeks. The News Corp./NBC Universal-owned video site also released a flurry of stats designed to demonstrate early progress: Hulu’s video streams have grown to more than 63 million, as viewers are watching more than two hours of Hulu content per month.

Reuters points out that Hulu’s April numbers now place ABC.com at number two, according to Nielsen Online rankings, as viewers played 60.8 million videos and spent an average of 57.3 minutes on the Disney-owned site.

-- CBS Audience Net gets nostalgic: After a first addition of TV rerun stalwarts like MacGyver, Hawaii Five-O and Melrose Place, the CBS Audience Network has just added several primetime hits such as The Love Boat and Beverly Hills 90210, which should help fill out the network given the dearth of new TV shows coming this year. Secondly, advertisers are interested in how CBS will make further use of properties like CNET’s TV.com video site, which is also part of the CBS Audience Network. As for the new site it quietly unveiled to media buyers at last week’s upfront presentation, a CBS rep told me that the purpose of the CBS Audience Network site is merely to serve as a marketing showcase for new partners and advertisers, and is not necessarily intended as a consumer site.

CNET All-Hands: ‘Very Few’ Redundancies; CBS Interactive To Be Folded Into CNET
As noted this morning, CNET (NSDQ: CNET) is holding an all-hands meeting this afternoon (1:30 ET), a chance for CEO Neil Ashe and CBS (NYSE: CBS) CEO Leslie Moonves to discuss things with employees. Not a CNET employee? It looks like you can follow along here, though who knows if there’ll be anything that hasn’t been covered elsewhere. Unfortunately it seems that link won’t work outside the firewall. If we hear of any news made, we’ll let you know.

Some notes from the call: Courtesy of someone who was able to listen to the call, it sounds as though all of CBS Interactive will basically be rolled into CNET with Neil Ashe running the show reporting to Quincy Smith. Just conjecture, but that could mean Ashe running ops and Smith doing broader strategy (deals etc.). At this point, the deal is expected to close at the end of June, and there are currently transition teams on both sides. “Very few” redundancies are expected.

Google On MSFT-YHOO: We’d Hire Yang; Would Work With Them Again
Google’s (NSDQ: GOOG) top trio met whilst in the UK last night to discuss revived Microsoft-Yahoo talks. Earlier yesterday, CEO Eric Schmidt gave his first reaction to journalists: “It’s too early. After this press conference, the three of us will meet and decide what our response is.”
Going in to that meeting, Sergey Brin said on Yahoo (NSDQ: YHOO) CEO Jerry Yang (via BBC): “Jerry is very talented and if he wants to work at Google we’d be very excited to have him, but I don’t think that’s going to happen.”

Even so, after Google trialled its ad platform on Yahoo.com, GOOG-YHOO may yet get closer. Brin (via Brand Republic): “Primarily we learned it was good to work with them again… and they have a very similar story to us and things went very well with that test so we would be very excited to work with them again.”

Google has already offered Yang a way out of an all-out takeover by Microsoft (NSDQ: MSFT). Now it’s clearly aligning itself with the search portal and simultaneously getting a foot in the door for an interest in whatever the business might look like after a possible scaled-back MS incursion. Asked to name Google’s top competitor, Schmidt admitted: “Eventually, I think it is obvious that it will be Microsoft, based on their actions.” More at PCUK...

Bloggers Rejoice! Customized TV Clips With RedLasso (Updated)
There’s no shortage of video sites that let bloggers embed movies into their posts. But until now, bloggers have typically had to rely on others to capture, edit, and upload this content - there hasn’t been an easy way to create your own clips from recently broadcasted media.

RedLasso is looking to change this. The site, which is currently in private beta, has created a useful (and potentially problematic) system that allows bloggers to sift through recent television broadcasts and extract their own clips.

The site captures content from big-name media sites (CNN, Comedy Central, and the BBC) within an hour after airing. RedLasso then creates an index of each file using closed captioning transcripts and phonetic audio detection (the company says that using phonetics instead of dictionary-based detection works better for proper names and places).

This index is searchable for relevant broadcasts, presented in their entirety. After finding a desired portion, the user can set the endpoints and a clip is generated and ready to be embedded.

The system sounds useful, but it also seems ripe for abuse. Because shows are captured in their entirety, RedLasso could easily be used as virtual (and free) Tivo. To combat this RedLasso is taking a proactive approach: they’re screening every applicant to the beta to ensure that they are actually bloggers. They’re also monitoring video usage, so if they notice that someone’s been watching a bit too much of The Daily Show, they’ll terminate their account. This may work well enough in a closed beta, but the company might not be able to handle an increase in abuse once the service goes public.

And then there’s the copyright issue. RedLasso says they have been in talks with a number of networks, but they have yet to establish any content deals. This is going to be the deal-breaker for the site. The company’s COO, Al McGowan, says that the short clips they generate fall under fair-use, but we’ve seen that argument fail countless times. And what about the full shows that are being hosted on RedLasso servers? If the site has a hope at long-term success, it’s going to need to establish those licensing deals before legal maneuvers shut them down.

RedLasso held a Series A funding round of $6.5 million last November, and they are looking for $10-15 million in a Series B round. Another player in this space is Blinkx.tv (which features audio detection), though users can’t define their own clips.

Update: And…the cease & desist letters have hit . The company failed to mention their new legal troubles in our interview today, even in response to direct questions on the matter. When questioned again about it a few minutes ago, McGowan said “we didn’t know the letter had leaked.”

YouTomb: Where Videos Go to Die
Ever wonder exactly how many videos are taken down from YouTube because of copyright violations or other reasons? So did the folks at the MIT Free Culture student group. They created YouTomb to document all YouTube videos that have been taken down. It is currently tracking 177,000 videos, and counts 4,394 that have been taken down for alleged copyright violations.

For each video taken down, YouTomb records the title, description, who uploaded it, when it was taken down, and some screen shots. You cannot watch the videos on the site. But it does document what happened to them, in case any were taken down wrongfully, in accordance with the Digital Millennium Copyright Act (which Youtube chooses to comply with by removing any videos for which it receives a take down notice). The biggest users of the take down notice ion Youtube include TV TOKYO, Viacom, Warner Bros, and World Wrestling Entertainment.

Exodus Watch: MySpace Loses A Sales Exec To Mochi Media
With MySpace failing to meet its internal revenue targets, executives there whose compensation is tied to those targets may now be more open to job offers from startups. Mochi Media, for instance, just hired Carol Werner as its VP of sales. Previously, she was in charge of West Coast sales for MySpace.

If more MySpace execs follow her, Yahoo won’t be the only big Web company that needs to worry about a talent exodus. Incidentally, last month Mochi hired its VP of engineering, Eric Boyd, from Yahoo. It will take talent from wherever it is fleeing fastest.

Mochi Media is an ad network for Flash games. the ads appear at different stages of the games, and Mochi splits revenues with game developers. It’s ads are in games that reaches 50 million gamers a months, says the company.

OMG, 3G iPhone confirmed for June 9, maybe
Someone, or something, has confirmed to GIZMODO that the 3G iPhone will be released on June 9, the day of the WWDC keynote. (I guess Jobs will be all, “Available… now! Go! Buy, buy buy!”) That’s a more or less worldwide launch date this time, with carriers in other countries able to set the price of the phone and plan, maybe.

On a scale of 1-10, how excited are you? I’m a 10, easy, but just because I hope for the day when 3G iPhone rumors go away forever. Then the 4G rumors start.

Netflix Roku: Free Is Such A Beautiful Word
Netflix made a big splash today with their announcement of a $100 set top box, built by a California startup called Roku, that streams free movies (for Netflix subscribers) to the living room.

Good for them. Instead of wading into a losing battle over cheap downloads and rentals (see Vudu , BlockBuster, AppleTV, Google, etc., which charge for each movie), they jump right to free. They know what the consumer wants.

Of course, the service isn’t really free. Users have to buy the $100 box, and continue to keep a Netflix subscription active ($18/month). There are 10,000 movies available on on the box, which is significantly less than the 100,000 or so titles on Netflix’s DVD mailing service (and it’s old titles, not new releases). But it’s also an order of magnitude more titles than are currently available on demand via Comcast, my cable provider. And just like Comcast and the other cable guys adopted Tivo’s DVR functionality into their boxes before Tivo could do much damage, look for them to eventually copy Netflix, too, and offer a much wider variety of on demand content.
Netflix is taking a big financial hit with this service, which originally launched via PC viewing only and has since expanded. Last year they said they were putting $40 million/year towards licensing and overhead costs.

But really, what choice do they have? BlockBuster is gnawing away at one side of their business (physical DVDs), while online services (and don’t forget BitTorrent) come at them from the other end. And now the cable companies will be focused on them, too.

It’s a wonder Netflix continues to flourish in such a hyper competitive market. They now have over 8 million subscribers, 21% more than a year ago, and 32% gross margins on their core business. Those margins have decreased somewhat, what subscriber acquisition costs have also dropped from $47 to just $30 per new member. But as long as they continue to give consumers what they want, they’re at least in the game.

Look for more devices with Netflix built in, including one from LG, later this year.

Nielsen: U.S. Video Streams Up 9% in April
Nielsen measured more than 7.6 billion video streams in the U.S. in April, up 9 percent from the 6.9 billion it measured in March. The firm’s VideoCensus also found unique viewers rose 4 percent to 119.6 million, with 63.6 streams per viewer and 142.8 minutes per viewer per month.

Over on the leaderboard, well-pedigreed upstart Hulu nudged the aging Google Video out of the last spot on the top 10, making the list for the first time. Other than that, the only change was Turner and CNN swapping the eighth and ninth spots.

Most sites on the list saw a bump in streams over the month, but YouTube, as usual, saw the lion’s share of both traffic and growth. The site had 4.1 billion streams, up from 3.7 billion last month.

Vid-Biz: Upfronts
Online TV Ads More Important at Upfronts; with more people watching TV online, digital ad buys are no longer an afterthought. (The Wall Street Journal)

Adap.tv Launches Ad Platform; company says its OneSource platform will let publishers manage their video ad campaigns across all ad formats and ad sources. (release)

South Park Heading to Fancast; animated series and The Colber Report part of an overall content deal between Viacom and Comcast. (C21Media)

Userplane Adds Web Video Hosting; company has introduced “Mediplayer,” a free white-label video hosting app. (TechCrunch)