Viacom and Google, who have been tangling over copyright violations at YouTube since 2007, will be at it again today at a federal courthouse in New York. The two sides will start oral arguments for Viacom’s appeal of the case, which Google won decisively in a 2010 ruling.

In the past, both sides have tried digging up evidence to discredit each others’ arguments, and while both came up with plenty of embarrassing stuff, they couldn’t find a smoking gun.

So now we’re back to the basic question of the case: How much protection does the Digital Millennium Copyright Act offer YouTube, or any other site that lets users upload and distribute content they don’t own?

That question has come up to the courts in at least three different suits in recent years: Viacom versus Google, Universal Music Group versus Veoh, and EMI versus MP3Tunes. And in all three cases, federal judges have offered up the same response: The DMCA gives Web sites enormous latitude. As long as the site serves a legitimate function, it can’t be held responsible if users upload stuff they don’t own. If copyright owners find something that shouldn’t be there, and they ask the site to take the offending piece down, the site has to comply. But that’s about it.

So far, that’s very encouraging news for all manner of digerati. And in theory, it’s quite threatening to media companies and other people who create, finance and distribute intellectual property for a living.

But things might not be quite so dire for the media guys. While you can read the recent court rulings as an invitation for a free-for-all, it looks a little different in the real world.

YouTube, for instance, has spent a lot of time and money creating systems to filter content on its site, which hoovers up more than 24 hours of stuff every minute. And it works hand in hand with most big media companies to help them keep stuff they don’t want off the site — and to help them distribute other stuff they do want there.

Included in that list of companies playing very nicely with YouTube — Viacom’s sister company, CBS. And once this suit finally gets settled — which could still take years — my hunch is Viacom will want to work closely with the world’s biggest video site, too.

[Image credit: Sweetheart/Shutterstock]

Anybeat aims to be “the evolution of the original Myspace” — a public gathering place for interacting with people you don’t know, according to Dmitry Shapiro, the former Myspace executive who founded the site.

Shapiro described Anybeat in an interview as an online community that “is in some ways the polar opposite of a social network” of existing connections. The site fits into a category I’ve been exploring lately: Social discovery services.

Anybeat, which is launching a limited beta later today, has a startling number of features — maybe too many! — for a brand-new product that was developed by a team of just seven people. There are the standard profiles and photo albums, a directory of all members and their interests, a live-updating activity feed, unified comment threads when a conversation is reshared, groups, questions, saved search alerts, instant messaging and a credibility score system. It’s kind of a grab bag of the latest and greatest in social networking.

One thing that Anybeat does not do? Per its user primer: “Unlike Facebook, Google, or Twitter, we don’t want to be your login credential for other sites. We will not follow you around the web!!!”

Shapiro — who was most recently CTO of Myspace Music, and before that founder and CEO of video site Veoh — earlier this year wrote a manifesto about creating a viable alternative to Facebook, one with better privacy controls. That was after he raised about $1 million to build such a thing, which at the time was called Altly.

Shapiro wrote, “There is clearly nothing wrong with Facebook making money, as all business has to do. What IS clearly wrong is when our privacy, our personal information, our digital lives are being subjugated for the sake of profit, without us having any meaningful capability to opt out, or even know the extent of such activity.”

At this point, though, Anybeat has become less about privacy. Shapiro said this week that Altly had originally developed functionality that was quite similar to Google Circles, but after Google+ launched, the company changed its focus. Now, an important tenet of Anybeat is that it not become a vehicle for personal branding, like so much of the social Web. As such, users are told not to market to each other.

What does that mean for the rest of us? In a nutshell: It’s yet another victory for Web sites and services that let users upload and access music, movies and other files under the protection of the Digital Millennium Copyright Act.

And it gives Google and Amazon additional cover for the cloud locker services they launched earlier this year, without approval from the big music labels.

In practical terms, though, I’m not sure that the decision does anything beyond maintaining the status quo. Had it gone the other way, it’s possible that it would have threatened lots of popular Web sites and services. But since it doesn’t: Carry on!

The most important news is that a third federal court has ruled on behalf of Web services whose users might use it to upload and/or access files that violate copyright rules.

In this case, it’s MP3Tunes fending off EMI Music. But it’s the same basic story as the Veoh/Universal Music and YouTube/Viacom cases: A judge has ruled that the DMCA doesn’t require Web services to figure out which files that users upload have the right to be there.

Assuming all of those rulings stand up (Viacom is appealing the YouTube decision, and this one will likely go back into the court system, too), this will give Web sites enormous flexibility. The rulings don’t give users unlimited access to stuff they don’t own, though, and they do require sites to pull down files if copyright owners complain.

In this case, Judge William Pauley ruled that MP3Tunes, which operates a “locker” music service similar to the ones Google and Amazon launched earlier this year, was liable for some copyright infringement, because it didn’t remove specific songs EMI had flagged. And he said MP3Tunes founder Michael Robertson was also liable, because he knowingly uploaded songs he didn’t own.

That means Robertson and his company could still end up paying significant penalties, even though they won most of their case.

Pauley’s ruling also briefly blessed the construction of the locker service itself. In short, he said that users have a right to upload their own songs to the cloud and play them back, even if the service they used to do it doesn’t have an arrangement with the music labels.

That’s good news for Google and Amazon, because they don’t have deals with labels for their services. But it didn’t seems like they were going to need them, anyway.

Though music executives huffed and puffed after the lockers launched, they haven’t taken legal action against the companies. They also haven’t pursued mSpot, a small start-up that offers something similar.

I’ve seen some reports that suggest that Pauley’s ruling gives Google and Amazon the ability to do a “scan and match” service, where users don’t have to laboriously upload their songs to a locker — instead, the service would simply look at what’s on their hard drive, and give them access to a copy stored on the site.

That’s what Apple’s new iTunes Match service does (among other things). And Apple hammered out a deal with the labels to make that happen.

But as far as I can tell, the only additional leeway that Pauley gives to Google and Amazon is the ability to save storage space on their own servers, by using “deduplication” technology — a “standard data compression algorithm that eliminates redundant digital data.”

That’s not nothing — it’s always nice to save storage space — but it won’t fundamentally change what they’re offering to consumers, who will still have to spend a long time moving their stuff into the cloud.

Big picture: If the idea of storing all of your music on a remote server — so that you can listen to it whenever you want, wherever you want — is appealing, this ruling is good news. It’s also good news if you like watching videos on YouTube, listening to songs on Tumblr, or using lots and lots of other Web sites that depend on stuff users upload. But since you can do all of that already, you’re not going to notice a change.

“I know it sounds crazy, but our new company, http://altly.com, is building an alternative to Facebook. More details soon :-)”

– Former Veoh CEO, and, more recently, former MySpace Music CTO Dmitry Shapiro, setting some not-very modest goals for himself via Twitter.

Shapiro, who had previously founded and led the legally challenged video site Veoh, said in a post on Facebook that his time at Myspace was “a rewarding, frustrating, eye-opening, and inspiring experience.”

His departure follows that of Courtney Holt, the Myspace Music president who left in February. Meanwhile, Myspace has been through a lot in the past year, including management shakeups, major layoffs, declining traffic and sales efforts by its parent News Corp. (which also owns this site).

Shapiro said he planned to form a new company on Monday but did not offer additional details. Myspace declined to comment on Shapiro’s departure.

Sources tell me that Index Ventures and Union Square Ventures are leading a “significant” new round for the Berlin-based company. I don’t have a dollar amount, but I’m told that VCs were competing fiercely to get into the three-year-old company, which raised a $3.3 million round from Doughty Hanson Technology Ventures in 2009. The round hasn’t closed yet.

Online music has been a black hole for investors for a very long time. So what’s the attraction here?

In large part, it’s because SoundCloud isn’t dependent on deals with the major music labels. It’s designed to let professional and amateur musicians share their own music with each other and the public, via cloud-based files that the company hosts.

Once the tunes are on SoundCloud’s servers, the service makes it easy to move the stuff around the Web, via its own widget and an API that’s showing up on lots of interesting sites, apps, services and devices, including Facebook and Apple’s iPad. You can load SoundCloud files into Spotify, the streaming music company that Index has also invested in.

The service uses the freemium model, offering most of its capabilities for free, and charging up to $700 a year for more storage and extra features.

You can also use SoundCloud to share music you didn’t create and don’t own–and a “private sharing” option makes it easy to do so discretely. That could leave the service open, theoretically, to copyright claims, a la YouTube.

But so far the company has signed up a million users without attracting the ire of the big labels. And recent court decisions in the Veoh/Universal Music and Google/Viacom cases seem to give user-uploaded services like SoundCloud a lot of legal leeway, at least in the U.S.

I’m told that the company also plans on using Audible Magic’s “fingerprinting” technology, which will make it easier for copyright owners to pull content off the service.

SoundCloud, Index and Union Square all declined to comment.

Here’s an example of SoundCloud at work–a 43-minute (!) mix that Beck has posted to his Web site, which we can also embed here:

Melted Lemons by planned_obsolescence

SoundCloud: The Tour from SoundCloud on Vimeo.

It’s not a huge shock to see former start-up CEOs join big companies after the demise of their own. But this move is a bit more surprising: It means Shapiro will be working for one of the companies that helped put him out of work.

That’s because MySpace Music is a joint venture between News Corp. (NWS) and the big music labels, including Universal Music Group. And Shapiro, among others, has pointed to Universal’s copyright-infringement lawsuit against Veoh as one the primary reasons for the video site’s downfall.

But apparently, Shapiro doesn’t mind working for Universal now. In any case, he’ll be reporting to MySpace execs Courtney Holt, Mike Jones and Jason Hirschhorn, not Doug Morris. And you could argue that it makes sense for MySpace Music to have a tech guy on board who has intimate knowledge of the big music labels, warts and all.

Plus, MySpace Music needs help from wherever it can find it. The site still boasts some 30 million unique users. And as other free music sites melt away, it is one of the only places to get legal streams without paying for them. But two years after launch, it’s still a mess to navigate, and I don’t know anyone who uses it on a regular basis. Maybe Shapiro can help.

Veoh, meanwhile, never actually went away. Something called Qlipso purchased the site, which had raised some $70 million, for less than $10 million in March.

This sounds alarming, but you can think of it as an amicable divorce: Spark gets back all of its bubble-era investment and Eqal gets to keep going, with fresh money from new and existing investors.

Spark led a $5 million series A round in the company in April 2008. Eqal co-founder Miles Beckett wouldn’t tell me how much of the round Spark accounted for, but did say that the VCs were made whole in a transaction that closed at the beginning of this year.

So what happened? As far as I can tell, it’s a straightforward story: Eqal changed directions and Spark didn’t want to stay on board.

Eqal began life as a video-production house spawned by the surprise success of “lonelygirl,” the supercheap, superpopular Web series that crested on YouTube in 2006, just as that site was acquired by Google (GOOG). But by 2009, as the market for Web video ads was slow to develop, Eqal was shifting from developing its own Web video to helping other people make and distribute stuff.

If you want to paint that in a positive light, you can say that Eqal had become a Web video-platform company. A less attractive way to describe Eqal is as a Web video-services company. The difference is meaningful if you’re an investor because “platform” is a scalable business while a service company requires more money and effort and offers less lucrative returns.

Any way you slice it, Spark wanted out. “They wanted to zig and we wanted to zag,” Beckett says. He notes that current management and some original investors, including Ron Conway, helped finance the buyout; Eqal also rounded up new money from investors like Scott and Cyan Banister.

The deal is a much better outcome for Spark than Veoh, another Web video bet, was. That one collapsed in a bankruptcy-protection filing earlier this year. The firm still has money in two other Web video investments: Next New Networks and 5Min.

Meanwhile, I’m still looking for examples of companies that can say they’re doing a booming business by concentrating solely on making original Web video. Anyone?

Here’s a clip of “lonelygirl,” the series that put Eqal on the map. Below it is an example of the company’s new work, a promotional campaign for Kraft’s (KFT) Philadelphia Cream Cheese, starring food celebrity  Paula Deen.

That’s the thesis behind Clicker, a would-be TV Guide for Web video, which has raised an $11 million B round led by JAFCO Ventures, with participation from earlier investors Benchmark Capital and Redpoint Ventures. The funding follows an $8 million round announced last fall that was actually raised in 2008.

I assumed the money would be targeted to build up a sales and marketing team for the 32-person company, which launched in October but has no revenue to speak of. In fact, CEO Jim Lanzone says the money will go in the start-up’s bank account for now.

“We didn’t need the money yet,” he says. “But we had multiple firms interested, and we had the opportunity to pick the best one for us and get it done. It was kind of a no-brainer.”

Clicker is a clever Web video play because it takes advantage of Web video’s popularity without getting clobbered by the cost and copyright problems that have felled start-ups like Joost and Veoh.

Clicker doesn’t have to pay to produce or stream Web video because it doesn’t make or host its own clips, though it will run embedded clips from other services. And it doesn’t have copyright problems because it only indexes professionally produced stuff. (Here’s Katie Boehret’s review from last November.)

The service doesn’t have significant traffic yet–comScore (SCOR) reports 226,000 unique visitors in January, though Lanzone says his internal numbers show 750,000–but it is getting a warm reception from the traditional TV business, which likes the idea of central hub for “legitimate” content.

And the industry needs one if it’s going to get users to embrace its “TV Everywhere” strategy. Again, viewers shouldn’t care if they’re watching “The Pacific” on Time Warner’s (TWX) HBO Go or via Comcast’s (CMCSA) Fancast–they just want to find the show.

All right, it was a cafeteria packed with Yahoo (YHOO) employees, but still. Check out Kara’s write-up and video of the experience, but be warned: no embed of the official Yahoo video so far, so those of us who weren’t there have no idea (yet) about what sort of profanity ensued. We’ll keep you posted. Kara also took a look this week at the serialized drama that is MySpace. The latest episode, of course, is the firing of brand new CEO Owen Van Natta, who may or may not have wanted to leave anyway. An insider described the company to BoomTown as a hot mess, since it’s both “impossible to save and hard to give up on.” BoomTown started off the week with a couple of the more amusing takes on Google’s Super Bowl ad, “Paris Love”–now its own meme–which includes the search history of Tiger Woods and a different kind of Parisian story.

Walt recently fired up Windows 7 on a late-model Apple (AAPL) MacBook Pro, using both Parallels Desktop 5 and VMware Fusion 3. Not at the same time, although both have been updated to get the most out of Snow Leopard and Windows 7 and will run the two operating systems simultaneously on an Intel-powered Mac. The quick version is that Walt thinks Parallels is the better product. The version with all the logic and details is in this week’s Personal Technology. He also took time to answer some readers’ questions in Mossberg’s Mailbox about iPad batteries, zooming on text in Firefox, locating the calendar in the latest version of Windows Live Mail and feeling stuck between a Kindle and a Nook. In this week’s Mossberg Solution, Katie Boehret tested some stylishly small scanners and desktop printers: the Fujitsu’s ScanSnap S1300 and PlanOn System Solution’s PrintStik PS905ME. Not surprisingly, she found that style comes at a price with both gadgets.

In Digital Daily this week, John Paczkowski quoted Bill Gates’s underwhelming response to Apple’s iPad hoopla: “It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it.” Then he quoted Gates on his initial reaction to the iPod in 2004: “There’s nothing that the iPod does that I say, ‘Oh, wow, I don’t think we can do that.’” Apparently, Gates was much more forthcoming–with his own Microsoft (MSFT) execs, anyway–about iTunes in 2003 when he wrote in a memo that “Jobs has us a bit flat footed again….” Maybe admitting you have a problem really is the first step toward overcoming it. But then again, Zune as a second step is pretty much three steps back. John also dissected the buzz around Google Buzz this week, which, admittedly, wasn’t overwhelming, but it could still dovetail nicely with the search giant’s mobile strategies.

Jeff Bronikowski, formerly of Universal Music Group–the world’s biggest label–explained in a Billboard interview this week that the business of Big Music is doomed. But Peter Kafka is reserving judgment, at least until a few more music industry vets leave their jobs and weigh in publicly on the matter. Which is not at all the same thing as being optimistic; it’s just being realistic. It’s important to point out, though, that Google (GOOG) made Peter feel better this week about having Time Warner Cable (TWC) as his ISP, which could signal optimism, realism or something else entirely. Back on the music front, MediaMemo spoke with Veoh CEO Dmitry Shapiro and found that although it’s tempting to blame music behemoth Universal Music Group for the company’s demise, the Web start-up dug its own hole.

Here’s hoping for good sound bites for next weekend’s update and no need for mention of the weather. Stay tuned.

The music label’s suit made it very difficult for Veoh to climb out of the deep hole it found itself in last year. But it was the Web video start-up, not Universal, that dug that pit.

First, some housekeeping. CEO Dmitry Shapiro now confirms his company’s impending shutdown and Chapter 7 bankruptcy filing.

Plans to either sell or refinance the company came “close, in both cases,” he told me late this afternoon. “But we were unable to secure either option.”

Shapiro didn’t offer any details about the future of the Web site or the videos users have uploaded there over the years. I gather that’s because he doesn’t know himself.

He did, however, sketch out a brief picture of the company’s demise. Like others, Shapiro points out the problems caused by Universal’s copyright suit, which is broadly similar to the one Viacom (VIA) is still fighting with Google’s (GOOG) YouTube.

“Clearly the UMG lawsuit was a tremendous weight on the company. It was both financially draining and distracting, and it choked off the ability for any significant strategic deals, because everybody we talked to was terrified of getting sued immediately,” he said. “And we know that potential investors were thinking that, too.”

But the UMG lawsuit didn’t burn through $70 million of investors’ money. At most, sources say, the company spent something in the $6 million to $8 million range on legal fees.

Where did the rest of the money to go?

To fund Veoh’s YouTube-sized ambitions, apparently. Sources familiar with the company tell me that during its go-go days, it was spending as much as $4 million a month on a bloated staff and infrastructure.

But Veoh only generated something like $12 million in sales over its five-year life, and most of that was in the past couple years, sources said.

Veoh’s burn rate was cut back significantly after the economy crashed. And it shrank even more last April, when Shapiro returned to the company he founded and replaced then-CEO Steve Mitgang.

Could Veoh have raised more money at that point? It’s hard to see how, even if the Universal lawsuit wasn’t hanging over it. It was difficult to raise money for any online advertising venture in the spring of 2009, let alone a money-burning Web video site.

And it’s worth noting that Joost, another well-funded Web video start-up, more or less shut down a few months after Veoh’s restructuring.

On the other hand, France’s DailyMotion managed to raise another $25 million last October. So there are still people out there betting on Web video, and Shapiro says they’re right. But his company was too early, and it grew too fast–and ultimately, not fast enough.

“We were pioneers, and we were there in the first few years when there was no advertising market to speak of,” he says. “Over the next couple years, do I think that more and more brand advertisers are going to move into online video? Absolutely. Online video is going to be a success.”

Veoh, which started as YouTube-style site, has struggled for years to find a business model that works and has burned through $70 million in funding from name-brand investors like Goldman Sachs (GS), Time Warner (TWX), Intel’s (INTC) venture arm, Spark Capital and former Disney (DIS) CEO Michael Eisner.

CEO Dmitry Shapiro declined to comment. He is tweeting, though:

UPDATE: Shapiro is talking now. Here’s my conversation with him, and a blog post he penned himself.

This one has been a long time coming. Last year, the San Diego-based company laid off about a third of its staff, replaced its CEO with founder Shapiro and focused on developing a Web browser-based app. Shapiro has also been actively looking for a buyer, but a copyright lawsuit with Universal Music Group made the site a difficult sale.

The company was buoyed last fall when it effectively won that lawsuit: In a sweeping ruling, a federal judge ruled that Veoh was protected against the music label’s copyright claims by the Digital Millennium Copyright Act.

That decision gave Veoh executives the confidence to try to gather up yet another funding round. And as recently as January, the company thought it might be able to convince its existing investors to pony up yet again.

But that plan collapsed in the past few weeks, sources said. It’s striking that Veoh couldn’t find any buyer willing to pay up for either its technology or its audience, which was supposedly at 25 million uniques last spring.

Here’s a post-mortem from Spark’s Todd Dagres, a Veoh board member:

Both sides filed the requests, as has been expected for some time, at the end of last month and is a sign that years of laborious discovery and depositions have come to a close.

There’s not much to the filings themselves:

• Google’s (GOOG) document reiterates the company’s initial argument. The search giant says it doesn’t knowingly store or play copyrighted clips on the site, and if it does, it is protected by the Digital Millennium Copyright Act. Google also cites last fall’s ruling in the Veoh/Universal Music Group case, in which a court ruled in favor of the video-sharing site.
• Viacom’s (VIA) document reiterates its initial argument, which is that Google and YouTube knew what they were doing and profited from it, which means the DMCA does not protect them. And perhaps it says something more interesting. Hard to tell, since U.S. District Court judge Louis Stanton has redacted more than a page of the document, as you can see here:

Wonder what that says? Me too.

Viacom filing:
Via 1710
Google filing:
Goog1710

And Google (GOOG) appears to have lost a tussle in Italian court today.

Mediaset, a commercial broadcaster controlled by Prime Minister Silvio Berlusconi, has won a copyright-infringement ruling, and a Rome court has ordered YouTube to remove all of Mediaset’s content from the site.

Variety:

The broadcaster began legal action in July 2008 following a trawl through the YouTube site revealed 4,643 clips and 325 hours of unauthorized Mediaset material, the company claimed.

In his written report, judge Tommaso Marvasi referred in particular to the prevalence on YouTube of Mediaset’s Italo version of “Big Brother,” which he described as the most important reality show on Italian television. It is also the Mediaset program most viewed on the Internet.

In a statement, Mediaset said that the ruling was historic because for the first time the rights of the broadcasters and program editors to their exclusive products had been fully recognized.

Mediaset is reportedly looking for more than $730 million in damages, but no word on how that phase of the trial will proceed.

YouTube’s response, via a spokesman:

We are considering our next steps, including a possible appeal. Under European and Italian law, service providers such as YouTube are not responsible for screening the content people upload. But we actually go beyond the law by offering copyright holders effective tools which allow them to manage how and whether their content is made available. It’s a programme called Content ID. More than 1,000 broadcast partners including Rai and Fox Channels Italy have chosen to use it. Mediaset could simply join these other partners and use the tools as well. Alternatively, it would be enough for them to provide us the URLs of the videos and we would remove them.

Win some, lose some. Earlier this year, YouTube–along with most other Web companies that rely on user-generated and/or uploaded content–was celebrating Veoh’s U.S. court victory against Universal Music.

If that ruling stands, it appears to put almost all of the onus on content owners to keep their stuff off of video sites. Which could pose a problem for Viacom (VIA) and its billion-dollar lawsuit against Google.

Warner (WMG) is handing those duties over to Outrigger Media, a New York-based rep firm that specializes in Web media (Outrigger’s preferred description: “Internet video sales and marketing firm”), the companies announced today; oddly, Warner’s release goes on and on without even once mentioning Google (GOOG) or YouTube. Go figure.

I’ll admit that I hadn’t heard of Outrigger before this morning, but I had heard of its CEO, Mike Henry, an ad sales veteran who was previously running ad sales for Veoh, one of the many video sites that aimed to become the next YouTube in the past few years. Turns out, Henry is still running ad sales for Veoh–the company has outsourced its ad sales business to Outrigger.

Warner’s strategy is different from the one rival Universal Music is taking with Vevo, the “Hulu for music videos” joint venture it launched with Sony (SNE), with help from YouTube. Vevo is creating its own in-house salesforce, to be led by Nokia (NOK) and and Viacom (VIA) vet David Kohl.

I can understand Warner’s reluctance to build a salesforce of its own–if you really want to do this stuff right, you’re looking at 20 or 30 people–but it seems that long term, if the labels have a future, it’s going to be primarily as a sales and marketing force, and you’d want to make a bet on that now. It will be interesting to see how this plays out.

Want to see this in action? Go to YouTube and try to find a clip of the Kanye West/Taylor Swift/Beyoncé incident from Sunday night’s Video Music Awards. Everyone’s still talking about it (I don’t know why, really, but I guess I’m out of the demo), but if you want to watch it on YouTube, you’re stuck watching shaky, grainy footage created when people film their TV sets with a camcorder.

That’s the result of Viacom (VIA) and YouTube using the site’s Content ID system–which YouTube installed after Viacom filed suit more than two years ago. Content ID allows YouTube to track copyrighted material on the site as long as the copyright owner tells it what to look for.

It’s not a plug-and-play solution: On Sunday, Viacom had to have staff work through the night to provide YouTube with “reference files” from the live show so that the Google’s video service could find the offending clips and take them down.

But it worked pretty well. Decent-quality clips of the Kanye incident were taken down fairly quickly, and the grainy shots had only generated some 700,000 views by Monday afternoon, according to video-tracker TubeMogul. Meanwhile, MTV’s official version was approaching two million views (it’s now above three million).

You could argue that both Google and MTV would be better served if the official clip was on YouTube. And one day, that might happen. But first, they have to settle their court case.

That looks less likely today than it did a week ago, by the way, because of the recent ruling in the Universal Music/Veoh case. Team Viacom says the case, which appears to be quite similar to its own, won’t have any bearing on the how the company proceeds, while the YouTube guys see it as an affirmation of their position. Translation: More legal back and forth and fewer Viacom clips on the world’s biggest video site.

Here’s one of the low-fi versions, by the way. Not recommended if you’re prone to motion sickness:

Depends on who you ask, of course.

Executives at Veoh say Judge A. Howard Matz has given them a new lease on life, and at least some of the company’s investors are doing some chest-beating. Universal, the world’s largest music label, says it’s confident it will win an appeal.

You can get the same split opinion by asking two different companies that happen to be locked in a similar fight. Executives at Google’s (GOOG) YouTube, which is trying to fend off a copyright suit filed by Viacom (VIA), say the Veoh ruling bolsters their case. You can guess what Viacom says.

The gist of the fight: Universal says Veoh didn’t try hard enough to keep illegally uploaded material off the video site; Veoh says it made a good-faith effort. Matz agreed with Veoh and tossed out Universal’s claims.

Even if you disregard the posturing, it’s fair to say there’s a genuine debate over the ruling’s meaning. Veoh, along with some of my bloggy colleagues, is treating the decision as the final word on Web copyright disputes, or at least those that involve the Digital Millennium Copyright Act.

And Matz certainly slapped Universal around. But it’s worth noting that copyright owners have lost Web cases in the Ninth District before, but ultimately won on appeal. Ask Grokster, the now-defunct file-sharing network that dissolved after a 2005 Supreme Court ruling.

You can read all of Matz’s judgment at the bottom of this post. But this excerpt, in which he argues that simply having illegal material on your site isn’t a crime, and neither is knowing about it (at least, in a general sense), gives you a good idea of Matz’s thrust and tone:

No doubt it is common knowledge that most websites that allow users to contribute material contain infringing items. If such general awareness were enough to raise a “red flag,” the DMCA safe harbor would not serve its purpose of “facilitat[ing] the robust development and world-wide expansion of electronic commerce, communications, research, development, and education in the digital age,” and “balanc[ing] the interests of content owners, on-line and other service providers, and information users in a way that will foster the continued development of electronic commerce and the growth of the Internet.”

Legal debate aside, the ruling does give a practical benefit for Veoh. It allows the company to fetch a higher price on the auction block.

CEO Dmitry Shapiro has been shopping the site to bidders over the summer, and as of a few months ago, he was willing to accept less than the $70 million investors like Time Warner (TWX), Goldman Sachs (GS) and former Disney (DIS) CEO Michael Eisner have poured into the site.

Selling a Web video site in 2009 is a tough challenge without a handicap, but the lawsuit was a big one. It was a huge time-and-money suck–Veoh may have spent as much as $6 million fighting the case in the last two years–and more important, the unresolved case was a huge liability. Who wants to buy a lawsuit?

Now, Shapiro says, Veoh’s options include not selling at all. He insists that some of Veoh’s existing backers are willing to recapitalize the company and that new investors might join in as well.

I’ll take him at his word, but if I had to bet, I’d wager that Veoh ends up getting acquired sooner than later. Maybe quite soon–the company has a board meeting today.

Wonder what they’ll talk about?

VEOH –

Still here? How about that? You get a bonus video! (But be warned: Pacino chews up a lot of scenery here, and there is some impassioned cursing.)

Google CEO Eric Schmidt gave what he just had to know would be a much quoted comment to the Nikkei today, explicitly saying that the company had “begun seriously looking into acquisitions again.”

Music to the beleaguered mergers and acquisitions market, to be sure, especially after a recent uptick from other big companies pulling out their wallets again as the impact of the econalypse subsides.

According to sources, Google (GOOG) is working on at least a half-dozen acquisition deals, most of which are small start-ups in the online advertising and cloud computing arenas.

That would be welcome news for many.

That’s because, as The Wall Street Journal noted in a piece today, “August was shaping up to be the worst month for deal making since 1995, according to data provider Dealogic” (see the chart).

That was, until Disney (DIS) bought Marvel for $4 billion, in a deal announced Monday.

Then yesterday, eBay (EBAY) traded 65 percent of its Skype Internet telephony unit to a group of free-spending private investors, led by Silver Lake Partners, for $1.9 billion.

While eye-popping numbers like that make dealmakers smile, most think it is in the spate of smaller venture-backed companies that more of the action will happen, with big companies like Google, Microsoft (MSFT), Apple (AAPL) and even Yahoo (YHOO) as predators.

Many of these were funded in the Web 2.0 boom and have done well enough, but are figuring out that a link with a larger fish will likely make for a better outcome, along with filling in tech and product gaps at the giants.

Think about Facebook’s $50 million acquisition of social networking site FriendFeed recently and you have the right idea.

According to more than a half-dozen Silicon Valley VCs I have spoken to this week, this is the likeliest kind of exit for a large group of their portfolio companies.

Thus, they are putting on their finest and placing themselves on display in the store window, offering talent and innovation.

“We all realize that a lot of these companies are not going to be independent, so we’re all trying to figure out where they best fit in,” said one VC. “We essentially did business development for a lot of the large companies.”

Thus, here are some companies whose names have been bandied about of late by M&A types who say they are more likely candidates for sale:

Veoh, the Web video portal that MediaMemo wrote about in July, has reportedly been searching for a home for a while now as it struggles in a costly space dominated by giants like YouTube and Hulu.

That goes for many other similar video efforts, such as Joost, Metacafe and Dailymotion, all of which have been trying to gain traction.

There is also likely to be a shakeout in the gaming and “guy” content space, which has also seen a lot of funding in the last several years and less monetary success.

Some possible names here include: Xfire, a gaming instant-messaging company Viacom (VIA) bought a couple years ago for $100 million; Giant Realm, a 20-something guy site funded by Comcast (CMCSA) and others; and UGO, Hearst’s version of a 20-something guy site.

Probably, given the need to focus on monetization, the most active M&A space will be in online advertising.

Sources said Google, for example, has been interested in companies such as Teracent, a dynamic ad-serving and optimization start-up in San Mateo.

There are lots of names in this general arena to pick from, from Tumri to Quantcast to AdMob to the Rubicon Project, not all of which are for sale, but might be for the right price.

Lastly, there is the smart phone and telecom space, where there might be some of the bigger deals.

While Palm (PALM) has been trying mightily to gain traction with its Pre offering, many think that if it does not go as well as hoped, the company will be an acquisition target eventually for giant companies like Nokia (NOK).

While many think Microsoft could also be a buyer of Palm, given the lackluster performance of its Windows Mobile devices, it might be more attuned to a much bigger catch: Research in Motion (RIMM) and its business-oriented BlackBerry empire.

Such a massive acquisition–most of those I bounced that idea off agreed–would be an uphill battle, but it would be perhaps the best fish story ever.

Please see this disclosure related to me and Google.

A few weeks ago, when I was having breakfast with legendary Silicon Valley entrepreneur Marc Andreessen about his new venture fund, he talked about what he thought was critical to being successful as an Internet company.

Ticking off names, from Apple (AAPL) CEO Steve Jobs to Facebook CEO Mark Zuckerberg, Andreessen said he always favored technical entrepreneurs for one key reason: “You need someone who lives and breathes product.”

It’s a refrain I have heard a lot recently from a wide range of people in the sector, most especially when talking about two of the more challenging renovations of key Internet brands going on of late.

That would be: Yahoo and MySpace.

In recent days, the focus at both Yahoo (YHOO) and MySpace, a division of News Corp. (NWS), has been on cost cuts, management rejiggering and, of course, layoffs, as new leaders at each Web giant are trying mightily to push the reset button. (News Corp owns Dow Jones, which owns this Web site.)

No surprise, their efforts have gotten a lot of attention and have been the subject of a lot of coverage (here for Yahoo and here for MySpace).

But, as those clean-up efforts wrap up, both have to show a whole lot more than that if either is to truly succeed at their tasks–which is to make both services much more relevant and exciting in the fast-changing Web arena.

While Yahoo and MySpace remain huge Web properties–and Yahoo, in particular, is very profitable in comparison to most Internet outfits–the widespread perception across the digital sector for too long now is that they are both tired in some significant ways and in desperate need of innovation.

Their big tasks include an overhaul of product offerings and features, a refreshing of brand and, most importantly, a strategic rethink that will set them on a new course for the next several years.

This is not a new thing in the Internet space, which has seen once-popular companies fall by the wayside as their products have gotten dull and consumers weary.

AOL–the Time Warner (TWX) unit whose new CEO, Tim Armstrong, is trying to reinvigorate that iconic but deeply tarnished brand too–is the classic example of this problem. But there have been too many that either hobble along, get subsumed into a larger company or just wither and die.

Sudden death is not likely to be the case for either Yahoo or MySpace, but time is most definitely running out for the pair to show some true product pizzazz and a strategic road map.

At Yahoo, most of the glitter thus far has come from the personality and charms of CEO Carol Bartz (pictured here), who has been hard at work projecting an image of moxie and decisiveness in her efforts to get some momentum at the turmoil-plagued company.

Replacing former CEO and co-founder Jerry Yang, Bartz has largely been busy cutting staff, pruning products that she recently dubbed “space debris” and rounding out her executive staff.

She’s also been prepping a new branding campaign to accompany Yahoo’s overhauled front page, which is set for the fall.

But, as the famous Peggy Lee song (see video below) goes: “Is that all there is, is that all there is?/If that’s all there is my friends, then let’s keep dancing/Let’s break out the booze and have a ball/If that’s all there is.”

But breaking out the booze and having a ball is actually not such a bad idea. To my mind, instead of tweaking what is there and emphasizing what it has been, Yahoo now has the chance to just go for broke and boldly make some dramatic choices.

That is especially true if it forgoes a search and online advertising partnership with Microsoft (MSFT), since Yahoo is going to have to do more than just what it already does better.

Interestingly, it is Microsoft, with its well-reviewed new Bing search service, that seems the most aggressively innovative these days.

So, why not, for example, make a shocking move, say, into the premium online video space? Yahoo certainly could pick up some damaged goods, like Veoh and Joost, on the cheap.

But what about buying the early winner: Hulu?

While the three studios that are its joint owners (the fourth owner is Providence Equity Partners)–News Corp., Disney (DIS) and GE (GE) unit NBC Universal–don’t seem inclined to sell, many sources close to the company said they most certainly would for the right price and perhaps a stake in Yahoo too.

Yahoo has been one of Hulu’s many distribution partners, but that effort has been lackluster. As owner, it would surely point its vast traffic and tech resources at Hulu to good effect.

In this kind of scenario, Google (GOOG) and Comcast (CMCSA) are also contenders for Hulu, but it is only Yahoo that has the truly better record of being able to create, manage and distribute Web content.

Plus, you could call it: HuHoo or YaLu or, better still, HooLu.

There are lots of ideas along these lines for Yahoo, but the overarching idea is to dominate in areas its rivals do not.

For MySpace, which was the dominator until rival Facebook cleaned its clock and then some, it is both a crisis of identity, a broken consumer experience and technology that needs a major overhaul.

It is hard to say what MySpace is, except really noisy. While the music part of that is good, the idea of making it hip again seems well-nigh impossible.

But it could be useful as an entertainment hub where it is fun to be. News Corp. CEO Rupert Murdoch raised this concept recently, in fact, and it is a good one.

That’s because Facebook is aggressively un-fun, with a fascist design sensibility and a thick ethos of utility and enforced busy-ness. Whenever I use it, I always start to feel like I am 23 minutes late.

There really is no good overall and unified entertainment hub on the Web in a massive way–one that aggregates all kinds of interests. I would, for example, love a place where I could easily live in a “Gossip Girl” universe.

Best of all, such a direction moves MySpace well away from Facebook, where is needs to get pronto.

MySpace CEO Owen Van Natta (pictured here) said as much in a memo to employees yesterday:

“As I’ve said before, simplifying and unifying our site is fundamental to our success going forward. MySpace should feel like one platform–not 15 sites loosely stitched together. We consider our diverse content offering a strength but too many logos and disorganized verticals makes the site difficult to navigate and creates confusion about our brand identity. Our users don’t know if we’re a social portal, a music site, or an entertainment hub.”

In her own memo last week, Bartz also talked about the need for speed and definition of Yahoo:

“I’ve noticed that since the reorg, people seem like they’re waiting for something. I’m not sure if it’s a sugar-low or what, but we need to stop waiting and get moving. Good things do not come to those who wait, they come to those who make things happen.”

Actually, per Marc Andreessen, good things come to those who make things. Wonderful things, fun things, memorable things and, if you are Steve Jobs, just one more thing.

Let’s just hope in the case of Yahoo and MySpace, they don’t settle for just any thing.

Until they do that thing they do, here is a catchy video from the movie, “That Thing You Do”:

A good bet: Veoh, one of the best-funded would-be YouTubes. Multiple sources tell me the company is aggressively marketing itself in hopes of finding a buyer.

And if a deal does go through, it will result in a loss for the company’s high-profile backers, who include former Disney (DIS) CEO Michael Eisner and Goldman Sachs (GS). I’m told that CEO Dmitry Shapiro has been shopping the company at prices below $70 million, which is the amount investors have sunk into the portal since 2005.

What happened to Veoh? The same thing that happened to almost every other Web video portal that isn’t Google’s (GOOG) YouTube or Hulu: Not enough audience, not enough ad revenue, too many costs.

Veoh claims an audience of about 25 million users, which is less than auditors like comScore (SCOR) report, and is, in any case, an order of magnitude smaller than YouTube’s. Sources tell me the company lost money on revenue of about $6 million last year. Sales are up and executives are optimistic it could break even this year, but the trajectory isn’t high enough to keep Veoh afloat as an independent company.

Complicating matters for Veoh is a costly court battle with Vivendi’s Universal Music Group, which accuses the company of copyright violations. That two-year-old fight has cost the start-up millions in legal fees.

The fact that Veoh’s backers include media-savvy players like Time Warner (TWX); former Viacom executives Tom Freston and Jonathan Dolgen; and Spark Capital, one of the primary investors in Twitter, hasn’t been enough to help the company extricate itself from the suit.

In April, Veoh laid off a good chunk of its staff, replaced CEO Steve Mitgang with Shapiro, the company’s founder, and focused its energy on a new “Video Compass” player that users are supposed to download and install in their Web browsers.

At the time, Shapiro said that the company’s Web portal business was a success but acknowledged that “quite frankly, there are a lot of things like that.”

So who would buy Veoh? Theoretically, at the right price, the company could be attractive to a large Web player like a Yahoo (YHOO), which used to be a big player in video back when video was a small market. Or the company could try marketing its technical expertise to a cable/telco company like Time Warner Cable (TWC) that hasn’t done much with online video but says it will soon.

But rival Web portal Joost tried making the same pitch to various buyers over the last few months and couldn’t get a deal done. Last week Joost laid off most of its staff and said it would try to go it alone as a services company.

This kind of flux is now par for the course among the big Web portals that thought they could rival YouTube, or at least secure second place. But Google’s lead over everyone else in video gets bigger every day, and its primary competitor is now Hulu, which has the advantage of premium content from its Hollywood owners–Disney, GE’s (GE) NBC Universal, and News Corp.’s (NWS) Fox.

In addition to Veoh and Joost, France’s DailyMotion has swapped out CEOs in recent months and is reportedly looking to raise money. Meanwhile, Metacafe, yet another video hub, has hired boutique investment bank Think Equity to look for “strategic investors to provide expansion capital.”

Metacafe CEO Erick Hachenburg says his company doesn’t need the money and can survive on its own if it doesn’t go ahead with a deal. “You would expect in this marketplace that you’re going to have a shakeout, and the stronger players are going to make it,” he says.

That sounds right. The question is whether we’ll have more than two players left when this is all over.

The service is laying off the majority of its employees, and CEO Mike Volpi (pictured right) is out, replaced by Matt Zelesko, who had been SVP of engineering. The Joost.com portal site will stay open, but best to think of it as an ad for the company’s hosting and distribution services, which it will try to sell to cable companies and the like.

A Joost spokesperson declined to say how deep the layoffs will be; but I’m told that the company, which had more than 100 employees last fall, will be down to a couple dozen after the cuts are done. In a post on Joost’s Web site, Volpi said the company “will say goodbye to many of our colleagues and friends.”

This isn’t a shock: Joost’s fate has been the subject of whisper and rumors for the last year or more. The service made an initial splash in 2007 by raising $45 million from the founders of Skype and an array of high-profile investors and media companies, including Sequoia Capital and Viacom (VIA), and was initially supposed to deliver copyrighted content via a peer-to-peer distribution system and a player that users downloaded to their desktops.

But YouTube, and later Hulu, conditioned users to watch video via their browsers, and Joost’s software never caught on. By last fall, the company had retooled and began offering video via the browser like everyone else, but it has never been able to generate a significant audience. In November, a month after the company launched its Web browser, it said it was attracting 2.1 million unique users world-wide, a fraction of YouTube’s audience, and well behind rivals like Hulu, MetaCafe, Veoh and DailyMotion.

Here’s the service’s unique visitor count, per Comscore (SCOR); Joost’s unique viewer count, which is the more relevant metric for video sites, is considerably smaller (click to enlarge):

Joost has been a frequent candidate for buyout rumors, and the company hasn’t gone out of its way to deny them. The supposed buyers would be cable companies like Comcast (CMCSA) Time Warner Cable (TWC) or telcos like AT&T (T) and Verizon (VZ), which would presumably use Joost’s technical team to help build out their own Web video plays.

But some of the cable guys and telcos insist that they’re fine with the people they have. And if they do want to buy a video player, they have plenty of options: Just about all of Joost’s peers have been on the block, formally or informally, for the past few months.

JOOST TO PROVIDE WHITE LABEL ONLINE VIDEO PLATFORM

NEW YORK AND LONDON – June 30, 2009 – Joost, the online video startup, announced today that, along with Joost.com, it will focus on providing white label online video platforms for media companies, including cable and satellite providers, broadcasters and video aggregators. This technology and service offering will support content owners’ efforts to build comprehensive branded environments online.

Media companies around the world are embracing internet-based video portals as a key path to distribute their premium video, but building a world-class video portal is increasingly difficult and expensive. Joost will focus on this issue and provide the market with a cost-effective, end-to-end solution for media companies to publish video under their own brands.

As a part of this new direction, Joost will reorganize and restructure its business. A core team in New York and London will work on providing these solutions, as well as operating and supporting Joost.com and its associated video applications. Joost also will wind down operations in its Leiden development center.

Matt Zelesko, currently SVP of Engineering at Joost, will take over as CEO while continuing to lead the engineering organization. Stacey Seltzer, currently SVP of international business development and content acquisition at Joost, will run the business operations. Mike Volpi has stepped down as CEO of Joost but will remain actively involved as Chairman of the Board.

Joost plans to make its white label video platform commercially available to media companies around the world. This offering will provide a solution for companies looking to build a branded experience for their content on their own site as well as other sites and platforms in their distribution networks.

Here’s one small step in that evolution: Joost, the once-hyped video site, is going to start selling ads for clips it shows via its Apple (AAPL) iPhone app. Doing the heavy lifting will be FreeWheel, a well-regarded start-up that already handles ad-serving for some of the Web’s biggest video players.

As with video, everyone knows the mobile ad market will be worth something–maybe a lot–one day. But right now, there’s no there there. The Internet Advertising Bureau, for instance, doesn’t even bother to break out mobile ads in its annual breakdown of digital marketing spend.

Still, Joost needs any boost it can get: Like a lot of other video start-ups in the past few years, the company has raised an awful lot of money but hasn’t made much of a dent in the market. Maybe it can get some traction by staking an early claim to mobile video. Last week, Veoh, another well-funded video site chasing after the same eyeballs, made drastic cuts to its staff and announced that it would put its resources into a new browser-based app.

Separately, the Joost announcement is a nice get for FreeWheel, which is staffed by veterans of Google’s (GOOG) DoubleClick, and which last I heard, was looking for a significant funding round.

Welcome once more to Weekend Update! I’ll be filling in today for your regular host, Beth Callaghan, who’s on vacation.

And what sane person wouldn’t be, after the slew of Silicon Valley silliness inspired by April Fools Day this past week? Digital pranks were the name of the game as Google (GOOG) and others heaped so many tepid hoaxes upon us that we wanted to call April Fold so as to quickly end this round of gags.

But no bag of tricks was needed for one Web site to April Fool itself into crying wolf about an imminent Google (GOOG) acquisition of Twitter, when a real story around the corner was aboutGoogle turning Turbo Tax tweets into ads.

Meanwhile, one of the biggest jokesters of them all, The Onion, won one of the biggest awards in journalism, a Peabody, meaning that the best sense of humor goes to that panel of judges. And to Stephen Colbert, who was willing to entertain (for a while) Twitter spokesmodel Biz Stone’s biz-model-less thoughts in an interview on “The Colbert Report.” Also on BoomTown this week: Facebook’s former CFO Gideon Yu is out, as was a leaked memo from Mark Zuckerberg about Yu’s departure and the company’s situation.

A sense of humor is certainly an invaluable feather to have in your cap these days. Digital Daily wrote about the most recent doom-and-gloom predictions and events to happen in this econalypse, like analysts’ predictions of YouTube losing $470 million in 2009, the barren IPO-less wasteland VCs are bemoaning and a major global slump in semiconductor sales. Other headlines weren’t quite so dreary: Google’s foray into VC land, the folks at BlackBerry HQ celebrating surprisingly good fourth-quarter results and the world’s worst-kept secret, the anticipated merger between IBM (IBM) and Sun (JAVA).

There was a similar mix of dark clouds and silver linings over at MediaMemo. The National Collegiate Athletics Association forced Twitter and partners AT&T (T) and Federated Media to take down one of its first ad campaigns, “March Tweetness,” crying copyright foul. Also running afoul with big companies in legal waters, free music Web site Seeqpod filed for bankruptcy. And video site Veoh laid off a significant amount of staff and kicked out its old CEO, replacing him with founder Dmitry Shapiro and refocusing the company on its “Video Compass” browser plug-in.

Online video is generally a turbulent space these, but the waiting is the hardest part for Hulu when it comes to the rumored Disney deal in which Disney (DIS) seems to be playing the field. Other gems of the week were URL-shrinking Web service bit.ly’s raising of $2 million and media mogul Rupert Murdoch’s Kindle envy.

In a new Mossblog, Walt Mossberg gives us his first impressions of the BlackBerry App World store in which Research in Motion (RIMM) takes a bold step into what was formerly the sole domain of Apple (AAPL). In Personal Technology, Walt reviews a network hard drive from Western Digital (WDC) that makes the technology gloriously simple for everyone. And in Mossberg Solution, Katherine Boehret takes a look at several laptop trays, designed to protect the–ahem–family jewels and family members in general from laptops’ scorching undersides.

Finally, our exciting Woz-watch, after many weeks, has come to a sad end: Steve Wozniak was voted off “Dancing with the Stars” this week after one misstep too many. Down, but not out, the Apple co-founder swore that the “geeks shall inherit the earth”… just not the dance floor, any time soon. Please.

More next week.

Shapiro says the company, which has been primarily focused on playing video and selling ads on its own site, will now be concentrating on a new “Video Compass” player that users will have to download onto their Web browsers.

Shapiro says the company is laying off 25 people and will have a staff in “the mid-40s” when the restructuring is over. That’s less than half its size in June of last year, when the company raised another $30 million, bringing the total capital it has raised to $70 million. At the time, Veoh’s investors–which included Goldman Sachs (GS), Intel (INTC), Time Warner (TWX) and Spark Capital–valued the company at about $125 million, pre-money. VentureBeat first reported the layoffs and restructuring last night.

But Veoh’s video Web browser is one of several players in a field dominated by Google’s (GOOG) YouTube, and now Hulu seems to have established itself as a clear second place.

Comscore (SCOR) says Veoh’s audience peaked in March of last year, when four million viewers watched 33.7 million videos on the site. It says that by February of this year, Veoh’s audience had shrunk to two million viewers watching 16.5 million videos. Every Web publisher disputes third-party measurements, but in this case, Veoh says Comscore’s data are way off: It says it has 23 million unique users watching 200 million videos.

Shapiro insists that the company will continue to support its original video site, but argues that there are more opportunities with its new browser plug-in, which suggests videos to users who are searching for things on other sites. So if a Compass user was searching for, say, “CSI” on Google, it’s possible that the Compass plug-in would offer up a clip or episode of the CBS (CBS) show, via a player that would launch on top of the site.

“The website is extremely mature. It’s been around for 3 and a half years. It’s extremely successful,” Shapiro said. But “quite frankly, there are a lot of things like that. We love it and will continue to invest in it. It’s just that we also see that we have something that no one else has in Compass, and we’re saying we are going to be investing in and supporting that.”

Mitgang came to Veoh in July 2007 from Yahoo (YHOO), and shortly after that the company became enmeshed in a high-profile copyright lawsuit with Universal Music Group. The suit is still ongoing, and though Veoh has won several recent points, people familiar with the company tell me that the legal bills have been significant. I asked Shapiro if the cost of the suit had anything to do with the restructuring, but he declined to comment.

Here’s the press release:

VEoh NETWORKS TO Intensify FOCUS ON ITS SUCCESSFUL
VEOH VIDEO COMPASS™

Company to Streamline Efforts around Omnipresent Video Discovery

SAN DIEGO, CA (April 1, 2009) – Veoh Networks, one of the leading innovators in the online video arena, announced today that the company will be focusing its efforts around its highly successful Veoh Video Compass™ application.  Video Compass is a browser plug-in that makes video discovery a truly seamless experience, enabling video to be played while on every major search engine, portal and commerce site.  It enhances the browsing experience by surfacing recommended videos that are relevant to a consumer’s search terms.  These video recommendations – based on the viewing behavior of millions of online video users – make it easy for consumers to discover and watch videos from an index of millions of videos from around the Internet.  Veoh adds over 25,000 new Video Compass users daily and supports millions of recommendations each day on major web sites such as Google, Yahoo!, YouTube, Ask, MSN, Amazon, IMDB, Craigslist, eBay, Wikipedia, etc.

Meanwhile, Veoh.com, the company’s popular video portal, continues to generate more than 200 million video streams each month from a wide range of independent and traditional content publishers such as ABC, CBS, ESPN, Viacom, and Warner Bros.  The site reaches over 23 million unique users each month with average engagement time at more than 100 minutes per user, and helps dozens of blue chip advertisers reach a broad and highly targeted audience.

As part of Veoh’s continued focus on innovation, Dmitry Shapiro, Veoh’s Founder and Chief Innovation Officer, will be stepping in as CEO.  Shapiro replaces Steve Mitgang.

Shapiro stated, “Veoh was founded in early 2005 when video on the Internet was at its very beginnings.  Today after four years of being a pioneer in the online video space, we know a tremendous amount of what viewers, publishers, and advertisers want.  We have always believed that video discovery and personalization are ultimately the important problems to solve in the world of billions of videos, and have invested heavily in technologies to support that belief.  Video Compass is the latest innovation from Veoh that makes video discovery omnipresent.”  Video Compass can be downloaded at http://www.veoh.com/videocompass/.

As part of this new concerted effort, Veoh will be streamlining its organization to better enable the company to focus on providing compelling offerings to consumers, partners, and advertisers.

About Veoh Networks
Veoh Networks is an innovative Internet Television company that delivers broadcast-quality video programming via the Internet. Veoh has more than 100,000 content publishers – from CBS, Viacom’s MTV Networks, ABC, Warner Bros. Television Group, ESPN and Lions Gate to thousands of independent filmmakers and content producers.  For advertisers, Veoh offers compelling ways of engaging with a targeted audience and measuring performance of their ad buys.

Veoh Networks is a privately held company that is backed by leading technology and media investors, including Shelter Capital Partners, Spark Capital, Michael Eisner’s Tornante Company, Goldman Sachs, Time Warner Inc., Intel Capital, Adobe Systems Incorporated, Gordon Crawford, Tom Freston and Jonathan Dolgen. The company’s principal offices are in Los Angeles and San Diego, California.