To provide a little background information: Veoh was a video-sharing site that ran into eventually-crippling problems over its right to show music videos.  But Veoh was quite successful for a time, chalking up over 23 million unique visitors one month.

By comparison, MySpace Music, which is now the second most visited music site, draws around 30 million unique visitors per month.

Shapiro should be more than capable of keeping MySpace Music in working order, then, and could be an asset in many other ways, as well.  Which is good, because MySpace said in a statement, "Shapiro will be responsible for all aspects of technical developments for the MySpace Music platform, including the next iteration of artist profiles and tools as well as the overall music experience on MySpace."

Shapiro then gave a vague hint regarding what he has in mind by saying, "The next phase of digital music’s evolution will bring artists and music lovers closer together."

Veoh launched in 2005 and its backers included Shelter Capital, Spark Capital, Michael Eisner’s Tornante Company, Goldman Sachs, Time Warner, Intel Capital, Adobe, Gordon Crawford, Firefly3 and Jonnathan Dolgen. Those backers supported Veoh with $70 million in investments.

Dmitry Shapiro, CEO and founder of Veoh, said part of the company’s problems were due to a costly legal battle with Universal Music Group over copyright infringement and the challenging economic environment.

"Unfortunately, great vision, a passionate team, tens of millions of users, millions in revenues and victory in court were not enough," Shapiro wrote in a blog post.

"The distraction of the legal battles, and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy."

Under Chapter 7 bankruptcy, Veoh will sell its assets and will use the money to repay its creditors.

Shaprio said Veoh had 28 million users per month, he did not provide details about the future of the site and what will happen to its content.

"This chapter of our lives has come to an end, but a bright new chapter will soon begin, and I assure all of you reading this, that we have lots of important work ahead of us.  Stay tuned, you will hear from us again!" Shapiro wrote.
 

According to Reuters, LinkedIn’s workforce was reduced in size by about ten percent.  There’s no word as to what departments were affected, but such a large number seems to signify a tightening-up in multiple areas.

The situation looks even more grim at Veoh, where 20 percent of the company’s employees were laid off.  CEO Steve Mitgang explained to Liz Gannes, "We have to make sure we have enough capital to weather the [economic] storm and ensure that we are operating with an efficient footprint."

Which brings us to the last layoff story we have today – the one involving online shoe retailer Zappos.  Aside from allowing for an easy segue, Zappos belongs in this article because its employees are using Twitter to chronicle the process.  (And Twitter, they should know, is hiring.)

A check on the markets reveals the final two issues: the Dow and the Nasdaq are down about 5.35 percent and 4.45 percent, respectively.

Veoh found that what it calls " engaged viewers" (those who watch more than an hour of online video a week) make up nearly 40 percent of all online video viewers and watch close to 75 percent of all online video.

Engaged viewers are more likely to watch videos all the way through, pay more attention to online video than they do to TV and are more likely to rate the videos they watch more frequently.

Over half (61%) of engaged viewers expect to spend a greater amount of time watching online video in the next year. Demographically engaged viewers are 13 to 24 year-olds and make up only 15 percent of the online population, but represent more than 35 percent of engaged online video viewers.

The study broke down engaged viewers into three sub-groups based on time spent watching video, types of videos watched, sharing of videos, and the amount of attention paid to online video compared to TV.

 "Watchers," those who spend just over an hour viewing video each week, don’t engage in the experience deeply by controlling playback and sharing videos.

"Controllers," those younger viewers who take an active role in controlling their video experiences and feel that online video is important to their lives.

The last sub-group, "Connectors" make up just 7 percent of online viewers, but consume 20 percent of all online video and do 42 percent of all online video sharing.

"As online video viewing continues to grow as a primary source of entertainment, it will create many new opportunities for content providers and advertisers alike to reach engaged, influential audiences," said Steve Mitgang, CEO of Veoh Networks.

"Now is the time for advertisers to re-think their approaches to marketing in online video in order to captivate these valuable viewers as they drive online video into a mainstream entertainment medium."
 

The copyright infringement suit was filed by adult entertainment company Io Group, and the complaint argued Veoh had not done enough to prevent users from uploading copyrighted clips of 10 Io adult sex films.

Judge Howard Lloyd of the U.S. District Court for the Northern District of California ruled that Veoh actively policed the site to protect copyright owners and qualified for "safe harbor" protections of the Digital Millennium Copyright Act (DMCA).

"The issue is whether Veoh takes appropriate steps to deal with copyright infringement that takes place. The record presented demonstrates that, far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its website," the judge wrote.

Io argued that Veoh should have to prescreen videos to avoid copyright infringement.
"The court finds no reasonable juror could conclude that a comprehensive review of every file would be feasible,"the judge wrote.

The decision provides a measure of hope for YouTube, which is facing a $1billion lawsuit for copyright infringement filed by Viacom.

"It is great to see the Court confirm that the DCA protects services like YouTube that follow the law and respect copyright," YouTube Chief Counsel Zehavah Levine said in a statement.

"We work every day to give content owners choices about whether to take down, leave up, or even earn revenue from their videos, and we are developing state-of-the-art tools to let them do that even better."

The network will offer full-length episodes of prime time shows including "Lost," "Desperate Housewives" and "Grey’s Anatomy."

Veoh’s content includes user-generated clips along with content from major media companies like CBS, Viacom’s MTV Networks and USA Network. Veoh is backed by former Disney CEO Michael Eisner and other private investors.

ABC’s agreement with Veoh is the second deal to offer free, ad-supported content on a site besides its own. ABC reached a similar agreement with AOL last year. Financial details have not been released, ABC said it was paying Veoh based on the traffic it sends to the ABC.com site. Veoh will promote ABC’s content on its home page.

"These types of partnerships allow us to reach our fans and viewers in a much deeper and more meaningful way," Matt Murphy, the senior vice president for digital media distribution at Disney and ESPN Media Networks, told The New York Times.

Murphy said the network was considering other content deals with YouTube and Hulu.

Dmitri Shapiro, Veoh founder and chief innovation officer, said networks are eager to enter into distribution agreements. "You are practically seeing a mad rush of networks clearing rights and digitizing their shows and getting partners to showcase their shows," said Shapiro. "They now realize that most of their viewership happens outside their own sites."

The BBC has data from Nielsen Online and Pew Internet Project which points to an unusual jump in online video viewing in the past two months.

The on-going writers’ strike has meant that many popular programs are currently off-air in the US and, according to Nielsen Online, this has seen Americans turn in large numbers to online alternatives.

Its figures show that YouTube’s audience was up 18% in the two months after the strike started, and newer video-sharing sites such as Crackle have also experienced unprecedented growth.

I just don’t get it. The writers’ strike means that we’ve lost a lot of quality TV shows, so why would we fill the void with the kind of junk that gets posted to the web? Don’t get me wrong, I love watching online video content, but not as a replacement to quality TV programming.

There are plenty of other reasons why web watching has increased–maybe it’s all of the presidential election coverage that’s online. Until I see numbers that show a direct correlation between increased online video viewing during prime time hours–7 pm to 10 pm–I’ll be unconvinced of the connection.

What do you think?

Comments

Pixsy’s technology crawls the Web hourly, aggregating and categorizing video and image results. The Veoh deal includes stand-alone fees and revenue sharing. Veoh can still work with other video search partners, but Pixsy is its exclusive image provider.

Pixsy CEO Chase Norlin told Media Post," We’re in the business of helping sites like Veoh profit from image and video search, the fastest-growing search verticals. We’re getting these sites in the search business, which everyone understands and knows how to monetize."

Last month Veoh announced that several media, entertainment and finance industries had joined its team of investors. They included Goldman Sachs, FireFly3 and Jonathan Dolgen. Veoh’s Series C funding closed in August 2007, and it received $25 million in financing.

Veoh is currently involved in a suit against Universal Music Group to reinforce its rights as copyright compliant company under the safe harbor provisions of the Digital Millennium Copyright Act (DMCA).

Veoh’s user base reached 18 million unique users in August 2007, up from 4.4 million users when the site launched in February 2007.

The investors include Goldman Sachs, former Viacom and MTV Networks CEO Tom Freston’s FireFly3 LLC, and Jonathan Dolgen. Previous financial backers include Shelter Capital Partners, Spark Capital, Michael Eisner’s Tornante Company and Time Warner Investments.

"As Internet television is becoming an increasingly large part of viewers’ media experience, it’s important for traditional and new media companies to work together to deliver the most engaging content possible," said Steve Mitgang, CEO of Veoh Networks.

"These new team members, along with our existing advisors, will help us build the bridges between historic and emerging media business models that are necessary to drive even more innovation and greater variety in Internet Television."

Veoh’s Series C funding closed in August 2007, and it received $25 million in financing. The company’s user base reached 18 million unique users in August 2007, up from 4. 4 million users when Veoh launched in February 2007.

Peter Perrone, Vice President at Goldman Sachs, said,"Veoh is a clear leader in Internet television. Their rapid traffic growth reflects a unique and innovative platform that offers tremendous value to consumers, publishers, and advertisers. We look forward to helping drive this next phase of growth."

As you might have guessed (or remembered from our previous coverage), the new suit relates to copyright infringement.  “Veoh follows in the ignominious footsteps of other recent mass infringers such as Napster,” stated Universal in its legal complaint.  “Veoh’s rampant infringement will not stop until Veoh, and those who own, control, and run it, are enjoined and held financially responsible.”

Those aren’t the sorts of words that any site wants to hear from a corporation as powerful as Universal.  Bloomberg’s Edvard Pettersson pointed out that Veoh has some strong supporters, including Time Warner and Michael Eisner (as well as Tom Freston), but still . . .

Veoh’s doing its best not to blink, though.  CEO Steve Mitgang even issued a statement to Wired’s David Kravets that appears to call Universal “ignorant.”  “UMG’s action is not surprising and reflects their limited understanding of Veoh and of the online video space as a whole,” he wrote.

It’ll be interesting to see how this all plays out.  Following a similar suit, Warner Music Group and Imeem somehow managed to resolve their differences and form a partnership, but on the other end of the spectrum, Bolt.com recently dropped dead.