Just like Andrey Ternovskiy‘s creation, the site lets strangers find each other via webcam, only this time – and similar to vChatter, which also powers social network Bebo’s own take on the idea – users have to log-in via Facebook, therefore insisting on a certain amount of real identity accountability. There’s an over eighteen user policy too and users also specify whether they’d like to chat to women, men or either. The site’s founders have an online dating site background.

Pitching security as Natter’s highest priority, Natter also introduces an element of gaming metrics to encourage good behaviour. And I can see it potentially working, should the site get traction of course.

After selecting the type of person a user is interested in meeting – base purely on gender – and the location of that person, limited to same country or worldwide, they are paired up with somebody else for the minimum 1 minute of webcam chat. If both make it past that, they rack up a ‘Natter Point’ each. The more points acquired over time, the safer or more fun or more “interesting”, the user is deemed to be. Thus there is an incentive to go beyond ‘doing a Chatroulette.’

That’s certainly progress.

Since then, of course, Bebo has seen another change of hands: After being left to languish by AOL, who eventually shut it down for tax purposes, the social network was sold to Criterion Capital Partners for about $10m in June of this year.

In his new role as strategic advisor, Birch will provide Bebo with his “expertise and eye for product innovation”, according to the press release. He’ll be working alongside CEO Adam Levin, newly hired chief product officer Kevin Bachus (one of the co-creators of Xbox) and CTO Akash Garg, co-founder of Hi-5. That’s a team with plenty of pedigree in the social web and consumer space.

Commenting on his return to the company, Birch talks up the opportunity to “re-invent Bebo” in a way that approaches social from a “different perspective” to create a “viable alternative to the now established market leaders.”

That’s likely coded language for how to taken on and differentiate Bebo from Facebook, both in the minds of consumers and advertisers alike.

A quick re-cap: After Bebo sold to AOL for $850 million in 2008, the platform was left to languish, with AOL eventually shutting it down for tax purposes and selling it for about $10m to Criterion Capital Partners. However, as we recently reported, the new team of 20 or so employees (and growing) has already made the site profitable and it’s now coming back in user numbers. Today’s news is another sign that the social network has a new spring in its step.

While bChat has some of the fun randomness of Chatroulette-style video chat, as you’d expect it has built in safety measures and taps into Bebo’s existing profile data to ensure that connections are better targeted. This is based on social preferences, geography, age and interests. VChatter was chosen to power the feature because of its focus on “safe social video chat”, including mechanisms to monitor user activity. We’ll see how well that works out.

In terms of support for video chat, this is just the beginning for Bebo. It says that it plans to extend the service to enable one to one and private video conferencing in 2011, and will soon announce “a new search, discovery and sharing interface for volumes of new video sources” in the coming weeks.

Who woke the dinosaur?

This is Bebo’s first step towards a much more real-time, interactive platform since they sold to AOL for $850 million in 2008. Right after that AOL let the platform languish, eventually shutting it down for tax purposes and selling it for about $10m to Criterion Capital Partners. True story.

The new team of 20 or so employees has – surprise surprise – made the site profitable and it’s now coming back in user numbers. Mike Arrington’s recent interview with CTO Akash Garg suggested they’d be going for “Self expression, mobile and video will be strong components.” Clearly IM and Meebo is part of that.

Bebo is like a bad case of herpes – it just keeps coming back. They sold to AOL for $850 million in 2008. Then AOL, under new management, sort of just shut it down for tax purposes, selling it for next to nothing to Criterion Capital Partners. AOL CEO Tim Armstrong called the whole thing a huge distraction.

But if you think you’ve seen the last of Bebo, you’re wrong. A whole new team is in place, and with just 20 or so employees the site is profitable and growing with 6 millionish active users. So what next?

That’s exactly what I asked CTO Akash Garg today at Google Zeitgeist in Phoenix, Arizona. The interview is below.

How will Bebo carve out a place for itself in a Facebook world? Tagged seems to have done it by focusing on dating. Garg says the team is currently deciding what’s next. “Self expression, mobile and video will be strong components,” he says. But beyond that he won’t elaborate.

And when I asked if Bebo cofounder Michael Birch is involved with Bebo today, the answer was clear: “Michael Birch is not involved in any official way right now.” Is he involved unofficially? Watch below to find out.

To remind you: AOL paid $850 million for Bebo back in 2008. Ouch indeed.

In a press release that just went out, Criterion acknowledges that it has acquired the Bebo business from AOL and that it will “assume the rights and complete operating control over the global social platform business”.

The acquisition and financing was led by CCP partner Adam Levin in partnership with business strategist Paul Abramowitz and web entrepreneur Richard Hecker.

Criterion Capital Partners will take over Bebo’s global operations immediately and retain its San Francisco-based headquarters.

Exact terms of the deal are not being disclosed by either party, but AOL CEO Tim Armstrong sent a note to all employees this morning that suggests our earlier reports that the ability to offset almost the whole sum it paid for Bebo as a tax loss played a big role are correct.

A couple of paragraphs from said note (emphasis ours):

In April we communicated the fact that Bebo was among the assets we
would be not be keeping as part of our main portfolio of businesses.
At that time, we indicated that we hoped to finish our strategic
evaluation by the end of May, which we did. Today we are announcing
that we completed the sale of substantially all of the assets of Bebo,
Inc. to Criterion Capital Partners, LLC.

This sale is important for Bebo’s users and for AOL. The deal will
allow Bebo’s users to remain within the social platform that they know
and love, while enabling a new owner to bring new possibilities and
experiences to bear. Criterion Capital Partners are specialists in
facilitating growth plans and turnarounds and are well placed to drive
Bebo’s effort to strengthen its foothold within the highly competitive
social networking arena.

For AOL, the transaction will also create a meaningful tax deduction,
which should allow us to more effectively manage our tax strategy.

That’s just a bit less than the $850 million AOL paid for the social network in 2008. And as decimated as Bebo is, it’s almost certainly worth more than $10 million.

But the deal will also give AOL the ability to write off the full purchase price of Bebo for tax purposes, which we wrote about in March:

Despite that value, Aol’s best financial option for Bebo will likely be to abandon it rather than sell it, say corporate tax experts we’ve spoken with.

Here’s why – complicated corporate tax rules will let Aol write off the full purchase price of Bebo if they declare it worthless and abandon the asset. With Aol’s effective tax rate of around 45%, that’s $380 million and change in their pocket in taxes that they’d be able to avoid.

A sale of Bebo would almost certainly be less attractive. If someone were to pay them $100 million for the service, which is optimistic, Aol could still offset the remaining $750 million as a tax loss. But it could only apply against long term capital gains, and Aol doesn’t have any to offset against. They’d have to carry that loss forward and hope for future gains to offset it against.

One corporate tax attorney we spoke with wouldn’t discuss Aol specifically, but did confirm the logic of the approach. Bryan Smith, a partner at Perkins Coie, says “Without getting into any specific facts or companies, it will often be more attractive for a U.S. corporation to simply shut down a subsidiary and claim a deduction for the worthlessness of the stock against ordinary income instead of selling the stock at a distressed price and taking a capital loss, which may only offset capital gains.”

In April AOL confirmed that they were going to sell or abandon Bebo. This sale, we’re hearing, still allows AOL to write off the purchase against ordinary income, meaning they may save hundreds of millions of dollars in corporate taxes.

We’ll update with more information as we get it.

Update: From AOL -

CRITERION CAPITAL PARTNERS ACQUIRES BEBO FROM AOL

Los Angeles, CA – June 17, 2010 – Criterion Capital Partners, LLC (CCP), a merchant banking and financial advisory firm based in the United States, announced today that it has acquired the Bebo business, the youth-centric social media network, from AOL Inc. As part of the deal, CCP will assume the rights and complete operating control over the global social platform business.

The acquisition and financing was lead by Adam Levin, managing partner at CCP, in partnership with accomplished business strategist Paul Abramowitz and web entrepreneur Richard Hecker. CCP will take over Bebo’s global operations immediately and retain a San Francisco-based headquarters. Exact terms of the deal are not being disclosed by either party.

“The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform both as a standalone entity and in the context of our broader investment objectives,” said Levin.

“Criterion Capital Partners are specialists in facilitating growth plans and turnarounds, and are well placed to drive Bebo’s effort to strengthen its foothold within the highly competitive social networking arena,” said Tim Armstrong, Chairman and Chief Executive Officer, AOL.

Bebo launched in 2005 and was acquired by AOL in March 2008 for $850 million. It is a social media network that combines community, connections, self-expression and entertainment via a range of social tools, games and a growing mobile platform. Bebo has a strong user base across the globe, including in the U.S., the UK, Ireland, Australia, New Zealand, Canada, Poland, France, Germany, Italy, Spain, India, Pakistan and the Netherlands.

About Criterion Capital Partners, LLC
Criterion Capital Partners is an integrated advisory and consulting firm serving U.S. and international clients who seek the preparation and implementation of APOs, outsourced business development, acquisitions or marketing strategies – executed concurrently with the organization and structuring of capital procurement. Led by Adam Levin, CCP delivers objective thinking, proven practices and best-of-breed partners to help clients achieve their specific development and financial goals.

Which, if the case, would imply that Google should be considerably worried about its future battle with the likes of Facebook and Twitter, as online marketing spend will surely follow Internet foot-through. Or does it?

According to Hitwise, during May, social networks accounted for 11.88% of UK Internet visits and search engines accounted for 11.33%, representing the first ever month that social networks have been more popular than search engines in the UK.

At this point, it’s worth noting that Google-owned YouTube is lumped into the social networks group – is YouTube really a social network? – so that in itself significantly skews the results. But, nonetheless, social, and in particular Facebook and Twitter, continue in its ascendancy.

Facebook now accounts for 55% of all UK social networking visits, almost three times as many as the next most popular social network, which Hitwise pegs as YouTube. Twitter, on the other hand, is now the third most popular social network in the UK, putting it ahead of Bebo (no surprise) and MySpace, which seems pretty significant considering how popular the Murdoch-owned property once was with Brits.

Robin Goad, Research Director for Hitwise, comments: “although social networks and search engines perform different functions, they both act as gateways to the wider Internet. This data perfectly illustrates the key role that social media now plays in so much online behavior.”

But the money isn’t yet following, with Goad noting that “the majority of online marketing spend is currently diverted towards search, and this is likely to remain the case in the short to medium term.” Search remains the “primary source of traffic for most websites”, particularly e-commerce, such as online retail, finance and travel.

“Many marketers and brand owners have yet to grasp the full potential of social media marketing, but spending on the channel will increase as more proven success stories emerge.”

Success stories, you say.

But can social media marketing really overcome the issue of intent? Too often, ads on YouTube and Facebook work like traditional advertising, forcing themselves onto people and interrupting the conversation or getting in the way of the content. Not only is it an issue of obtrusiveness but that advertising is out of kilter with the user’s self interest.

However, when a user searches on Google, there is an intended action at the end of it, which is very often making a purchase or researching one. In which case, the interests of the user and advertiser are perfectly aligned.

Nobody is interrupting anyone.

Regardless of today’s report, it’s only once somebody really figures out how to tap into intent on Facebook that Google should be worried.

Very worried.

(Cue social media and WOM marketeers to tell me why I’m wrong.)

Straight from the horse’s mouth: AOL CEO Tim Armstrong just told the TechCrunch Disrupt audience what most industry watchers already knew: the company made a strategic mistake in acquiring social network Bebo, and it ended up being a “major distraction” for them.

Armstrong admitted that it would have been very hard to make Bebo work right out the gate no matter what, and that probably the deal shouldn’t have gone through in the first place, given technology and other issues.

About the only good thing that came out of it, Armstrong acknowledged, was Lifestream.

Michael Arrington asked Armstrong in an on-stage interview whether AOL is still in the process of shutting down or actively trying to sell Bebo, but the only response he got was that the company is still in the middle of the whole ordeal, with no further comment.

My educated guess is that we’ll find out what Bebo’s future will look like soon enough.

Punktilio, whose clients include Arsenal F.C, Harper Collins, Phones 4u and Simon Cowell’s SyCo Music label, was founded by ex-Bebo Head of Music, Hal Stokes, so there’s an existing relationship between the two. Stokes launched Punktilio with his brother Sam after leaving AOL last year.

AOL of course purchased Bebo for $850 million in March 2008, and is only now looking to shut down or offload the site, which has suffered badly in the last few years with the rise of Facebook.

Stokes says of Birch’s investment in Punktilio: “The Birch deal means we can now compete with the big oil-tanker agencies that are progressively moving into the social space. Social media is the glue that binds digital and ATL marketing together; it’s our intention to be the leaders of that booming reality – from creative to strategy, media buying to app builds.”

While Birch adds: “The social space is now a visible reality, and it’s only going to get bigger. Few people truly understand it, particularly from a brand perspective but everyone involved with Punktilio has worked on both sides of the fence so the knowledge and skills are unparalleled.”

How do you handle that awkwardness? Send out a mass email to all open media partners to explain the situation:

———- Forwarded message ———-
From: [Bebo]
Date: Fri, Apr 9, 2010 at 1:22 PM
Subject: Important News From Bebo

Dear Open Media Partners,

First, I’d like to thank you for your support of Bebo.

The end of last year brought with it many changes to our business, both difficult and exciting, including the successful spin-out of our parent company AOL and a new strategic direction. Set out in May 2009 this strategy leverages AOL’s core strengths and scale in quality content, premium advertising and consumer applications, positioning it for the next phase of growth of the Internet.

We also made a commitment to keep the lines of communication open as we worked to arrive at a strategic resolution for Bebo and today I’m reaching out to let you know that in an annual filing for Bebo made this week, AOL indicated that it is currently evaluating strategic alternatives with respect to the Bebo business, which could include a sale or shutdown of Bebo in 2010.

Social networking remains a space with heavy competition, where scale defines success, and unfortunately AOL is not in a position to further fund and support Bebo in pursuing a turnaround in social networking.

The decision to move forward at this point on Bebo was not made lightly and AOL is committed to working quickly to determine if there are any interested parties for Bebo. The company’s current expectation is to complete our strategic evaluation by the end of May 2010 and we hope that by sharing what we can, when we can, it helps to relieve any uncertainty about what’s ahead.

In the interim I wanted to assure you of our continued commitment to your organization and we will come back to you as soon as we are able to move forward.

AOL has long regretted its $850 million purchase of social network Bebo, and ever since CEO Tim Armstrong came on board it’s pretty much been left to die on the vine. AOL is preparing a filing in the UK to alert regulators there of its plans to either sell or shut down the site. While a sale seems like the logical way to go, Bebo is pretty much worthless now and for tax reasons it might make more sense to simply shut it down.

In an email sent out to employees today, AOL explained:

As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.

AOL has been thinking of selling Bebo for more than a year, and already wrote down much of the acquisition. So it already swallowed the loss. The only question now is what is the most efficient way to dispose of it.

Photo credit: Flickr/Hoggarazzi

Newly independent Aol is still struggling with the fate of Bebo, the social network they acquired for $850 million in 2008.

No one argues that Aol underpaid for Bebo. And the social network has fallen from 22 million monthly unique visitors when it was acquired to just 14.6 million today (Comscore worldwide). But even so, Bebo clearly has some value on the open market.

Despite that value, Aol’s best financial option for Bebo will likely be to abandon it rather than sell it, say corporate tax experts we’ve spoken with.

Here’s why – complicated corporate tax rules will let Aol write off the full purchase price of Bebo if they declare it worthless and abandon the asset. With Aol’s effective tax rate of around 45%, that’s $380 million and change in their pocket in taxes that they’d be able to avoid.

A sale of Bebo would almost certainly be less attractive. If someone were to pay them $100 million for the service, which is optimistic, Aol could still offset the remaining $750 million as a tax loss. But it could only apply against long term capital gains, and Aol doesn’t have any to offset against. They’d have to carry that loss forward and hope for future gains to offset it against.

One corporate tax attorney we spoke with wouldn’t discuss Aol specifically, but did confirm the logic of the approach. Bryan Smith, a partner at Perkins Coie, says “Without getting into any specific facts or companies, it will often be more attractive for a U.S. corporation to simply shut down a subsidiary and claim a deduction for the worthlessness of the stock against ordinary income instead of selling the stock at a distressed price and taking a capital loss, which may only offset capital gains.”

If Aol were to abandon Bebo they couldn’t pull any of the assets of the company back into Aol, say the experts we’ve spoken with. Otherwise it becomes a non-taxable liquidation. If Aol had debt or preferred stock on the books with Bebo, though, they could pull out assets to offset that liability.

If the title sounds a bit odd, it’s because Foursquare is avoiding having executive-sounding positions, Crowley says. But Cohen’s role will be vital for the startup as he’ll be basically stepping in for much of what takes up Crowley’s time now: big deals, hiring, outgrowing our space, finances, and legal issues. “Everything that takes me away from product,” Crowley notes. In other words, basically he’ll be the COO of the young startup.

Cohen joins Foursquare at a time when the location-based atmosphere is red hot. Not only are Foursquare, Gowalla, and Loopt pushing the check-in game, but Yelp, with its 1.25 million iPhone users just got into the game as well. Crowley noted earlier today that it was one year ago when he and co-founder Naveen Selvadurai decided to take Foursquare seriously as a new business.

“Our growth curve no longer looks like a hockey stick. It looks like a skateboard ramp with 4 feet of vert. Bananatown,” Foursquare tweeted from its main Twitter account earlier today.

Cohen left Bebo sometime after it was acquired by AOL in 2008. He was currently in between jobs, but him and Crowley go way back to Crowley’s first job at Jupiter Research. Cohen brings the total number of Foursquare employees up to eight. Expect that number to keep blossoming with the Cohen hire.

The new collaboration sees the launch of the ‘Tour Dates‘ application, which enables British Bebo users to get a heads-up of when their favourite bands are playing nearby and of course purchase tickets. It does this by looking at the artists listed in a user’s Bebo profile.

The app isn’t just aimed at music fans, however, but also record labels themselves who can use it to push tour dates directly to interested punters. Atlantic Records have already begun doing so, along with independent label Visible Noise. It’s all part of Bebo’s play to “build an ecosystem around music”, says David MacDonald, Bebo’s Business Development Director Europe.

What also makes the partnership interesting is that GigJunkie.net offers social features of its own. As well as receiving alerts of upcoming gigs and accessing ticket feeds from all of the UK’s primary and secondary ticket agents, members can find and connect with other fans interested in the same artists and share photos taken at gigs and publish concert reviews. By extending its core functionality of gig listings and ticket availability to Bebo, GigJunkie – a sort of niche social offering in itself – will be able to get access the uber social network’s much larger user-base.

I don’t have comparable data to back it up, but anecdotally it seems the Web 2.0 generation is doing a better job at giving. Or at least Bebo founder Michael Birch is.

Birch has spent the last six months working with a team of two other people to build a social giving site for the popular organization, Charity:Water. It launched its beta site today, and with just a Tweet announcing it nearly 400 members have already raised some $3,000.

Charity:Water’s accountability and simplicity of purpose has made it a popular charity in New York, Hollywood and increasingly the Valley.  Here’s the value proposition: One-out-of-six-people on the planet doesn’t have access to clean drinking water. $5,000 buys an African village a well. Every dime you donate, goes to these wells. You can even watch the wells being tapped for the first time via Web video. The non-profit is turning three in a few weeks, and it’s raised more than $10 million over that time—much of it in $20 increments from a base of some 60,000 donors. It was Obama-fundraising-math before that was invented. As a result some 700,000 people in the world now have access to clean drinking water.

It was all started three years ago when Scott Harrison, reformed bad boy and Charity:Water founder, asked people to come to a huge New York party for his September birthday and donate $20 at the door instead of giving him a gift. He raised $15,000 and built six wells in Uganda. (They were cheaper than the wells Charity:Water usually builds because three were shallow wells and three were rehabs of existing wells.) Like any great accidental entrepreneur, Harrison knew he was on to something.

In addition to all kinds of creative fund raising, detailed in the video below, the following year, Harrison opened his birthday to everyone via the Web, asking them to donate $32 dollars, since it was his 32 birthday. That year, he raised $59,000 and other September birthday babies brought the total to $150,000, which went to wells in Kenya. Not bad, but they had to HTML hand-code each participant’s site. Pretty laborious work for a small non-profit.

The next year he got more September babies to “give up” their birthdays, and a company called InspEnv.com built them a site, but it wasn’t hugely social or scalable. Still 800 people “gave up” their birthdays and raised some $965,000 dollars to bring some 50,000 people clean water in Ethiopia.

But Harrison knew that the value of a lot of micro-giving campaigns like Kiva and the popular Facebook application, Causes, is rooted in the ability to make small donations super-easy to solicit and to make via existing online social graphs. He was trying to figure out sites that knew when a huge number of people’s birthdays were and after MySpace and Facebook, he came across Bebo. Early last year, he cold-emailed Bebo founder Michael Birch to ask if he’d be willing to send a note out to his September born users and Birch wrote back that it was “a bad time.” It was actually a great time for Birch—he was selling the company to AOL for $850 million.

Once the deal was done, Birch called Harrison and suggested he build him a site that could help people born in any month instantly “give up their birthdays” for Charity:Water’s mission. It was fitting since Birch’s next project was his pre-Bebo project, a site called Birthday Alarm. Nine months later, Harrison is about to turn 34, Charity:Water is turning three, and Birch has finished the site. For a free project, it’s a pretty nice looking site.

The recession makes this perfect timing. If you’re panicked about money and job loss, giving up your birthday is an easy way to give to those less-fortunate without having to spend a dime yourself. My husband has a September birthday and has already signed up. I plan to sign up for my birthday in December. You can create your own campaign in a matter of moments and with a few clicks, share it via all your existing social networks.

I’m sure the coders who were up until 4 a.m. last night will have mixed feelings about this, but this is one time I really want to see TechCrunch users break a beta site.

[Photo credit: Scott Harrison]

http://vimeo.com/moogaloop.swf?clip_id=6202666&server=vimeo.com&show_title=0&show_byline=0&show_portrait=0&color=00adef&fullscreen=1

The story of charity: water – The 2009 September Campaign Trailer from charity: water on Vimeo.

Translation – AOL is looking to spin Bebo off into an independent company, and they’ll retain an equity interest via AOL Ventures.

This is pretty much in line with what he told Erick during an interview last week. During that interview he distanced himself from the acquisition: “I was not here during the acquisition of Bebo. Social networking was an unclaimed category, and growing quickly.” The reason he placed it in AOL Ventures is so that it can “focus on improving the consumer product,” he said. Armstrong added that one of the purposes of AOL Ventures is “to keep things on track that have not been on track. “

But he noted that there is another purpose for AOL Ventures as well. In areas where product synergies “have not been realized, it gives us an opportunity to take it out of AOL, to make it groomed, and maybe attract outside investment.” It was pretty clear he was talking about Bebo.

AOL acquired Bebo in early 2008 for $850 million. But the property has languished since then and it has not been integrated much at all into AOL proper. Bebo had 8.7 million unique visitors in the U.S. in June, 2009, 20 percent down from its peak in March, 2009 (comScore). Globally, it is holding up better, with 24.2 million uniques in May, 2009 down 12 percent since March, 2009. But if Facebook is worth $6 billion to $10 billion, Bebo might still be able to get a decent valuation if it can hold onto its users.