YouTube is now showing approximately 3 billion videos a day. A growing proportion of those are shown with ads—more than 2 billion a week—and YouTube as a business is expected to pass $1 billion in revenue next year.

But when it comes to making money, some videos do better than others. Professionally-produce videos attract the most ad dollars. These include videos from TV networks and major media companies, which is the low-hanging fruit, but also increasingly from Web-only video networks and studios such as Blip.tv, Maker Studios, and Revision3. A big part of YouTube’s strategy is to encourage and promote these native Web networks. It bought one of the biggest ones, Next New Networks, and that team is now training other video producers how to replicate their results.

For YouTube, it is all about scale, and networks of loosely aligned online video producers scale better than individual shows and viral-video phenoms. In fact, there is a brand new department inside YouTube called Networks. The purpose of the department is to encourage the formation of these outside networks which then use YouTube as their distribution channel. (Update: YouTube denies the existence of this department, see below).

YouTube can then help sell advertising targeted at these more professional networks of Web series and shows, and that scales better than supporting individual YouTube producers. YouTube will keep doing that, of course, but you can see the beginnings of an organization that will help to further professionalize the Web video industry.

In this view, each network is like a channel, and YouTube is the new cable system or MSO (multiple system operator). The ABCs and Food Networks are welcome on YouTube, but Networks is very much an attempt to grow native channels on the Web. If YouTube gives them enough support and makes it profitable enough for the Web-only networks, they in turn will be able to pay more for native Web shows and series, and one day the best talent might even skip TV altogether. But first, baby steps.

Update: YouTube denies there is any new strategy or organization focused on Networks. A spokesperson says: “There are many networks doing great things on the YouTube platform, but there is no group inside YouTube called Networks.” Whether or not it is a formal department, executives in the online video industry refer to it as “YouTube Networks” and perceive a shift in strategy. That may turn out to be wishful thinking, although there is at least one YouTube manager overseeing these relationships.

Success in online video is relative to how much time, effort, and money you put into it. Andrew Baron of Rocketboom offers the (albeit self-serving) chart at right in a post updating the State of the Union for his startup and online video in general. I like this chart because it tries to compare the total capital poured into four different online video ventures and the total cumulative videos put out and consumed by viewers.

Next New Networks is by far the largest, with an estimated 1 billion cumulative video views, but it’s also raised $27 million in venture capital (weren’t they supposed to be bought by YouTube by now?). Revision3 and Rocketboom come in at the next tier with 312 million and 290 million cumulative video views, respectively. A decent accomplishment by both, but it took Revision3 about $10 million in capital to get there whereas Rocketboom got there with only $1.5 million. And then there’s MyDamnChannel, with 105 million cumulative views and $7.5 million in capital invested. Not very capital efficient at all, assuming revenues are tied to video views, which is usually the case.

In order to better visualize the ratio of cumulative views to total invested capital, I created the chart below based on Baron’s original one. Here you can see the capital efficiency better in terms total video views per dollar invested. Over its lifetime, Rocketboom has attracted 193 views per dollar invested, compared to 37 for Next New Networks, 31 for Revision 3, and 14 for MyDamnChannel.

That’s pretty good for a bootstrapped startup, but Rocketboom still only produces one show (albeit daily), compared to a whole roster of shows for Next New Networks and Revision 3. Is Rocketboom pofitable? Baron says, “We’re still here.” And the company, which also operates KnowYourMeme and Mag.ma, is living off revenue since last September. It’s capital efficiency has gotten it this far, but I wouldn’t be too surprised if Rocketboom taps outside investors to help take the company to the next level, just as online video advertising starts to finally take off.

Update: Predictably, other online video startups are taking exception to this chart because they are not included. WatchMojo CEO (and occasional TechCrunch contributor) Ashkan Karbasfrooshan offers up the following stats for his bootstrapped video startup: 225 million video views (not including another 75 million autoplay) and only $1 million invested. That would give WatchMojo a ratio of at least 225 in the chart below. He also sent me a handy table of online video startups and how much money they’ve raised, which I’ve added below.

Internet TV network Revision3 is today formally debuting a new TV-optimized website and bringing its full catalog of online content to multiple platforms including Google TV, Yahoo! Connected TV, Windows Media Center, AppleTV, Boxee and Roku.

Revision3, which was founded by Kevin Rose, Jay Adelson and David Prager, is porting its full line-up of more than 20 programs to the television screen, including shows like Tekzilla, Diggnation, AppJudgment, Dan 3.0 and Film Riot.

You can use either customized applications for the various Internet-enabled television sets or combos, or you can simply visit TV.revision3.com to watch the shows.

The application’s user interface was designed to make finding content simple, according to the company, as it sorts shows by name, category, featured content and most recent episodes. Viewers are also able to manually search for their favorite episodes and “lean back and watch” fresh content.

Will you be tuning in to the no-longer-strictly-Web-only Internet TV network from your TV?

Video recommendation startup Taboola has been having quite a year, signing up major Web publishers such as the Huffington Post and the online editions of Bloomberg and The New York Times. The driving force behind the company’s continued traction is their Text2Video product.

In fact, its most recent coup, Revision3, has seen a whopping 90% video uplift since adding Text2Video to their non-video pages.

Adam Singolda, Taboola’s CEO, explained to me that while Taboola’s initial product was purely Video2Video recommendation, the company realized that although video CPMs are higher and publishers want more video views, most Web traffic is still mostly textual. Put simply, folks on the Web read much more than they watch video.

To use Text2Video, publishers must also add the Video2Video module, allowing Taboola to crawl the publisher’s video inventory for title, thumbnail, description, etc. Then, the Text2Video module analyzes page content to offer video recommendations. Revision3 saw a 90% uplift in video views when Text2Video was added to its non-video pages, such as DiggReel. See it in action on Bloomberg.com as well, here.

Singolda went on to explain that Text2Video’s ‘secret sauce’ is its ability to measure user engagement after the click on a video recommendation. This means that unlike purely contextual/semantic analysis solutions that can tell that page content happens to be about the iPhone, and consequently ‘pull’ iPhone videos, Taboola can tell that for iPhone page content, only short videos keep users on the site. Taboola can also determine that for iPhone page content, users are likely to be more engaged with off-topic videos (travel, for example).

It seems the benefits of increased engagement and additional inventory publishers can monetize at higher CPMs are not falling on deaf ears. Taboola tells me that it’s now running on hundreds of millions of pages a month, doubling traffic every couple of months. Perfect timing for the video advertising ‘Frenzy Point‘ we recently wrote about.

In general updates, since we last covered Taboola, the company has moved its headquarters from Israel to NYC. It has also brought on Lior Golan to run Product/R&D. Golan co-founded Cyota, which was sold to RSA for $145M. Liz Hughes also joined the company as VP Business Development. She previously held the same position at RealNetworks.

The new show will be launching in a couple of months, Kevin tells me, “as a weekly live streaming tech/geek culture show.” Rose says he’ll be the primary host of fforward, but will have guests on to debate topics and demo new products.

Here’s what Kevin has to say about Diggnation: “It’s been five years, Alex and I still have fun doing the show, but I think we’re both ready for less travel and something new (Alex currently lives in LA). ffoward is going to be unlike any show I’ve ever done, I’m excited to try some new ideas w/a live streaming audience. Diggnation will continue till the end of this year, we’ll be having a huge final live show sometime in November or December.”

Maybe someone should tell Revision3, which is still claiming no final decision has been made on Diggnation (see update to our post last week) and slammed us for having “incorrect information” when we wrote that Rose was leaving the show. The good news for them – fforward will be on Revision3 as well.

You can follow fforward on Twitter here.

Update: Revision3′s statement: “Kevin will be wrapping his involvement as a regular co-host of Diggnation at the end of 2010. The future of Diggnation will be determined sometime in the Fall. We have been talking to Kevin about fforward for some time now and are very excited about this new and very innovative project.”

The show has been “aired” since July 1, 2005 and regularly attracts 200,000 or more viewers. It is the most popular show on Revision3, although new shows like Penn Point are starting to bring in real mainstream talent.

Why is he leaving? We’re speculating, but his new job as CEO of Digg may be keeping him too busy to make time for the show. Or maybe it’s just that after five years he ready to focus on something new.

It’s not clear if cohost Alex Albrecht is staying with the show, or if it will simply shut down.

Update: Rose says via Twitter that he will leave the show at the end of this year.

Update 2: Revision 3 says Kevin will be there at least through the end of the year (perhaps they think they can change Kevin’s mind): “Every year we sit down and think about what the next year of Diggnation should be. Those decisions have not yet been made, however Kevin and Alex will remain hosting the show through at least 2010 . We will also be announcing an exciting new video project of Kevin’s on Revision3 in the coming months.”

Revision3 might have finally found a star bigger than its own founder Kevin Rose (who co-hosts Revsion3′s flagship show Diggnation). The Web video production house just signed magician/comedian Penn Jillette of Penn & Teller for a new show called Penn Point. The first episode will go up on May 24.

The format will be a 3 to 7 minute rant by Penn on politics, news, pop culture, or whatever he wants to rant about. Maybe he’ll throw a magic trick in every now and then. Or he can show off the iPhone app he launched at TechCrunch50. Really, whatever he wants to do. Revision3 will edit the video to make him look good. (I’m in the wrong line of work, should have been a magician).

While you are waiting for the first episode, here is a backstage camera-phone interview Paul Carr and Sarah Lacy shot of Penn at TC50 (Penn is such a large man, it took two of them to interview him):

Editor’s note: This is the fourth in a series of posts by guest writer Ashkan Karbasfrooshan.Previously, he wrote about the State of Online Video, 12 Surprising Things Holding Back Online Video Advertising, and Context is King: How Videos Are Found And Consumed Online.  In part 4 today, he examines where he thinks the sweet spot is for making money in onljne video. Karbasfrooshan is the founder and CEO of WatchMojo.

In Search of Profits

Ten years ago, web companies didn’t generate much revenue.   These days, web companies are some of the most profitable around.  Online video is where the Web was ten years ago: in investment mode as video companies that are generating high revenue are not necessarily the most profitable.

Are those companies suffering low margins because they’re investing in the future or are they fundamentally lower-margin businesses?

Ad Networks Are Low Margin Businesses

This week, video ad network Brightroll raised $10 million from Scale Venture Partners.  Ad networks aggregate audiences and sell ads to marketers, sharing the proceeds with publishers/producers.  Scale’s Rob Theis’ argues: “the most strategic Internet investments are those that compete not with other Internet businesses, but with the much larger amount of money still being spent offline.”

Brightroll’s CEO Tod Sacerdoti added: “I think by this time next year the majority of the top five to ten video properties by any measure will be aggregator networks.  The best example for this is display advertising.”  Indeed, networks have an unmatched ability to scale but can also crash to the ground awfully fast.

The low margin is the least of their problems; differentiation and defensibility are.  Blue Lithium and Right Media hit jackpots by selling to Yahoo!  But those who didn’t sell (Tribal Fusion, Valueclick) suddenly found themselves under pressure from search advertising on performance and video on branding.

Content Networks Have Little Differentiation

Similarly, aggregators gather videos from content providers, sharing ad revenues.  iFilm (sold to Viacom, renamed Spike), Guba, Grouper (sold to SONY, renamed Crackle), Revver, YouTube (sold to Google), Veoh, DailyMotion, Metacafe, Viddler, blip.tv, are all vying for content, audiences and dollars.

YouTube is master of this domain.  Hulu is giving YouTube a run for its money, but the business model is anything but certain and its long term exit strategy is murky (Disney, News Corp. and NBC Universal/Comcast are shareholders but also competitors).

Ultimately, ad and content networks operate in a high-risk, winner-take-all game.   For publishers, it’s a lower risk world.  Consider the two acquisitions News Corp. made in 2005: Rupert Murdoch paid more for IGN ($650M) than for MySpace ($580 million), but MySpace’s subsequent growth made him look like a genius (for a while).  Today, MySpace is searching for its raison d’etre while IGN treks along as an unstoppable force in its sphere.

The Myth of Hyper Distribution?

In online video, producers are agnostic to distribution channel or platform.  To reduce risk, they diversify distribution, but the jury’s out on whether hyper distribution bears fruit.  Hyper distribution refers to syndicating one’s content as broadly as possible with little or no restrictions.

When it comes to generating revenues, is hyper-distribution wise?  Not according to Chris Pirillo, a prosumer video producer who leverages video to promote his empire but only counts YouTube as a commercial platform: “YouTube offers the largest audiences and generates most the revenue.  If you’re not YouTube, you have challenges in creating value for content producers”.  If that changes, look out for Freewheel, which according to CEO Doug Knopper allows “media companies and content owners to be able to monetize their video libraries across multiple channels and devices”.

Advertisers Follow Audiences…

Ex-Disney CEO Michael Eisner doesn’t pretend to know how the industry is going to play out, but he’s got no doubts what the end result will be: “I don’t know if the growth in content made for the Internet will be evolutionary or revolutionary, but it can’t not happen: a death march has been going on for other media who are in trouble because there is a more efficient way to share content around the world with the Internet.”

Business Models Take Time to Develop

Eisner made his fortune in television.  One VC who’s made his online has another opinion.  In Fred Wilson’s influential 2005 post “The Future of Media (aka Please Take My RSS Feed)”, he suggests to:

1 – Microchunk it – Reduce the content to its simplest form.
2 – Free it – Put it out there without walls around it or strings on it.
3 – Syndicate it – Let anyone take it and run with it.
4 – Monetize it – Put the monetization and tracking systems into the microchunk.

In theory, in the future when video streams monetize the way search queries have (whereby a search query is always associated with some kind of paid listing) then perhaps Wilson’s thesis will prove right.  But in practice, at least in the five years that have passed since the post, it’s been a recipe for financial disaster.

Hyper distribution is great for promotional purposes but not necessarily for commercial purposes.  Marketers do pay more attention as an audience grows, but they also pay a premium for scarcity and exclusivity.

This is the fundamental conundrum facing new media producers who rely on hyper-distribution to build brands and audiences but who weaken their pricing power and ability to secure guaranteed dollars by giving away their videos.  This can work if you can build ad-supported businesses, but that takes time and money.

Today, a few new media producers have managed to build ad-supported businesses, namely Revision3 and Next New Networks.  But between the two, they have raised over $30 million in venture capital.  Most producers don’t have that luxury.  For those others, I recommend creating content that other media companies will pay for, to buy them enough time to build a syndication business and eventually, a fully ad-supported business which commands the large ad dollars.

An imperfect but useful analogy I use is the banking model, where retail, corporate and investment banking fees can create a large business.

This diversified strategy provides:

• a safe income stream:  licensing, like retail banking, provides a recurring and non-volatile revenue base.
• a growth business: syndication, like corporate banking, requires other companies in the ecosystem to do well.  This can provide higher CPM rates by placing content in the right context.
• a wildly lucrative stream: advertising, like investment banking, takes time to develop, is speculative and seasonal, and risks drying up abruptly.  Notice how advertising revenue spikes each fourth quarter, for example.

The reason why I place content producers in the highest Profitability circle over time  in the first chart above is because only they can build such a business.  (The Profitability Index represented in the chart takes into account operating margins and total return on investment, including likelihood of a liquidity event).  And, yes, I am completely biased, since this is the kind of business I am trying to build with WatchMojo.  Aggregators and networks are solely advertising based businesses; just ask YouTube who generated $10,000 in a paid model test, even though it can generate billions in simpler ways.  Video advertising will be a bigger business, but not necessarily a higher-margin business.

Video will be Everywhere: on all Websites

Video on the Web is no longer just about entertainment.  It is also about marketing, instruction, and conveying information of all kinds.

• Content bellwether Wikipedia announced it will be rolling out videos soon enough.
• e-Commerce leader Zappos encourages users to submit their video experiences which increase sales 6% to 30%.  In 2010, it will create 50,000 videos.
• It won’t be long before organizations feature their accountants, lawyers, management, VCs in videos too.

Video will be Everywhere: in Ads

Videos won’t simply be on all websites; video ads will converge with rich media and display banners.  Publishers and ad networks will swap out low yield ad placements for videos that sell at a premium.  Rupert Murdoch is right to say that there isn’t enough advertising to make all publishing online profitable, but if you insert a video-enabled ad where a display banner exists today, maybe it will become more profitable, as video rates tend to generate a tenfold premium over display banners.  Of course, the flip side of that argument is that if video ad inventory lost all scarcity as display banners have, then it rates would also see a steep drop.

Video is the Anti-Search

Google’s dominance of the Web today stems from a perfect storm.  Search benefitted from low expectations.   Whereas Google’s competitors threw in the towel to focus on portaldom (or outright handed them the business), online video companies’ war chests seemingly have no bottom as they wage the war for the online audience.

With YouTube being a unit of Google, it’s hard to compete being a pure video aggregator.  Those who have tried are flailing badly.  Yet video’s expectations have always been high and will only get higher.

History Repeats Itself

Video will follow search in two ways though.

Search is software and Google is the only successful ad-supported technology company.  Video is media, which has a natural disposition to embrace ad-supported models.  As such, advertising will monetize video streams.  In fact, as large ad agencies and marketers shift online, they’ll embrace branding campaigns and push video advertising could eventually top search advertising.  Once that starts, online advertising will surpass television, it’s already happened in the UK.

Search for The Leading Ad Format

Everyone agrees that video advertising will be huge but what will the prevailing ad format be?

Stakeholders are obsessed with finding the ad format likely to follow television’s 30-second ad spot and search’s paid listings.

What might lead the way?

Pre-rolls are the equivalent of pop-ups (and mid/post rolls the equivalent of pop-unders) in that users hate them, but unlike pop-ups, I actually think pre-rolls won’t disappear, mainly because

• They’re the most in-demand ad format (according to Brightroll CEO Tod Sacerdoti)
• It is easier to include a pre-roll when you’re syndicating to other websites and platforms (says blip.tv co-founder Dina Kaplan)
• But largely because they’ll get more user-friendly: the 30-second ad will make way for 5-10 second interactive pre-rolls (SpotXchange CEO Michael Shehan).

However, there will always be properties which will forego pre-roll revenue to improve the user experience in order to build audiences, and all else being equal users will migrate to those sites.  So I’m not sure the pre-roll will remain all that ubiquitous.  The other problem with pre-rolls is lack of attention.  When a pre-roll starts, I tune out and look for my headphones or go grab a coffee.

That’s why I like the contextual display banner (and not necessarily the companion banner).  A companion banner comes bundled with the video pre-roll, but sits alongside the video  A contextual banner comes without the pre-roll.  Whereas most banners disappear quickly next to text with one downward scroll of the mouse, alongside a video player, that banner becomes quite valuable and top-of-mind since people are just staring at the video.

We’ve also seen the rise (and fall) of overlays, which is basically an expanded Picture-in-Picture (PIP) format; we know how that fared.

Of course, content producers are also salivating over branded content (more than product integration and product placement, the brand becomes central to the story) or outright sponsorships.

Finally, there’s the Web’s favorite offspring: the viral video.  Viral video is not an ad format, of course, but it is not quite branded content nor is it supported by ads.  As these become more common, achieving success with content alone becomes a sure-fire recipe for failure.  All content will need to be supported by a media buy or some kind of promotional push.  After all, on TV you spend millions creating an ad but you need to buy media spots to promote it.  It’s not going to be that different online.  Yes, it’s a meritocracy, but it’s a loud, cluttered one.

KISS: Keep It Simple Stupid

There won’t be a single dominant ad format but the holy grail will prove simpler than expected.  It always does.

Remember Don Lapre’s infomercials?  He would go on and on about placing “Tiny Classified Ads” in newspapers.  I never thought much of those ads until Google’s adoption of (essentially) little text ads next to search results led to their explosive growth.

Sometimes in business, the solution is simpler than you can imagine.

The regular “director’s cut” will be shown at at Diggnation.com. The customized version will be available here on the Revision3 website.

We’ve got a few screenshots of today’s show (actually, we’ve seen the show, but we can’t post it here, you’ll have to watch at 3 PM).

Web video production house Revsion3 is canceling three shows, cutting back staff, and ending distribution agreements with Wine Library TV and Epic Fu. Rumors started swirling earlier today about layoffs, when Rocketboom founder Andrew Barron put out a Tweet about one of the layoffs. Revision3 CEO Jim Louderback confirms in a blog post that three in-house shows have been canceled (the long-running Pixel Perfect, as well as PopSiren, and Internet Superstar). In addition, Revsion3 will no longer be distributing Smashface’s Epic Fu or Gary Vaynerchuck’s Wine Library TV, possibly because those required upfront payments to the producers of those shows which Revision3 had been hoping to make up over time in advertising revenues.

In his post, Louderback writes:

As you may have heard, today we had to make some tough staffing decisions as we ended the run of a few of our shows.

Even though we’re sad to see these shows end on Revision3, in today’s economic climate it’s essential for us to focus on what we do best, and where the best opportunity for success lie.

We’re continuing to develop and invest in new properties. We launched seven new shows last month, for instance, on Revision3 Beta, and we’ve got high hopes for an expanded lineup there – and seeing some of that first crop graduate to Revision3

He does not say how many people were laid off. I’ve asked him via e-mail. (I count at least five. Caroline McCarthy at Cnet counts nine, which would be about one third of employees. If anyone knows the exact number, please submit it to our Layoff Tracker. Update: Kevin Rose lists ten people). Smashface, for its part, is laying off three staffers as a result of losing the Revision3 licensing revenue.

Revision3 was founded by Digg founders Jay Adelson and Kevin Rose (who also hosts its most popular show, Diggnation). It raised $8 million just last June. But producing video shows can be very expensive.

Revision3 has partnered with VideoClix to offer viewers clickable web videos.

VideoClix’s technology allows viewers to click on different objects within a video, including show hosts and products, for more information and facts on what they’ve clicked on. The product is pitched as offering curious TV viewers seeking more information on what they’re seeing on the screen the option to obtain that information.

The additional information provided by the service is monetized, with affiliate or sponsored links to products features in the video.

Diggnation is the first Revision3 show to include interactive episodes, with Internet Superstar, Tekzilla and The Totally Rad Show to follow, although currently the clickable versions can only be accessed on the VideoClix site. The first Diggnation show with the technology can be viewed here.

Belmont resigned from the Mahalo Daily podcast last week after only 5 months, with a relatively cool send off from Mahalo CEO Jason Calacanis.

Prior to working for Calacanis, Belmont worked for CNET.com, where she produced and co-hosted shows including Buzz Out Loud, MP3 Insider and Crave. She also regularly appears on programs on DL.TV, MSNBC, CNBC, the G4 Network, PC Gamer, and This Week in Tech.

Belmont featured in our list of geek chicks to watch March 21.

image credit: Veronica Belmont

Episode 143 of Diggnation: Hosts Kevin Rose and Alex Albrecht announce the sale of Revision3 to Fox News at about the 2:05 mark. Rose says “Well, ah, we basically have a big announcement for everyone. Revision3 has been acquired by a bigger company. We’ll be moving to Fox News.” He added “I’m thinking of getting a fox tattoo, its kinda part of my signing bonus, if i do it i get a little extra money.”

It’s an early (very early) April Fool’s joke, of course. Jump to the 3:45 mark. They are clearly playing off a story from two weeks ago, spread quickly via a credulous Robert Scoble Twitter message, that CNET had acquired Revision3 for $58 million.

The company was founded in April 2005 and has raised $9 million in funding.

Here’s a video match made for the Web. Revision3, the video playground of Digg founders Kevin Rose and Jay Adelson, is teaming up with Blip.tv to syndicate all of its shows. That includes Diggnation (shown above with hosts Alex Albrecht and Rose), the GigaOm Show, Web Drifter, and Tekzilla. Some of these shows are already popular, especially Diggnation. And they are distributed in many ways—through Revision3″s Website, through iTunes, as embedded videos. By signing this deal, Revsion3 expands its reach to Blip.tv’s audience.

Blip.tv has done a good job of finding and highlighting the best original Web video shows, including Wallstrip, Alive in Baghdad, Rocketboom, and (back in the day) The Show with Ze Frank. So Revison3 will be in good company. Blip.tv sells advertising against the videos and splits the revenues with the producers, so it is incremental revenue for Revsion3.

At some time around 8 pm Dan Farber, the new Editor in Chief of CNET, says, “huh, I just got an email that says, according to [blogger] Robert Scoble, we bought Revision3 for $58 million.” Uh-oh, I thought. I’m in San Francisco, an hour away from my computer. We’re going to be very late to this story.

I asked Farber if it was true. He said if it was this was the first he’d heard of it. A few moments later, after a couple of phone messages back and forth with his team, he said CNET had posted on the rumor (he was joking with me, but I couldn’t read him and thought he was serious). I emailed our team to look into it and cover the story, pulling Mark Hendrickson away from dinner and back to his computer.

I then called someone at Digg, who said something along the lines of “it’s complete bullshit.” After that call I did two things. I told our team to back off the story, and then promptly lied to Farber and said that Digg confirmed the rumor – Revision3 had definitely sold to CNET. Farber (damn him) didn’t bite – he typed a message or two on his phone, then looked at me and said “no, we didn’t.” At that point I laughed and told him what Kevin really said.

Scoble, meanwhile, sheepishly retracted his original Twitter message and the whole ordeal came to a end.

My guess is that 7 or 8 people between CNET and TechCrunch had their evenings at least partially throw into chaos over this. But my only disappointment was that I couldn’t trick Farber into writing a post on CNET that they had acquired Revision3, when it was nothing more than a figment of Robert Scoble’s imagination.

Update: Loic Le Meur gets Farber on video:

Now, the servers of our partners can say, “I want to create a room.” It automates the creation process on a server-to-server basis. Also, we will be putting advertising into these rooms.

In addition to the APIs, the company is also announcing the Meebo Network, which will serve ads inside Meebo Rooms across the Web, splitting the revenues with the Websites hosting the rooms. Since each Meebo Room is formed around a particular interest, ads can be targeted. And to the extent that sites participating in the network have demographic data on their members, that can be used for ad targeting as well. Only Meebo Rooms created through the API will show ads, not the ones created manually.

The launch partners joining the Meebo Network are Piczo, Revision3, RockYou, Social Project, and Tagged. Revision3, for instance, will create a Meebo room on its site where fans can watch a synchronized loop of Web TV shows while chatting. Access to the full APIs and the ad network is by invitation only at this point. Social networks could use the new APIs to automatically add chat rooms to every group page. Rock bands or movie sites could add Meebo Rooms to their sites for visiting fans.

Comparisons can be made here to Userplane, a white-label chat service which was bought by AOL in 2006 and powers many of the chat rooms on MySpace. But there are subtle differences. Most notable is the fact that Meebo Rooms can spread anywhere on the Web. Anyone can grab the embed code and put it on their blog or MySpace page as I’ve done below. Notes Sternberg:

A user cannot take a room off of MySpace and throw it somewhere else. We have all our rooms networked. A user can take the CBS Jericho room, and throw it on their WordPress blog. Our chat rooms are networked versus islands within Websites.

It is very hard to get a synchronous conversation going. You won’ get enough people on your MySpace page to have a conversation. But with Meebo Rooms, most of the traffic is coming from somewhere else. It solves the problem of the Web being so distributed.

The power of Meebo Rooms is that they let anyone create live conversations on their site by aggregating people with similar interests from other sites. In fact, it links people between sites. And that, hopes Sternberg, will give it enough scale to become an ad network of sorts. Meebo has raised $12.5 million from Sequoia Capital and Draper Fisher Jurvetson.

The Revision3 shows will be viewable on Virgin America’s seat-back entertainment system throughout the cabin on flights to New York, San Francisco, Los Angeles, Washington D.C., Las Vegas, San Diego and Seattle. This is a big coup for Web-based video, and Revision3 in particular. The Revision3 shows will sit right alongside options for in-flight movies and satellite TV, exposing its brand of videos to a captive audience. And why not? On a six-hour flight, people will watch anything. This could help Revision3 win more fans, and expand its Web-based audience, which already watch 4.2 million videos a month. The shows will run with the original ads.

They are focused on delivering high volume rich media (streaming video and audio files) and large software downloads with a near zero buffer time and very low lag time.

Their flagship customer is Revision3, which has a number of popular high definition video shows (such as Diggnation and The GigaOm Show) that a lot of people watch right when a new show becomes available. Given how well those shows tend to stream, it’s the best endorsement BitGravity can get. An example GigaOm Show episode (recorded during the TechCrunch40 conference) is embedded below.

http://bitcast-a.bitgravity.com/revision3/swf/rev3_player.swf?AutoPlay=off&Buffer=120&File=http://bitcast-a.bitgravity.com/revision3/flv/gigaom/0010/gigaom–0010–ning–400kbps.flv&ScrubMode=advanced&Thumb=http://bitcast-a.bitgravity.com/revision3/thumbs/gigaom–0010–ning–thumb.jpg&DefaultRatio=0.56&AutoSize=off&allowFullScreen=true

CEO Perry Wu says the company has a lot more planned in the near future. They say they’ll be working specifically with big networks to stream live events and other popular content, and to look for bandwidth-heavy streams that include, for example, 360 degree views of concerts and sporting events.

The company has raised a seed round of capital but will not yet disclose investors or the size of the round.

Leah Culver, a co-founder of Pownce with Rose has made a bizarre post to Digg suggesting that Digg’s new features were a direct copy of those from Pownce:

Since I originally came up with the Pownce gender list, I’m somewhat miffed that Digg copied Pownce.

Culver also linked to an image on Flickr which she subsequently deleted.

The first and most obvious question: has there been a complete break down in communications and trust between Pownce’s founders that they now find it necessary to air their dirty laundry (ironically) on Digg? Second: why did Culver delete the picture after posting the link on Digg? Was pressure brought to bare?

As much as we all admire Kevin Rose’s tenacity and creativity, there is always a point where you can be wearing too many hats. Rose has three (Digg, Rev3, Pownce), which I’m guessing is at least one too many, possibly two.

Bitgravity, located in Burlingame, California, hasn’t officially launched. But the company is the content delivery network (CDN) for Revision3 and other video sites. The quality of the video on this site is significantly better than what you see with other live streaming services like Justin.tv and Ustream. I’m looking forward to hearing more about the streaming technology, as well as the Google Maps/GPS hack (some resources for GPS mashup here and here).

Thanks for the tip David.