As the Microsoft-Yahoo will-they-won’t-they? saga drags on, Google’s role in any future talks becomes more apparent.

On Thursday Google CEO Eric Schmidt said a two-week trial selling search advertisements on rival Yahoo last month had given the companies good reason to discuss cooperation, but there was no deal yet.

That isn’t great news for some in the online advertising world.  As commentators have pointed out, a Google-Yahoo partnership (Yahoogle? Yoogle? Gahoo?) could concentrate too much power with just one team. This has led to some folk to paint Microsoft as the little guy. Yes, the same Microsoft, which is a Monopoly 101 case study for first-year economics college students.

In a TV interview with CNBC on Friday, WPP CEO Martin Sorrell said, “It was a shame…that those negotiations failed. Maybe they’ll come back again.”

Sorrell, whose empire of ad agencies includes Ogilvy, JWT and Y&R,  said the advertising industry lost a potential balancing influence in the Web search market when the talks between Microsoft and Yahoo collapsed.

Meanwhile,  Silicon Alley Insider reports that Google is seriously considering having display ads on its home page, based on statements from executives. SAI estimates Google could add up to $3 billion to $4 billion in annual revenue if it decided to do so.

 Keep an eye on:

* British video search engine company Blinkx sees it shares fly on rumors of a possible bid by News Corp or Google  (Reuters)

* MySpace lets users share their profiles across the Web (Reuters)

* Real Networks spins off its gaming division (GigaOM)

(Photo: Reuters)

There were indeed fans lined up along the streets of New York City awaiting the launch of  Grand Theft Auto IV on Tuesday morning. According to the experts, they will not be disappointed.

Even the New York Times lavished praise of a sort on the video game from Take-Two Interactive’s Rockstar studio: “‘Grand Theft Auto IV’ is a violent, intelligent, profane, endearing, obnoxious, sly, richly textured and thoroughly compelling work of cultural satire disguised as fun.”

Though the vast majority of gamer blogs were even more emphatic in their love of the game, there were bound to be many naysayers if only because “GTA” deals with such edgy content, in this case an Eastern European immigrant who runs drugs, shoots cops and beats up prostitutes. The Parents Television Council thinks retailers shouldn’t carry the game according to Variety magazine.

Keep an eye on: 

- Rupert Murdoch’s $580 million bid for New York’s Newsday, the Long Island newspaper, puts the News Corp chief on a collision course with the U.S. regulators. (Financial Times)

- Clear Channel Communications said a Texas court dismissed a request by a group of banks to delay a trial over funding for the $20 billion buyout of the radio station operator. (Reuters)

- Blockbuster is in talks about taking a stake in a new Viacom-led premium television channel that plans to compete with HBO, Showtime and Starz. (WSJ)

(Photo: Reuters)

So who’s winning the pay-TV so far this year? With days to go until two of the biggest cable operators (Time Warner Cable on Wednesday and Comcast on Thursday)  report first quarter financial results, Reuters canvassed eight Wall Street analysts for their estimates of subscriber net additions during the period.

At first glance it doesn’t look like it will be a good quarter with these analysts forecasting Comcast, Time Warner Cable and Cablevision to lose around 100,000 basic TV subscribers collectively, while satellite TV plays DIRECTV Group and DISH Network will add around 320,000.

Even more worrisome for cable companies?  AT&T and Verizon added around 410,000 new TV subscribers between them during the quarter.

Yet at least one analyst cautions investors  not to read too much into cable’s basic video subscriber losses as this metric is not as important to growth as the addition of other revenue generating units in particular Internet access and phone.

“It would be missing the point to focus on basic video subscriber adds,” says Chris Marangi, an analyst at Gabelli & Co. which holds shares in Comcast, Time Warner Cable, Cablevision as well as the two satellite TV companies.

“Voice services and high speed data subscribers is what drives revenue growth,” says Marangi.

(Photo: Reuters/Glenn Britt (l), Brian Roberts (r))

Will Microsoft stay and fight or dump its bid for Yahoo altogether?

Even as it mulls its next move, the software maker is cranking up the heat on Yahoo ahead of its Saturday deadline.

The software maker has lined up a proxy slate of candidates to nominate to Yahoo’s board in the event it pursues a hostile bid according to the Wall Street Journal. The list has 10 nominees and three alternates the paper said citing a person familiar with the matter.

Nominees include former Nextel Partners CEO John Chapple, from Grey Global Group CEO Edward Meyer, Jaynie Studenmund, the former COO at Overture Services, which was later acquired by Yahoo, and former Adelphia Communications Corp. Chief Financial Officer Vanessa Wittman, said the Journal.

A partial list of Microsoft nominees for the Yahoo board first surfaced in March, when TechCrunch reported on sources a list that included Meyer, Chapple, and Studenmund but also listed Tom Freston, former CEO of Viacom Inc.

Meanwhile, Microsoft CEO Steve Ballmer insists he remains phlegmatic about the original $44.6 billion bid’s success. In the last couple of days he’s told journalists his company’s willing to go it alone rather than pay excessively for Yahoo.

The Journal believes one of the reasons for that might be internal skepticism at his own company. The longer the acquisition process takes the more Microsoft’s rank-and-file workers and executives weigh the consequences of what would be Microsoft’s largest deal and many oppose it.

(WSJ)

Keep an eye on:

• E.W. Scripps Co. said quarterly profit rose about 22 percent fueled by strength at its TV networks and its Shopzilla comparison shopping Web business. (Reuters )
• Apple posted a 36 percent rise in quarterly profit, helped by strong sales of Macintosh computers and iPods. (Reuters )
• The Screen Actors Guild and major Hollywood studios agreed to extend their contract talks by a week, heightening hopes for continued labor peace. (Reuters)
• Nintendo’s fourth-quarter profit jumped 60 percent but it forecast only modest annual growth of 9 percent as sales of its DS handheld machine slow. (Reuters )

(Photo: Reuters)

Clive Davis is one of those legendary music industry executives who, like some of the artists he has nurtured, is known by just one name, like Miles, Whitney or Santana.

But even legends have off days. Davis, most recently CEO of BMG Label Group - has been bumped up, pushed sideways, demoted, depending on your view - to the position of Chief Creative Officer for Sony BMG Worldwide, the label’s parent company.

Most media outlets and blogs are reading this as a demotion of sorts for the great man, who shaped the careers of acts from Janis Joplin to Alicia Keys.

Writers point to the departure of Davis’ long-time right-hand man Charles Goldstuck, who was president of BMG, as a sign that an era of ‘regime change’ is sweeping through 550 Madison Avenue.

In the meantime Barry Weiss, a long-time Zomba label exec, will fill Davis’ shoes. He most recently has overseen the careers of Justin Timberlake, Britney Spears and R. Kelly.

But skeptics shouldn’t be too quick to write off the 76-year old, the Wall Street Journal says, reminding readers that King Clive has made more successful comebacks than anyone in music.

(Photo: Reuters)

Aside from the chaps at EMI, Sony/ATV CEO Martin Bandier is another person who is very excited at the possibility of the Beatles archives finally going digital.

Why wouldn’t he? According to the larger-than-life publishing veteran, his company manages the rights of “about 100 percent” of the music and lyrics penned by John Lennon and Paul McCartney for the Fab Four.

After last month’s TV ratings success in licensing the Beatles’ tunes to American Idol, Bandier is keen to do more deals with the valuable archive. He thinks making the songs available in a digital format will create even more opportunities for his company, EMI and Apple Corp, which manages the Beatles’ affairs.

“One of the things that I think the Beatles are working on closer with EMI - and hopefully getting closer to finalizing it - is to allow for the digital use of Beatles on the Apple (iTunes) store and everywhere else. It would be incredible,” Bandier told Reuters in an interview.

But it isn’t his decision to make as EMI and Apple Corp lead those discussions.

“All we can do is sit on the sidelines and root like crazy,” said Bandier.

Sony/ATV is a joint venture between Sony Corp and pop star Michael Jackson. Bandier says the gloved one has been a great partner even as speculation floats from time to time that Jackson may want to sell his share to repay some of his loans.

“I don’t think that Michael’s interested in selling his share. For me, he’s been a great partner, has been supportive and has an amazing reputation among the artistry and makes a call when we need him to reinforce our position with artists. “

They say success has many fathers, and nowhere is that ever more evident than in the music business, where aging executives still argue over who first spotted the rasping rick-rolling talent that is Rick ‘Never Gonna Give You Up’ Astley in a smoky London bar.

One talent everyone loves talking about, though not much about her music recently, is Amy Winehouse. In fact, two separate executives who’ve taken the top job at different companies both claimed to have signed the five-time Grammy Award-winning bad girl, according to press releases that landed in our inboxes this morning.

Nick Gatfield is joining EMI Music as president of A&R Labels, North America and UK. According to EMI’s release he joined from Universal Music where he had been president of Universal Island Records Group since 2001:

“As well as signing five times Grammy Award winner Amy Winehouse, who has sold close to nine million copies of her ‘Back to Black’ album, Gatfield has also overseen the recording careers of Keane, Mika, The Fratellis, McFly, Busted, Sugababes, The Feeling and new artists Robyn and Sam Sparro.”

The next email in our inbox was a press release from Universal Music Group announcing the promotion of Darcus Beese and Ted Cockle as co-presidents of Island Records Group. Again the press release:

“Darcus Beese steps up after 15 years with Island, latterly as one of the industry’s most respected Directors of A&R. In 2003 he signed Amy Winehouse, now widely acknowledged as one of the world’s most talented artists. A year earlier, he signed Sugababes and strategised their reinvention, to make them one of Britain’s most successful and enduring girl groups.”

So who signed Winehouse? To be honest it doesn’t matter much to Universal Music Group International’s top boss Lucian Grange. He’s more concerned about Amy ending up ‘otherwise engaged’ one time too many according to reports.

(Photo: Reuters)

 Was it any coincidence that Apple decided to trumpet its victory as the biggest U.S. retailer of music on the same day the world’s biggest social network declared its intentions to provide an alternative?

Who knows? What’s certain is Apple now faces another in a growing legion of competitors aiming to chip away at its dominance.

Here’s what the experts think:

James McQuivey, analyst at Forrester Research:
“A MySpace music store is exactly the right step to get the music industry to the next level because it recognizes that consumers don’t just buy music, they experience it, which is a much larger concept — they share, they discover, they heckle, they even use it to provide self-identify. That’s what people do with music already on MySpace, it’s what has made Last.FM and Imeem.com so popular so quickly. But none of those experiences take it to the next level, allowing consumer to integrate buying music and related things. ”

Ben Drury CEO of 7Digital, a UK-based digital music service:
“Initially, this looks like a positive move for consumers. DRM is still a big issue for a lot of music fans and this latest announcement is further evidence that the majors are moving away from it all together. Competition to iTunes’ domination of the market is always good news, as it helps drive competitive pricing in the digital music sector. However, the quality of the user experience may still be an issue. MySpace pages are chaotic due to the levels of customisation and could easily put consumers off the service. It will also be interesting to see how many consumers, or parents of young consumers, will be willing to hand their credit card details over to MySpace when buying music.”

Paul Myers Chief Executive Wippit (digital music service):
“I think the effect that MySpace has had on music has been hyped out of control. Half truths or misunderstandings like those that the Arctic Monkeys or Lily Allen were broke on MySpace have become accepted as fact in some circles. And it’s a problem that might hurt it in the long run as the majority of friend requests most people get on MySpace these days are from aspiring musicians plugging their wares and not old friends or new acquaintances. If it carries on MySpace will become a service of aspiring musicians, spamming aspiring musicians, spamming aspiring musicians.”

MySpace has sent out a ‘breaking news’ media advisory for a news conference featuring CEO Chris de Wolfe (left) at 11am ET, which we presume is about the launch of MySpace Music as Reuters reported yesterday to be coming in days.

Silicon Alley Insider reported later yesterday that Universal Music Group had settled with MySpace for $100 million, a figure we also confirmed from our source. The November 2006 lawsuit was the main sticking point for getting MySpace Music off to a flying start. With a third of the recorded music market under its thumb, Universal’s participation was seen as critical to the new service’s success.

MySpace’s parent News Corp. will own the majority stake of MySpace Music while Universal Music Group, Sony BMG Music Entertainment and Warner Music Group will each have a minority stake proportional to their market size, say our sources. The music companies also have an eye on a possible spin-off of the music company in the future, said one source.

No one knows if EMI, the smallest of the big four, will be on board in the future. This week the company appointed former Google executive Doug Merrill as president of digital.

Keep any eye on:

• Jay-Z does $150 million deal with Live Nation - NY Times, WSJ and Silicon Alley Insider
• The iPhone shortage - NY Times, Reuters
• Garmin to cut costs in 2008 - Reuters

The Live Nation touring and merchandising agreement with supergroup U2 could be worth $100 million estimates one Wall Street analyst.

Live Nation, a tour promoter that is evolving rapidly into an all-round music company, has prepped a 12-year deal with supergroup U2 which includes its merchandising, digital, image licensing in addition to its touring but hasn’t revealed how much money will change hands (not to us anyway).

However David Joyce, media analyst at Miller Tabak, ventures that the deal will be in the $100 million range. Joyce, who likes Live Nation’s prospects, has based his guesstimate on the $120 million figure that Live Nation is widely believed to have agreed with Madonna in cash and stock last year.

The Madonna deal was a much more far-reaching partnership that included three albums over 10 years. While the U2 pact doesn’t include recording, it’s a longer term deal with a bigger live act says Joyce.

What does $100 million get you these days? Well for 12 years Live Nation can print as many ‘U2 waz ‘ere 2018 World Tour’ t-shirts as they can sell, and they might be able to convince a few more big pop names to come on board the touring/merchandise all-you-can-eat fiesta now that they have Madonna and U2 on their calling card. But will they make their money back? That’s the big question.

Joyce cautions that the record labels want a piece of the action as well:

“Will the music label companies, facing continued secular decline in their traditional album-selling business, get into the concert promotion, artist merchandising, and fan website business with their currently signed artists, thereby fending off Live Nation’s expansion attempts?”

That appears likely, especially as Live Nation works quickly to formalize deeper relationships with the biggest names in pop and may be willing to pay more than the labels at present. It’s shaping up to be an arms race that could end up getting very expensive.

(Photo: Reuters)