Despite our best intentions, it looks like the DEMO v. TechCrunch50 war will continue, even with DEMO under new management.

In 2007 we launched the first TechCrunch50 event - a place where companies can launch to rabid fans and tech press. These launching companies are the stars of the show, and they don’t pay a cent to attend. We thought DEMO’s longstanding policy of forcing launching companies to pay a $20,000 fee was ridiculous, and led the conference organizers to make decisions based not on the merits of the startups but simply on who was willing and able to pay. Not only do we let startups launch for free, we give the top one a $50,000 prize.

Our conference has grown rapidly - nearly 2,000 people attended TechCrunch50 last year while DEMO languished in San Diego with a paltry few hundred. To be fair, our events were on the exact same dates, so they were hit doubly hard. This year we moved our dates to give them some breathing room. We thought we were done battling DEMO.

But today DEMO announced that they’re giving away a “massive” prize - $2 million in advertising credits - to the top two startups at the event. The press is eating it up, saying that TechCrunch50 looks paltry in comparison.

Of course, there’s a catch. The “advertising” is remnant stuff on IDG properties (IDG owns DEMO) and will certainly be priced at rate card. They’ll also charge for creative and other expenses. Meaning there is very little actual value. I’m guessing that the amount of advertising actually delivered would be in the tens of thousands of dollars of value, at best. And, of course, every startup launching still needs to pay to launch.

But whatever. You want adverting? We’ll give you advertising.

On Wednesday I spoke with antitrust attorney Gary Reback, the man who spearheaded the push to break up Microsoft in the nineties. The event was hosted by HBSTech at the Computer History Museum in Silicon Valley.

If anyone in the world can make antitrust law interesting, it’s Reback.

Much of the hour plus conversation focused on the history of antitrust law and Reback’s experience in big antitrust cases from his new book, Free the Market!: Why Only Government Can Keep the Marketplace Competitive (buy it here). But we also spoke about current events and his concerns that lax antitrust enforcement has led to less competition today in tech than is optimal.

We spent a lot of time on Google. His chief concern is Google Books (jump to the 30 minute mark), and he argues that a DOJ investigation is appropriate. I’m more concerned with competition in search and search marketing, and we spoke about this as well.

The video is below (plus a way to get his new book for free):

July 1, 2009 - the day the music wars started in earnest. Last night the guys from Dovecote Records, a small music label based in New York, were hanging out at their local bar. Employees from file sharing startup LimeWire showed up to have a party. There was confusion over the ownership of some pizza, and a riot almost ensued.

From the Dovecote Blog:

Woman: “Who the FUCK are you? And why are you eating our pizza?”

Kosuke and Paul look confused.

Kosuke: Are you joking? Is this a joke?

Woman: No this is definitely NOT a joke. I want to know who you are and why you’re eating our pizza.

From the “rearranging the deck chairs on the Titanic file”: The new MySpace exec team has promised changes (”we have…laid the groundwork for an exciting new chapter of innovation for MySpace”). And they’re delivering. A couple of hours ago they changed the MySpace logo. No longer does it say “MySpace.com - A Place For Friends.” Now it simply says MySpace. The old logo is below.

We’ve confirmed that the change just occurred this evening, although MySpace PR is as usual not responding. They refuse to confirm that the logo is new, or say why they changed it. It sure is absurd to have a conversation that goes something like “So it looks like you’ve changed your logo this evening? No Comment. Uh huh. Ok, so any official reason why you changed it? No comment.” Trade secrets, I guess. And heck, I’m just happy someone still works there to pick up the phone.

MySpace is also on the warpath to get more users. At login they now strongly suggest you log into your email and invite friends (hopefully they’ll avoid turning this too spammy). And they’ve also added a “people you may know widget” that shows friends of friends.

We’re also hearing that MySpace will be removing some of the ugliest ad units that adorn the site today. Whether that’s an effort to clean up the user interface or simply a sign of slowing ad sales, we’ll probably never know.

Last summer we broke the news that Engadget editor-in-chief Ryan Block would team with former editor-in-chief Peter Rojas to create a new gadget startup. Today that new startup, GDGT, launches. Gadget lovers rejoice - this is a social site where you can obsess over those tiny bundles of tech joy among others just as geeky as you.

GDGT (pronounced “g-d-g-t,” but I like to just say “gadget”) is a highly structured wiki that centers on tech gadgets. Like our own Crunchbase, anyone can edit any information on the site, but everything is structured which allows for lots of slicing and dicing of the data.

Users select gadgets that they own, used to own, or want, and can add reviews and ratings. Blog reviews are threaded into the discussion as well:

It’s sad to see a company that we were all so excited about fade further into oblivion. Today Joost, one of the most anticipated startups in 2006/2007, is just an also ran in a sea of big online video sites like YouTube and Hulu. Today CEO Mike Volpi stepped down, the company is laying off most of staff, and refocusing the business to “white label online video platforms for media companies.”

Om has a good monday morning quarterback overview of why they failed, but to me it comes down to just a few things. They over funded ($45 million before they even launched) and they ignored the fact that users were quite willing to sacrifice quality in online video for the convenience of Flash in the browser. Joost waited until late last year to go all Flash - until then users had to use the downloadable Joost software and allow P2P streaming of shows. In the meantime there was no linking to Joost videos. YouTube and Hulu got all that social media and SEO juice that could have gone to Joost.

Founders Niklas Zennstrom and Janus Friis, who founded Skype and Kazaa, see the world in terms of P2P and downloadable clients. The joke about how everything looks like a nail if you’re a hammer is very true with Joost. But what worked with Kazaa and Skype a decade ago doesn’t work with online video in today’s world, obviously.

Mochi Media, the fast growing Flash game advertising network and payments platform that we covered last week, is in the midst of an internal battle over the fate of the company.

The company is mulling over an acquisition offer that would give investors Accel Partners and Shasta Ventures their original investments of around $14 million back, but not much more. Founders and other employees wouldn’t make much from the sale.

Normally this is an easy offer to turn down. The company is doing well and has “plenty” of money left in the bank, sources say. The founders obviously would want to continue to grow the business and hope for a good outcome.

But for some reason at least one investor, Ping Li from Accel, wants to close the deal and take his original investments off the table. He has been pressuring the founders and management team to accept the terms offered, multiple sources say.

That’s left the founders frustrated, who apparently turned down an offer from Time Warner to acquire the company for $65 million or so a year ago. Li convinced the founders not to take that deal, sources say, and instead raise more money to go for a “home run.” Now, a year later, Li wants to sell the company for a small fraction of that $65 million.

URL shortener and analytics service Bit.ly has been working on a new set of products, being referred to as “Bit.ly Now” internally, which will define the next stage of the company’s growth. The company confirmed these plans to us today. The services will include both a destination website as well as a distributed service via expansions to the Bit.ly API.

The core Bit.ly service, which lets users shorten web URLs into something suitable for Twitter and other services with limits on characters per post, has continued to grow quickly. 7 million URLs are shortened via the service each day, the company says, and 2-3 million of those are unique URLs Bit.ly has not seen before. Those Bit.ly URLs are clicked on 150 million times per week across a wide range of services - Twitter, Facebook, instant messaging, email, etc. Twitter itself now uses Bit.ly for URl shortening, and the service has quickly taken the lead in their market.

The magic behind Bit.ly are the stats that the service makes available on the underlying domains being clicked. Investor John Borthwick explained it all to investors in an email we obtained earlier this month:

Digg founder Kevin Rose, Founders Fund partner Sean Parker and leading Israeli angel investor Yossi Vardi will return to our third-annual TechCrunch50 conference Panel of Experts September 14 - 15 in San Francisco. Our experts judge the fifty startups launching at the event and discuss each of the demos on stage as a group. Yossi, Sean and Kevin were experts last year and return based on popular demand with Roelof Botha, Marc Andreessen and Marissa Mayer. We have an amazing line-up of new and returning experts, and additional judges will be announced over the coming weeks.

If you’re a new startup, and want a shot to launch at TechCrunch50 and pitch our expert advisors on stage, you have until June 30 to submit your application. That’s tomorrow night.

All the details for the conference are here. TechCrunch50 is an action-packed conference where fifty new startups launch over two days. The event will be held at the San Francisco Design Center, a huge and beautiful venue where we packed nearly 2,000 participants last year.

Tickets for the event can be purchased here courtesy of Eventbrite (extra early-bird pricing is available until June 30).

More on the TechCrunch50 blog.

People have always been inclined to join mobs - most people have at least one story to tell about a time that they got swept up in or had to face a crowd demanding justice for one thing or another (both of my experiences were in college). The Internet has proven to be a frighteningly efficient tool to create virtual mobs. But we note two trends that suggest a bleak future: the increase in non-anonymous mob participation and the evolution of online services towards ever more efficient and real time communication platforms that facilitate mob creation and growth like never before. Things are changing online way too fast for society and culture to adapt. Something will eventually break.

I’m going to pick on FriendFeed in this post because I believe it is the nearest thing to Shangri-La for mob justice enthusiasts. I explain why below. But first I want to compare FriendFeed to Syphilis, which may have been the “perfect” disease when it first hit Europe in the 15th century. Today Syphilis takes years to kill its victims and is easily treated with antibiotics. But back in the early 1500’s it led to certain death within months.

Aardvark’s social search service has been allowing beta users to invite friends since March. But if you don’t already know someone on the service, you’ve had to wait in line. That wait ends today, though, at least for Facebook users. You can now create an account via Facebook Connect and start using the service.

The service, which we described a couple of months ago, lets users ask questions of their friends and friends of friends like “What’s the best place to go hiking in Marin?” But it only works well, the company says, when your friends are already on the service. That’s why people who weren’t able to get an invitation from a current user had to wait in line until now:

Aardvark is a way to get quick, quality answers to questions from your extended social network. You can ask questions via an instant message buddy or email. The questions are then farmed out to your contacts (and their contacts) based on what they say they have knowledge of. If you ask taste related questions about music, books, movies, restaurants, etc., they’ll ask people who tend to show similar tastes as you in their profile.

Our posts earlier this week about the alarming amount of click fraud at Facebook left more than a few unanswered questions. The problem is real and was confirmed by Facebook. But what wasn’t clear is exactly how or why it was happening. Now, after we’ve interviewed a number of advertisers and fraudsters, we know exactly how and why they are doing it.

First the why. Click fraud is serious business on the big search engine advertising networks because the bad guys can make serious money. Sign up for an Adsense account and put those ads on parked domain names or wherever. Then all you have to do is start clicking those ads like crazy, using bots or cheap labor. The search engines fight this via obvious and not so obvious means, and an arms race begins. To win you need access to a lot of good IP addresses and not get too greedy. And like inflation and the government, a little click fraud is tolerated by Google and others. It keeps the dollars flowing.

Yuck! Today, I’m told, is National Handshake Day. It’s also Take Your Dog To Work Day & National Chocolate Pudding Day, apparently. And, err, it’s National Watermelon Seed Spitting Week.

But back to the handshaking thing. It’s disgusting and we need to put a stop to this medieval practice. Most people agree with me. Those that don’t are the people that don’t wash their hands after they use the bathroom. You have to decide which side you’re on.

I urge people to follow OpenCandy’s lead - no more hand shakes. A good place to start is at board meetings.

Mochi Media continues to quietly build out monetization and reporting tools for Flash game developers. In May we reported on the big growth in their ad network - over 100 million people a month now play games that include their ads. You can find their games on big sites like Hi5, RockYou and Meebo. We’ve heard that games that include Mochi Media stats or advertising products are played over 1.5 billion times a month.

These games are embedded on publisher sites and are very often “borrowed” by other sites who just lift the Flash files. So it’s important that the game files generate revenue directly. Ads served by the publisher around the game aren’t reliable. Mochi Media puts the ads directly into the games, so even if they are ripped off, the ads still show and create revenue.

The problem is these ads don’t make a whole lot of money - the industry average is around $0.50 per 1,000 game plays.

To fuel revenue growth to developers (and therefore Mochi Media), the company has launched a payments platform called MochiCoins with a handful of game developers. MochiCoins lets developers charge for game upgrades - users can pay for coins via credit card, PayPal or SuperRewards, and the coins that then be used to purchase upgrades in games.

The early results, we’ve heard from someone close to a game developer on the platform, are stunning.

TechCrunch Editor Sarah Lacy’s book Once You’re Lucky, Twice You’re Good came out in paperback edition earlier this month. We posted some of the new Twitter history that she included in a new chapter included in this edition a few weeks ago.

You can buy the book here. But since most of you are way too cheap to actually pay for a book, we’re going to give away 15 signed copies for free (postage included!).

Here’s what you have to do - retweet this story using the retweet button at the bottom of this post (or just click here) by midnight California time tonight. We’ll choose 15 at random and contact you for delivery details. Good luck, and enjoy the book.

Another public official of South Carolina shames himself: Governor Mark Sanford is extremely sad that he got caught cheating on his wife. The video is here, the transcript is here. Bottom line, he says “I’ve been unfaithful to my wife.” Read all about it everywhere.

All I’m wondering is, where’s South Carolina Attorney General Henry McMaster when we need him? Adultery is serious business. This is clearly, somehow, all Craigslist’s fault. For example, how do we know that Sanford didn’t meet his mistress in the adultery section of Craigslist? And also, can we please kick South Carolina out of the Union now?

LinkedIn had a management shakeup last December - CEO Dan Nye stepped down. Founding CEO Reid Hoffman stepped in again and former Yahoo exec Jeff Weiner joined the company as President.

The hiring of Weiner as President was clearly an interim move, and we predicted he’d move into the CEO role sometime this year: “The addition of Weiner is also quirky, and may explain the changes. Weiner was likely expecting a CEO role as his next job. He’s now second to Hoffman. Perhaps the company is using the interim period to see how he can handle himself leading the company. I wouldn’t be surprised to see Weiner take the CEO job at LinkedIn sometime in 2009, or else leave the company.” It turns out that is exactly what happened.

LinkedIn continues to roll. They are the fifth most valuable social network according to our recent model. The site attracts over 15 million monthly unique visitors (Comscore worldwide, April 2009), up from less than 7 million a year ago, and has 42 million registered profiles. They’ve been ebitda profitable since last year and say they plan to be cash flow positive this year. In February, Hoffman told me “We can go public any time we want to.”

And Weiner agrees, telling me today that their current plan to to build an independent public company, with three key revenue sources: premium subscriptions, corporate solutions and advertising. To date the company has raised over $100 million. The last round, a year ago, valued the company at just over $1 billion.

Just a little over a year ago Michael Barrett was shown the door at Fox Interactive/MySpace - he was, said insiders, the guy that took the fall when the company missed its $1 billion revenue target.

Fast forward a year and things look pretty good for Barrett. His former boss is long gone from Fox Interactive and shuffled to a new job at News Corp. MySpace is on the ropes. Meanwhile Barrett, landing solidly on his feet, is running one of the hottest online advertising startups in New York: AdMeld.

The company already raised $7 million in funding late last year. Today they’ll announce an new $8 million round, bringing the total to $15 million. Existing investors Spark Capital and Foundry Group led the round.

MySpace had a serious secret weapon when it came to fighting the bad guys - Director of Security Enforcement E.J. Hilbert. Hilbert, a former Cyber and Counterterrorism Special Agent for the FBI, defended MySpace against spammers, scammers, hackers, virus spreaders and other lowlife from 2007 until earlier this month when he left the company.

Our understanding is that he resigned, and was not part of the mass layoffs last week. Either way, it was a real loss for MySpace.

VoIP startup Ooma has raised another $14 million in venture capital, we’ve heard from multiple sources, increasing the total amount of capital the company has raised to $56 million. This most recent round of financing was led by existing investor Worldview Technology Partners and was a restructuring that wiped out earlier investors who chose not to participate in this round.

The company was really on the ropes and down to its last few dollars, says one source. But sales, particularly at Best Buy, are brisk and the company should reach profitability with this new round of financing, he added.

Ooma first launched two years ago as a new type of consumer VoIP product. But a complicated business model (expensive hardware, free service) made it confusing for consumers to compare to competitive offerings from Vonage and others.

MySpace is planning to lay off 300 of its 450 non-U.S. employees, it announced this morning, confirming our earlier report. Just one person in three gets to keep his or her job. The company has now announced that over 700 of it’s 1,800 total employees have been or will be laid off - 30% of U.S. staff last week, and 66% of non-U.S. staff today.

The company will not confirm whether Managing Director Travis Katz is still with the company (we reported earlier this evening that he has left the company). Update: sources at MySpace are saying that Katz will remain with MySpace and that “his role hasn’t changed.” The company will still not respond to an on-the-record request for comment about Katz.

TechCrunch Europe has the press release and email from MySpace CEO Owen Van Natta to what’s left of staff.

The company also says that it will close “at least 4 of its offices outside the United States,” adding “Upon completion of the proposed plan, London, Berlin, and Sydney would become the primary regional hubs for MySpace’s international operations. Under the proposed plan, MySpace would place all existing offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain under review for possible restructure. MySpace China, a locally owned, operated, and managed company, and MySpace’s joint venture in Japan would not be affected by the proposed plan.”

The email to employees notes absurdly that the “restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace” (with nearly half of MySpace staff now laid off, the few that are left are thinking about everything except innovation). He also says “I look forward to working with you all and speaking with you in the coming days.” I’m sure he’ll get something less than a warm reception.

The full email is below.

Update: MySpace sources now say Katz may still be at the company, although 2/3 of international staff will be terminated.

More bad news at MySpace. As we await what are likely to be significant cuts in MySpace’s international headcount, MySpace International managing director Travis Katz is out, we’ve heard from a source in the UK. MediaWeek is also reporting this.

Katz joined MySpace in early 2006 as Vice President International, taking a SVP and Managing Director title in October 2006. He is responsible for all non-US operations for MySpace, IGN and other Fox Interactive Media properties. He grew staff from 2 to more than 400 in a span of 2 years.

How many of those 400 international employees will shortly be following? We’ll likely know soon. International employees were spared from the 30% layoffs last week due to legal requirements for notice in some countries, particularly in Europe. But the clock is still ticking on those employees.

So much for zipping through airport security for people willing to pay $199 per year and have their fingerprints and iris images scanned to be pre-approved.

Clear, the largest company to leverage the Registered Traveler program in the U.S., has “ceased operation” as of 11 pm PST today and their parent company, Verified Identity Pass, Inc., is in the deadpool. They were “unable to negotiate an agreement with its senior creditor to continue operations.” Users were notified this evening by email.

The service was popular - it was used 250,000 times at Washington, DC airports alone. Overall, the company said, over 2.5 million people were processed using Clear. It operated security lanes at 20 U.S. airports: Albany, Atlanta, Boston’s Logan, Cincinnati, Denver, Indianapolis, Jacksonville, LaGuardia, Little Rock, New York JFK, Newark, Oakland, Orlando, Reno, Salt Lake City, San Francisco, San Jose, Washington, D.C.’s Reagan and Dulles, and Westchester.

Next week I’ll be interviewing antitrust expert Gary Reback on his new book Free the Market!: Why Only Government Can Keep the Marketplace Competitive (buy it here). This is a HBSTech event being held at the Computer History Museum in Mountain View, California.

This is the guy that represented Netscape in its epic legal battle with Microsoft in the nineties, and he was instrumental in convincing the U.S. government and a number of state attorneys general to sue Microsoft for antitrust violations.

In general he’s a proponent of ripping monopolies apart to keep competition strong. I’m generally less eager to kill off the companies that have won. It will definitely be a lively debate, and Google will be brought up more than once.

If you’d like to attend the event is free but has limited seating - register here. We should have archived video available after the event as well.

An update to our post yesterday talking about a weeks-long issue with click fraud on Facebook: A spokesperson for the company admits there’s a problem and says a fix is coming today. Advertisers will also be credited for any fraudulent clicks.

In a comment to the post, Brandon McCormick says:

This is Brandon on the Facebook communications team. I wanted to chime in to make sure that our voice was part of this discussion and to clarify how we are addressing this issue.

We take click quality very seriously and have a series of measures in place to detect it. We have large volumes of data to analyze click patterns and can identify suspicious activity quickly.

Over the past few days, we have seen an increase in suspicious clicks. We have identified a solution which we have already begun to implement and expect will be completely rolled out by the end of today. In addition, we are identifying impacted accounts and will ensure that advertisers are credited appropriately.