On Monday we broke the news that MySpace was in late stage negotiations to acquire music service iMeem. Those negotiations are now concluded, we’ve heard from multiple sources, and an agreement has been signed. MySpace will acquire most of the assets of iMeem for a purchase price of around $1 million in cash.

$1 million isn’t the “real” purchase price for the company. Some assets are being left behind, say our sources, including millions of dollars in accounts receivable plus some other cash. All or most of these assets, plus the purchase price, will be used to pay off some of the debt iMeem has accumulated.

About half of iMeem’s 55 employees will now work for MySpace. The rest, we’ve heard, will be looking for a new job.

One question that’s still unanswered – will the iMeem service live on? That’s completely up to the music labels, say our sources. iMeem’s deals with the labels terminate on this acquisition. The service is running at breakeven, we’ve heard, so MySpace may push to keep iMeem alive.

One thing is clear – MySpace is getting the iMeem assets for an absolute steal. I wouldn’t be surprised if other bidders suddenly get interested in iMeem and try to disrupt the deal before it actually closes.

MySpace is in late stage negotiations to acquire music streaming service iMeem, we’ve confirmed from multiple sources. MySpace is on a bit of an acquisition spree – they acquired iLike, another music service, three months ago.

The iMeem acquisition isn’t yet finalized, we’ve heard from sources, and awaits approval from various stakeholders.

We don’t know the price of the acquisition, but this isn’t going to be a big win for investors. iMeem has raised at least $25 million (that we’ve been able to track) plus at least another $10 million in debt. But the difficultly in making a free streaming music service work as a business model forced them to make some hard decisions. Earlier this year they renegotiated label contracts and recapitalized the company, bringing in $6 million in fresh capital.

iMeem found a way to survive a few more months. But now they’re under the financial gun again, we’ve heard, and investors aren’t willing to put more capital into the company. But MySpace is stepping in to acquire the company.

At the Web 2.0 Summit a few weeks ago, MySpace CEO Owen Van Natta outlined the strategy for the social network to perhaps regain some of its former glory: the “socialization of content.” While MySpace may not be seeing major growth in terms of new users, the social network is gaining major traction on its communities that are based on niche verticals, such as MySpace Music. Van Natta said that he thinks MySpace has a unique position on the web because of its music deals with all the major labels and the independent ones in the music space. Van Natta’s strategy is being applied in other verticals and MySpace Fashion is one niche community that has flown under the radar but features compelling content.

MySpace Fashion, which had a significant UI overhaul last week, aggregates news and provides original content about all things fashion and style, including established and unknown designers, clothing, accessories, trends and celebrities. The site and all of its features, which like all for MySpace’s niche platforms, can be fully accessed by non-MySpace members, making it a web destination as opposed to an enclosed community. The MySpace fashion community currently has includes over 500,000 MySpace members but site is also being accessed by non-MySpace members who simply want to visit the sites to checkout the latest trends and news about fashion.

This was inevitable, particularly after this video surfaced. Sacramento based law firm Kershaw, Cutter & Ratinoff, LLP is investigating complaints about unauthorized charges imposed social network users who were mislead into accepting offers of dubious quality. Among those being investigated: Facebook, MySpace, Zynga, RockYou, Offerpal Media, SuperRewards and many others.

It’s ScamVille, the lawsuit. And we’ve spoken to one other law firm considering a class action claim against these companies.

Will users be vindicated and get their money back? Maybe part of it. A recent class action settlement against WebLoyalty for post transaction marketing scams led to a $10 million settlement, just a tiny fraction of the total revenue pulled in by these offers. The law firms are the ones who get a payday.

MySpace seems to be on a bit of a hiring spree. Over the past few months the social network hired Mark Rosenbaum as Chief Financial Officer, Alex Maghen as CTO (he was formerly CTO of MySpace Music), former AOL and Tsavo exec Mike Macadaan as VP Product, and former Facebook Director Katie Geminder as SVP of User Experience and Design. Now MySpace has recruited a product manager from LinkedIn, Christina Wodtke, to be the general manager of social.

Wodtke was previously a Principal Product Manager at LinkedIn and ran the activity stream (which recently got a little Twitter-happy), communication products, and the events application. She also built the search and marketplace design team at Yahoo, and helped to redesign search, shopping and local products. Wodtke will fall under the purview of chief product officer Jason Hirschhorn.

Plenty of people use Twitter to syndicate out their content — like TechCrunch, for example. And often those tweets also are syndicated out to other places — like MySpace, for example. But now you can remove one step in that process if you choose with MyFeedSync for MySpace.

This tool, developed by Egghead Ventures, with the help of developer Sean Percival, who has been advising MySpace recently, uses MySpace ID to sync any RSS feed with your MySpace status. This is similar to the tool that MySpace’s recently announced that syncs your Twitter with your status. But instead of showing a tweet with a Twitter logo, it shows a blog post title with a link, and a RSS logo. This should make it clear to people looking at your profile that you’re highlighting a post of yours rather than just linking to some piece of content you think is cool. The blog URLs are shortened with MySpace’s lnk.ms shortener.

A Facebook developer named Yvo Schaap has uncovered a massive security flaw present on both Facebook and MySpace that would give hackers the ability to steal all of your account data, including your photos, personal messages, and basically everything else you’ve ever put on the social networks, without you ever realizing it.
Update: MySpace tells us that in their case no private data was actually exposed, see their statement below. However, Schaap believes that MySpace is simply wrong, and that they were in fact open to the exploit.

Schaap stumbled upon the exploit and contacted both Facebook and MySpace. According to his blog MySpace has since fixed the bug, and while his blog indicates that Facebook is still working on it we’ve confirmed that they’ve fixed it as well. So what exactly could the exploit do? From Schaap’s blog:

You don’t need much time to think of all the ways this could be exploited. All what has to happen is a active session, or a “auto login”-cookie and a URL which hosts a exploiting Flash file. For example when accessed, a automatic “post update” could be made, that would lure friends of the user to access the exploit URL, and the exploit would spread virally. An more invasive and hidden exploit could harvest all the users personal photo’s, data and messages to a central server without any trace, and there is no reason why this wouldn’t be happening already with both Facebook and MySpace data.

The industry is definitely making big changes to self regulate around social gaming offer scams (complete background here, with updates). Zynga, the largest social gaming company and the worst offender when it comes to scams, said yesterday that they will take steps to remove scams from games. They were quickly followed by RockYou.

Today MySpace is making a big move itself. They are instituting a “zero tolerance for app scams” policy, says CEO Owen Van Natta, and are amending their apps developer terms of use to further restrict the types of offers than can be presented to users.

The existing terms of use already prohibit many types of scams and require clear and accurate descriptions of offers. But as we’ve shown in previous posts, sometimes a clear and accurate description hidden at the bottom of a page in 8 point type isn’t all that useful.

Last week Google launched the Music Onebox — a special new search result that lets users stream songs in their entirety for free. The feature is being powered through partnerships with MySpace and Lala, who are providing the song streams, with contributions from a host of other partners like Pandora and imeem. Millions of people will doubtless stumble across the new feature on their own as they run searches for their favorite bands, but Google also has a few tricks up its sleeve to get the word out. We’re hearing that a number of well known artists will soon be actively promoting the service, offering exclusive content to fans who Google them.

We’ve heard that artists will be offering songs that can only be found through Google search, some of which will be given away for free. Over 20 artists are involved. Beyond that details are still scant, but we hear that the new promotion will start running soon — perhaps later this week.

A big part of the debate about the lead gen scams plaguing Facebook and MySpace via social games is over how much money is being made on these “offers.” Zynga, by far the most successful at building and monetizing these games, is now telling us exactly how much – 1/3 of total revenues, according to Andrew Trader, a co-founder of Zynga:

Andrew Trader, co-founder of Zynga, said the company makes about a third of its revenue from advertising and another third from virtual goods transactions. The last third comes from companies that provide commercial offers, trading Netflix memberships and marketing surveys for in-game cash.

Zynga revenue guesses range all over the place, but are likely $250 million a year or more. That means $80+ million/year is being brought in from legitimate offers like Netflix subscriptions, as well as the really smelly stuff like recurring mobile phone and learning CD subscriptions that trick users into paying big dollars for little or no return value.

What percentage of offer revenue is scammy? We believe it varies over time, and is heading in the wrong direction. Legitimate advertisers like Netflix and Blockbuster, hit with countless laundered subscriptions from repeat subscripers, are said to be dramatically lowering bounty fees paid on signup. Far less scrupulous advertisers like Video Professor and Tatto take their place.

Last night we wrote about the lead generation scams within social gaming networks. This is a guest post by Dennis Yu, the CEO of BlitzLocal, a privately held 50 person advertising agency in Denver, Colorado, specializing in local search engine marketing for franchises and professional service firms via Google and Facebook. BlitzLocal is no longer in the business of spam, but they do specialize in Facebook advertising and are now using the platform they’ve developed to run campaigns for big brands and small businesses. Dennis writes a blog at dennis-yu.com

Did you know how Mark Zuckerberg supported Facebook in the early days, before he got venture funding? Casino ads. And how about those advertisers who were making over $100,000 a day selling Acai Berry and other weight loss products – they are friends of mine, pioneers of new advertising channels. You see those ads saying “Inbox (5). Nick, someone in San Francisco has a crush on you!” (with your name, profile picture, and city in the ad). I generated millions of dollars from these offers on Facebook – I am not proud of it, but it was very lucrative.

I will walk you through how these online scams work on Facebook and other social networks – the mechanics of how the money is made, some of the people involved, and who is actually clicking on ads. If you’re reading this article, there is a good chance that you are not the type of person actually clicking on these spam ads, but are you curious as to who actually is?

In June 2007, Facebook opened up their application developer platform so that anyone could build games on top of the social network. By having access to user data, game developers could instantly make engaging, viral games. Rate who is hottest among your friends, share quizzes, race cars, grow vegetables, and so forth – all with a click of a button. Users in one click gave the game permission to access their profile data and they didn’t think twice about it.

Last weekend I wrote about how the big social gaming companies are making hundreds of millions of dollars in revenue on Facebook and MySpace through games like Farmville and Mobsters. Major media can’t stop applauding the companies long enough to understand what’s really going on with these games. The real story isn’t the business success of these startups. It’s the completely unethical way that they are going about achieving that success.

In short, these games try to get people to pay cash for in game currency so they can level up faster and have a better overall experience. Which is fine. But for users who won’t pay cash, a wide variety of “offers” are available where they can get in-game currency in exchange for lead gen-type offers. Most of these offers are bad for consumers because it confusingly gets them to pay far more for in-game currency than if they just paid cash (there are notable exceptions, but the scammy stuff tends to crowd out the legitimate offers). And it’s also bad for legitimate advertisers.

The reason why I call this an ecosystem is that it’s a self-reinforcing downward cycle. Users are tricked into these lead gen scams. The games get paid, and they plow that money back into Facebook and MySpace in advertising, getting more users. Who are then monetized via lead gen scams. That money is then plowed back into Facebook and MySpace in advertising to get more users…

Here’s the really insidious part: game developers who monetize the best (and that’s Zynga) make the most money and can spend the most on advertising. Those that won’t touch this stuff (Slide and others) fall further and further behind. Other game developers have to either get in on the monetization or fall behind as well. Companies like Playdom and Playfish seem to be struggling with their conscience and are constantly shifting their policies on lead gen.

The games that scam the most, win.

Now that the dust is settling on the newly launched Google Music (if you don’t yet have it in your normal Google search results, you can use it here) that integrates LaLa and iLike/MySpace streaming music, all I can think of is this: What were Facebook and Ticketmaster thinking when they passed up the opportunity to acquire iLike?

MySpace is the big lottery winner here. They bought iLike for $20 million in August. What they got: a talented (literally) team that is starting to fill the executive ranks at MySpace, the biggest music application on Facebook, and, it turns out, a deal with Google that is now sending massive traffic flow directly to MySpace Music.

Our understanding from sources is that MySpace made an offer to iLike without knowing about the Google deal. Supposedly, since iLike was under NDA, all they knew was that iLike had a big partnership opportunity with some big company, nothing more. In hindsight the iLike deal looks smart even without Google. Add that in and it looks absolutely brilliant. I’m no fan of MySpace CEO Owen Van Natta, but I’ll give the man credit here.

TechCrunch writer Jason Kincaid traveled down to Los Angeles earlier today to cover the launch of Google Music Onebox. In addition to his live notes from the event and the panel, he managed to point his camera at just about everyone involved in the new service: Google Director Product Management Search R.J. Pittman, MySpace Music President Courtney Holt and LaLa founder Bill Nguyen. Jason also recorded his own first demo of the product, which didn’t go so well based on the mouse and browser setup.

Key takeaways – Google will integrate new partners as it makes sense. And while MySpace knew about the negotiations between iLike and Google prior to announcing their acquisition of iLike in August, the deal was far from certain. More on that in a subsequent post.

All are below:

I’m here at Capitol Records in Hollywood, California for a special media event where Lala, MySpace, iLike, Google and others are officially announcing the launch of Google’s Music Onebox — a special new kind of Google search result that will let you instantly stream songs directly from Google’s results page. We first broke the news of the feature’s impending launch last week, though none of the companies involved have been willing to comment on it until now.

Here’s how the new feature will work: Onebox will let users stream songs directly from Google’s search result page, and will also include additional content like tour information and music videos (the actual content shown will vary depending on the partner — more on that later). Enter a query for “Use Somebody”, and you’re going to see a small ‘play’ button in your search result that lets you stream the Kings of Leon song in its entirety, or buy the song. Clicking on the play button will bring up a small browser window that will immediately start streaming your song.

Yesterday at the Web 2.0 Summit, Founder’s Fund managing partner Sean Parker gave a provocative presentation entitled “The New Era Of The Network Service.” In it, he argues that so-called “network services” like Facebook (which he helped start) and Twitter will soon dominate the web, rather than “information services” like Google and Yahoo.

It’s a very interesting idea, to say the least, and obviously you’re interested in it, as about 200 of you commented on it yesterday. So we’ve obtained Parker’s full slide deck from his presentation. Find the full presentation embedded below, definitely worth the read.

Today at the Web 2.0 Summit in San Francisco, News Corp. Chief Digital Officer Jonathan Miller sat down to talk with Federated Media’s John Battelle. Miller oversees a lot of projects for News Corp., most notably MySpace.

Miller reiterated some of what MySpace CEO Owen Van Natta said yesterday at the conference. They have a plan to move forward focusing on what they believe they’re good at, socializing content, which will be music-heavy thanks to their deals with the music labels.

MySpace CEO Owen Van Natta is here at the Web 2.0 Summit in San Francisco. He sat down with Federated Media’s John Battelle to answer some questions about his company.

Van Natta clearly had a strategy for this Q&A: To say “the socialization of content” as much as possible. That’s the direction he wants to lead the social network in as it attempts to prove it can exist in a world where Facebook has passed it as the dominant social network.

So what does the catchphrase mean? Van Natta thinks MySpace has a unique position on the web because of its music deals with all the major labels and the independent ones. And because it’s a much more open network than Facebook, he believes this will work to MySpace’s advantage in helping people find content.

None of the companies involved will confirm the new Google Music service – we have “no comments” or absolute silence from Google, LaLa, MySpace and iLike. But the new service is all but confirmed. And we have the screenshots showing how the service, which will be announced on October 28, will look to prove it.

Matt Ghering, a product marketing manager at Google, has been one of the people talking to the big four music labels about the new service, we’ve heard from one of our sources. And he has supposedly sent these screenshots of the look and feel of Google Music search to various rights holders and potential partners.

The first screenshot shows how a search result might look on Google for a search for “U2.” A picture of the band is to the left of four streaming options for various songs, and the user has the option of listening via either iLike or LaLa. Click on one of the results, and a player pops up from the services that streams the song, along with an option to purchase the song for download.

News Corp., via MySpace, acquired photo/video sharing site Photobucket back in 2007 for $250 million, plus a $50 million earnout. We’ve now learned through a source with knowledge of the deal that MySpace is in the process of selling at least a majority interest in Photobucket. The likely buyer? Disney-backed Ontela, a Washington state startup.

Photobucket has grown steadily since the acquisition, and currently brings in 54 million worldwide users each month (Comscore). But MySpace never integrated with Photobucket, keeping their own separate photo and video platforms.

It’s been little more than a side show ever since the acquisition, and the founders have left to do other projects. With News Corp. scrambling to fix up its digital division, it’s no wonder Photobucket has been on the chopping block.

Best of all, the deal will bring in new cash to News Corp.

It’s not clear that the final terms have been worked out. But our source tells us that News Corp. will sell a majority stake in Photobucket, retaining some equity. If Ontela is the buyer, the merged company will take a new round of financing, with most of the cash going to News Corp., and part of it going into the new company.

Presumably this deal won’t look much different from eBay’s spinoff of StumbleUpon earlier this year, except on a larger scale. News Corp. gets a cash injection and retains a portion of Photobucket. And the service, combined with Ontela or another buyer, gets a new start.