Virgin Media (NSDQ: VMED) has scrapped groundbreaking plans to pay music labels for songs its customers download illegally - effectively legitimising P2P - after lack of support from some of the majors, The Register first reported and paidContent:UK has confirmed.

We learned last year Virgin Media was talking with Playlouder MSP - a veteran vendor working on the model - about creating the service, which was due for launch this Q1. But what The Reg now says was to be called “Virgin Music Unlimited” has been scuppered at the last minute by major-label demands the ISP block transfer of songs outside of computers owned by subscribers.

The service would have been revolutionary, helping to monetise some of the 95 percent of music downloads the music business acknowledges are illegal. Virgin would have effectively allowed paying subscribers to continue transferring songs over P2P networks, and would have paid royalty collectors for the privilege.

Playlouder strategy director Paul Sanders told paidContent:UK: “The music service as it was conceived is on ice. It’s incredibly sad for both sides, and even sadder for consumers as the research from MidemNet shows consumers want legal P2P services and want to buy them from their ISP. The project is off and the project team is stood down.”

As the music biz is nearing its last chance to build conventional retail stores that can make a dent in illegal downloading, momentum had recently gathered behind the radical legal P2P model. Isle of Man’s government this week mooted a plan to legalise P2P in return for raising a €1 levy on ISP customers. Billy Bragg manager Peter Jenner told this weekend’s MidemNet in Cannes: “The music industry is in the f***ing dumper; the reality is we’ve got to compete with free.”

For more on the digital music industry, join us in LA on Feb. 5 for our second EconMusic conference

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Earnings season has started again, kicking off with Q4 results from Apple, Microsoft and Google, among others. We’ll be tracking the results as they come in, so be sure to check back for more coverage in the coming weeks.

paidContent.org:
—Google’s $726 Million Writedown On AOL Is More Painful For Time Warner
—Google Can’t Save Newspapers Either; Gives Up On Print Ads
—Apple Being Investigated By SEC Over Way Jobs’ Health Handled? It Should Be
—Market Unimpressed With Slim’s Investment In NYTCo, Stock Down For The Day
—Playboy Warns Of Q4 Loss And $100 Million In Write-downs; Unspecified Number Of Jobs To Be Cut

mocoNews:
—Google Writes Down Clearwire Investment By $355 Million
—Sony Ericsson Will Use A Branded Experience For The Android Platform; Will It Be PlayStation?
—Ericsson To Cut 5,000 Additional Jobs; Weighed Down By Mobile Phone Sales
—Mobile Continues Momentum In 2009 With Inauguration; Potential To Be A “Wireless Woodstock”
—Report: Mobile Music To Grow To $16.8 Billion In 2013

Join us for our second EconMusic conference on Feb. 5 at the LA Times building

As the UK officially falls into recession, it’s not a question of how many jobs will go in the regional newspaper industry, it’s more a case of how many will survive. Today, staff at DMGT-owned Northcliffe Media’s Western Daily Press and Bristol Evening Post were told the company is considering cutting 45 of its 154 editorial jobs from the two titles as part of plans to create single content and production desks for the papers, according to the NUJ. Sharing resources is a popular way to maximise resources for newspapers right now and is at the heart of proposed cuts at Newsquest’s Glasgow titles and Trinity Mirror’s Birmingham and South Wales centres.

And HTFP reports that westerndailypress.co.uk will be scrapped after managers decided the domain had “no digital future”—the site will now point Northcliffe’s more successful thisissomerset.co.uk and thisisgloucestershire.co.uk. In print, WDP will retain it’s paid-for status, and will become more like DMGT’s free Metro paper and employ fewer dedicated reporters, syndicating stories from other Northcliffe titles in the South West. It’s the first Northcliffe centre to be turned into a local “hub.”

UK company developer Eidos is laying off 14 people and shuttering its mobile games studio in Manchester almost two years after spending £7.7 million on the facility, writes GamesIndustry.biz. The move marks Eidos’s retreat from casual gaming: as the company confirms to GamesIndustry, “We need to focus our efforts on high-quality titles that will deliver long-term franchise value”—and that means focusing more on big game like Tomb Raider. While still a global gaming brand, the latest Lara Croft installment sold comparatively badly in America, prompting the company to cut its sales forecast for the year.

Eidos bought the studio, then called Rockpool Games, in February 2007 along with games-licensing company Ironstone Partners and casual-games developer SoGoPlay. At the time it said it was making an acquisition in a “consistently growing market;” the market, of course, has since changed. Last year, Eidos shut down its Pivotal studio, which made the Conflict games series, and has cut staff at Crystal Dynamics, the makers of Tomb Raider.

Meanwhile, talk of an Eidos takeover has gone quiet one week after the company confirmed it was in exploratory talks over a deal.

• Eidos Buys Rockpool For Up To 7.7 Million Pounds

Israelis get conscription for their eighteenth birthday; but France’s president Sarkozy today decided to give a free annual subscription to a newspaper all new 18-year-olds’ choosing, as Guardian.co.uk reports. It’s part of a €600 million plan designed to save the country’s ailing newspaper business, which is crippled by poor retail and distribution channels, declining readership and an ability to reform for the digital age, partly thanks to strong employee protections.

Sarkozy is “instructing (newspapers) to improve the content of their articles, bring in younger readers and transform business models in exchange for emergency aid worth €600 million over the next three years,” Guardian.co.uk said.

Issuing free subs may add several hundred thousand to the registered circulations publishers can show advertising, but this more like a sticking plaster than a permanent fix. Sure, FT.com itself is giving away site subs to university students through Facebook - but that’s a business strategy. Sarkozy said “The habit of reading a daily paper takes root at a very young age.” But it’s a habit many young folk have already fallen out of.

Other measures, however - tax breaks for investors in online journalism, and the state will double advertising in print and online papers (unlike UK governments, which are looking at pulling their mandatory newspaper ads away). His sweeping media reforms since Sarkozy came to power include removing ads from public service TV and placing a levy on ISPs to made up the shortfall.

—Spotify: In-beta Swedish music streaming service Spotify has appointed former Yahoo (NSDQ: YHOO) director of business development Gustav Söderström as its “director of portable solutions”, signaling an imminent move into the mobile space for the company. Writing on his blog, Söderström says that using it for the first time gave him “that very rare ‘Wooha!, wait a minute!’ feeling”. Though he doesn’t reveal any concrete plans, he writes: “Starting in February, I will head up something that a lot of users have already requested and discussed extensively, Spotify on the mobile.”

—Publicis Groupe: Advertising group Publicis’s Vivaki division has appointed former Zed Media director Nick Burcher to the new role of head of social media and audience messages for EMEA. Burcher will be working on the social side of Publicis brands including Digitas, Zenith Optimedia, Starcom Invest, Performics and Zed and will be responsible for the implementation the Vivaki trading platform across EMEA. Via Mediaweek.

—Associated Newspapers: Roland Agambar, head of marketing for News International’s The Sun and News of the World, has defected to arch rivals Associated Newspapers, the national newspaper division of DMGT, which has just agreed to sell the Evening Standard. At NI he will be replaced by Allan MacCaskill, currently head of brand marketing, and he will be working alongside former L’oreal marketer Jeremy Schwarz who has taken up the new role of chief marketing officer. In a separate development, Associated has promoted group marketing Linda Grant to the new role of director of commercial development. From Campaign.

BT (NYSE: BT)  has issued a profits warning after suffering losses in its Global Services division and announced a one-off charge against profits of around £340 million due to the on-going review of the company’s finances and contracts. And it may not be the last “one-off” charge—BT says it could make more non-cash charges when the reviews are completed in Q409.

Global Services was given a new management team following disappointing Q208 results when it failed to make a profit despite winning £1.8 million in contracts worldwide. That division, currently the subject of review of its 17 contracts of its cost efficiency, is making up the lion’s share of the 10,000 full-time and temporary redundancies currently being made across the group.

The company expects to report revenue growth of 15 percent in its Q309 results, due on February 12, thanks to favourable currency exchange rates, acquisitions and orders of £1.8 billion taking the 12-month order list to £8.3 billion. The company’s retail, wholesale and openreach divisions are all expected to post results ahead of expectations for Q3 with EBITDA five percent up year on year. In Q2 BT made £5.3 billion revenue, up four percent on Q1, although its pre-tax profits of £590 million were down 11 percent on the same period last year.

Release.

• Earnings: BT Will Cut 10,000 Jobs To Slim Costs, Networks Unit Underperforming

Austrian travel site Tripwolf has completed a $2.5 million (£1.8 million) round of VC funding led by German travel guide producer MairDumont and joined by the Holtzbrinck publishing group, according to thealarmclock.com and confirmed to us by the company. The site mixes professional travel advice with user-generated tips and reviews from its online community of 13,000. The money will be spent on The money will be used to improve the site, improve its content and mobile versions: an iPhone version is currently in beta and a Google (NSDQ: GOOG) Android app is expected soon. Tripwolf is developing French, Spanish and Italian versions of the site to add to the existing English and German versions.

Barcelona-based multimedia adult content producer Private Media Group (PMG) is extending its global empire, buying US adult VOD portal GameLink for 8.5 million PMG shares, plus a further 4.6 million based on earn-out targets. The deal gives the company a bigger foothold on content production and digital distribution in both adult and mainstream sectors and gives Private the use of GameLink’s US and Europe sales staff.

Nasdaq-listed PMG already has online or mobile distribution deals in 37 countries so now expect a global re-launch of GameLink’s VOD portal, a re-launch of Private.com (which is not for the faint-hearted), more localised content for more countries and increased distribution to other platforms. Between them, the two companies made $35.3 million in revenue for the nine months to September 30, compared to $22.7 million for PMG alone. Private magazine was launched in Stockholm in 1965, though the company is now based in Nevada.

Release.

• Adult Mobile Content: Ad-Supported Videos, French Publisher Deal

Helsinki-based Sauma Technologies, which is making an in-browser massively multiplayer online game (MMPOG), has scored €500,000 funding from government-backed Tekes and Finnvera funds plus the Nordic Game Program. Its first game, Hours Of War, is due for release in the next few weeks - set in war-torn Normady, 1944 - and will involve both free, pay-monthly, pay-per-play and ad-funded options. Sauma plans to take it to more platforms and to develop more casual games later this year, Arctic Startup reports. Sauma reckons the multiplayer online games market is worth €1.6 billion.

The Paris-based game publisher posted strong fiscal Q308 numbers—buoyed by sales of new launches like Shaun White Snowboarding and Prince of Persia. Sales came in at €508 million, up nearly 13 percent from fiscal Q307; beating Ubisoft’s own forecast. It acquired Swedish studio Massive Entertainment from Activision Blizzard in mid-November, and just bought out Brazilian developer Southlogic Studios this week. Release.

The party’s surely over for Google’s go-go ad sales. It drew revenue of $685 million from the UK in the three months to December 31 - that’s 3.6 percent more than the same period last year, but 11.7 percent down on the previous quarter. Though many have expected online to continue attracting more and more ad spend, Google (NSDQ: GOOG) is clearly now a victim of the falling spend that is hitting other media.

Overall, though, Google recorded 18 percent better worldwide revenue than a year ago at $4.83 billion. The UK’s contribution to Google’s overall bottom line, though, is sinking - from 14 percent of global revenue in the previous quarter, it fell to 12 percent. Non-US sales’ proportion fell slightly from 50 percent in the previous quarter to 48 percent. Currency fluctuations between the quarters cost Google $334 million. Full Google earnings coverage over on paidContent.org...

• Earnings: Google Q4 Profits Plummet 70 Percent; But Still Beats Estimates
• Earnings Call: Google’s Schmidt: ‘We All Had It Easy In Q4’; Profit Hit By Writedowns

Channel 4 will slash its mobile offerings to save money, moving to automatic porting and away from bespoke mobile publishing. Channel 4 has been a prime move in mobile content in the UK since launching a separate mobile division back in 2005 with an intent to develop mobile as a separate content medium, so this is kind of sad announcement for the industry. “As a consequence of the current difficult economic conditions, we believe the best opportunity for the continued strong growth of the portal involves concentrating resources on providing free content, such as preview video clips of top shows…We will therefore shift emphasis away from bespoke mobile publishing and towards automated content delivery,” a Channel 4 spokeswoman is quoted as saying in NMA. Fewer labor-intensive services such as competitions and quizzes would feature on the portal.

Robert adds: C4 is on a big cost-saving drive, closing its red button interactive TV ad sales business as well as its mobile ad sales operations recently. It’s also removed ads from its homepage to focus on TV show content.

• Comment: Jon Gisby, New Media Director, Channel 4: We Can Re-Invent Public Service
• UK Broadcaster Channel 4 Buys 10 Percent Mobile IQ Stake, Entering Mobile Video Ad Space
• UK’s Channel Four Broadcasts Whole Shows Live

UK premium content regulator PhonepayPlus has released new rules for the mobile content industry following a 108 percent increase in mobile-related complaints from 2006/07 to 2007/08. The most significant point is that anyone signing up to a subscription service which charges more than £4.50 ($6.25) in any given week (including joining costs) must first receive a free confirmation message detailing the cost and conditions of the service, and reply to it. Moreover, any company wishing to offer mobile subscription services for more than £4.50 a week or wanting to apply pay-per-page charges must first apply for permission from PhonepayPlus. Release.

The “final statement on mobile phone-paid services and their marketing” also includes requirements that prices be clearly displayed in advertising, and a product or service cannot be labeled free unless there truly is no cost involved. Some other stipulations:

—Providers sending free promotional messages must inform recipients that the message is free and make clear how to opt out of receiving similar messages in the future

—All subscription and promotional messaging services must respond to the “stop” command

—Companies cannot sell or trade third party marketing lists without evidence the recipients have agreed to receive promotional messages

—Text-based chat services must not imply that users are exchanging messages with other individuals nor that customers will be able to meet people by using the service unless this is the case.

• Industry Moves: George Kidd Resigns As PhonepayPlus CEO
• Zed CEO Accuses British Watchdog Of “Destroying” UK D2C Content Market
• Updated: EU, UK Clamping Down On Mobile Content Scams

Cambridge-based enterprise search firm Autonomy has bought California-based CMS group Interwoven for around $775 million (£563 million) in cash. The deal, which is subject to shareholder approval, would give the two companies a combined base of 20,000 customers. The lack of credit that hampered M&A deals in 2008 doesn’t appear to have been a problem here: the deal was eased through with the placing of ordinary shares, a new credit facility from Barclays and cash reserves from both parties.

Interwoven shareholders will receive $16.20 in cash for each of their shares. The acquisition, which officially goes through in Q209, will leave Autonomy with a cash balance of £75 million. Autonomy expects the deal to increase earnings by 20 percent in the first full quarter. It anticipates cost-savings too, $40 million in the full first year of the combined company from the elimination of duplicated operations. Interwoven, whose customers include BT (NYSE: BT), Virgin Media (NSDQ: VMED) and Microsoft (NSDQ: MSFT), reported revenues of roughly $70 million in Q4, while Autonomy posted net profits of $53.4 million on revenues of $145.3 million for the same period. Release.

Any notion that the debate over whether Google (NSDQ: GOOG) is a friend, enemy or frenemy to online content producers is mellowing was put to rest at today’s Oxford Media Convention. 

The National Union of Journalists called for a tax on content aggregators, while Google itself made the case for a loosening of UK IP law to allow freer use of copyrighted material. Google UK’s public policy manager, Richard Sargeant, told the convention that the UK’s fair dealing law, which allows limited re-publishing of news content along with attribution, should be brought in line with US fair use law. He says (via Guardian.co.uk): “Europe doesn’t have anything similar [to the US], which makes it much more difficult for people to see what they can and can’t do.” Such a change was recommended in the 2006 Gowers Review of IP regulations and its implementation here could lead to Google News legally publishing excerpts of news stories instead of just a link and the the first line for each one. More after the jump…

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Update: Stone told us: “Nothing concrete to report just yet.”

Apologies for another post about the messaging-service-without-a-business-model, but co-founder Biz Stone has promised inbound SMS service is coming back to the UK - a move likely to see an acceleration in already fast-growing take-up. Twitter canceled the service here in August, claiming excessive SMS termination fees could make it cost $1,000 per user per year, despite having raised a healthy $20 million venture capital previously.

But @biz told Times Online the “service was going to be restored soon and negotiations were under way for better deals with telecoms operators in individual countries, after the hiring of a director of mobile business development last week”: “We are close with Canada and the UK is on our list as the first place to go next. We know that it will be well received there.”

Twitter and O2’s Manx Telecom, which was routing Twitter’s UK SMS, have ignored our requests for comment throughout. Having grown 10 percent in the last year after the addition of celebs like Jonathan Ross to the geek clique, there’s a real risk Twitter could approach mainstream popularity - but that will always be held back if SMS is not restored.

(Photo: juanjaen)

• Twitter Rules Out Premium Rate Service In UK
• Updated: Twitter Stops SMS To UK, Blame The Isle Of Man

Microsoft (NSDQ: MSFT), which announced 5,000 worldwide job cuts today, is making 58 of them from the UK. The outfit said 1,400 of the cuts are coming immediately, after finding Q4 net income fell 11 percent on poor Windows sales. Microsoft is believed to employ about 2,900 in Britain so the cuts represent about two percent of the workforce here, coming from services, support groups, “vendors, contingent staff, facilities, capital expenditure and marketing”, the company told Computer Weekly. Ashley Highfield has now joined Microsoft from Kangaroo to be MD and VP of its UK consumer and online business. David Kaplan has the full layoffs story over on paidContent.org.

• Earnings: Microsoft Cutting Up To 5,000 Jobs; Q4 Net Income Down 11 Percent
• Earnings Preview: Analysts Expect Microsoft To Miss Projections; Apple Still Inspires Hope
• Earnings Call: Despite Down Economy, MSFT Ad Revenue Up 7 Percent

The Generations Network’s Ancestry.co.uk is taking on former eBay (NSDQ: EBAY) UK marketing director Olivier Van Calster as its UK MD. Belgian Van Calster worked for Pearson (NYSE: PSO) on FT.com commercial roles for five years before joining eBay, where he was clearly liked (the eBay.ie team, over which he also had responsibility, recorded this video message for his send-off). He holds an MBA from Insead, the European business school. Private equity firm Spectrum Equity Investors bought a majority of The Generations Network for $300 million in 2007. The company had raised $95 million in three “significant” rounds in the past 10-plus years.

• The Generations Network, Parent Of Ancestry.com, Sold To PE Firm For $300 Million

—ITV (LSE: ITV) Football: ITV is finally catching up to the BBC on red-button content. It will broadcast a 15-minute analysis segment on the interactive slot following Saturday’s Man Utd/Spurs FA Cup game, simulcast on ITV.com/Football. The site will also run extended highlights of cup games. Release.

—Premier League: The competition, which is already suing YouTube, is now lobbying in campaign against piracy of its copyrighted live match footage. The league’s lawyers arecalling on culture secretary Andy Burnham and business secretary Lord Mandelson to make ISPs legally responsible for customers’ IP infringement and to appoint a government IP tsar. The league has sent more than 700 warning letters and had a 87 percent success rate in stopping infringements this season. The league has also tried to force video-sharing site Justin.tv to remove videos of matches streamed by webcam users. Via Guardian.co.uk.

—Sony (NYSE: SNE) PSP: The handheld console is trialling a system of relaying replays on PSP screens to fans at live sports events. Some football, rugby and cricket stadia show replays of key incidents on big screens during matches, but PSP owners could get the same thing in their palm in a system being pioneered at Arsenal’s Emirates stadium. Sony is working on technology that would allow fans watching the same game to chat and share statistics with each other using PSPs. From tech.uk.msn.com.

—Five: The broadcaster Five has completed the outsourcing of its website hosting and management to Claranet in the hope of bringing together all its online content in one place. The plan was agreed last year by Five’s digital media group and since October the company has launched a corporate site and developed accompanying content for its flagship TV shows. Five says 2009 will see development of gaming content and communities. Via Managementconsultancy.co.uk.

—4iP: Channel 4’s £50 million new media investment fund 4iP has unveiled one of the first projects to launch a fully-formed service. AudioBoo is an iPhone app which lets users record and share audio files and it launches in beta on January 26. Designed to make it as easy to share audio as it is to send and receive photos, the service will have an accompanying website and API.