After a few months of informal moves on it, the U.S. Justice Dept is now investigating an anti-trust inquiry into Google’s book settlement with the authors and publishers over its online book scanning and repository project. The agreement, which was reached last year, has been criticized by some authors and publishers as giving the search giant a stranglehold on the book publishing industry; the agreement is up for review by the federal court in New York in late October. In a letter to Federal District Court Judge Denny Chin of New York, William F. Cavanaugh, the Justice Department’s deputy assistant attorney general wrote that “The United States has reviewed public comments expressing concern that aspects of the settlement agreement may violate the Sherman Act.” But even though the dept has not reached any conclusions on it, this requires further investigation, the letter said.

According to a Google (NSDQ: GOOG) spokesperson, quited by LAT, “The Department of Justice and several state attorneys general have contacted us to learn more about the impact of the settlement, and we are happy to answer their questions…It’s important to note that this agreement is non-exclusive and if approved by the court, stands to expand access to millions of books in the U.S.”

Photo: Le Journal DuNet

The search for a new CEO for also-ran online video site Dailymotion has ended, Cédric Tournay (pictured) agreeing to take the reins of the Paris-based site, the company said in an e-mailed announcement. Tournay is the former CEO of European health portal Doctissimo. He replaces the company’s interim head, Ian Brotherston, who in turn stepped in for Mark Zaleski in April. Zaleski was moved over to the role of non-executive chairman and was charged with heading up international operations. With Tournay’s at the helm, Brotherston, a former BT (NYSE: BT) and AOL (NYSE: TWX) exec, will now manage Dailymotion’s EVP International Strategy. Dailymotion has raised a big $34 million round in late 2007, to expand into U.S., but things haven’t gone well for the site stateside, mirroring the woes of the online video industry. According to a French newsletter Stratégies, Dailymotion’s 2008 revenue at €12.5 million ($16.2 million)—that’s big in France, I hear—and reports have suggested it is looking to raise more money.

»  Amazon taps its inner Apple, but Apple (NSDQ: AAPL) could be the one to stop Kindle’s march cold. Great read. [FastCompany]

»  Deconstructing Malcolm Gladwell: “We hate most in others that which we fail to see in ourselves.” Anil, I love you, man. [Anil Dash]

»  MySpace and other such web services not liable for assaults. Could help Craigslist as well. [Reuters]

»  Online video startups raised about $64 million in Q209. Better than most related categories. [Videonuze]

»  Access Intelligence, publisher of Min media industry newsletter, reorgs; lays off 20 people. [Folio]

»  Shock and horror in Twittersphere: followers can be bought. [BBC]

»  MJ’s funeral could be streamed live online. At least on Hulu. [NTV]

»  Facebook’s revenue breakdown: an informed guesstimate [SAI]

Photo: Flickr

Online ads are often targeted, but that doesn’t mean that people necessarily pay attention. A survey by AdWeek and Harris Interactive (via SearchEngineLand) shows that people are much more likely to ignore internet ads (both banner ads and search ads) than TV ads, radio ads, or newspaper ads. Internet ads also don’t get high marks for helpfulness. So what’s the bottom line, according to the survey’s authors? “While advertisers scramble to create their ad campaigns, one thing they need to remember is that, even if viewership may be down and even with the increased use of digital video recorders so people can fast forward through commercials, television ads are the most helpful to consumers. Also, while an Internet strategy is essential for a comprehensive ad campaign, Internet banner ads are not considered helpful by few and are ignored the most.”

Photo: Flickr

Borrell Associates—which earlier this year provided a very bearish outlook for growth in the local online ad market—has changed its mind. The research firm now expects the market to grow by 11 percent, up from its initial projection of 8 percent in January. That means the market should reach $14.03 billion this year, up from $12.9 billion in 2008—but the jump is likely to be even bigger than that. Says CEO Gordon Borrell in a blog post: “We take a lot of pride in our projections, which have been on target year after year. But we may have been far too conservative earlier this year when we projected that local online advertising would grow 8% in 2009. At the end of the first quarter, the increase looked closer to 11%. When we finish collecting our second-quarter data in the next few weeks, I’m certain the number will be quite a bit higher.”

Al Gore-backed Current Media enticed multiple ad agencies to tweet for its business in April, but now the attention-grabbing idea has been shelved and the executive behind it is gone—as the digital media company reevaluates whether it even needs an ad agency at all. VP of brand Jordan Kretchmer hatched the Twitter RFP (request for proposal) idea; Adweek reports that he’s left the company, replaced by Michael Streefland who will serve as SVP of marketing.

Streefland told Adweek that the RFP process led to discussions about whether the company had a solid “strategic direction” in place; the executive team decided to put the agency search on hold until the details were hashed out, and plans to update the agencies that pitched within “a few weeks.” Meanwhile, Kretchmer’s departure was described as “mutually amicable;” he’s headed to a venture-backed startup.

Photo: AT&T

Already ringtones are more expensive than a full-length song—and pay a higher royalty to the artist than a normal track—but the music industry is trying to make them even more profitable by arguing that someone should pay even more when the 30-second snippet plays in public.

IDG News Service reports (via MacWorld) that AT&T (NYSE: T), in particular, has been sued by the American Society of Composers, Authors and Publishers, asserting that ringtones qualify “as a public performance under the Copyright Act.” The group wants mobile operators to pay royalties, not individual consumers.

Photo: Flickr/Joi

The Inside Word is a weekly feature that looks at compelling industry debates and discussions unfolding on the blogs of employees at digital-media companies.

Poster: Raj Kapoor

Blog name: the vc in me ...

Company: Mayfield Fund

Backstory: Kapoor, a managing director at Mayfield Fund and co-founder of online photo-sharing service Snapfish (sold to Hewlett-Packard) argues that non-profits are on the upswing online. He cites several non-profits that have disrupted for-profit businesses, including Wikipedia, Firefox and Openstreetmap, and says he expects non-profit sites to take over other areas on the web soon.

And now it’s done. Midway Games has been sold to Warner Bros. for $33 million—ending about six months worth of financial turmoil and headline-grabbing legal disputes surrounding the bankrupt Mortal Kombat publisher. Warner gets most of Midway’s assets in the deal, per the Chicago Tribune; disputes between the publisher’s unsecured creditors, senior execs and majority stakeholder Mark Thomas, as well as a lawsuit over the rights to Mortal Kombat have been resolved.

While the Jerry Seinfeld ads represented the nadir of Microsoft’s attempts to create a popular ad campaign, the software company seemed to hit its stride recently with the generally positive notices for its I’m A PC spots. But now the latest in a series of ads promoting Microsoft’s Internet Explorer 8 browser is so bad that it’s making some viewers want to puke—literally. The ad features a typical suburban couple at the breakfast table, and includes a laptop. (See the full ad, after the jump.) Microsoft (NSDQ: MSFT) told CNET that ad was intended to humorously highlight IE8’s InPrivate Browsing feature. But as complaints rose, Microsoft and its agency, Bradley and Montgomery, decided to remove the ad from their respective sites. The spot is still on YouTube for the time being.

Evite, the invitation service owned by IAC (NSDQ: IACI), is done a reorg and laid off 9 employees out of 38 total, we have learned and confirmed from the company. Among the execs who have been laid off include Rosanna McCollough, who was the GM of Evite since early last year, and Lariayn Payne, VP of Marketing for Evite.

This is part of the reorg of the service, as John Foley, who used to run Evite a while back (from 2002-2005) but now runs sister IAC-company Pronto, is taking Evite under his wings, though they will continue to be separate businesses. Hans Woolley, a co-founder of Pronto, has been named President of Evite and will report to Foley. An IAC PR rep told me they have some new ideas about Evite as a product and will be implementing those going ahead. This follows a similar reorg earlier this year where Gifts.com was brought under Pronto’s management, and Gifts.com CEO Jason Rapp left the company. .

IAC doesn’t break out Evite as separate category in its earnings—it is part of the Media & Advertising group—but Diller said in the Q109 earnings call that display advertising on Evite, its main source of revenue, has been hurt due to the downturn. A lot of more social-media friendly events sites have also come up in the last few years, including MyPunchbowl, Socializr, Zvents, Eventful, and a new contender Cocodot (which we wrote about here), and of course, biggies in social networking Facebook and MySpace.

StyleCaster has raised $4 million in a first round led by billionaire Quicken Loans owner Dan Gilbert. The site—which offers personalized style tips, shopping, and a social network—said it would use the funds to expand internationally, grow its ad network, and create new web-based and mobile apps. It was started in February and claims 200,000 unique users per month, although Compete.com puts its audience at just a fraction of that. There have been other investments in personalized fashion sites lately, including Stylefeeder which raised $500,000 in late May. Release.