As people watch videos on YouTube, they'll be able to buy the song, a game, or eventually other products related to that video, via the buttons you can see at the bottom of that photo at the top of the post. Here's one example on a Katy Perry video, and here's one from Electronic Arts where you can buy the new game Spore from Amazon.

So far, only Amazon.com and Apple's iTunes are involved. When you click on those links, you're taken to Amazon.com or the iTunes store. But in coming months YouTube plans to roll out click-to-buy with other partners in music, film, television, and publishing. It's part of a broader e-commerce platform, the shape of which YouTube is keeping under wraps for now, says Bakari Brock, YouTube's business affair counsel. "There's a lot of promise for this," he told me. He envisions sales of everything from concert tickets to the cool sunglasses an artist is wearing.

For now, click-to-buy involves the direct merchants (Amazon and iTunes) selling digital products. But eventually, Bakari sees other advertisers selling against videos.

Click-to-buy joins several other recent moneymaking opportunities at YouTube, such as in-video ads that run at the bottom of videos 15 seconds after they start, contests, and a content identification system that allows video owners to share in revenues from ads placed against their content. Interestingly, says Shishir Mehrotra, YouTube's director of product management for ad solutions, content owners told YouTube to "monetize" 90% of the videos they claimed, rather than having YouTube simply take them down. (Not surprisingly, Viacom, which is suing Google over unauthorized video clips on YouTube, isn't part of that 90%.)

For all that, it's apparent that YouTube, for which Google paid $1.7 billion in 2006, still has a slog ahead to make money on the popular site. A few weeks ago, Schmidt insisted that YouTube has the "luxury of time" with YouTube. I read that to mean that, while click-to-buy looks promising, even if it takes off YouTube will still need to come up with a lot more ways for advertisers and video partners to reach people watching the videos.

YouTube, which generally doesn't run clips over 10 minutes long, also announced a test of full-length videos, with new theater-style views, shown below.

I clicked to buy and I liked it

By Glenn Brown, YouTube Strategic Partner Development Manager, and Thai Tran, YouTube Product Manager

When you view a YouTube video with a great soundtrack, you often see comments from YouTube users asking about the name of the song and where they can download it. Or when users watch the trailer for an upcoming video game, they want to know when it will be released and where they can buy it.

Today, we're taking our first steps to providing YouTube users with this kind of instant gratification, by adding "click-to-buy" links to the watch pages of thousands of YouTube partner videos. Click-to-buy links are non-obtrusive retail links, placed on the watch page beneath the video with the other community features. Just as YouTube users can share, favorite, comment on, and respond to videos quickly and easily, now users can click-to-buy products -- like songs and video games -- related to the content they're watching on the site. We're getting started by embedding iTunes and Amazon.com links on videos from companies like EMI Music, and providing Amazon.com product links to the newly released video game Spore(TM) on videos from Electronic Arts.

This is just the beginning of building a broad, viable eCommerce platform for users and partners on YouTube. Our vision is to help partners across all industries -- from music, to film, to print, to TV -- offer useful and relevant products to a large, yet targeted audience, and generate additional revenue from their content on YouTube beyond the advertising we serve against their videos. And those partners who use our content identification and management system can also enable these links on user-generated content, by using Content ID to claim videos and choose to leave them up on the site.

These retail links are being gradually added to our library of music videos and are currently only available to users in the United States, but our goal is to slowly but surely expand the program to additional content and product partners, as well as our international users. We'll be experimenting with the UI over time to make sure this works for our community, and we'll continue to innovate based on your feedback. We're just getting started, so stay tuned for other innovative new features and product options soon.

YouTube partners interested in this program should contact their partner manager.

As industry analyst Roger Kay of Endpoint Technologies Associates notes: "AMD gets to lower its fixed costs, making it profitable at a lower level of revenue, and it can still participate in leading-edge technology development. It gets out from under some of its debt and receives a cash infusion from a patient source. The bonus: it gets to participate in an entirely new business, a foundry that takes in knitting from other fabless semi companies. AMD sweated this deal for a long time. It wanted to enter into, not just any partnership, but the right partnership. Certainly, Samsung and other large semi companies would have been happy to have a captive processor and graphics company in the stable, but AMD wanted to continue doing what it does best: developing computer innards. By moving in this direction, the company positions itself well in both its existing business and a whole new future business."

The former vice president of global online sales and operations at Google, who joined Facebook last March, told the lunch audience that the only advertising that has worked really well so far is search ads. But they're focused largely on fulfilling demand for things people already know they want. "What no one’s quite figured out what to do is demand generation," she said. "We need to find a new model and new metrics."

The basic challenge for Facebook is similar to the one most publications face especially online: "Users are not on Facebook looking to buy something," she said. But she firmly believes that "where people spend their time is where advertisers will be eventually," and notes there's still a wide gulf between the amount of time people spend online and the proportion of advertising that has moved online.

Sandberg holds out hope that sites such as Facebook can integrate advertising into the kinds of things people are already doing on Facebook. "Sex in the City" movie studio Warner Bros. recently let people gift virtual shoes to their Facebook friends, for instance. "People don’t dislike ads," she said. "They dislike irrelevant, annoying ads." So if Facebook can target ads based on personal information--without annoying or freaking people out--she thinks there's plenty of opportunity for brands that currently don't find search ads very appealing to move more forcefully online.

Now, if she can just casually mention to those advertisers what she mentioned to me and Steve before the lunchtime event: She still loves reading magazines in print, too.

(Update: Mediapost has a bit more on Sandberg's interview.)

So why did eBay pull the trigger now? ZDNet's Larry Dignan and Scot Wingo at eBay Strategies explain that combining BML with PayPal further strengthens eBay as a leader in online payments--and does so before Amazon got around to buying BML itself, after investing in the company late last year.

And I'm sure BML's top brass was looking for the best deal they could get--so long as they got a deal. I wasn't on the conference call, but Wingo says that eBay CEO John Donohoe claimed the price tag would have been twice as high if the deal had been done a year ago. With all of the current economic headwinds--and so little visibility into future economic conditions--each day would likely bring a lower valuation. “Both this year and in general, if you can get a really good profitable liquidity event, it’s smart to do it," says Mike Kwatinetz, a partner with Azure Capital Partners. He was introduced to the company back in 2001, by the firm's first VC backer, Crosspoint Venture Partners.

No doubt, the payday is smaller than Kwatinetz and other investors may have wanted. I wrote about the company back in 2005, and even then insiders were thinking more in terms of a $1.5 or $2 billion acquisition. Still, I imagine they are feeling more relief that seller's remorse right about now. They earned one of the bigger paydays of the year, and no longer have to worry about the future of a company that had raised $200 million over the years but had incurred big losses..

Now, Kwatinetz is hopeful that BML will have far greater impact than it could have had on its own. He hopes that eBay will use the technology to grab share as other credit companies limit their exposure in coming months and quarters. He points out that BML's real added value is algorithms that check a shoppers' credit-worthiness in seconds, enabling the merchant to make a smart decision for each transaction. By tweaking the algorithms--say, to lower the maximum purchase amount advanced to person with a high FICO score from $2,000 to $1,500, until they've paid their outstanding bills--eBay should be able to continue offering this payments feature without incurring lots of bad debt. Of course, if the integration or execution of this deal doesn't go well, offering the BML feature could give some of eBay's already frustrated users even more to complain about--at least judging from many of the responses to this reader survey I once posted (Make sure to look towards the end of the long list of comments).

So is Kwatinetz going to take his share in dollars to put under the mattress, or go get some gold bars? Actually, no. He says he made a lot of money in the dark days after 9-11 by investing in Amazon, Apple, eBay and Microsoft. Now, with even the best companyies' stocks beaten down, he says he's again on the prowl. Asked if he's already made some investments, he says "no, but I'm about to."

Let's hope, for the economy's sake, that he's not alone.

A federal appeals court earlier this year ruled that digital video recorders offered by satellite provider Dish violate software patents held by TiVo. A lower court earlier had issued a permanent injunction against Dish that would have required the satellite provider to shut down some 3 million DVRs. Dish, formerly named Echostar Communications until it split its hardware and programming arms late last year, says its newer DVRs do not infringe on TiVo's patents.

When Dish, which has been fighting TiVo since 2004, finally decides to fork over the $74 million judgment, it will hardly affect the company's bottom line. After all, TiVo continues to lose money nearly 10 years after it began letting consumer pause, rewind and skip through programming and commercials. The company in late August lowered its guidance to Wall Street, suggesting it will post a third-quarter net loss of between $7 million and $9 million.

But the high court's decision not to take up the case is likely to serve notice on other vendors of digital video recorders that they may first need to talk to TiVo about licensing key pieces of software.

Cable companies such as Comcast and satellite provider DirecTV recently have formed partnerships to offer some customers the option of DVRs with TiVo software installed. And the Alviso (Calif.) company has been moving to make its services available elsewhere by partnering with CD-burning company Nero to bring the interface to the pc, and Research in Motion to bring customized TiVo services to the Blackberry smartphone platform.

TiVo hopes to gain more overall subscribers through such deals. That way it can expand service offerings to differentiate itself from other DVR providers. For instance, TiVo plans in coming weeks to let subscribers to its standalone digital media recorders automatically record TV programs listed on magazine Entertainment Weekly's recommended viewing list.

TiVo also recently expanded its relationship with online retailer Amazon to let broadband-connected subscribers purchase all manner of products off their set-top box.

While investors likely would take a string of quarterly profits over all these things, they seem to taking solace in the fact that the Dish decision at the very least points TiVo in the right direction.

"The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the Department of Justice. We have had discussions with regulators and look forward to responding to their questions about this agreement."

One undeniable takeaway from the delay is that there are issues with the deal that Justice feels the need to hash out. So clearly, the deal isn't going to sail through just as Google and Yahoo have laid it out so far. Justice's options range from filing suit to block it to seeking to impose conditions or restrictions on it. And Google's and Yahoo's options are to agree to some conditions (which seems likely if they don't fundamentally change the terms), forget about it (possible), or go ahead with the deal as-is and fight it in court (unlikely).

UPDATE: Kara now says that "according to several sources with knowledge of the situation, staffers at the Justice Department had recommended to their superiors that the deal be investigated further and even blocked in court." That doesn't necessarily mean Justice will do what the staffers recommend, but if true, it sure doesn't seem to bode well for an agreement that Google and Yahoo had hoped was crafted to avoid antitrust problems.

The delay isn't too surprising. Based on recent conversations I've had with outside antitrust attorneys about the deal, in which Yahoo would run Google search ads on some of its pages, the issues are far from clear. Since this isn't a merger and Yahoo retains control over which and how many Google ads run on Yahoo pages, the antitrust implications are murky. Yet clearly, there's concern on the part of advertisers about the potential for Google--which by various estimates has north of an 80% share of search advertising revenues--could capture even more and effectively raise prices for search ads. And Justice recently hired antitrust litigator Sandy Litvack, in a sign that its antitrust division is either planning to bring a case, or at least wants to provide deep cover in case it decides not to file.

So what does the delay mean? Hard to tell, but the ongoing discussions may hint that the deal won't necessarily be quashed entirely. Also, Sen. Herb Kohl of Wisconsin, chair of the antitrust subcommittee, on Thursday said that the deal warrants monitoring but stopped short of recommending it be stopped, which some observers took to mean he was assuming some form of the deal would go through. And a group of California legislators sent a letter on Sept. 26 to Justice arguing against an "unprecedented" preemptive action against the deal.

What's more, American Antitrust Institute, which generally opposes any deal that reduces competition, recently raised uncertainties about the potential impact. It said that it's unclear whether the deal would cede effective control of search advertising to Google or, conversely, provide enough money to Yahoo--up to $800 million annually, by Yahoo's reckoning--for it to remain independent. If it's the latter, the AAI mused, there could be a more competitive marketplace than if the deal were quashed and Microsoft swooped back in to buy Yahoo, as it tried to do earlier this year.

Indeed, one notable antitrust figure from the past, Microsoft antitrust hound dog Gary Reback, speculates that Google--whose monetary benefit from the deal is relative chicken feed--wants an independent Yahoo as a hedge against more regulatory scrutiny in the future. If Yahoo continues to exist independently, even as weak as it is in search ads, Google can point to a market with at least three competitors--a magic number for antitrust regulators. This worked well for AT&T despite its similar dominance over Sprint and MCI.

As a result, some observers believe the deal will pass muster after all, though with possible restrictions or ongoing oversight. But not all the experts I talked to agreed. Some think antitrust thinking is moving back toward taking a more proactive role in maintaining competition. Justice, which has come under criticism for greenlighting too many mergers and other deals, may be under pressure to take a more active role in the Google-Yahoo deal.

Google and Yahoo weren't required to seek antitrust approval, but did so in order to try to smooth the way on what they knew would be an eyebrow-raising deal. They're hoping to come to some mutual agreement on the terms of the deal to avoid an outright confrontation that could make the less worthwhile to both Google and Yahoo. But there's no guarantee they'll be able to do that. Otherwise, that's the announcement we would have heard today instead.

So for now, it's anybody's bet which way this will go. It's just not going right now. And, I should add, it's apparently not going Google's and Yahoo's way.

The news reflects a dramatic change in market conditions. During an interview at his office just nineteeen days ago, on Sept. 15, Warmenhoven was confident that the turmoil hitting Wall Street would not spread to the rest of the economy, as many financial analyst reports were suggesting. "My feeling is that the analysts on Wall Street are all woe-is-me, because their industry happens to be getting hammered. Well, go cry in your own beer. Don’t ruin mine.”

But on Sept. 29, as I reported out this story on the impact of the downturn on companies such as Sun Microsystems, Warmenhoven told me via e-mail that his optimism was waning. Then, in a conversation on Oct. 2, he said that sales were definitely being impacted. He says many customers from many different market segments--he signaled out automotive--have suddenly put spending on hold. "Everyone has just put a freeze on everything. It's like a nuclear chain reaction," he says.

Warmenhoven still thinks NetApp will grow and gain share, but is moving into a more "defensive" position from the aggressive plan announced last March to gain share. Exhibit A: yesterday he nixed plans to hire 550 new staffers to support the market share offensive. He thinks the company will ultimately make 150 of the hires--mostly for quota-carrying salespeople, rather than administrative or techie jobs that don't directly increase sales. As for lay-offs, he's hopeful it won't come to that. Warmenhoven says he's intent on not having to repeat that experience, as occurred in 2001 when the company laid off 200 people.

The fact that this is happening to NetApp is a scary indicator of how steep this slowdown might be. That's because storage was supposed to be relatively slow-down proof. While companies can put off buying more servers or starting new software projects, the world continues to create terabytes of new e-mails and photos and other such each day. It has to go somewhere.

And the psychological aspects to this slowdown are scary, as well. Back when NetApp and other tech firms got hammered in the Net Bust earlier this decade, the reasons were far simpler. Many of the customers, from dot-coms to telecoms, were simply going out of business. Now, Warmenhoven suggests that many customers are racing to the sidelines not because they can't buy, but because they want to see how the current crisis plays out. "If everybody is playing wait and see, that causes a downturn in itself."

In fact, back on Sept. 15, Warmenhoven said “The truth is that business is not that bad." While the problems at Lehman, AIG and other financial operations would certainly hurt, he felt the tech sector had already absorbed much of the slowdown in the finance sector. NetApp's sales to Wall Street, for example, had already fallen from 17% of total sales in July 2007 to 12%. He noted that Countrywide had planned on doing a $25 million project, but that had evaporated amid the mortgatge crisis.

Now, he says sales to finance have fallen even more, to a run rate below 10% of NetApp's sales. He even notes that Lehman owes NetApp money ("We'll see if Barclays makes good or not,” says Warmenhoven.)

And whether rightly or wrongly, Wall Street's woes are affecting other IT buyers. "The collapse of Lehman, the virtual collapse of AIG, the final failure of WAMU (after months of a death watch), and the buyout of Merrill Lynch have collectively had a pronounced impact on the mood of the business community." (Warmenhoven was hopeful that the $700 billion bail out, which had yet to be passed when we spoke, would inject some much-needed confidence.)

And here's more bad news. It comes from Michael Dell, who may be the tech sector's best-positioned early warning system. As the world's largest direct seller of tech gear (Dell.com does about $17 billion a year), he's in position to see changing buying patterns far more quickly than companies that sell through resellers, retailers and other channel partners. In a Sept. 30 e-mail, he told me that "I would not be surprised to see effects across many industries given the current situation in the financial sector. Now we see consumers being clearly impacted in the two areas where their money is concentrated most – their home and bank accounts. Given this, no business should consider itself immune to the current environment. Short-term focus for consumers is likely to shift to conserving and protecting capital."

The privately-held company says in a statement that it is doing the dreaded "sharpening of strategic focus" by looking for a buyer or joint partner in its handset business. The news probably shouldn't come as a surprise: one of the company's biggest customers has been its former parent, Motorola. That company's handset business has fallen on hard times after a series of missteps in product and marketing follow-ons to the hit Razr lineup.

Though a private equity group acquired Freescale in 2006, the company still must report earnings and major changes because of its rating and huge debt overhang. The company's long-term debt stands at $9.3 billion, while half its $14.6 billion asset base is listed as goodwill and intangibles. As of early July, the company had just $1.2 billion in cash and equivalents.

With the recent economic turmoil and virtual freezing of the credit markets, the company could be hard-pressed to come up with cash to satisfy short-term needs. Chip companies burn through cash at a steady rate; Freescale had just $65 million in free cash flow provided by operations as of July, down sharply from $474 million a quarter earlier.

A source close to the company denied the company is experiencing a cash squeeze and suggested it has an untapped revolving line of credit it could turn to in a dire situation. A company spokesman was not immediately available for comment.

Freescale CEO Rich Beyer has been working to hone the company's focus since taking the helm six months ago. In June, Freescale spun out a money-losing unit that is developing a new type of memory chip. Beyer has said he would look at all aspects of the operations to focus only on those with the best long-term profit and growth potential.

In seeking to jettison the cellular chip operation, the company is giving up one of its most-known businesses. Despite analyst projections that long-term growth in the cellular industry will be phenomenal as more people in developing company use only mobile devices to communicate, Beyer says now is the time to get out as teh chipmaker focuses on areas where it has leading market share.

“In the cellular handset chipset market, it has become evident that this business needs considerably greater scale in order to achieve a position of market leadership and long-term success," he said in a statement. "We feel the investment required to achieve that scale by Freescale will be better served extending our product portfolios where we are the leader and expanding our application expertise in sensors, analog, power and multimedia processing.”

The company says it will increase its investments in sensors and other chip technologies used in the automotive sector and consumer networking. Freescale has a leading position in the microcontroller market that has helped improve fuel efficiency and exhaust emissions. Supplying chips into the automotive market could be trying short-term, however, given an increasing drop-off in new car sales.

What's more, onerous restrictions on when and where you can watch the movies have slowed uptake despite widespread consumer interest in the market.

Startup Vudu now hopes it has found the right recipe with new technology and expanded distribution deals going into the holiday shopping period.

The first big news is that it will be the first to offer consumers full high-definition, or 1080p, downloads of certain Hollywood movies, including The Chronicles of Riddick, Speed Racer and The Spiderwick Chronicles. The company announced Oct. 2 plans to sell the movies under the category "Vudu HDX."

With 65 titles available to start, it's an impressive feat of software engineering; download companies must compress the images enough to transmit a full HD movie to the home in a reasonable period, but not so much that users start to see imperfections in the picture and sound. In a demonstration I saw of the technology a few days ago, it appears Vudu has done just that. Both the picture and sound in two movie demos was stunning, and looked very similar to what you'd see on a Blu-ray disc (though of course, you don't get all the extra goodies you might in purchasing a physical disc).

The catch? To get the quality right, it still takes nearly four hours to download an entire movie. That means you've got to plan well ahead if you want to watch a movie and takes the joy out of spontaneity. Those who like to plan ahead, though, might be overjoyed by an update to Vudu's website that lets you log in from the office to begin a download to the box remotely.

Will consumers care enough to turn to Vudu? That's the big question. Sources say the company has a very small base of customers after more than a year on the market, while Apple, Microsoft and even Sony are attracting many more consumers with Apple TV, the Xbox 360 and PlayStation 3, respectively. Meantime, Netflix and Roku sold out initial shipments of boxes that let consumers stream about 10,000 Netflix movies to the TV through a dedicated $199 box. And Amazon has been trying to expand its on video-on-demand service beyond TiVo digital media recorders into other equipment.

Vudu appears to be moving more aggressively to turn the tide. The company also announced it is expanding nationwide into Best Buy stores (and online). Customers who buy the $300 box through the end of the year receive a $200 credit to purchase movies (no adult titles). The credit is good for four months after purchase. It might be incentive enough to get people off the fence during what could be a big economic downturn.

The company on Oct. 2 unveiled its new PRS-700, a step-up model to its current PRS-505. It's the third new model in two years for the consumer electronics giant--and its best so far. The highlight is a six-inch touchscreen display that lets you swipe your finger back and forth to turn pages. It's a much more natural motion that reaching for buttons and far more intuitive than Amazon's somewhat awkward Kindle design.

It's a nice-looking device, too, with an all-black finish and nifty textured accents that feel nice in the hand.

Executives also took past complaints to heart about the inability to read the screen in darkened rooms; the new $399 gadget incorporates a light that rings the screen. The Sony Reader uses the same digital ink technology as the Kindle. It is energy-efficient, sustaining up to 7,500 pages of reading on one charge, but the downside is that manufacturers cannot build a backlight into the grayscale screen.

Sony also adds new search and bookmark features, and additional support for e-book formats and digital documents.

The upshot? It seems clear that Sony is committed to making money off the digital book market. Steve Haber, who formerly headed up the U.S. digital camera business, now heads the newly formed Sony Digital Reading Business Division. Haber told me in an interview that the company has transferred all hardware and software development to the United States and plan to make a full press in the coming year to take electronic readers mainstream.

To do that, Haber says the company plans to significantly revamp is much-maligned e-Book online store this month, making it easier to search and find titles and offering better suggestions about what a reader might like.

While some fans will be disappointed the PRS-700 does not offer the ability to wirelessly download copy the way the Kindle can (using Sprint's domestic cellular network), Haber says there also are plans afoot for devices that do offer the feature--not just in the U.S., but worldwide. The PRS-700 is expected to go on sale in November.

This could be an indication of demand to come for the G1 phone. Of course, we don't know how many units T-Mobile made available for preorder. But the goings-on around the G1 remind me of the fever that swept the U.S. right before the iPhone was launched. According to one story, T-Mobile expects to sell 500,000 units this quarter.

Schmidt commissioned the $4 trillion proposal, which is intended to complement other alt-energy proposals from former Vice-President Al Gore and onetime oilman T. Boone Pickens, as a way to influence whatever new administration is elected. Speaking to an audience of several hundred people in San Francisco, he said moving to alternative energies will more than pay for itself eventually in savings of various kinds, and blamed "a total and complete failure of leadership" in the government for an inability to set the country on the road to energy independence. "It's cheaper to fix global warming than to ignore it," he said. "The payback on energy efficiency is enormous."

Google's not spending much in absolute terms on its investments in alternative energy companies--about $45 million through its Google.org philanthropic arm. But its executives have been spending a lot of time lately pushing green energy. Why?

One reason, of course, is that the company is a huge user of electricity for its data centers--though it blogged today that its data centers use only 20% of the electricity of the average one. So any reduction saves Google a lot of money. Another reason, Schmidt frankly admitted to reporters after his talk, is that it's positive branding for Google.

Yet another, very Googley reason, is that fixing the energy grid, the system by which energy gets delivered from where it's produced to where it's needed, is one of the most fascinating systems design problems around. Indeed, he says Google's systems and network design expertise could contribute to development of the "smart grid", a proposed new electrical infrastructure that can run much more efficiently and reliably. It includes such notions as allowing electricity to flow back and forth between power sources ranging from solar and wind farms to plug-in car batteries around the country. "If you do this right, it sure sounds like the Internet," he said.

Still, he says there's a less practical reason that comes straight from Google cofounders Sergey Brin and Larry Page: Hokey as it may sound, they see greater use of alternative energies as a way to make the world better. So does Schmidt, who added, "To me, it's a moral issue. We should demand that people realize the implications of short-term thinking."

Some Wall Street analysts have raised eyebrows at Google's attention to energy issues, but Schmidt waved off those concerns. "Our shareholders are used to this sort of stuff from Google," he smiled.

Rubin's message: Google won't impose many of the restrictions Apple developers have been grumbling about. Unlike iPhone aficionados, developers using Android Market will, for example, be able to allow consumers to try their applications for free before they buy them. This may seem like a small thing, but developers name lack of free trial as one of the biggest reasons behind their lukewarm App Store sales.

Android Market also won't place limits on how much bandwidth a given application may use up. T-Mobile G1 phone launch partner, T-Mobile USA, just announced that it will ask developers whose free apps take up more than 15 Megabytes of bandwidth per user per month to pay it a $2 monthly fee. Since G1 users will be downloading apps from the Android Market, which offers no such restrictions, that policy, it seems to me, may be difficult to enforce.

Case in point: Gigya, a Palo Alto-based startup that makes software allowing people and companies to distribute widgets across social networks, raised $11 million in a "C" round led by DAG Ventures, which ponied up most of the money. In March, just six months ago, Gigya raised $9.5 million in a “B” round led by Mayfield Fund, with additional investment from existing investors Benchmark Capital and First Round Capital.

Gigya is growing fast. In August, comScore reported that Gigya served more than 150 million widgets worldwide during the month of June, up from 120 million widgets in March. In addition, Gigya claimed 55 million unique U.S. users in June, up from 44 million in March. See updated data below based on new comScore numbers.

Gigya was not planning to raise another round of financing, but Navin Chaddha, a managing director at the Mayfield Fund who is also a director of the company, encouraged Gigya to take advantage of any financing offers given the slowdown in the economy. DAG Ventures came knocking in July, putting an offer on the table at a higher valuation than was placed on the company in March, says Chaddha. “If extra capital is available take it,” he says.

Even though the investment diluted the ownership stakes of the company’s employees, Chaddha persuaded Gigya’s co-founders to take the money. “Navin convinced us that being diluted a little bit more would be worth it,” says Gigya co-founder and president Rooly Eliezerov. “It keeps us from being distracted. We have air for three years. Nobody will be looking around for a job.”

Eliezerov says the company will use the funds primarily to expand its sales force. Gigya currently has five sales people and wants to hire 15 more sales people by yearend.

Gigya works with companies such as Levi Strauss, Wal-Mart and Sony Pictures to create and distribute widgets that market their products across the Web. They are creating a performance-based business model in which they only get paid when a person installs a widget on their Web site, blog or social network page.

Update: Two updates on the comScore numbers. One, new data came out today from comScore showing that Slide was the most popular widget network, with Gigya close behind it. In July, 170 million people worldwide viewed Slide widgets, compared to 158 million people who viewed widgets by the Gigya network.

In addition, I learned that the comScore chart I referenced for the June numbers above contained incorrect information. It turns out that in June Slide was the most popular widget network, with 161 million people worldwide viewing Slide widgets, compared to 150 million people worldwide viewing widgets on the Gigya network.

Pichinson, known in Silicon Valley and beyond as The Undertaker, essentially shuts down companies that have gone under--most recently mobile startup Amp'd and Web phone service SunRocket. His firm sells off the assets to return as much as possible to creditors and venture investors. He has been doing this a long time, as this profile from 2002 by my former colleague Linda Himelstein notes.

Pichinson's business began picking up, he says, around July or August--he thinks because the IPO market has been dead for awhile and it started to become apparent to VCs that exits just aren't in the cards for any company that's struggling. And two weeks ago, right after that ugly weekend on Wall Street, he started getting more calls. By late last week, he was closing a couple of deals a day to shut down companies. "The venture market is getting ready to have a big oompah," he says. "The financial storm has totally paralyzed exits for VCs."

I don't want to overplay Pichinson's surge in business. He's got a business to promote, for one. For another, these are not mostly the Web 2.0 startups you might suspect, because those companies generally take so little capital that they either can run for a long time or they have too few assets to bother calling in Sherwood.

In fact, some aren't even directly related to the economy. Mostly, he's handling green-tech companies that ran into financial problems (which he's trying to restructure, not shut down) as well as biotech, medical device, hardware, and software firms--more traditional tech companies that often take more capital, and have more stuff, especially intellectual property, to sell off when they tank.

Still, it's a warning sign when Marty the Liquidator declares, "It's our turn now."