Web 2.0 birthplace sees investment dip

Is the Web 2.0 business losing a bit of steam?

As with a lot of things, the answer is yes and no.

In a report being released today, Dow Jones VentureOne and Ernst & Young found that $464.2 million was invested in 101 deals involving Web. 2.0 worldwide during the first half of the year, a 7 percent increase from the same period last year.

But, as the report noted, virtually all of that growth came in Europe and Israel; the amount invested in the U.S. — $357 million and 67 deals — was basically unchanged.

And in the U.S., the San Francisco Bay Area, arguably the birthplace of Web 2.0, drew only 20 percent of Web 2.0 deals, down from 40 percent for much of the previous five years. Instead the money flowed to New England and Southern California.

Washington state? Only two Web 2.0 ventures received investments in the period, the report said: WetPaint at $9.5 million and IceBreaker at $7.2 million.

More rhapsodic

Britney Spears received a lot of attention of the unwanted type at the recent MTV Video Music Awards. Out of shape, critics said. Bad performance. That was far from the case for Seattle's Rhapsody digital music service, which seemed to be on top of its game at the show.

Last month, Seattle-based RealNetworks and MTV Networks, a division of Viacom, announced a partnership in which the two companies will market and operate the Rhapsody service together.

The awards show was the renewed service's unveiling.

In addition to the main awards ceremony, held at Las Vegas' Palms Casino, MTV had several guest suites where artists such as Justin Timberlake and Timbaland, Kanye West, Fall Out Boy and the Foo Fighters played for smaller audiences.

Rhapsody focused on these shows. When the awards show went for a break, Rhapsody streamed video from the suites live for a commercial.

The Foo Fighters said in one shot: "Hear it at Rhapsody.com."

Some integration of the two services has already begun, with subscribers of Urge, MTV's music service, being allowed to log in to both Urge and Rhapsody.

Different chips

Embedding microchips in humans scares some people on privacy grounds alone. Now the chips are raising alarms for a different reason — a potential link to cancer.

Studies done in the 1990s found that chip implants had "induced" malignant tumors in lab mice and rats, according to an AP story last week.

The Food and Drug Administration approved the VeriChip by Applied Digital Solutions for use in humans in 2005. At the time, the man in charge of the Department of Health and Human Services, which oversees the FDA, was Tommy Thompson.

Two weeks after the approval took effect, the story recounted, Thompson left his job; five months later he took a paid position on the board of Applied Digital Solutions.

This just doesn't look good for Thompson or for the 2,000 people with RFID chips in their bodies now.

To get a sense of how worrisome this newly uncovered research might be, we asked one of them. Amal Graafstra has put two chips in his own hands voluntarily, but he deliberately avoided the kind approved by the FDA.

The reason is he wanted to be able to remove his implants easily for any reason. The "anti-migration" coating on pet and human implant chips makes them much harder to take out.

Graafstra said he strongly suspects it's this coating that caused cancerous cells to grow around the implant sites on the animals in the studies.

"Now I'm just that much more satisfied I chose not to get an 'FDA-approved human' or pet implant which have this coating," he writes in his blog.

Could it be that self-taught "guinea pigs" provide better expertise than the FDA?

Download, a column of news bits, observations and miscellany, is gathered by The Seattle Times technology staff. We can be reached at 206-464-2265 or biztech@seattletimes.com.