By Doug Caverly

Defends against onslaught of “croak” jokes

SpiralFrog hasn’t been doing so well, but $2 million can heal a lot of wounds, and the ad-supported, Web-based music service has raised this amount in funding.

SpiralFrog is the company that intended to serve both consumers’ desire to get free songs and the music industry’s interest in making money.  “Listen to a tune, then watch a commercial” is the basic idea.  As Marshall Kirkpatrick recently noted, this approach lost the company $3.4 million in the third quarter.

So, on to the fresh infusion.  SpiralFrog received $2 million “through the private placement of Senior Secured Exchangeable Notes,” according to a formal release.  “The Notes bear interest at 12 percent per annum, with interest payable quarterly, commencing January 1, 2008.  The entire principal amount is due on April 19, 2008.  The Notes are exchangeable into 2,325,582 common shares at the Exchange Price of $0.86, subject to certain adjustments.”

Fascinating stuff, right?  Or not.  Either way, this isn’t the same thing as a well-known venture capital firm stepping up to support SpiralFrog.  The company plans to expand its operations and acquire “additional content for the site,” however, so we’ll see how things pan out in the first quarter of 2008.

Inside a cramped conference room at Toronto’s Mars Discovery Centre, angel investors listened closely as Nussar Ahmad pitched the future of the Internet.

Equipped with just a cellphone and a laptop connected to the web, Ahmad, director of Addictive Mobility, demonstrated how his company’s latest software application has the ability to cash in on the world of social networking - the web’s latest gold mine.

Using code supplied by Facebook, Ahmad’s software can take pictures snapped on a camera phone and instantly send them to a Facebook profile page.

During this past year, a number of oddities emerged in the world of tech. First, Microsoft was forced to live through an unbridled flop, Apple was enjoying its meteoric rise as the most successful company of the year and social networks gained even more steam. On the back of that, the world’s favorite social network, MySpace, quickly gave ground to Facebook and companies like the ill-fated Netscape tried to take on Digg.

And it’s that site — Digg.com — that emerged this year, not necessarily as the most popular social site (it’s tough to call it a full-fledged social networking company in the vein of a Facebook or MySpace), but as the best destination for people surfing the Web.

Don’t believe me? Let’s take a look at some other social networking sites to see why they couldn’t make the cut.

Macy’s Inc., the owner of its namesake chain and Bloomingdale’s, said Friday that it would close stores deemed to have inadequate sales and eliminate 899 jobs.

Macy’s will shut locations in Akron, Canton and North Randall, Ohio; Lake Charles, La.; Riverdale, Utah; Indianapolis; Oklahoma City; Houston; and Dallas. Final clearance sales will begin in the next few weeks, the retailer said.

The company will operate 815 Macy’s after shutting the stores, all of them locations the chain acquired when it bought May Department Stores in 2005, a spokesman, Jim Sluzewski, said. The retailer’s sales growth has been hurt by the former May stores, which were converted to the Macy’s name last year, analysts said.

“They are certainly muddling through, but not muddling through very well,” Patricia Edwards, a portfolio manager at Wentworth, Hauser & Violich in Seattle, said of the merger. “It’s a big bite to chew off, and these customers are used to different things.”

Former May shoppers want coupons and national brands, Ms. Edwards said, while Macy’s clients are accustomed to that chain’s own labels. She holds shares of retailers including Target.

Shares of Macy’s rose 44 cents, or 1.8 percent, to $25.48, on the New York Stock Exchange.

In a statement, Macy’s chief executive, Terry J. Lundgren, said: “While the decision to close stores is difficult, it is necessary that we do so selectively in locations with declining sales and where we have been unable to identify sufficient growth opportunities.”

The company, based in Cincinnati, opened 10 new stores and one furniture gallery in 2007. In 2008, it expects to open five stores, and has six to eight new locations planned for 2009.

Macy’s $11 billion acquisition of May made it the second-largest department store company after Sears Holdings. Macy’s converted more than 400 May locations, including Marshall Field’s and Hecht’s, to the Macy’s name, doubling the size of the chain, in September 2006. It operates 40 Bloomingdale’s stores.

Forget the cavernous big box stores that laid waste to the retail landscape a decade ago. Apple Chief Executive Steve Jobs‘ tiny iPod has turned his company into a category killer for the digital era–first wiping out music stores and now, potentially, the corner video store.

Starting in mid-January, the Cupertino, Calif., computer and gadget maker will take on Blockbuster (nyse: BBI - news - people ) and Netflix (nasdaq: NFLX - news - people ) by renting movies from Fox on its iTunes digital media store, according to a report first published in the Financial Times earlier this week.

While older models of the iPod–and its low-end iPod Shuffle–can’t play digital video, the gadgets now have a proven record of disruption, with customers bypassing record stores to tap into illegal distribution networks, along with Apple’s (nasdaq: AAPL - news - people ) iTunes music store, to fill the up their devices.

The result: Sales of CDs fell more than 30% to 614.9 million units last year from a peak of 881.9 million in 2000, according to the Recording Industry Association. Once sprawling chains, such as Tower Records, have shuttered.

Apple, however, isn’t the first major tech company to offer digital video rentals. Amazon rents movies to users of PCs and TiVos via its Unbox service. Microsoft (nasdaq: MSFT - news - people ) is even offering digital movie rentals on its XBox 360 game console. Neither company, however, poses the same threat to DVD rental companies as Apple, which has an installed base of more than 100 million digital media devices that consumers carry in their pockets.

Since Apple first began offering video content in its store two years ago, Jobs has expanded the company’s video offerings. The weak link: the AppleTV set-top box effort. Some industry observers estimate that the device has sold fewer than 1 million units since it went on sale earlier this year, so video rentals could surely revive the effort.

Despite Apple’s movie rental push, Blockbuster and Netflix won’t disappear tomorrow. They likely will continue to slug it out in the business of renting digital video discs. Blockbuster has moved to counter the threat from Netflix, which mails movies to customers who queue up their orders online, with a Web-based service of its own. Netflix, meanwhile, allows customers to rent digital movies for their PCs.

Still, their days might be numbered: The iPod has killed before. It will kill again.

Shares of Netflix sagged 2.19% to $26.85 in Friday trading. Shares of Blockbuster fell 1.03% to $3.86. Apple rose 0.40% to $199.37.

Brian Caulfield