Google's adventures in the media world took a fresh twist today, after the Silicon Valley company announced it was selling off its radio assets while simultaneously spending more than $100m buying leading online video company On2.
After three years of struggling to make an impact in the radio advertising business, the search giant said it was dispensing with its Google Radio arm in an undisclosed deal with Californian online ad firm WideOrbit.
Although the terms of the agreement are not clear, it is believed that it marks a significant loss on more than $100m pumped into the venture by Google over recent years. WideOrbit, meanwhile, said it said it would inherit around 3,600 customers and a number of employees - believed to total around 40 jobs - as a result of the purchase.
"We are pleased that WideOrbit will be able to take advantage of Google's radio automation technology as they continue to develop their business," said Jim Woods, Google's director of product management, in a statement.
The radio system allowed stations and advertisers to automate the process of buying and selling airtime, using a scheme similar to Google's hugely profitable online AdWords system. But despite early trials and other efforts, the operation was widely regarded as a disappointment.
The news marks an end to Google's three-year attempt to to broaden its business into the world of buying and selling advertising space on the airwaves. That effort began with the acquisition of another company, dMarc broadcasting, early in 2006. While the deal was worth $102m in up-front cash, it also offered up to $1bn in extra payments to dMarc's owners if certain performance targets were met - objectives which are not believed to have been achieved.
However, Google attempted to soften the blow of its retreat from radio by announcing that it was spending $106m (£62m) buying up On2 Technologies, an American business that owns crucial systems used by many online video operators.
The company - based in Clifton Park, New York - owns a number of advanced video compression tools, used to make video files usable across billions of PCs, mobile phones, and other gadgets. Its customers include software maker Adobe, internet telephony company Skype and electronics manufacturers such as Nokia and Sony.
For Google, the deal will give it ownership of technologies that could be used to significantly improve web-based video - of particular interest since it owns YouTube, the world's largest video website.
Although the company refused to be drawn on its plans, it did hint that On2's systems would be used to improve YouTube's image quality and delivery speed - something of critical importance to Google executive as they press forward with plans to offer full TV episodes and movies through the popular site.
"Although we're not in a position to discuss specific product plans until after the deal closes, we are committed to innovation in video quality on the web," the company said in a statement. "We believe that On2 Technologies' team and technology will help us further that goal."
It could also use On2 to improve the video in its other products, such as mobile phone system Android - with systems that are built specifically to allow users to receive higher-quality video streams over the air and direct to their handsets.