All Things Digital

On one of my many trips to Los Angeles (what can I say? I like to hang where LoRo* hangs), I dropped in to see Nick Grouf of Spot Runner.

As many might know, Spot Runner is an online-offline ad agency play that has gotten big funding and even bigger hype of late.

We’ll see how that goes. But Spot Runner actually seems to be tackling an underserved (and unexciting) market of local and national clients in need of cheap online ad solutions married to more traditional marketing venues to boost revenue.

Here’s my video interview with Grouf at Spot Runner’s offices on Wilshire Boulevard:

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Earlier today, BoomTown broke the stunning-for-blogs news that ContentNext, owner of the popular online digital media news site paidContent, was being bought by the Guardian Media Group for about $30 million in an earn-out acquisition.

I have posted below a video interview with ContentNext’s founder Rafat Ali, who spoke about the deal. I caught up with him in his New York hotel this morning (by coincidence I flew into New York today on a redeye).

But the deal–which comes after the mid-May sale of Ars Technica to Condé Nast for a reported $25 million–begs the question of which tech blog might be next to be acquired.

And, after much noisy poking around today, BoomTown is giving the nod to one of the sector’s larger and splashier sites: TechCrunch.

Several sources told me TechCrunch has been in off-and-on talks recently with Time Warner’s AOL (TWX), which wants to pay from $20 and $30 million for the site.

I could not find out what price TechCrunch thinks is fair, although one might assume it is higher than that.

TechCrunch CEO Heather Harde told me via email that she had no comment. “My policy is not to comment on rumors of our business,” she wrote.

TechCrunch, which was founded in mid-2005 by Michael Arrington, is a group-edited blog that has grown large by focusing–”obsessively,” according to the site’s About page–on Web 2.0 start-ups, covering every jog and tittle of their life cycles.

Sources said the talks between TechCrunch and AOL have been ongoing for the past six to eight weeks, although the site has been in talks with several other large media companies interested in it in the past and these have not led to an acquisition.

AOL would probably be a good home for a site like TechCrunch, since it has a blog focus from its own Switched site and sites it bought, like Engadget.

AOL acquired that popular gadget site in 2005 in the $25 million acquisition of Weblogs, which was founded by entrepreneur Jason Calacanis.

Calacanis, by the way, runs an annual tech conference with TechCrunch, now called TechCrunch50.

Also, I have stayed in Calacanis’s house in the Brentwood (see post and video here), when I was interviewing a Disney exec onstage at a paidContent conference in Los Angeles recently.

Oh, yes, it’s a small tech blogging world after all.

But the money has suddenly become big for the sites involved in that universe too, although most still have relatively small businesses.

Nonetheless, tech bloggers have grown in number and influence, as sites–like this one–compete to break news and attract readers.

Such efforts take funding–despite the lower costs as compared with traditional media–and this probably means inevitable consolidation.

Before its acquisition by Guardian, for example, ContentNext had been raising several million dollars recently to fuel more expansion.

Other sites have also recently raised funds, such as GigaOm, Silicon Alley Insider and VentureBeat.

Most of them have also been talking about various roll-ups between and among one other. Sources told me that VentureBeat, for example, has spoken separately in the past to both paidContent and TechCrunch about joining forces.

VentureBeat’s Founder Matt Marshall would not comment on that, but did note that “size matters, so you have to do what you can to get the economics of scale.”

That includes adding on more sites and doing conferences, as VentureBeat has done (its new conference is called MobileBeat, for example, which will take place in Sunnyvale, Calif. on July 24.)

“Consolidation is what you are probably going to see,” predicted Marshall about the tech blogging arena.

Here’s ContentNext’s Ali talking about exactly that and more today:

When I was in Los Angeles recently, I stopped by the Santa Monica offices of Demand Media, the network of social networking sites and apps maker, because of the rumors that I had heard swirling around that Yahoo was looking to purchase it for up to $2 billion.

Such a major deal seemed to me to be a rash one for Yahoo (YHOO) to make at this point, due to its current turmoil, as it seeks to find ways to socialize its massive content and communications assets more quickly.

As it turned out, reports of that possibility were greatly exaggerated, mostly due to a dinner that top Yahoo execs Hilary Schneider and Scott Moore had with its founder and CEO Richard Rosenblatt the very night I was visiting, which was not treated like a secret in any way whatsoever.

(I called Moore and Schneider, in fact, to tell them Rosenblatt would be late due to our interview, and I am guessing they would not have picked up for me if they were in the midst of prepping a big offer.)

Rosenblatt played down the idea of any Yahoo offer on the record, noting he was not interested in selling at this point anyway.

“There is a lot of potential here and I want to build a big company for the long-term,” said Rosenblatt, who has sold several. And while IPO plans are not in the near future, one imagines Demand could work toward that.

And Yahoo sources confirm that there has been no offer floated.

But there is no question that Schneider, who just took over all U.S. operations at Yahoo, is very interested in partnering in a significant way with Demand, because it has built a profitable company that creates a plethora of ad-impression-generating social networks of all kinds.

The bigger Demand sites are eHow, and Livestrong, a health-oriented site in partnership with famous cyclist Lance Armstrong.

The company also has a major domain registry business and recently acquired Pluck, which powers social networking features on many other sites, such as the Washington Post.

So far, gold-plated investors like Goldman Sachs (GS), Oak Investment Partners–and even a private investment from major Yahoo investor Gordon Crawford–have poured almost $400 million into the company.

Nonetheless, some wonder whether the patchwork of sites–many of which get content from other Demand sites, along with its many other disparate businesses–adds up to a multi-billion-dollar valuation quite yet.

Still, at some point when it is not in the free fall it is currently in, Yahoo might make a great purchase for Demand.

And it could certainly use the dose of energy from the ebullient Rosenblatt–who came from a paparazzi-clogged lunch with Armstrong, his latest squeeze Kate Hudson and her mother, Goldie Hawn, right before our chat.

And, in fact, Rosenblatt, who was former CEO of Intermix, which owned MySpace (Rosenblatt was chairman) and sold it to to News Corp. (NWS)–the owner of Dow Jones and All Things Digital–might indeed be the kind of bold, swing-for-the-fences exec Yahoo needs to reinvent itself.

But, as you will see in this long video interview below, he has some interesting ideas about where he can take the start-up first.

Here’s the video:

Microsoft’s not the only one possibly backing billionaire investor Carl Icahn in his quest to unseat Yahoo’s leadership and board–major Yahoo investor Gordon Crawford told Yahoo CEO Jerry Yang in a face-to-face meeting last week that he was seriously considering voting against Yahoo (YHOO) in the looming proxy fight.

The troubled meeting that took place last Tuesday in Los Angeles between Capital Research Global Investors’ Crawford (pictured here) and Yang–accompanied by three Yahoo board members–could be seen as a portent of what is to come at the company’s annual meeting on August 1.

And those signs are definitely not good for Yahoo’s current leaders.

At the meeting, according to several sources with knowledge of the encounter, Yang–as well as Yahoo Chairman Roy Bostock and board members Ron Burkle and Gary Wilson–strongly defended their actions thus far.

That included claiming Yahoo’s recent management reorganization was sound–despite internal unrest over it–and calling top execs who have recently left the company “MBA types,” even though several were key tech leaders.

Yang also underscored his opinion that Yahoo needed to keep its online ad search business intact with its display business, rather than sell it off to Microsoft (MSFT), although he noted the company was open to all proposals.

But Crawford and his top analysts aggressively questioned Yang’s assertions and pressed him on Yahoo’s strategy going forward.

And they indicated they had lost patience, as Yahoo shares have drifted downward in the wake of the collapse of Microsoft’s takeover attempt.

Microsoft had offered $31 a share for Yahoo and dangled a $33 price for the company, whose stock has been trading lately in the low $20s.

According to sources, Crawford told the Yahoo contingent that he was considering backing Icahn’s new board slate–although he has not yet firmly committed to it–if the company did not engage with Microsoft over some sort of deal or find a suitable alternative.

Crawford’s Capital Research Global Investors fund–one of two separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings. Capital World Investors, which is not run by Crawford, owns 9.8 percent.

Abandonment by Crawford, an influential investor who has become increasingly and publicly disdainful of Yang and its board, means the unlikely chance that Icahn could topple Yahoo’s board and make good on his promise to throw the Yahoo co-founder out becomes a much more distinct possibility.

Of course, that got another boost today with a classic wrestling double-body slam that Icahn and Microsoft CEO Steve Ballmer perpetrated on Yang today by unveiling their own dysfunctional love match–united in hatred of current Yahoo leadership.

The move was a little sneaky and a lot crude–and mostly served to unveil just how much Microsoft dissembles about its shifting interest and non-interest in Yahoo.

But it was still an effective blow.

Wrote Icahn in an open letter to Yahoo shareholders:

“Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

Like Tweedledee to Tweedledum, Microsoft quickly followed up with its own clearly coordinated statement:

“We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

It is a union weary Yahoo investors like Crawford might welcome.

“I never though Carl [Icahn] would really prevail,” said one Yahoo source last week. “But losing the support of a major investor like Crawford would create a very slippery slope.”

Indeed, as the stock situation has deteriorated, investors have been pressuring Yahoo and also Microsoft for weeks to engage in new talks about a sweeping search and investment deal and perhaps more.

While Microsoft has been considering a sweetened bid, it was irked by Yahoo’s recent filing that called the software giant “unresponsive and inconsistent” in its intentions toward buying Yahoo.

Yahoo has clearly been trying to make the case that Microsoft had never intended to actually buy the company.

In its own statement about the Icahn-Microsoft lovefest, Yahoo said: “If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately.”

Well, as it turned out today, Microsoft doesn’t intend to buy Yahoo now–at least from Yang.

Said Microsoft in its statement today:

“Despite working since January 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo!. We have concluded that we cannot reach an agreement with them.”

Icahn is another story, of course. For now.

Recently, while I was at a conference in Los Angeles, I caught up with Veoh Founder Dmitry Shapiro.

BoomTown will be focusing a lot on online video this year and Veoh is one of the several online video-sharing sites–a group of smaller players that includes sites like Joost, Hulu, Dailymotion, Vimeo and others that I like to call not-YouTube.

But there are pluses to not being the Google-owned (GOOG) video behemoth, in that major entertainment companies who want to figure out how to put their content online aren’t wondering all day long whether to hug or sue you (or both if you are Sumner Redstone).

Today, for example, the Los Angeles-based Veoh announced that the ABC (DIS) television network would put full episodes of its hot prime-time shows–such as “Ugly Betty” (love it) and “Desperate Housewives” (not so much)–up on the site on a non-exclusive basis.

While Veoh has a lot of short, user-generated material, it has also made a push to get more professional material from big media companies like CBS (CBS)–which wins kudos for being the most promiscuous of networks–on its service.

Interestingly in this deal, media connections seem at play here: Disney-owned ABC is giving over content to Veoh, which has former Disney poobah Michael Eisner as one of its principal investors.

The traffic-type deal is typical–Veoh gets paid to send audience to ABC’s site or gets it to use ABC’s really nice player, and ABC tries to monetize it. Veoh currently says it has 28 million unique monthly visitors.

Of course, Veoh is also trying to figure out that nettlesome monetization issue that all online video sites face, which centers on building audience with the attractive big media content and then getting them to watch other ad-supported fare on its site.

But, as with all video sites, it is still in the early stages and, thus, Veoh got another tidy pile of new funding just two weeks ago to help it muddle through.

That would be $30 million more to add to the kitty of about $40 million previously raised.

Along with existing investors–Shelter Capital Partners, Spark Capital, Goldman Sachs (GS), Eisner’s Tornante Company, Tom Freston’s Firefly3, Time Warner (TWX) Investments and Jonathan Dolgen–Veoh’s latest round included Intel Capital, Adobe Systems (ADBE) and also media and tech investor Gordon Crawford.

I talked to Shapiro, who now serves as Veoh’s chief innovation officer, about the money and more here:

BoomTown just spent a few days in Los Angeles recently, and will be there a lot more over the next year, part of a new vision quest in search of what makes great original content on the Web.

Also, how any of it is going to make any money. Yes, that.

As part of this journey, I will be visiting online content efforts of all kinds, shapes and sizes–from small one-man bands to large-scale projects by big studios.

And what better way to start than with Hayden Black, creator of two really interesting Web series: a behind-the-scenes spoof of a local news broadcast called “Goodnight Burbank” and “abigail’s ‘x-rated’ teen diary,” in which Black plays a very believable teen girl.

“Burbank” came online in 2006 and “abigail” just this year.

Both have garnered millions of views, without any marketing, at a low cost of a few thousand dollars per episode.

Black, 34, who was formerly in television marketing and wrote and produced for the medium, has a production company called Evil Global Corporation.

I visited him when I was in L.A. recently, where we talked about how how he puts together the show.

Obviously, the business plan is still small scale, with advertising and product placement as its best possibility for money-making, along with making online hits to offline ones.

But first, Black has to build an audience, and he is doing OK so far. “Burbank” is one of the most popular downloads on iTunes, and Black has just inked a deal to appear on Hulu.com too.

In addition, he has presence on many social-networking sites and is about to launch a widget that will allow his audience to talk to each other from any of them.

Here’s why I like about Black: He is fresh, curious and runs circles around a lot of other online episodic efforts armed with a lot more money and so-called “Hollywood experience.”

Also, he’ll try anything.

Most of all, Black also does not dismiss the old way of doing things, focusing on development and noting quite wisely, “Storytelling never goes away.”

Indeed, it does not.

Here’s my video interview with Black:

And here is a recent episode of “Burbank”:

And here is a recent episode of “abigail”: