Microsoft is searching for a major executive to run its world-wide online sales, said several sources close to the situation, even as talks with Yahoo about a deal to partner in its search and display advertising businesses continue.

“They need to find a way to make money in display,” said one source close to the situation. “Or, I guess, find a way to not lose quite so much.”

The software giant has been trying to build its online business for many years now, spending a lot of money and not getting very much traction.

In its recent quarterly results, in fact, Microsoft’s online services got hit badly, with a 14 percent decline in revenue from a year ago to $721 million. Losses doubled to $575 million.

Sources said Microsoft (MSFT)–which has hired headhunting firm Spencer Stuart to conduct the search–is looking for more execs to turbocharge the situation, with one criterion being that the person hired is “another ambassador to Madison Avenue.”

Last fall, it did that by hiring Time Inc. ad exec Robin Domeniconi to take over as the new VP, U.S., Microsoft Advertising.

That’s why the new sales candidate the company is looking for might only be for someone to lead Microsoft’s international ad sales, since the exec in charge of that business left in December as part of a mass of changes in the wake of the hiring of digital head Qi Lu.

Those changes included the departure of that exec, Global VP of Sales Bill Shaughnessy, as well as its top online ad sales exec, Brian McAndrews, and the rejiggering of its online sales unit.

In that switch, Microsoft said in a press release: “The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.”

The move to centralize, according to sources, has been controversial within the company, since it means all sales are being lumped into one megagroup.

That could all change dramatically again if there is any success in the talks Microsoft has been having with Yahoo (YHOO) about outsourcing its online display sales to the Internet giant. The pair have been discussing partnering over search and advertising.

While such a deal might not happen–Yahoo has been especially reticent to separate its search and display businesses–the two sides have been discussing several scenarios in a bid to compete with online giant Google (GOOG).

Among the latest ideas is one in which Yahoo would take over both search and display advertising sales and Microsoft would run the tech behind the scenes.

Such a deal would be a major shift for both companies in their business focus and would also tether them together.

In the wake of the changes at Microsoft’s online division, a senior advertising sales exec, Bill Shaughnessy (pictured here), is set to leave his post, the company confirmed.

The departure was first reported in Ad Age, which said Shaughnessy’s future plans were undetermined and, in fact, noted it was unclear why the longtime Microsoft (MSFT) staffer of 15 years was leaving.

BoomTown found the answer looking at the very bottom of the press release announcing the hiring of former Yahoo (YHOO) tech exec Qi Lu as head of its online services group:

“As part of today’s announcement, several teams will move to further align resources. The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.”

The move to centralize, according to sources, has been controversial within the company, since that means all sales are being lumped into one mega-group.

Shaughnessy has worked on a range of MSN properties, as well as for the Windows group.

In his most recent job, he worked closely with Brian McAndrews, the top online ad sales exec at Microsoft, who announced he was leaving the company on the same day Lu was hired.

McAndrews had been a contender for the digital head job.

According to a Microsoft profile of him, Shaughnessy was global VP of sales, marketing and services, “responsible for the business leadership and management of its international business operations outside of the United States, including the Greater Asia region. His responsibilities include sales, marketing, business development, programming and regional and country management.”

It used to be, many years ago, that longtime Silicon Valley tech exec Eric Schmidt could work up a very significant head of steam when talking about the thuggish monopolistic practices of Microsoft and its negative impact on the tech industry.

And, for the most part, Schmidt was dead right–Microsoft’s overwhelming power then had a malevolent impact, both directly and indirectly, on innovation and openness in the digital sector.

Thus, BoomTown is both gobsmacked and a bit in awe that Schmidt–now sitting atop the high-tech pig pile as CEO of the powerful search giant, Google–can, with a straight face, make the argument that everyone is wrong to be nervous about its deal with Yahoo to serve some of its search and text advertising, even though the pair control more than 80 percent of the search market.

Because while Google displays none of the bullying tactics of Microsoft in its glory days–think of it more like a giant that could accidentally squash all us little people with its big dumb feet–the worries about it amassing too much power are well-founded.

Along with customers, competitors and anyone who fears a concentration of power in the hands of one player, I have been a critic of the deal since it was announced in the spring as a Hail Mary play to get Yahoo out of the clutches of Microsoft.

In addition, the Justice Department has hired an outside litigator to decide whether to proceed with an antitrust investigation of the deal and possibly look into Google’s business more deeply.

And just today, comScore released new stats for search market share for August; Google’s rose once again to 63 percent, up from 61.9 percent.

Both Yahoo (YHOO) and Microsoft (MSFT)–the distant No. 2 and No. 3–lost share, logging in at 19.6 percent and 8.3 percent, respectively.

In addition, Google (GOOG) accounted for 77.4 percent of all search engine spending in the second quarter of 2008, according to Efficient Frontier.

And–oh, yes–Google-owned YouTube dominates online video rather significantly.

Translation: Scary, like that-bullying-banker-Mr. Potter-from-”It’s a Wonderful Life” scary.

Still, at a press conference yesterday– my invitation must have gotten lost in the email so I will have to rely on the quotes collected by others–Schmidt went on the offensive to defend the Yahoo deal, which is set to begin in a few weeks, in a most peculiar way.

“While we have been talking to regulators, we don’t know what their position is,” Schmidt said. “We don’t know if they think it’s a good deal or poor deal.”

But Schmidt and other Google execs–including co-founders Larry Page and Sergey Brin–said they would move forward with or without regulatory approval.

“Time is money in our business,” said Schmidt, who also noted the deal was “designed precisely to meet the terms of antitrust law in the United States.”

Well, I am not sure being within the letter of the law is quite the argument I would make. After all, one can be entirely correct–and Google does love to be mathematically accurate!–and still be completely wrong.

Yet Schmidt pressed on!

“You face a question as a large company trying to change things: How many initiatives do you want to take on that are unpopular or lead to criticism?,” he asked, pontificating as if he were fighting for better health care for the world’s poor instead of just being able to sell small text ads hawking things like Viagra and electronics.

Schmidt said the deal would have “strong user benefits” and not raise online ad prices, part of Google’s basic argument that its auction-style business model makes that impossible.

As a side note, Brin–who was, I think, being completely genuine–said Google also felt a debt to Yahoo co-founders Jerry Yang and David Filo for helping Google get started a decade ago.

(Ironically, being the search option on Yahoo’s homepage was the key way Google grew and Yahoo damaged its future prospects).

But, while the payback argument is very touching, it ignores the fact that–on its very face–the No. 1 and No. 2 search and search-ad companies should never be in business together.

That Google leadership does not seem to understand these fears is disturbing.

And with what can only be described as an oafishly arrogant style, they seem to be dismissing anyone who raises concerns as being uneducated or simply a front for Microsoft’s lobbying efforts.

“We are quite certain Microsoft is busy helping everyone get upset about things,” said Schmidt, who has long loved to slap Microsoft at any opportunity.

As if we are all in the thrall of Microsoft (whom I, for one, smack around daily for its dopey Web strategies).

Google, it seems, is in the thrall of no one.

While the deal has been voluntarily delayed by three months, the redacted agreement Yahoo released said it had 105 days from June 12 to start. That would be Sept. 25.

Under terms of the agreement, either Yahoo or Google could end the deal after 120 days from when it was struck, if it was not “commercially reasonable” for either to defend. That would be Oct. 11.

In addition, Yahoo or Google can end the deal if a court later enters an injunction.

But Google does not seem to care about a possible noisy government investigation, which it should.

While Google is in no way guilty of the kind of behavior that got Microsoft into hot water, not caring what anyone thinks was perhaps the most disastrous error of hubris that Microsoft’s Bill Gates (he is pictured on the stand here) made when the federal government came at him and took him to trial.

After a long and bruising court battle in which the judge ruled the company had violated antitrust laws, in which Gates came off very badly, Microsoft eventually settled via a consent decree to rein in some of its behaviors.

And I think we can all agree that Microsoft emerged from that encounter deeply wounded and with diminished momentum that continues to resonate today for it.

There was one thing that Schmidt said yesterday at the press conference that I do agree with: “There is a natural fear of things getting larger.”

Yes, Eric. And, naturally, more people than ever fear Google.

And while that fear has not seeped down to consumers and impacted Google’s terrific brand quite yet, it surely will, especially if Google keeps claiming that it is not all that powerful when anyone with eyes can plainly see that it is.

Just ask Microsoft.

Please see this disclosure related to me and Google.

How much is AOL really worth?

Well, its own owner, Time Warner, has been trying to put a big, shiny $10 billion price tag on the much- beleaguered online unit for months now, as it dribbles out tiny leaks about hot-and-cold- running acquisition talks with both Yahoo (YHOO) and Microsoft (MSFT).

But after yesterday’s less-than-impressive results for AOL, which dragged down the crowing Time Warner CEO Jeff Bewkes could deservedly do over his company’s “The Dark Knight” and “Sex and the City” film successes, can it even hope to get that much?

Of course, $10 billion is about half as much as AOL was valued in late 2005, when Google (GOOG) forked over $1 billion for five percent of the unit.

At the time, no one actually believed the $20 billion was a real figure, but that it was due more to Google’s incentive to overpay in order to clinch a renewal of its search deal with AOL and ward off Microsoft’s aggressive efforts to steal that business away.

But AOL’s weakening performance in a tough economy makes figuring out a sale of AOL to Yahoo–its most sensible partner–more difficult than ever.

Let’s do the math, shall we?

(This analysis was suggested to me by someone familiar with both companies and makes a lot of sense.)

Let’s begin by assuming that Time Warner (TWX) would want to trade AOL for a stake in a merged newco entity, and by using the $10 billion value the media giant seeks.

This, by the way, does not include the profitable Internet access business, which Time Warner officially announced yesterday it would cleave from the AOL ad and content business and sell separately for $2 to $3 billion.

Next calculation: At $20 a share, Yahoo is worth $27.6 billion at yesterday’s close.

So with a new valuation of $37.6 billion ($27.6 billion plus $10 billion), Time Warner would then own 26.5 percent of the company, which is jokingly dubbed Yahol.

Maybe it is just me, but I can’t see Yahoo agreeing to this. Or its big and mighty disgruntled investors, such as Capital Research Global Investors’ Gordon Crawford, either.

To appease him and other shareholders, Yahoo might first, say, sell off those much-touted Asian assets and deliver a wad of cash to shareholders.

This move would yield about $8 billion, leaving a $19.6 billion market cap for Yahoo. In a combo in that scenario, Time Warner would then own 33.7 percent of the remaining company.

And while Time Warner could throw in some other assets to add value, like video rights or content from its other properties, it’s still a leap to imagine Yahoo would trade away that much of itself for a merger that has a 50-50 chance of succeeding.

That’s because both Yahoo and AOL have been feeling the pain of the downturn in the ad market and are each particularly vulnerable.

Yahoo’s second-quarter earnings, announced a few weeks ago, were weak, which management blamed on the economy.

And yesterday, Time Warner did the same, noting the ad business at AOL had stalled.

Revenue fell 16 percent in the second quarter to $1.06 billion, largely due to a massive fall-off in its subscription business, resulting in a 36-percent drop in net income.

But online advertising revenue grew only two percent, which is–let’s just say it–depressing, largely because of a 14-percent decline in the more lucrative display business, versus its healthier but lower-margin third-party ad business.

In addition, AOL still has to figure out how to properly monetize its newly acquired Bebo unit, which it woefully overpaid for, in an even more difficult environment for social networks.

And while turning to Microsoft for a better deal might seem a good idea, the software giant is also unlikely to want to overpay in this market.

Nonetheless, Time Warner must sell AOL, which was abundantly clear yesterday, as it does not fit in with the rest of its businesses and its weakness is dragging down the stock.

Unfortunately, it could turn out to be a fire sale. Using the old AOL catchphrase, to describe the odds of getting a huge pile of dough for AOL: You’ve Got Fail.

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:

I met Grouf many years ago when he–along with Spot Runner partner David Waxman–founded PeoplePC and Firefly Networks.

Grouf sold the struggling PeoplePC–which hawked computers bundled with an online service–to Earthlink (ELNK) in 2002 for $10 million and assumption of $35 million in liabilities, in a Web 1.0 meltdown deal that followed a disastrous IPO.

He then started working for the Presidential campaign of Sen. John Kerry, helping figure out how to best and most cheaply place critical television ads–crunching all sorts of data about lots and lots of neighborhoods and towns and cities nationwide to figure it out.

What Grouf figured out, though, was that a system for doing so was nonexistent.

That experience turned into Spot Runner, which is essentially a do-it-yourself model that tries to iron out inefficiencies in the buying and selling of advertising and bridge the gap between the traditional and online ad markets.

Offering cheap ad templates, clients can make and place low-cost television and radio ads for small and national businesses, as well as political campaigns, and get analytics about the impact of the ads. Some ads cost as low as $500.

Spot Runner got a pile of cash to try to do that better, recently nabbing $51 million in funding to add to the $60 million already raised.

Investors include international media giants Daily Mail and General Trust (DMGT.L) and Grupo Televisa (TV), investment company Legg Mason Capital Management (LM) and luxury conglomerate Groupe Arnault/LVMH (MC.PA).

Spot Runner’s previous investors are Allen & Company, Battery Ventures, Comerica Bank (CMA), Lachlan Murdoch, Vivi Nevo, Capital Research and Management, CBS (CBS), Index Ventures, Interpublic Group (IPG), Tudor Investment Corporation and WPP.

Its board includes Index’s Danny Rimer and former AOL exec Bob Pittman.

All that money has given Spot Runner an eye-popping valuation upwards of $500 million.

This is its biggest burden, I think, setting expectations very high for what is still a little start-up.

And while there are rumors of both Microsoft and Google, as well as Comcast, being interested in acquiring the company, Grouf dismisses the speculation.

He says Spot Runner is more intent on using the money raised to buy companies and improve its offerings.

For example, it recently bought Weblistic, a local search listings creator, and hired former Microsoft exec Joanne Bradford.

Bradford, who was a VP and chief media officer of MSN Media Network, is executive vice president of National Marketing Services at Spot Runner, focusing on getting national advertisers to also think small and targeted.

Who knows whether the company will be able to overcome its hype, but time (and money) will tell.

(*And a free D6 bag for anyone who correctly identifies who I am referring to here, either by sending in a comment or an email to me at kara@allthingsd.com.)

But there is a movement afoot among its developers and other execs at Microsoft (MSFT) to push for Chief Software Architect Ray Ozzie (pictured here), who replaced Founder Bill Gates in the job just over two years ago.

Ozzie’s role at Microsoft has been to think the big thoughts about where computing is going, and he has been integral to the company’s vision of providing “software plus services.”

Essentially, that boils down to Internet-accessed software–which is Microsoft’s longtime cash cow–a kind of mash-up that plays to the company’s strengths.

But some think there is no bigger puzzle for Microsoft to finally solve now than to figure out how to finally succeed in the online space.

Microsoft’s online unit lost $1.2 billion in the past fiscal year, double what it lost in 2007, with quarter after quarter of disappointment, even as rival Google (GOOG) and Microsoft’s acquisition quarry Yahoo (YHOO) have raked in the profits.

That’s why some think Ballmer should put Ozzie in charge. With a long history of being a strong product exec, he also is a well-respected leader throughout Microsoft and, perhaps more importantly, the tech industry.

“We need a real star to shake up the status quo,” said one Microsoft employee, in a sentiment voiced by many BoomTown spoke to. “Ballmer has to put someone who can command the attention and respect of all the parts of Microsoft, which just can’t seem to get it together in our online business.”

But Ballmer (pictured here), said other sources, might be loathe to remove Ozzie from his overall tech guru role and place him in such a grinding and potentially thankless job.

There are other internal candidates at Microsoft for the opening, which was just created after the sudden departure of Platforms and Services Division President Kevin Johnson earlier this week.

With Johnson’s departure, Microsoft announced it would break up the unit into two parts. One will be a Windows/ Windows Live group, headed by Ballmer and run by a trio of execs, and the other will include online services such as search, MSN and online advertising.

There are several insiders quite interested in taking on that daunting task, said sources.

They include Senior Vice President Brian McAndrews, who runs Microsoft’s Advertising and Publisher Solutions Group and who came to the company via its $6 billion acquisition of ad firm aQuantive. He is widely seen at Microsoft as having the leading edge for the position.

Strategic Partnerships SVP Yusuf Mehdi, who has run online businesses for Microsoft before, is also a contender.

Ballmer has also put feelers out to Web leaders all over Silicon Valley of late, including former Facebook exec Owen Van Natta, to come and refurbish its Internet arm. Sources said Ballmer is also interested in execs like former CNET head Shelby Bonnie, as well as others.

One of the leading outside candidates was former AOL (TWX) head Jon Miller, who, sources said, told Ballmer yesterday that he does not want to be considered.

In fact, Miller is now likely to join the board of Yahoo as part of a deal the Internet company struck with activist investor Carl Icahn to cease his proxy fight.

Yahoo was, not surprisingly, top of mind in Ballmer’s speech before financial analysts yesterday at Microsoft’s Redmond, Wash., HQ.

Not surprisingly, Ballmer went out of his way to pooh-pooh Yahoo–a behavior that looks like it will become Microsoft’s latest weapon of choice for denigrating Yahoo and tanking its stock, in the wake of Yahoo’s rejection of Microsoft’s initial bid to buy the company outright and then, just its search business.

Pointedly calling the important search arena a “two-horse race” between Microsoft and Google–despite the fact that Yahoo is the No. 2 player, with a market share more than double Microsoft’s–Ballmer sounded more like a spurned swain for Yahoo’s affections.

Trotting out his somewhat inexplicable distinction of the Yahoo bid being “a tactic, not a strategy”–whatever!–Ballmer said: “We had a set of principles, we talked about them, it didn’t work out. … Fine, we’re done. We can move on.”

It seems Neil Sedaka was right: Breaking up is hard to do. As a parting shot, even though he was careful to leave the door open to future talks with Yahoo, Ballmer added: “People say ‘you have to buy Yahoo.’ … No, we don’t.”

Except Microsoft, um, does.

In any case, what the company will definitely do is spend more piles of money on its online business–an unspecified $500 million going forward, to be exact, which Ballmer said was critical to Microsoft’s future.

“There is this huge, huge, huge new opportunity around the Internet and online and we have to embrace that opportunity and invest in that opportunity,” Ballmer said.

That’s why some think Ozzie would be perfect for the job, now that the once fast-rising Johnson is gone.

He left, sources said, due to the collapse of the Yahoo deal, an effort for which Johnson served as point man.

Sources said that if the deal went through, Johnson would have run the Yahoo business, noting he has long indicated he wanted higher-level experience.

He will be getting that in his new job as CEO of Juniper Networks (JNPR), a quick move that many sources said surprised Ballmer and irked him (and things were already tense due to the failure of the Yahoo deal).

“Ballmer has to have a win here,” said one Microsoft source. “Even he can’t afford to miss again in this important space.”

That is the other certainty related to Microsoft’s rocky road on the Web: No, he cannot.

Please see this disclosure related to me and Google.

BoomTown was all busy trying to think of execs to replace Yahoo CEO Jerry Yang, as pressure mounts on him to right the troubled Internet company.

But now, Yang’s position feels safer than ever and it’s his nemesis–Microsoft– that needs a new leader for its long-stumbling online services business.

Microsoft (MSFT) was already cracking, according to sources, and had a wish list of internal and external candidates that CEO Steve Ballmer is now considering.

Ballmer noted in his memo to company employees yesterday the departure of Platforms and Services President Kevin Johnson and the reorganization of that massive division, that he would “create a new senior lead position and will conduct a search that will span internal and external candidates.”

Many think, given the turbulence, that Ballmer will pick a trusted internal Microsoft veteran, especially since he probably should move quickly.

Sources said Brian McAndrews (pictured here), who came to Microsoft via the $6 billion aQuantive acquisition last year, is the leading insider for the job.

SVP Satya Nadella, who will run search, MSN and ad platform engineering efforts in a new reorg, is less likely.

But Strategic Partnerships Senior Vice President Yusuf Mehdi, a longtime exec who has previously led online businesses at Microsoft, is also in the mix, the possible dark horse due to his past experience. As strategy “wingman” to Johnson, he might want a more operational job again now that Johnson is gone. Mehdi is also well liked in Silicon Valley and in media circles.

More interesting perhaps is one of the top outside candidates on the list, former AOL head Jon Miller (pictured here), who is poised to be added to the–wait for it–Yahoo (YHOO) board, as part of its recent proxy fight settlement activist investor Carl Icahn.

Miller, who was bounced out of AOL unfairly several years ago, is now running an investment firm with former Fox Interactive Media head Ross Levinsohn.

(And, adding to the hijinks, Levinsohn was on Microsoft’s alternate board in its own abandoned proxy fight against Yahoo.)

Other execs on the list are also more experienced in the Web space, such as former CNET head Shelby Bonnie, who is currently working on a start up called PolticialBase.

Microsoft sources said someone like former Yahoo COO Dan Rosensweig–now in private equity at the Quadrangle Group–is also the type of exec the company is looking for. Of course, he is deeply loyal to Yahoo (and his name has also been bandied about as a possible future Yahoo CEO too).

Of course, the company’s fondest desire is probably to get an even bigger Web or media exec like News Corp.’s (NWS) Peter Chernin or former eBay (EBAY) head Meg Whitman. (News Corp. is the owner of Dow Jones and of this Web site.)

Having been around when Microsoft first dipped its toe in Internet waters back in the mid-1990s, I’m sorry to say that whoever the software giant picks has small shoes to fill.

After years and years of losses, while Google (GOOG) and Yahoo made bank and grabbed share, Microsoft has not.

In its recent quarterly report, for example, while revenues for the online business rose 24 percent to $838 million, losses from Platforms and Services doubled to $488 million.

Ouch! That’s gotta hurt.

Because of the continued inertia, Johnson’s large unit–which includes the powerful Windows division, as well as the online services business–will be reorganized into two parts.

The Windows and Windows Live online service will be one part and other will be made up of online advertising, search and MSN.

That division needs to bulk up the software giant’s efforts in the Web space, especially in the online advertising arena where Google now rules.

In an attempt to make an end run around the search behemoth, Microsoft tried to buy Yahoo, the No. 2 player in the search and search-advertising space, and then tried to grab only its search business–efforts that have so far yielded nothing.

In any case, this reorg of a previous reorg (Ballmer united the Windows and online services business three years ago) is a clear signal of the unrest and even a bit of chaos at Microsoft resulting from the Yahoo battle.

There is definitely a lot of ire aimed directly at Johnson (pictured here) as the key executive in charge of the effort besides Ballmer, because of his failure to make a deal.

Worse, the bid forced Yahoo into the arms of Microsoft archrival Google, via a controversial search-ad outsourcing deal.

Microsoft must obviously do something.

Its market share in the search market, for example, has persistently stayed under 10 percent, despite a range of efforts to differentiate itself.

Re-energizing Microsoft’s Web efforts is most definitely a thankless job.

And whether replacing Johnson and bringing in a new leader who can push the reset button will work this time is unclear, as are many things having to do with Microsoft’s Internet strategy right now.

Please see this disclosure related to me and Google.

In what will be seen as a new media coup, sources tell BoomTown that Britain’s Guardian Media Group is set to announce this morning that it will buy the company that runs the high-profile digital media news site paidContent for a price “north of $30 million.”

That price, though, includes an earn-out, sources said, which will depend on future performance of the company.

The paidContent site is owned by ContentNext and was founded by Publisher and Editor Rafat Ali in 2002.

With the motto,”The Economics of Content,” paidContent has been a pioneer in the online news space, doing high-quality reporting about online media and digital efforts by big media companies.

ContentNext has offices in Santa Monica, Calif., and Manhattan and operates several other sites, and also runs several conferences.

The company had reportedly been raising funding of several million dollars recently to fuel more expansion.

But ContentNext’s only financial backer so far has been Alan Patricof’s Greycroft Partners, which invested an undisclosed amount in 2006.

Longtime digital media exec Larry Kramer is on its board and ContentNext recently hired media exec Nathan Richardson as its CEO.

Sources said ContentNext would continue being run independently after the Guardian purchase.

This sale comes after the mid-May sale of Ars Technica, a much larger tech-focused site, to Condé Nast for a reported $25 million.

More to come soon.

But until then, here’s a video I did with Ali just over a year ago in a when I visited his then-new offices in Santa Monica.

The motto: “I, for one, welcome our new AOL overlords.”

Why shouldn’t they? As BoomTown reported, every Bebo employee has had their previously granted stock options accelerated and fully vested under terms of the deal.

This is typical in acquisitions by the Time Warner (TWX) online subsidiary, since it cannot offer enough of its moribund old media stock.

Unfortunately, those kind of deal terms don’t make for the kind of environment that encourages already jumpy entrepreneurs to stay. In fact, it kind of gives them a free pass to leave.

Still, it is nice to see Bebo minions celebrating their new bosses, including AOL CEO Randy Falco and President Ron Grant, who helmed the Bebo deal.

But to clarify for Bebo staff: Falco and Grant’s nickname at AOL is Smithers and Burns, that lovable pair from “The Simpsons,” and not overlords.

It goes without saying that further errors like this will not be tolerated.

Together, they created the 25-volume “Stereoscopic Atlas of Human Anatomy,” which was published in 1962 and was soon out of print.

Now Stanford University’s School of Medicine is putting the astonishing images online, working with Silicon Valley’s eHuman. Right now, the Times reports, just the head and neck collection is online for $8 a month, but there is more to come.

It seems well worth it. As Schwartz writes:

“Even without the stereoscopic boost, the images are stunning, though perhaps not best examined over breakfast. Blood vessels cluster in a cobwebby tangle along a spinal column, and pelvic bones stand out like butterflies against a stark black field. The back of a man’s head, its layers of flesh and bone sliced away, shows the excavation from the scalp down to the brain as if looking at a stratified canyon wall. The original Kodachrome slides, carefully preserved, still provide images of tremendous clarity.”

He notes that it will eventually be possible for those with special glasses to see the images in 3-D too.

Google (GOOG) has been long tinkering on a version of human-body mapping, dubbed Google Body, a concept much like Google Earth, with many partners including eHuman and Stanford.

But this work–done well before anyone had the sophisticated tech tools we have now–seems just perfect.

Below are some pictures by William B. Gruber from the Bassett Collection:

First, a Fast Company piece on the disaster at AOL (this is, for anyone who follows the company, nothing new), called “Dead Man Walking” by David Case.

The phrase, the origins of which is not mentioned in the piece, was applied by pundits to AOL in the early 1990s, when it looked like the Internet was going to make closed online services like AOL obsolete.

It did not turn out that way, of course, as AOL became–for a time, at least–the most powerful player in the digital arena, before imploding right after its disastrous merger with Time Warner (TWX).

After a bit of resurgence under Jon Miller (who was fired for his efforts), AOL is on the ropes again, this article contends–and which BoomTown has been saying for a while now. There are copious examples of this sorry trend in the piece, one more painful than the next.

If you don’t want to slog through it, here’s the money quote:

Eight years removed from the Time Warner merger and more than four years after AOL was expunged from the public company’s official name–an eternity in our evolving Internet age–AOL has been unable to find a way to innovate out of its troubled past. Yes, AOL has been plagued by internecine battles with its corporate parent and by a dial-up subscription-revenue model that could not possibly survive in the modern era. But it has also failed to exploit a wealth of formidable assets, including a ubiquitous brand, millions of regular users, the Web’s dominant instant-messaging service, the iconic MapQuest and Moviefone, the most popular finance site, a top celebrity-gossip site in TMZ, an innovative video search engine in Truveo, and deep television and music offerings… what emerges is a tale of failure on multiple fronts: short-term thinking, bad technology, bungled product development, a dramatic miscalculation of what drives page views on its own site, and a risk-averse culture more prone to imitation than innovation. ‘Pretty much everything we worked on,’ says a former AOL manager, ‘executives pointed to someone else’s product and said, “We want that.” ‘

Second, a piece in the New Yorker by Eric Alterman about the death of newspapers–or, as BoomTown likes to say of this much-trotted out concept: Generalissimo Francisco Franco is still dead!

Most interesting, though, is its look at the growth of Arianna Huffington’s online phenom, the Huffington Post (which we wrote about last week here, in fact), as part of the problem for newspapers. (We borrowed this very funny illustration from the article, which kind of says it all.)

And that is basically: They are dull and Arianna is not.

Here’s the money quote:

Though [the] Huffington [Post] has a news staff (it is tiny, but the hope is to expand in the future), the vast majority of the stories that it features originate elsewhere, whether in print, on television, or on someone’s video camera or cellphone. The editors link to whatever they believe to be the best story on a given topic. Then they repurpose it with a catchy, often liberal-leaning headline and provide a comment section beneath it, where readers can chime in. Surrounding the news articles are the highly opinionated posts of an apparently endless army of both celebrity (Nora Ephron, Larry David) and non-celebrity bloggers–more than eighteen hundred so far. The bloggers are not paid. The overall effect may appear chaotic and confusing, but, [HuffPo Co-Founder Kenny] Lerer argues, ‘this new way of thinking about, and presenting, the news, is transforming news as much as CNN did 30 years ago.’ Arianna Huffington and her partners believe that their model points to where the news business is heading. ‘People love to talk about the death of newspapers, as if it’s a foregone conclusion. I think that’s ridiculous,’ she says. ‘Traditional media just need to realize that the online world isn’t the enemy. In fact, it’s the thing that will save them, if they fully embrace it.’

Since we have been hugging online for a while now, Arianna just made us feel all warm and fuzzy.

The Wall Street Journal gave a big hello to its new owner, Rupert Murdoch, who takes over Dow Jones (owner of this site) today, by publishing this tough piece also today on the disaster of News Corp.’s investment in Gemstar-TV Guide International.

It comes from breakingviews, an online financial commentary Web site that the news organization regularly adds to its print paper and online site. Dow Jones also is a minority investor in the site, which was writing about the recently announced deal for Macrovision to buy Gemstar, in which News Corp. owns a 41% stake.

Money (or, more precisely, non-money) quote:

But in gross terms, Mr. Murdoch looks to have paid $1.6 billion–after selling the magazines in 1991 and receiving cash from Mr. Malone in 2000–for the first half of his Gemstar stake. He paid $6 billion in News Corp. stock for the other half. That is nearly $8 billion for an investment valued at $1 billion today.”

Ouch!