The reality: Battelle's dream of conversational marketing has turned into something more like the schlocky endorsements radio hosts get paid to do. By falling so short of his rhetoric, Federated's experiments have mostly ended in embarrassment, both for him and the bloggers he represents. Last year, he roped Malik and other writers into a scheme to have them recite a Microsoft slogan. And though Battelle apologized for that advertising campaign, he's conducting a similar campaign for Intel — though he has wisely picked so-called "social media marketers" with less journalistic credibility to lose; most already willingly shill for products on Twitter, Digg, and the like.

That's the insult. But Battelle's company has also delivered an injury, in the form of an abrupt slashing of advertising rates. GigaOm, TechCrunch, Silicon Alley Insider, and a host of other tech blogs represented by Federated have had their official rates cut 35 percent; deals negotiated with large advertisers are presumably being struck at even steeper discounts.

So Malik has taken his business elsewhere, to IDG, the publisher of PC World and several other large technology trades. As with Federated, IDG will sell ads, keep a large portion, and share the rest with Malik's company; 30 to 40 percent is a typical commission in the business. IDG has a vast army of salespeople to serve its print publications; as the print business vanishes, it makes sense to busy them with selling online advertising. Federated, meanwhile, has had to assemble its sales team from scratch.

Federated's slogan is that it is "author-driven." What does it say that an author has been driven from its ranks? Malik and Battelle are both savvy businessmen who know each other well. (I have known both for a long time, too, and edited their columns at the late Business 2.0 magazine.) IDG simply cut Malik a better deal, I believe — and no amount of rhetoric about "serving authors" from Federated could make up for the financial shortfall. In every negotiation, the time arrives to wrap up the conversation and strike a deal.

(Photo by Scott Beale/Laughing Squid)

—-—-—-- Forwarded message —-—-—--
From: Federated Media
Date: Thu, Nov 13, 2008 at 9:05 AM
Subject: A Holiday Gift from FM, $5 CPM's
To: melissa@melissagira.com

Believe it or not the holidays are already fast approaching! To make planning your holiday advertising campaign quicker and easier, we've created a Holiday Shopping Federation that includes the best gift and shopping related content in the Federated Media family of sites. Sites in this category include Uncrate, Mighty Goods, The Bargainist, and many more.

The Holiday Shopping Federation reaches the savviest of shoppers. They are avid readers of product reviews, and hunt down everything from the best in fashion to the coolest new tech gadgets. This is where engaged shoppers peruse gift guides, and look for suggestions for everyone on their list.

Here's the best part, for a limited time only, we're offering access to these high-quality sites at a low $5 CPM.

Reserve your campaign now through November 28th to lock in this low rate, and get access to readers on some of the best content on the web.

Start Planning and take advantage of these low CPM's before holiday inventory gets booked up!

Cheers and Happy Holidays,
Federated Media

FM Self-Serve Homepage
Online Marketing Idea Exchange

When Frauenfelder appeared in an Apple TV spot a few years ago, his fans loved seeing their fringe-culture hero take over the boob tube. But today ads are jammed full of Internet hipsters. Boing Boing's "band manager," John Battelle, has turned old-fashioned host endorsements into an online art form at Federated Media, his advertising agency. He's holding a conference right now in San Francisco's Presidio, telling eager brand managers that endorsers like Mark Frauenfelder make them part of a conversation with Internet consumers.

Battelle builds sites whose ads feature authors on whose blogs he also sells ads. It's a reputational Ponzi scheme far more complex than a George Foreman grill. Maybe that's why I flinch when Frauenfelder's face pops up on my screen with an Adobe logo and a button that says Grab Widget. Mark, if I want a widget, I'll open your magazine and make one myself.

At no point does Santora mention Dell's name. But his underlying message, that new technological gear helps us all do our jobs better, certainly serves Dell's purposes. I would have thought that the strict Times ethics code would forbid such an endorsement, paid or otherwise. Why bloody the reputation of someone who's taking a bullet to get stories for the newspaper? I've asked the Times what's going on, but haven't heard back yet. Update: Marc Santora has written in to let us know he had no involvement, financial or otherwise, with the ad — which just adds to the headscratching.

1. Robert Scoble
2. Michael Arrington
3. Jack Dorsey
4. Biz Stone
5. Matt Cutts
6. Pete Cashmore
7. Dave Winer
8. Guy Kawasaki
9. Loïc Le Meur
10. Kevin Rose
11. Merlin Mann
12. Stowe Boyd
13. Jeff Atwood
14. Jeremiah Owyang
15. Veronica Belmont
16. Kara Swisher
17. Scott Beale
18. Marc Andreessen
19. Ryan Block
20. David Sifry
21. Emily Chang
22. Om Malik
23. Timothy Ferriss
24. Nick Douglas
25. John Battelle
26. David Cohn
27. Louis Gray
28. Tom Foremski
29. Tim O'Reilly
30. Ariel Waldman
31. Matt Mullenweg
32. Dean Takahashi
33. Philip Kaplan
34. JD Lasica
35. Sarah Lacy
36. Brian Solis
37. Charlene Li
38. Rafe Needleman
39. Dan Farber
40. Howard Rheingold
41. David McClure
42. Margaret Mason
43. Jason Goldman
44. Leah Culver
45. Chris Shipley
46. Jackson West
47. Liz Gannes
48. Owen Thomas
49. Adeo Ressi
50. Max Levchin

(Photo from Michael Arrington)

Xeni Jardin: There wasn't some kind of sinister plot here. It's just kind of how we did things. But at the time, I did that for personal reasons, and for a back story that will always remain private.

John Battelle: What's made it so good is that it's kind of an asynchronous jam between four musicians, without being in the same place or looking each other in the eye. Anything that we might change that affects that magic, we really have to think about.

Joel Johnson: The community expected us to react with the speed that they reacted.

David Pescovitz: I'm not going to say — I haven't determined — whether I agree or disagree that Xeni should've unpublished the posts.

John Battelle: Isn't it also the right of the person who put it up to take it down? If you were truly the owner, I think one could argue unequivocally that you had that right. The question is: Do you damage the community in doing so?

And a bonus dance remix:

Xeni Jardin: This is my work, this is my blog. This is not the same thing as Wikipedia or the paper of record. It’s Boing Boing.

(Photo by Bart Nagel)

I'd long thought that Battelle's flip-the-bird photo, used here, was a reflection of his charmingly combative personality. As a founding editor of Wired, which set the tech world on fire in the '90s and helped inflate the bubble, Battelle failed to stack up the tall dollars. He founded The Industry Standard, which sold more pages of advertising than any other magazine in American in 2000 and then went bankrupt in 2001. Battelle, in short, has been adept at chronicling booms, but not profiting from them. Until now.

Battelle is just the latest entrepreneur to cash out before his company goes public, a practice once frowned upon in Silicon Valley. But Federated Media turned profitable last fall, we're told. Being cash-flow positive means never having to say you're sorry. And it also gives entrepreneurs leverage with investors that they never had in the '90s, when building Web companies was much more expensive.

So at last he's earned what they call in the Valley "fuck-you money" — enough money to simply walk away, should a job turn unpleasant. In fact, we hear that's what Battelle is planning to do, albeit temporarily. He's told investors in Federated that he plans to take a leave from the business to work on his next book, The Conversation.

Where Battelle's profane wealth may get him in trouble is with the bloggers he represents. Unlike him, most of them have yet to cash out, or even turn a profit. Federated Media's take of their advertising — typically 40 percent — strikes many as too high, though most have yet to try their hands at hiring and managing their own salespeople.

But they shouldn't worry. Having enriched himself, Battelle is now thinking of them. After hearing rumors that one of Federated's blogs was in merger talks, he approached the blogger and encouraged him to come talk to Federated first before taking an offer.

In other words, Battelle is now contemplating a blog rollup. Rather than see his customers picked off one by one, with their ad inventory walking out the door, Battelle may use some of the money he's raised to buy blogs himself. It only makes sense. He knows his customers' businesses well, since he organizes conferences, orchestrates redesigns, and performs other services besides for them, in addition to the mundanities of selling advertising.

Battelle likes to think of himself as more than just a business partner to his bloggers. He's their buddy. He's their pal! This bubble has everyone frothy, and the valuations may be making some of the bloggers under his care unduly giddy. While Battelle may enjoy a tipple now and then, friends don't let friends sell drunk.

A recent Fast Company article on Andreessen's current venture, Ning, went no better. You can practically hear the writer propping his eyelids open as Andreessen goes on, and on, and on, about "viral expansion loops."

What happened to the Andreessen who once ridiculed Windows as "a set of poorly debugged device drivers"? Why, he's gone online. Andreessen's blog is relentlessly entertaining. His verbal fisticuffs with the New York Times are must-reads; the vitriol oozes out of every line. And he posts just infrequently enough to keep us hanging on every word.

The only surprise, really, is that Andreessen took so long to start blogging. This world was not made for him. In the Web, he created one to suit.

(Photo by mathoov)

The problem with running a network is that you don't own the pageviews, and websites can always bolt, or be sold. It's hard to imagine AOL won't switch that inventory over to its Platform-A ad network as soon as it can. Not all pageviews are created equal. Sphere's blog-search inventory likely garnered less revenue than some of the high-prestige tech blogs Battelle represents. Still, this is the kind of thing one is happier to have investors learn about after they've committed their money, not before.

He saw Wired, where he was a founding editor, sold to Conde Nast for a pittance. The Industry Standard, which he launched and ran, crashed and burned. Federated Media, which caters to independent bloggers like Boing Boing and Dooce, could well be more successful than either, redeeming his reputation as a businessman. And with the economy teetering, now's a good time to take the money and run, before people deepen their questioning of the blog business model. Still, taking that much money from investors now — if Battelle can even get it — only increases the odds of a sale down the road.

It would not be much of a story that Federated is repping Blodget's blog, save for the identity of Blodget's backer: Kevin Ryan, the cofounder of DoubleClick, one of the Internet's first online ad networks. Embarrassing: It seems Battelle knows something about selling ads that Ryan doesn't.

According to a tipster:

-everyone has signed confidentiality agreements
-the whole island of virgin gorda is rented out for the wedding guests
-special times for meals have been requested at little dix bay and olde yard inn
-anyone who had planned and reserved little dix for a vacation have been called and told the resort is suddenly "over booked" and have been bumped.
-all ferries and cars are booked
-all new eco friendly furniture is being shipped in to redecorate
-three presidents rumored to attend
-600 expected to attend

Heard anything else? Please share.

MerchantCircle is continuing to spam local businesses, despite promised by CEO Ben Smith that it would stop. Smith still hasn't addressed complaints that his company autodials merchants with false claims, a full year after he told John Battelle that "he's on it." Even to this day, MerchantCircle's targets complain in the comments on Battelle's Searchblog. MerchantCircle says it plans to reach an additional 750,000 businesses over the next year. Local businesses make money through their phone lines. Telemarketers, they'll gladly tell you, take bread from their tables. Is this a merchant-first business model? Or MerchantCircle-first?

• The Web 2.0 Bowl is tonight. Watch as Web celebrities Jay Adelson from Digg, AOL founder Steve Case, angel investor Ron Conway and New York Times reporter John Markoff face off in a brain battle to see who can remember details about the Internet industry and the people who created it. Like Jeopardy, only replace Alex Trebek's bitchin' mustache with host John Battelle's oompa loompa glow. [Web 2.0 Summit]
• 
  
• Frog Design hosts an open studio tonight. [Upcoming]
• 
  
• We hear that website rating service Quantcast is hosting an open-bar first anniversary party tonight at 6 p.m. at Thirsty Bear in SOMA.

Got a to-do that's a must-do? Send it to calendar@valleywag.com. Check out more events on our Google Calendar:

(Photo by Blake Ross)

A directory on its face, MerchantCircle at its root, it is a cynical, poorly-conceived search-engine-optimization play using deceptive techniques to harvest business data. MerchantCircle is notorious for autodialing merchants to build its database. The recorded message tries to dupe merchants into entering their data with the lie that someone has left a bad review. It's a classic bait-and-switch not unlike Rapleaf's "someone has searched for you" emails. Hoffman's new buddies have used this technique for at least a year despite numerous complaints.

MerchantCircle's response, like Hoffman's has been to pay lip service to its critics. Entrepreneur John Battelle contacted CEO Ben Smith a year ago. Smith promised to address the deceptive practice but — surprise, surprise — MerchantCircle continues the spam-calling to this day.

And Auren Hoffman can't plead ignorance to MerchantCircle's behavior. He has been prominently listed as an advisor to the company for quite some time.

How will Hoffman spin this one? His words promise one thing. His actions, quite another. As in the real world, one's reputation is best judged not by what one says, but by the company one keeps.

WebbAlert discloses on its website that it has "barter arrangements" with other FM-represented sites. But that's not the sales pitch that Webb's husband, Listen.com founder Rob Reid, gave some FM bloggers. Contrary to what the WebbAlert site claims, Reid made suggestions of link-swapping that went beyond mere ad barters. And from the appearance of things, Arrington, among others, took the bait, linking generously to WebbAlert after its launch. Federated Media executives, of course, insisted it was all just a coincidence. Of course. We'll just try not to notice the ethical bald spot here.

It's a deal similar to the one Facebook signed with Microsoft last year.

It may be a wise move, since how-to content is popular online. Indeed, a guide on booking a cheap hotel room got Mahalo on the "popular" page for social-bookmarking site Del.icio.us, the first time it's garnered such an honor.

But for the voluble serial entrepreneur, it's an embarrassing about-face from his original plan. When he launched Mahalo, he distinguished his offering from previous attempts like About.com by writing, "They are tapping citizens to write content about what they're passionate about — we're trying to index all the passionate information on the Web." In other words, Mahalo would "curate" links to helpful pages on the Web, not create content itself.

He further told search expert John Battelle, "You will see they are trying to answer the questions and we're trying to help you find the people who can answer the question. Both are valuable, but my feeling is that the world doesn't need Mahalo to answer questions for them."

Mahalo, clearly, is now in the business of answering questions. So perhaps we'll find the answer to this one on the site: Jason, when are you going to admit how badly your original idea for Mahalo flopped?

The BW missive actually brought the Battelle Watch blogger out of retirement. He points out that the writer of this BW article (Spencer E. Ante) also penned a review of James Ledbetter's book chronicling the flameout of Battelle's Industry Standard. Summary of review: book "good, if incomplete," Battelle "brilliant." In the current piece, Battelle also brags that "[FM client] Boing Boing is never going to get into the offices of General Motors. But Federated Media does all the time." Sounds like a challenge, BBers.

"Rumsfeld has resigned." Applause. "I don't know why I knew you guys would enjoy that..."

"Also, in the Senate, Montana has gone to the Democrats, with Virginia undecided. And the House, as you know, is won."

Applause.

"...by the Democrats."

The author of Batelle Watch, Mr Bubble states in the About Me:

Remember that gazillion-dollar boondoggle tech magazine called the Industry Standard? Remember how the Internet Bubble popped like a poison zit? Well, the bad times are back again and so is John Battelle.

We miss you, we need you. Please come back to us, Mr. Bubble.

Battelle Watch May Be "Calling in Sick" [DisObey]
[Battelle Watch]

That's why this writer's been obsessively blogging Battelle's new career since May, in no uncertain terms. No, he or she uses very certain terms, like "glorified trade publication," "septic tank," and "$20,000 rooftop parties."

As with all anonymous hate blogs, take this with a lump of salt, and don't go quoting it at cocktail parties, just at dive bars.

Battelle Watch [Official anonyblog; photo by John C. Dvorak]