Blog search engine Technorati was days away from merging with blog network b5media when the whole deal blew up earlier this week, according to a source familiar with the negotiations.

Technorati has been searching for a new strategy ever since it appointed CEO Richard Jalichandra last October. It was recently trying to raise an additional round of financing, and pitching venture capitalists that it could turn itself into a blog advertising network and/or even pursue a blog roll-up strategy.

The talks with Toronto-based b5media (they’re big in Canada) indicate that it is taking the blog roll-up idea more seriously than we previously thought. If the merger with b5media had gone through, Technorati would have gained a network of 340 blogs. One of the slides in the pitch deck Technorati was showing potential investors (shown below) outlines how a roll-up strategy could be combined with an ad network. Technorati would use its search engine to promote owned-and-operated blogs. It would sell ads using its own sales force instead of third-party ad networks for an “immediate 30-50% revenue bump” and sell across its network.

According to our source, th deal with b5media never went through, though, because of personality conflicts between the CEOs and a lack of transparency on Technorati’s part during due diligence. At least that is how the b5media side sees it. Prior to its dalliance with Technorati, b5media was itself trying to raise another venture round that would put a $20 million valuation on the company. But there were no takers. So b5media started talking to potential merger partners or acquirers (including at one point Federated Media Publishing). A combination with Technorati could have made both Technorati and b5media more appealing to later-stage venture investors. But now the two need to keep looking for other options before their time (and cash) runs out.

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Trade magazine Blogger & Podcaster Magazine is expanding into advertising with their own blog advertising network.

The Blogger & Podcaster Network (BPN) will target “the B,C,D & E listers who have smaller and often more niche audiences.” Blogger & Podcaster have retained investment bank The Riderwood Group to obtain expansion funding for the network.

Those signing up to BPN will get promotion in the mainstream media through The Blogger & Podcaster Guide and revenue from advertising and other revenue generating services.

The obvious comparison for the network is Technorati’s recently revealed advertising network. Although both target the long tail, BPN would be one of the most different pitches I’ve ever seen in 6 years covering this space. To be a part of BPN you have to be listed in The Blogger & Podcaster Guide which costs $5 a month due to a new deal with USA Today (it was previously $49.95/ month). On top of the advertising opportunities there is also an affiliate program for selling memberships to the guide, pretty standard fare. This is where it gets very interesting: members will have “access to healthcare.” Exactly what level of healthcare provided wasn’t specified, with Blogger & Podcaster simply saying that “this is a big issue for bloggers/podcasters looking to leave their day jobs and go full-time.” Ultimately the devil will be in the detail but immediately every US based blogger who blogs for a living is going to want to look at whatever they are offering; even if it’s a basic healthcare package it’s a whole lot better than having no healthcare coverage in country that (unlike most of the rest of the western world) does not provide universal healthcare.

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CNET is reporting that tech-focused advertising network Federated Media (which sells advertising on our behalf) is looking for a new round of financing. CNET is basing this partially on our previous report that they hired investment bank Savvian to represent them after they turned down a $100 million acquisition offer, plus a new source that says the company is looking at term sheets now.

From what we hear, Federated Media is looking at both financing and new buyout offers, but wants a valuation way beyond the $100 million floated to them last year. Founder John Battelle is said to be looking for more of a Glam-like valuation, in the $400+ million range. Glam has a similar business model to Federated Media, but focuses on womens sites. Glam also guarantees significant revenue to its partners, which resulted in a loss last year of $3.7 million on $21 million in revenue. Federated Media doesn’t guarantee revenue, and is reportedly profitable (they better be, with how much of our revenue they keep).

Federated Media is reportedly generating gross revenues in excess of $2 million per month, and they keep 40% of that after the split to partners.

It’s unlikely the company will get buyout offers in the price range Battelle is looking for, so a new financing is likely. But part of me wonders why they’re doing this at all. A new financing means a bigger valuation, which means they need a much higher price down the road when they do eventually sell. And with competitors springing up all over the place, margins can take a hit.

Perhaps Federated Media intends to take the Glam approach and go in the red for the sake of growth and begin to guarantee revenues. That’s a slippery slope, but it may also get Battelle his payday.

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Through a variety of sources we’ve confirmed that Technorati is making plans for a major shift in it’s going forward strategy, and is also considering a number of corporate development transactions.

First, they’ve been pitching venture capitalists on another round of financing. That’s not surprising - their last round, $10.5 million, was in June 2006. The company has raised a total of just over $20 million, and given that they have 25 employees, it’s time for another round. But we’ve also heard that they’ve hired Montgomery & Co. to shop the company to buyers, simultaneous to their funding pitches.

What’s more interesting, though is what we’re hearing on the product front. Technorati, under new CEO Richard Jalichandra, recently changed it site to focus more on its core blogging audience.

That change foreshadows the upcoming shift - which places the Technorati site itself as an anchor in a new blog advertising network.

Advertising networks are popular right now - Glam recently raised $85 million after transitioning, seemingly overnight, from a small web property focused on women to selling advertising for a variety of similarly-focused publishers. And John Battelle’s FM Publishing, an advertising network focused on technology blogs, recently hired investment bank Savvian to help them raise money or sell after turning down a $100 million buyout offer.

Technorati will certainly be competing head to head with FM, although sources say they’ll focus on the long tail of the market as well (FM only takes larger sites). The network will be a self-serve exchange for bloggers (and other publishers) as well as advertisers. Ad units will include both display and text ads, and will allow units to be charged on both a CPM and CPC basis. This self-service model looks a lot more like Adbrite than Glam or FM.

Technorati tags, which are very often used to describe blog posts with keywords selected by the author, would also be a natural way for Technorati to target advertising more effectively.

Technorati has also considered other strategies recently, including a blog rollup. But our understanding is that they’ve gone with the ad network idea, and are currently focusing engineers on finalizing the product.

Will the strategy work? As we’ve argued many times, ad networks suffer from fickle customers. Glam offers partners revenue guarantees based on page views (and lost $3.7 million last year on $21 million in revenue). FM has resisted guarantees to date, but lost high profile partner Digg last year to Microsoft. Others, including us, have simply sold advertising directly while continuing to work with FM. With Technorati entering the market, publishers will have yet more choices. That’s good for everyone except the ad networks competing for their business.

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Former Technorati CEO David Sifry has launched Web Hot or Not?, a Hot or Not site for websites. Sifry left Technorati in August 2007.

For the one person reading this who doesn’t know how Hot or Not style sites work, the site presents a website which must be scored between 1 or 10, 1 being not, 10 being hot.

MG Seigler writes that “Quite frankly I’m shocked it has taken this long for someone to come out with this.” I like MG, so perhaps its the intense jetlag talking when I write what the? Sure, on the surface it’s an obvious idea, but the reason why its taken this long for a site like this to appear is because the idea isn’t a very good one.

David Sifry hints that it might be a lark, and if that is the case then we’ll let it slide and recommend people take a look, it should provide seconds, maybe even a minute or two of interest. If, as Sifry suggests “Who knows where it’ll go” (meaning it might take off), I’m off to buy alcohol. Cheers.

Update: you can vote for Web Hot or Not on Web Hot or Not here.

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At first glance, blog search as a category is oversaturated. Ok, at second glance, too. Not only did Google enter the market directly in late 2005, they’ve also increased the rate that they index blogs and other regularly updated sites for core Google search. TechCrunch, for example, is now indexed multiple times per day by Google, and new posts are often available in a normal Google search within minutes of posting. Most people today say the best blog search engine is, simply, Google.com.

And there are many competitors. The Comscore chart below shows the relative traffic of the major ones - Technorati, Google Blog Search, Ask Blog Search, Sphere and IceRocket. Feedster is gone, although there are additional smaller engines like Zuula and Blogdigger as well. Every one of those companies is U.S. based (note that Paris-based Wikio has blog search as well as a Digg-like service).

Now Europe will have it’s own blog search engine - Twingly. I met Martin Källström, the company’s CEO, at the DLD conference in Munich earlier this week. Their focus, he says, will be to have a spam-free engine (something none of the others can claim) at the cost of inclusiveness. And at least at first, the engine will be focused on European blogs. Twingly’s search engine hasn’t launched yet, although I do have a screen shot of what the home page will eventually look like:

Twingly already has a product - a nifty screen saver that shows blog posts on a world map as they are written. The new search engine will use some of the back end technology they’ve developed for the screen saver - mainly their ping server (see here for our overview of what ping servers are) and existing index of blogs.

The search engine will be different from others, Källström says, in that it will be almost 100% spam free. How are they doing that? Instead of trying to index every blog in existence and then removing spam via black lists and other methods, they are limiting the blogs they monitor to those that are proven to be legitimate. They started with a small list of known blogs, and then spidered out from there based on links to other blogs. The assumption, which is fairly sound, is that good/real blogs will not link to spam blogs. The end result is a white list of real blogs that are indexed - everything else is ignored.

Källström says that, in addition to the consumer-facing search engine, they’ll partner with large content news sites to show blog posts related to news content. This is something both Sphere and Technorati have had success with in the past, and the company can do revenue-sharing deals on additional page views. Content providers like it because it incentivizes blogs to link to their content (to get a link back). Twingly may not be able to compete with Sphere and Technorati in getting U.S. based partners, but he says he already has some deals with large European publishers completed.

The company has raised €1 million in a July 2007 round of financing from Servisen. They have seven employees. Look for a launch of their search engine in the next month or two.

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Technorati made changes this week to the way it counts inbound links for purposes of determining its blog rankings. This had some effect on the Technorati 100 list.

Technorati was previously counting all links made to blogs on a given domain. So links to, for example, chinese.engadget.com were also counting towards engadet.com, even though they are separate blogs. They are no longer counting these links.

Engadget took the biggest hit, losing more than a quarter of their 30,000+ unique links over the last six months. They are still the top blog; however, no. 2 Gizmodo is within striking distance, whereas before they were not even close. TechCrunch was affected, dropping from no. 2 to no. 3 behind Gizmodo (our France, UK and Japan blogs are on subdomains). Even so, the changes seem appropriate.

Technorati VP Engineering Dorion Carroll explains the change here. There is still a massive amount of fraud links counted by Technorati in their Top Blogs list. I’m hoping that their newfound focus will lead to further changes.

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This will be the third annual post on “Web 2.0 Companies I Couldn’t Live Without.” The first post, for 2006, is here. The 2007 post, written a year ago, is here.

This is a list of the products I tend to use daily. Some are for work (Wordpress, Delicious, Google Docs, etc.), some are for fun (Amazon Music, Amie Street, etc), and some are useful for both (Digg, Skype, YouTube, etc.). But I use most of them every day, or nearly every day, and I would not be as productive or happy without all of them.

The list changes a bit from year to year, and is also getting longer (see chart). Five products have been favorites all three years (Flickr, Netvibes, TechMeme, Skype, Wordpress). Five more were favorites last year and this year, but not in 2006 (1-800-Free-411, Amie Street, Digg, Gmail, YouTube). Two were off the list last year but are back now (Delicious, Technorati). And there are seven new products on the list (Amazon MP3 Store, Facebook, Firefox, Google Reader, TripIt, Twitter, Zoho). Some of my picks might be surprising, like Firefox just being added to the list this year (I used Flock previously and was unhappy with Firefox on the Mac, but the 3.0 beta is performing very well). Some of these are close calls (I love Pageflakes, but just not enough to fully switch from Netvibes, for example). And there are a bunch of startups that didn’t make the list to keep it short. I’ve put a few “almosts” at the end to round out the list, as well as a couple of favorite gadgets.

Here’s the current list, in alphabetical order, of products I use every day and couldn’t live without:

(more…)

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Technorati has a brand new CEO, and he’s been busy in his short time with the company. Today Technorati is relaunching, with a new core focus on bloggers.

Last week I saw a demo of the new products, which CEO Richard Jalichandra and VP Engineering Dorion Carroll say reflect the company’s re-dedication to their core audience: bloggers and advertisers.

Technorati Front Page

The recently changed home page, just three months old, is gone. In place of the streaming blog posts is a news aggregator that, like TechMeme and the New York Times’ Blogrunner, use linking behavior on news sites to determine headline news.

Blogs and mainstream media are separated. Blog headlines are on the left; MSM is on the right. Below each headline is a cluster of blogs that have linked to and discussed the story.

The news aggregator complements Technorati’s core strength as a blog search engine, Carroll says. Sometimes users want to search. Other times, they want to discover and browse. The news aggregator helps them see what bloggers and journalists are talking about right now, all over the world.

The topics feature that Technorati launched in September (front page, business, entertainment, lifestyle, politics, sports, technology) is now highlighted directly via navigation tabs on the home page.

This is something Technorati experimented with in the past (see our 2005 coverage of Technorati Explore, which never made it out of the lab), but it never dedicated meaningful resources (or the home page) to finding news patterns in blog posts. Now, the company is dedicating those resources to making it work.

Blogger Central and Today In Photos

In addition to the Front Page news aggregator, Technorati is making two other big additions to the site.

The first is a resource page for bloggers called, fittingly, Blogger Central. It shows blog posts about blogging (clustered using the news aggregator engine) as well as popular blog tags at any given time. The page also has top blogs by links and popularity.

The second, pictured left, is a new product called Today In Photos. Like AOL’s new Mgnet product, it shows popular news via the photos and images included in those news items. People like to see and click on images. This page will show them what’s hot, visually. Users can reach the page by clicking on the grouping of images on the bottom of every page.

A Fresh Start

The new products are encouraging signs from Technorati, which has had to reinvent itself a number of times over its existence. Their core blog search business has been under fire from Google and others for some time. But the site is still synonymous with blogging for most of us, and has a store of goodwill that has yet to run dry.

Comscore and Compete show slow and erratic growth over the last year. Comscore says they have 5.3 million unique visitors and 20 million page views per month, up from 2.1 million and 9 million, respectively, a year ago. Technorati says those numbers are about half of what their internal stats show.

Will the new product drive core usage and page views? I think it has a real shot. It’s much better than the existing home page (and the one before that, which really pulled away from bloggers). I already visit Technorati multiple times per day. I can see increasing that usage with the new stuff.

On a side note, when I met with Jalichandra, he said the company has raised $21.6 million in venture capital over three rounds of financing. The company has never dislcosed financings before, leaving us and others to speculate based on the occasional publicly filed document to piece it together. Now we have a firm number (and we’re updating CrunchBase).

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Can’t see the video? Click here

When Technorati announced a new CEO at the beginning of October, many were hoping that the once great Technorati would focus on its core blog search product, a product that had been virtually ignored as the company tried to be all things to everybody, whilst never being the master of one thing.

It might have been wishful thinking.

Zoli Erdos noticed on Monday that he couldn’t find anything in Technorati’s index that was older than 6 months. He emailed them for a response, and a reply from Technorati’s Ian Kallen confirmed it:

We’re in the midst of some economization, performance fixes and retooling that have required taking some data offline. The data is not lost but our priorities are to prefer keeping recent data online. Most people don’t notice We’ll probably be bringing that data back online but I don’t have an ETA yet.

The emphasis in the quote is mine but it’s the key line: “most people don’t [sic] notice.” They didn’t notice because they’ve long since switched to using Google BlogSearch or the main index of Google itself. The declining number of people who do regularly use Technorati for search will soon be jumping across to Google as they discover that Technorati is a shallow pool when searching blogs.

If Technorati wants to save money (economization) on their core product so be it, because the long term result will be less traffic for their servers to cope with which will result in data center savings, a good thing given that if rumors are correct they’re quickly running out of funding as well.

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