Webware

The ax has fallen at Federated Media Publishing, the online advertising company founded by former journalist John Battelle. Seven of the company's 90 employees were laid off Friday.

The layoffs, according to a company representative, were almost exclusively on the display-advertising side of the company. Federated also creates interactive marketing campaigns, and with the display ad downturn in full effect, that's where the company has chosen to focus. Federated doesn't plan to ignore display advertising, but hope to make several hires on the marketing side.

"Given our journalistic heritage, we don't want to bury the lede: Today FM is restructuring parts of our business, and as a result, we are saying goodbye to a small number of our employees," a post by Battelle on the company blog read. "Also as a result, we are adding several positions in strategic areas where we see growth in the coming year."

In April, Federated Media raised a $50 million investment round led by Oak Venture Partners. The company serves ads on many of the Web's most popular blogs, like Boing Boing and TechCrunch, but it's had some high-profile losses over the past few years. In 2007, the company lost its display ad contract for aggregator Digg to Microsoft (though it still handles sponsorships), and tech blog network GigaOM left Federated Media for IDG last year.

Om Malik, founder of GigaOm.

(Credit: GigaOm)

Om Malik, the head of the Giga Omni Media group of tech blogs, said on Friday he is moving his ad business from John Battelle's Federated Media to a new advertising network IDG launched in March.

The companies, which have partnered for three years (and weathered differences of opinion involving a scandal over "conversational marketing" in which the writing of Malik, Battelle, and other bloggers was featured in ads for Microsoft), are splitting amicably. They are characterizing the move as them having grown in different directions, according to Malik and Federated Media Publisher Chas Edwards.

Giga Omni Media's seven Web sites are small vertical sites, which are more suited for a company with a trade publishing background like IDG, Edwards said in an interview.

Meanwhile, "the Federated Media approach is the Conde Nast or Time Inc. approach, (working with) larger brands, fewer of them, and national and global advertisers," he said. "Our model has not been well-suited to take those smaller sites where they wanted to go.

"I think it's actually a wonderful move for Om and, frankly, for Federated Media," Edwards added.

In a blog posting, Malik explained the situation like this:

"Progress is often accompanied by a divergence of ideas and ambitions within partnerships. At Giga Omni Media, we have been developing a network that revolves around niche verticals. As our needs became more specialized, we sat down with the folks at Federated to try and figure out how we could continue to work together. But both sides quickly realized that instead it was time to wrap up what has been a successful business relationship."

The situation is completely different from the circumstances that led to news aggregator Digg to switch from Federated Media to Microsoft for its advertising last year. While Microsoft serves up the contextual and display ads on Digg, Federated Media handles the sponsorships, including some banner ads, Edwards said.

Yang (left) and Battelle on Wednesday at the Web 2.0 Summit.

(Credit: Josh Lowensohn/CNET News)

SAN FRANCISCO--This hasn't been the best year for a lot of people in the tech industry. But nobody can argue that Yahoo CEO Jerry Yang hasn't had a particularly rough time.

"Jerry Yang has had a tough nine months," Web 2.0 Summit host John Battelle of Federated Media said as he introduced the CEO for a talk at the conference here on Wednesday, and went on to list some of his company's much-documented woes. Yang, in a blue blazer and white checkered shirt, slouching a bit in his chair, replied, "That's quite an intro."

But it was still an understatement. Yang took the stage at the high-profile industry conference on the same day that Google announced it was walking away from a 10-year search-advertising deal with Yahoo, which would have brought the beleaguered Sunnyvale, Calif.-based dot-com hundreds of millions of dollars in revenue, due to antitrust concerns. Battelle said that, due to the situation, before the talk started that he'd gotten calls from multiple reporters wondering if Yang would actually show up.

But he did, and he was defiant. "I don't regret any minute of what happened," Yang said. "Because I've been there the whole time, it's a part of me and some people say that's great and some people say 'well, you're just too close to it.'"

Even though Battelle, moderating the "conversation," brought up just about every ghost from Yahoo's recent past--from the "peanut butter memo" to the Microsoft takeover debacle to corporate raider Carl Icahn's attempt to shake things up--the talk proved less than electrifying. The CEO kept driving home a single point: that Yahoo is a growing company and that he fully expects it to weather the storm regardless of the situation.

"I certainly didn't expect the year to be what it's been, coming into it, but I think that the environment which we are in today is extraordinary," Yang said. "I think what Yahoo's been through in 2008 has been extraordinary."

Video: Jerry Yang at Web 2.0 Summit (courtesy of TechWeb)

The problem with the Microsoft deal, he said, was that it was the wrong deal for the two companies. "To this day, I have to say that the best thing for Microsoft to do is to buy Yahoo. I don't think that is a bad idea at all...at the right price, whatever the price is, we are willing to sell the company," he explained. "We were ready to negotiate, we wanted to negotiate a deal, and we felt that we weren't that far apart. But at the end of the day, they withdrew and they since have been very clear about not wanting to buy the company."

In a joking reference to the fact that Yahoo may not get within striking distance of the share price Microsoft was willing to buy it for any time soon, Battelle exclaimed, "Why didn't you take the $33 a share, Jerry?" Indeed, some pundits think that Microsoft may show a renewed interest now that Yahoo has been (arguably) sufficiently battered to make it bargain-basement cheap. The catalyst, of course, is the disintegration of the Google deal.

"Google clearly decided that they did not want to stay in the deal, and we're disappointed with that," was Yang's take on it.

He encouraged Battelle--and the audience--to focus on the innovation, not the bad press. Namely, he meant the company's restructuring (or "rewiring," as they seem to prefer) into a developer-friendly open platform. When Battelle asked him if Yahoo was just jumping on the "platform" bandwagon kick-started by Facebook a year and a half ago, Yang replied, "It's very different from Facebook because what people go to Facebook for is very different from why they go to Yahoo."

The other light at the end of the tunnel, as detailed by Yang, is APT, the upcoming advertising product that's such a big deal for the company that they enlisted Mad Men star Jon Hamm, who plays a fictional advertising exec on TV, to help them pitch the product.

"I think that advertising is still fairly early in its development on the Internet, and I know it's a $40 billion industry and everyone talks about it as a large mature industry," Yang said. "But our view has been that the real sort of endpoint for advertising, the real vision for advertising is being able to really take advertisers and advertising offers and being able to map them against consumer needs, consumer desires in a way that is seamless, sort of one big marketplace."

Though he remained characteristically quiet and soft-spoken, Yang made it clear that he, along with the rest of Yahoo, wants to be seen as a fighter.

"The Yahoo story that hasn't really been told, and what we've had to execute in order to do it, is we do believe we're innovating, we do believe we're changing, we do believe we're changing the game," Yang said. "My personal belief is if you're not in the game to win, you shouldn't be in the game, and that's the way that I try to encourage the whole company to think about."

SAN FRANCISCO--"It turns out that the Internet has worked pretty well," industry mainstay Marc Andreessen told an audience at the Web 2.0 Expo here Thursday morning.

Andreessen's keynote interview with Federated Media chief John Battelle was somewhat of a history lesson into the distant past of the Web (you know, 15 years ago) followed by the requisite speculation about an uncertain future.

Marc Andreessen looks back and ahead at the Web 2.0 Expo.

(Credit: Seth Rosenblatt/CNET Networks)

"It was a very confusing time," Andreessen said of the Net's early days. In the early days of Mosaic, the browser created by Andreessen that eventually evolved into Netscape and then Mozilla and then Firefox, "the conventional wisdom in the business world and in large parts of the press was that interactive television was going to be the future...the Internet, really, at the time, and the Web and Mosaic were really sort of renegade academic research projects."

But Andreessen's current project, Ning, couldn't be less renegade. The slick dot-com, which taps into the social-media craze by letting members build their own social networks without requiring technical expertise, has been fueled not only by Andreessen's Valley cred but also by a sky-high valuation and a recent $60 million funding round that the exec famously said was for an economic "nuclear winter."

"I have no idea what's really going to happen," Andreessen said when Battelle asked him about the "nuclear" comment. "There's this huge irony for our industry...we got blamed for a lot of the last crash. We are the most remote uncorrelated part to this crash that's happening because tech may have lots of issues but we tend to not have a lot of debt and this is all about debt and credit.

Regardless, Andreesen seems to think his own company's well-prepared. He proudly touted some Ning statistics: more than 250,000 individual social networks have been created, 75 percent of which are active. Page views are going up 10 percent week over week; a million new members are joining every month; and 1,500 networks are created every day.

But Ning, like Battelle's Federated Media, could take a big advertising hit in a recession. Once again, Andreessen reminded Battelle and the audience that things tend to be unpredictable. Back in the early days, he said, "everybody told us there was no way to make money on the Internet."

Battelle made sure he touched upon a particularly touchy subject for Andreessen: Microsoft. Gates & Co. famously dealt a fatal blow to Andreessen's Netscape Navigator browser in 1995 when it released Internet Explorer. Anyone hoping for nastiness would've been disappointed, though, as Andreessen's take on Microsoft was quite friendly. "It's hard to even conceive what this industry would be like if Microsoft hadn't standardized the operating system," he said.

"Our view was, we adapt," Andreessen said when asked if he'd freaked out over the debut of Explorer. "The browser turned into Mozilla, which turned into Firefox, which has been a huge success."

Andreessen also addressed Microsoft's ongoing desire to acquire Yahoo. "If the deal goes through I think it will actually be a really good deal. I think they'll get a lot out of it," he said.

But he added that he'd be a bit sad for Yahoo. "It's always a little bit sad, the prospect of an entrepreneurial company, especially one that's had that kind of success over the years, not being independent. But over time these things are part of the natural evolution."

The media business hasn't figured out that direction yet, in his view. "Most of the major media companies are still largely unprepared for the shift, which is ironic considering how long the stuff has been around. If you look at newspapers right now they're just in absolute freefall from a business standpoint."

He kept talking about evolution. But somewhat paradoxically, he repeatedly emphasized that nobody can really tell where it's going. "We're 15 years into it, and yet things are still developing, and a lot of things are still unknown."

Digg seems to have outgrown Google as its ad provider, as today marks the start of a new three-year deal with Microsoft to serve up ads on the popular social news service. Microsoft is replacing Google for serving up many of the ads you see on Digg's pages. The rest are provided by Federated Media, which also works with Digg to create special branded pages like the newly-updated Arc visualization in Digg labs.

Digg is claiming the move is about scalability, and positive reviews from Facebook who also uses Microsoft for their contextual advertising. What does this mean for you, the end user? According to Kevin Rose's post on the Digg blog, there will be "...no dancing monkey ads, and the design will remain uncluttered." Whew.

Elinor Mills over at CNET News.com has the full story.