What is that thing? Well, it has a name, Byrne says today in a blog post: “C-Change.”

So what will it do? Byrne doesn’t want to say much, except that it will have something to do with digital media, specifically mobile stuff:

It’s too early to tell everyone what our first products will be, but I do envision more than a single platform. It will be a network of niche products for the business audience with an emphasis on mobile applications.

Okay. That sounds good. In the meantime, here’s Byrne’s pithy description of the state of media today, which happens to dovetail pretty nicely with mine. And reading it might save you a couple of days of panel-watching.

I have three fundamental beliefs that inform my thinking: 1) Print advertising will never come back. There are just too many options for advertisers today and too much pressure on rates. Sadly, success in print will be measured in single-digit declines, forever. 2) Online advertising will never offset those declines nor save print. There’s far too much competition online and far too much available inventory; and 3) Users will not pay for content, unless they’re convinced it has immediate and tangible value. Very little journalism meets that standard today. Do we really need 57 versions of a story on Bernie Madoff pleading guilty?

As everyone knows by this morning, Spot Runner–the heavily-funded and once-hyped online-offline advertising agency–is being sued by one of its more prominent investors.

Ad behemoth WPP, which is making a variety of harsh allegations in a lawsuit filed about two weeks ago, is saying it is still not too big to be snookered by the start-up’s top execs and some of its other investors.

WPP (WPPGY), which has been quite active in making digital ad investments over the last several years, is alleging that Spot Runner sold over $54 million in “secondary” shares to line its own pockets without telling WPP much, all while losing money, running out of funding and not building a sustainable business.

The lawsuit essentially paints an ugly picture of Spot Runner as the Bernie Madoff of Web 2.0.

In its strongest phrasing, the lawsuit alleges:

“Rather than working to make Spot Runner a successful and profitable venture, they perpetuated a ‘pump-and dump’ scheme in which they aggressively promoted the Company to new investors (often by promoting that WPP was an investor in and supported of the Company) and then sold new investors large quantities of their own secondary shares at ever-increasing valuations. Such secondary sales were accomplished surreptitiously and without disclosures to Investors required by the controlling Investor agreements or federal and state securities laws.”

Those named in the suit include: Spot Runner CEO and co-founder Nick Grouf, CTO and co-founder David Waxman, venture investors Battery Ventures and Index Ventures, and board members, such as former AOL exec Robert Pittman.

This is obviously a bad turn of events for Spot Runner, which is currently reeling from the advertising downturn too.

Before that, it had gotten over $100 million in funding from a strong slate of investing luminaries.

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

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.

All that money had, when times were good, given Spot Runner an eye-popping valuation upward of $500 million.

And that’s the very kind of bubble economics that apparently allowed some at the company to make those lucrative secondary sales the lawsuit alleges, with lots of demand to get in to the latest hot start-up.

To be clear, such sales are not uncommon at tech start-ups in Silicon Valley, often done to allow entrepreneurs to take some money off the table, especially if there is no clear path to liquidation.

But the scope of the sales alleged is quite unusual, with Grouf getting half the proceeds of the transactions, which were made from early 2006 to early 2008.

That said, WPP–which is seeking $11.5 million in damages, as well as legal fees, after investing $10 million–leaves itself open to its own tsk-tsking, since it finally got to participate some in the sales too, dumping $900,000 worth of shares in the last one.

That makes it seem like WPP is just miffed that it did not get enough while the getting was good, which is underscored by the small amount of money being asked for in the lawsuit, in comparison to the large and loud accusations.

Worse still, perhaps, for everyone involved, is the suit’s revelation that Spot Runner was not the revenue geyser it had touted itself as being–which should not come as a huge shock to anyone who has followed any Web 2.0 company in an even cursory way.

Very few, including the star, Facebook, make money, as BoomTown and others have pointed out a lot to little interest.

The lawsuit says the profit-free Spot Runner had $5 million in revenue in 2007 and $9 million in 2008. It alleges too that the company only has $20 million left of its funding and is spending $35 million to $45 million a year.

That’s because Spot Runner was trying to create a new online ad system, which was 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. It has since changed its strategy and is working on other products, such as a digital-media buying platform called Project Malibu.

Other than Spot Runner’s statement that it would defend itself vigorously, there were mostly no comments all around.

“This situation is unfortunate; we had hoped that we would have had a long relationship with WPP. We believe the claims are without merit and we will vigorously defend against them, including taking all necessary legal action to protect Spot Runner’s reputation,” said a Spot Runner spokeswoman in a statement.

But one source close to the Spot Runner side, while not addressing the specific allegations, noted in an interview with me that what looks bad now did not then:

“These are different times and things look differently.”

You can say that again. And again after that.

As point of that fact, check out a video I did, below, with Grouf last July at Spot Runner offices in Los Angeles, right after it had gotten one of its giant piles of money. (Grouf is pictured here.)

This video took place right after a lot of the transactions that the lawsuit alleges, which makes sense since Spot Runner was the hot start-up at that moment and many would have been trying to get into the action.

I met Grouf many years ago when he–along with 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.

But with a hot new start-up, everything looked pretty again, perhaps too pretty, for Grouf.

As I wrote at the time about the hype, which including rumors of Spot Runner being sold for big bucks to Google (GOOG) or Microsoft (MSFT):

“This is its biggest burden, I think, setting expectations very high for what is still a little start-up…Who knows whether the company will be able to overcome its hype, but time (and money) will tell.”

Obviously, we can tell a lot more now.

Here’s the Grouf video (the full lawsuit text and a memo Spot Runner sent to employees about it are also below):

Here is the full lawsuit (click on + button to zoom in):

And, finally, here is the letter Spot Runner sent to employees, who have suffered from layoffs, about the lawsuit:

Team,

As you may have heard, WPP, a minority shareholder (less than 3%) in Spot Runner since 2006, filed a lawsuit against the company and its board members primarily related to the sale of Spot Runner stock and Spot Runner’s communications with WPP. This situation is unfortunate, as we appreciate and value the relationships we have with all of our investors and we had hoped for a long and supportive relationship with WPP. We believe these claims are without merit and we will vigorously defend against them, including taking all necessary legal action to protect Spot Runner’s reputation.

We feel strongly that WPP’s complaint contains many baseless accusations and we want to give you a broader perspective on the matter. This lawsuit is unrelated to our products and services–it is centered on legal agreements entered into with WPP, a sophisticated investor, regarding the way that shareholder stock sales were handled. WPP alleges that Spot Runner’s board members failed to disclose to WPP the stock sales by shareholders, allegedly in violation of the board’s obligations to stockholders, among other things.

We are confident that Spot Runner complied with all of its obligations under the various shareholder agreements. When these sales occurred, there was overwhelming demand for Spot Runner stock and the company did not want to dilute existing shareholders by issuing new shares. Therefore, the founders (in 2006) and the board members and other preferred shareholders (in 2007 and early 2008) agreed to make room for important, new investors and respond to their desire to invest in Spot Runner by selling their own shares. In 2007 and 2008, WPP and other preferred shareholders were given notice that the sales were occurring and they had the opportunity to participate in the sales. In fact, WPP signed various documents acknowledging this opportunity.

Spot Runner and all of its employees conduct business with the utmost integrity. Our team, technologies, and products and services are core assets of which we can all be proud. It is because of your hard work that we have come this far. To that end, we continue to drive hard toward successfully launching Project Malibu and realizing its full potential. You also should know that our board members remain majority shareholders in Spot Runner–a concrete sign of their commitment to and confidence in the business.

Our outside counsel will work with the board and management team to develop a formal reply, which ultimately will be filed with the court. These legal proceedings should not affect our day-to-day operations.

We are grateful that we can count on you to remain focused on serving our clients and partners to the best of your abilities.

Thank you again for all that you do for Spot Runner.

The software giant has jokingly renamed it Omuk, which is Kumo spelled backwards.

No kidding, but BoomTown likes it better!

As I wrote about Kumo and Microsoft (MSFT) efforts to compete better with archrival Google (GOOG) in early March:

“Sources at Microsoft said the company has not yet decided whether it will keep the Kumo name, which sounds a little too much like that crazy dog from the Stephen King novel.”

Thus, I was heartened when I obtained this internal memo, sent suspiciously on April Fool’s Day.

The Bernie Madoff and “muk it” jokes are actually funny.

Here’s the screenshot (click on it to make it larger) and the memo:

From: Brian MacDonald
Sent: Wednesday, April 01, 2009 5:16 AM
To: Search FTE’s
Subject: Yesterday’s brand leak

Based on all the mail I have been getting on the topic, I imagine most people have seen the blog posts from late yesterday leaking the new brand. Marketing has asked me to share some of the “why” behind the final brand decision, but everyone should know that we are still officially keeping a “no comment” stance on the leak. We shouldn’t be discussing the new brand name externally until after the official launch.

In picking the new brand, marketing tried to have a brand that resonated with power users. We want to increase our fanbase amongst the heaviest searchers and want to pick a brand that will support that. Google had the scientific/math term kind of savvy user appeal and we wanted something akin to that. One of the real clever product names of all time was the operating system Gnu, which stood for Gnu’s Not Unix, with the G not really standing for anything. Kind of quirky and kind of fun.

So this same kind of thinking was behind the brand name. So it was Kumo after all, but with a twist. Kumo was just our new brand spelled backwards. The new brand “Omuk” stands, gnu-like, for “Omuk means unlimited knowledge.” The phrase “unlimited knowledge” really resonated with focus groups as something they most wanted to achieve with a search engine. It is rare that you can get the brand promise so neatly tied directly to the brand name. It also ties in corporate wide with the Unlimited Potential group etc.

There is a lot of riffs marketing can do in advertising with “unlimited knowledge.” If you recall the Dreyer’s Ice Cream ads where they brought in people who said they were abducted by aliens etc. and then did the tagline “unbelievable product from an unbelievable spokesperson” etc., we can do something similar. For example, tying Bernie Madoff, Unlimited Chutzpah with Omuk, Unlimited Knowledge. That type of thing.

In testing, Omuk scored very high on attributes like “empowering”, “organized” and “warm/fuzzy.” Another key attribute was ease of spelling and Omuk did very well. There was some concerns that people might spell it ohmuk or omuck but that didn’t happen.

The final key feature for the brand was verbability. Here marketing is planning to go with a little ingenuity and drop the o and just push “muk it.” In ads they will get playful and have the actors talk about the joys of accessing unlimited knowledge by just “muking around”, etc. The hope is to generate a lot of word-of-mouth and free impressions on the internet the way that the very successful Bill and Jerry commercials did for Windows.

Below is a sample homepage screenshot with the new brand. Really looks great. This also has the latest thinking on default “scopes.”

–Brian

I know that “The Daily Show” host Jon Stewart does not need even more praise for his spot-on comic and very real jabs at the CNBC financial cable network and its milquetoast coverage of the financial crisis, pre and post.

The silliness that prevails too much over doing serious and rigorous reporting that Stewart takes perfect aim at is a major problem.

Taking CEO spinning at face value and letting them yammer on on air without being challenged much at all has always been excruciating to watch at best and woefully irresponsible at worst.

But, to my mind, the most important thing that he elicited out of CNBC’s most famous stock jester, Jim Cramer, was the part of the interview discussing using the malleable press to float fictional rumors about companies in order to make money on the negative news.

While Cramer at first tried to deny he did it, Stewart had the videotape of the “Mad Money” host talking about the practice, specifically in regard to Apple (AAPL).

His appalling idea to make a quick buck? Making it up that the mobile carriers did not like the iPhone right before Macworld, in this case in 2006.

“And this is very easy because the people who write about Apple want that story, and you can claim that it’s credible because you spoke to someone at Apple, because Apple doesn’t…comment,” said Cramer cavalierly, as if he was not talking about a way to essentially steal other people’s money and hurt Apple unfairly, to interviewer Aaron Task, then at Cramer’s own TheStreet.com.

“So it’s really an ideal short. And again if I were short Apple, I’d pick up the phone and I’d do that today.“

Bernie Madoff would be so proud, if he wasn’t otherwise imprisoned for life!

Kind of puts all those Steve-Jobs-Is-Dead-Right-Now rumors of a few months ago into a new light?

It’s been obvious that the legendary Apple CEO has been quite ill from his appearance alone.

But, as BoomTown has always maintained, the rumors written without any serious reporting about him were also a troublesome issue because it was that clear short-sellers played a large part in stoking the fear about his imminent demise, given how important Jobs has been to Apple.

(Although, this has not seemed to stop Apple from releasing a lot of really cool stuff of late, like the new Shuffle, which Walt Mossberg reviewed here.)

While Apple has not been adequately forthcoming, either, about the Jobs situation, that does not mean the press–as Stewart correctly points out–should not try to actually do its job and dig for what is really going on rather than just slap up unsubstantiated blather.

“It’s not a f@#*ing game,” said Stewart perfectly. Indeed not.

You can see Cramer cynically discussing the Apple stock manipulation tricks at the 6:45-minute mark of Part 2, but here is the entire Stewart well-deserved roasting of Cramer in three parts.

(And at the bottom is the Task interview with Cramer too.)

Part 1:

Part 2:

Part 3:

TheStreet.com Interview:

Early this morning, Bloomberg reported that regulators are looking into Apple’s disclosures about the health–or lack thereof–of its iconic CEO Steve Jobs.

According to the story, the Securities and Exchange Commission is conducting a review of Apple (AAPL) “to ensure investors weren’t misled, a person familiar with the matter said. The Securities and Exchange Commission’s review doesn’t mean investigators have seen evidence of wrongdoing, the person said, declining to be identified because the inquiry isn’t public.”

And while BoomTown has railed against the creepy obsession the media have had with Jobs’s health and the publishing of rumors and innuendos about it as fact without a whole lot of reporting, I hope it is true.

It is also entirely appropriate that the government agency charged with keeping an eye on public companies does investigate–at the very least, to get the story right.

Because if the press and blogosphere and Apple aren’t going to do it, I vote for the one with subpoena power to sort it all out and make some levelheaded determinations about the rules of the road.

(And, frankly, it is good to see the SEC more vigorous after its stunningly moribund record of late–Hello, Bernie Madoff!)

Apple’s COO and acting CEO Tim Cook, by the way, will likely be questioned about the SEC look-see, Steve Jobs’s health and more at its first-quarter conference call at 2 p.m. PST today.

Of course, the health of its business is the most important thing–sales of iPods and iPhones, new products and what Apple will do with its $25 billion cash horde.

But the focus will surely be on Jobs and now, this government inquiry.

What will be most interesting is exactly how much companies do have to reveal about the health of their leadership and whether the relative fame and brand-critical nature of that exec matters more.

For example, do leaders like Jobs or, say, Martha Stewart, have more need to discuss their health than some lesser known CEO who might have a similar problem?

And since it has been well known that Jobs suffered from a bout with pancreatic cancer and recovered, does he have to disclose it all, given that even his curable version of the illness has complications that are well documented?

And, most of all, how specific do Apple and Jobs have to be, and how frequently do they have to update, especially since a diagnosis is always a moving target?

More to the point, given that the bordering-on-crazed attention given to Jobs–who engenders so much passionate emotion–has also been off-putting and, worse, all over the map in terms of accurate information, what clarity can regulators provide?

Apple has been under increasing pressure, since Jobs revealed he had a “hormonal imbalance,” soon after which he announced that he was taking a five-month medical leave from his duties because his health problems were “more complex.”

I am less strident than others on this turn of events since having accurate health information about yourself is not quite the same as, say, details of a merger and who knew what when.

Plus it has been clear for a long time that all has not been well with Jobs, something any investor had to be aware of.

I have no inside information; nor have I talked to anyone who has treated him, but anyone who has not been on Mars for the past year could see that Jobs was not looking great, especially from his woefully haggard appearance.

As I have written:

Apple investors who have not figured Jobs’s precarious health–after a round with any kind of cancer–into their investment strategies about Apple going forward need some serious reality medication themselves.

Guess what? Jobs has been really sick and it means he is going to have a harder time with any kind of infection or complication for the rest of his life, and he will likely be more delicate than someone who has not had cancer.”

Who knows if the government will find out more, but it would be good if some of the smoke could be cleared away to see if there is some actual fire or not.

And if not, Jobs can get the peace he is seeking to try to recover his health.

As he said to Bloomberg last week: “Why don’t you guys leave me alone–why is this important?”

It would be nice to be get that answer and then, hopefully, let Jobs get on with getting well.