You owe me. I had to get off my sickbed today to call David Karp, the CEO of Tumblr, and ask him if he really was in talks to sell his company to Yahoo (YHOO), as you reported today on Gawker/Valleywag. For the record, David says your report is “categorically untrue.”

I’d spend more time discussing it, but, as I said, I’m feeling under the weather. And your story is not true. So here’s what Karp has to say via his Tumblr account.

And here’s what Marco Arment, who helped start Tumblr with Karp a couple of years ago, says:

And here’s what venture capitalist Bijan Sabet, whose Spark Capital helped raise a $4.5 million round for Tumblr last year, says via his Twitter account:

Now I’m going to return to my convalescing. Please give me a break for another day or so.

[Image Credit: Library of Congress via Flickr]

An open-ended timetable for an employee stock sale program.

Perhaps it’s the same “open-ended timetable” Facebook’s using for that mythical liquidity event, hmm? Without a silver bullet business model and no stable revenue stream to speak of, investors were bound to question Facebook’s perceived valuation sooner or later. And, apparently that’s exactly what happened, according to Valleywag’s Owen Thomas. “Facebook’s common shares…have a value that put the whole company’s worth at around $4 billion,” Thomas explains. “Or they did. A source close to potential investors said they wanted to buy shares from employees at a lower valuation, or with guarantees similar to Microsoft’s. To reward a small number of employees who had enough shares to benefit from the program, [Facebook] would have had to give away something for nothing.”

Yes, this is the third post I’ve written today about Gawker Media’s Nick Denton, who seems to prefer to get all of his news out at the same time.

But briefly:

• Denton has put Consumerist, his, um, pro-consumer site, up for sale.
• Denton is folding Valleywag, his Gawker-for-techies site, into…Gawker. Editor Owen Thomas will keep his job, and essentially become Gawker’s man in Silicon Valley. Writer Paul Boutin will contribute some stories, but likely fewer.
• Denton has more moves to come. Conveniently, he has provided a playbook for them via his post this morning, in which he spells out what Internet publishers should do in the face of a cratering ad market. Educated guess: If you sell ads for Denton, or work for one of his most successful titles (Gawker, gadget site Gizmodo, videogame site Kotaku), there are decent odds you will get to continue doing so in the future. Everybody else, all bets are off. Then again, that’s the same position that all those with a job in media finds themselves in these days. Cheers!

Don’t care what what a man who publishes gossip blogs predicts will happen to the ad market? Fair enough.Here are some actual data from the front lines: Online advertising sales results from Jupiter Media (JUPM), an odd collection of Web sites, trade shows and (until last month), stock photography businesses.

To spell that out–Jupiter is reporting that revenue per online advertiser dropped 29.6 percent in the last quarter, which ended Sept. 30. And recall that the financial meltdown didn’t really hit until the last two weeks of September.

The net effect: Jupiter’s online media business declined 4.6 percent in that quarter. What do you think the current quarter will look like?

If you want to argue that Jupiter’s an outlier, and that big Web players like Google (GOOG) and Yahoo (YHOO) are still going to be fine, you’re not alone. Yesterday, for instance, someone at Condé Nast’s Web publishing unit told me the company’s still forecasting high single-digit to low double-digit revenue increases for 2009.

But recall that Time Warner’s AOL (TWX) just recorded a six percent ad revenue drop during its third quarter. At some point Nick Denton is going to look less paranoid and more prescient.

Here’s one certainty in the hubbub that has resulted in the wake of the departure of high-profile exec Ben Ling from Facebook last week: COO Sheryl Sandberg is definitely not responsible for the melting of the polar ice caps.

That’s the joking question–”Was global warming Sandberg’s fault too?”–asked at a staff meeting at the social-networking start-up last Friday afternoon after the news of Ling’s departure on the heels of previous employee exits suddenly morphed into a series of increasingly vituperative posts on the Valleywag tech gossip site centering on what blogger Owen Thomas called Sandberg’s “reign of terror” at Facebook.

Using Photoshopped images–one of Sandberg wielding a rifle and another with the bright-red word, “LIAR,” plastered under her mug–the vaguely sexist and decidedly over-the-top picture painted was of Sandberg (at right) as some unholy cross of Lady Macbeth, the bad side of Hillary Clinton and a really grumpy fascist dictator of a small third-world country.

“She demands total loyalty, and brooks no dissent–even the healthy, boisterous debate that’s common to start-ups,” wrote Thomas dramatically, as if Sandberg might really use that fake rifle on errant minions. “You’re either with Sheryl, or you’re against Sheryl. And if you’re against Sheryl, you’re not long for Facebook.”

Owen, you have now officially scared the bejesus out of BoomTown with that added dash of Rosa Klebb!

(And, of course, this image conveniently leaves out the very pertinent fact that Founder and CEO Mark Zuckerberg is still firmly and much more militantly in charge at Facebook than ever before, but we will get to that later.)

In any case, Valleywag used all of this to postulate that Sandberg’s insane reaction to Ling’s leaving–complete with a sneaky-sounding stock bribe to buy his silence–was evidence of her mad grab for power over all of Facebook.

The talented and strong-willed Ling was portrayed in an odd way too, as some sort of whiny victim of circumstances he was unable to control.

Except–while BoomTown likes a good “Tom and Jerry” cartoon as much as the next person–it’s a deeply inaccurate portrayal of Sandberg, who arrived at Facebook in March; of what happened with regard to Ling; and most of all, of the often-painful growing-up process that has actually been occurring inside of Facebook.

The Ling incident is, in fact, a perfect example of this.

According to multiple sources from all sides, Ling (pictured here) was offered the choice of resigning or being terminated last Monday, and he and Facebook senior management wrangled over how he would leave the company and announce his return to Google (GOOG)–in a big job at its YouTube division, in fact. But the true story of his departure is highly typical of how small, promising Web companies stumble forward.

From mismanaging expectations related to Ling’s job after his arrival from Google last fall (after Facebook widely touted the new recruit), to constant shifts in how the company was organized, to a series of miscommunications and misunderstandings on both sides, the curious case of Benjamin Ling and Sheryl Sandberg is–more than anything–completely human.

Which is to say, it is a bit of a mess.

Here’s what I found out, after spending the weekend talking to as many people with knowledge of the situation as possible, in a very long report:

To begin, as someone who has been consistently tough on the company for its insane valuation, criticized its sometimes ham-handed management and pressed it to show the true path to sustainable monetization, I think I cannot be considered a cheerleader for Facebook or for its shifting management.

Thus, I and many others looked closely at the recent departures of CTO Adam D’Angelo (to take time off) in May and longtime exec Matt Cohler in June (to become a VC at Benchmark Capital) with a gimlet eye.

Looking further, I learned from several sources that the 20-something D’Angelo had issues with the company inevitably becoming larger and more bureaucratic, and there were also questions about his ability to run the much larger and increasingly complicated technical organization.

The sudden exit of Cohler (pictured here), who had become Facebook’s VP of Product Management, had an even a more complex set of variables, sources said, including his longtime interest in being a VC, the highly attractive offer he got from Benchmark and, most of all, his lack of interest in running a much larger organization.

While some say Cohler–who was, in fact, key to bringing Sandberg in–quickly grew disillusioned with her and the direction of Facebook, it seems a bit of a stretch to me to say he left because of her.

As Zuckerberg’s earliest and most trusted of execs, who is also well-liked by all, Cohler had as much–if not more–power as Sandberg over the organization. More likely, I imagine Cohler would have stayed if he thought she was laying waste to the place.

In any case, the arrival of Sandberg–followed quickly by the hiring of former Google PR head Elliot Schrage–heralded massive changes and an eventual path to an IPO for Facebook, a journey that not everyone welcomed, to be sure.

With their much more disciplined and controlling management styles, highly polished Harvard, Washington, D.C. and Google resumes, and obviously sharper edges, Sandberg and Schrage (pictured here) represented a contrast to earlier, less-intense times that not everyone at Facebook has liked.

Many execs–used to the chaos of jostling for attention and power from the close-to-the-vest Zuckerberg, whose attention to various employees seems to always wax and wane–also resisted a No. 2 in charge.

Typical was discontent from Technical Operations VP Jonathan Heiliger, whom many sources pointed to because of his vocal complaints around the company and around Silicon Valley about Sandberg’s more brusque and meddlesome style.

(Heiliger now gets along better with Sandberg, according to many, as do many execs previously wary of the new regime.)

Interestingly, Ling was not in this disgruntled camp, having known Sandberg from Google and hoped her arrival would clarify his growing disappointment with the job he thought he had been hired for.

According to many sources, Ling thought his job as director of platform product marketing, as described to him by Zuckerberg and others who recruited him in the fall of 2007, would be much more expansive than it turned out to be.

And, indeed, the letter from his new boss, Chamath Palihapitiya, heralding his arrival seemed to indicate that Ling would have a lot of responsibility:

Hi Guys,

Please join me in welcoming Ben to Facebook as our Director of Platform Product Marketing, working on my team. He joins us from Google where he was the General Manager of eCommerce, where he ran Google Product Search and Google Checkout and was the founder of Google Checkout. Ben also led the mobile efforts at Google in 2004, where he launched Google SMS. Prior to Google, Ben received his Ph.D. in Computer Science from Stanford University.

Ben is responsible for overseeing Platform aspects of Product Management, Product Marketing, Technical Support, and Partner Solutions.

Zuck, D’Angelo and I are psyched to have Ben on board. *BLING*, as he is known to his friends, sits on the 2nd floor of 156 if you want to come by and introduce yourself.

Chamath”

It was a wide swath of duties, which seemed to indicate that Ling was, in essence, the lead manager of the platform.

This turned out not to be the case, as Facebook runs more as a “functional” organization rather than a “cross-functional” one, which is to say, no one manager is in charge of all the many parts it takes to get a product out the door.

For someone like Ling, sources said, the lack of structure meant chaos and no clear lines of accountability, and he pressed his bosses for more definition of his role.

For their part, sources said, those execs–Palihapitiya (pictured here) and then Cohler–felt Ling was too interested in internal politics, his title and control rather than in taking the lead in a more organic way. They also felt Ling, while a good executor of tasks, lacked the vision to be the overall manager of the platform.

Whether they ever did anything about it, of course, remains unclear, except for the fact that this kind of thing happens a lot all over Silicon Valley.

Let me just stop here then, because one can go round and round with this kind of wrangling over job performance issues and never be able to determine who exactly is to blame.

But it is safe to say Ling was not happy with Facebook and Facebook was not happy with Ling.

When Schrage was put in charge of platform marketing (and not in charge of the platform itself, as many have misconstrued, since he is decidedly nontechnical), the controversial move caused more problems and threw Ling’s status into even more confusion.

Ling and many others did not like the move, of course, but Ling did go to Schrage to share his disappointment and then took his gripes to Sandberg.

That, from what I can tell, is where things went most awry.

In that meeting about 10 days ago, Ling told her that Google had been tring to recruit him and that he was unhappy with the structure of the Facebook organization. According to those who back Ling, he was not making a threat, but seeking advice.

That is not the way those at Facebook see it. “Ben wanted a bigger job, and he was using the prospect of going to Google as a hammer,” said one person. “But he was not doing a good enough job with what he had been running to make such demands.”

Sandberg said she would discuss it with other senior execs, most especially Zuckerberg, and get back to Ling with some answers on Monday.

That was when discontent with Ling bubbled up among his managers, and suddenly a series of smaller slights and problems with Ling added up, and not in his favor.

Curiously, although Facebook sources claim they were dissatisfied with Ling’s work, there seems to have been exactly zero effort to remove him before he revealed the Google offer.

Nonetheless, all now agreed that Ling should not have the larger job, especially if he was also considering a job at rival Google–although, once again, it is not clear that he actually asked for a larger role within Facebook.

What has been lost in this story, though, is that the final decision came from Zuckerberg (pictured here), who was irked by Ling’s demands and his perceived disloyalty.

Sandberg and Schrage came back to Ling on Monday of last week with a startling decision: He could either resign immediately and write an email to his staff announcing it or he would be terminated by them that night and they would announce it.

Ling was, many sources said, flabbergasted that what he thought was an attempt to get some clarity had turned into this. His detractors maintained he was threatening Facebook by dangling the Google offer.

Ling wrote his letter to staff, and news of his departure leaked by the next day, both to me and VentureBeat’s Eric Eldon.

In my post, Ling did not say he resigned under pressure, nor did Facebook say it was about to fire him if he did not resign.

“I have huge respect for Elliot and work well with him,” Ling told me. “Facebook is a tremendous organization, and I would not leave it if it were not for a great opportunity.”

Facebook’s statement said, in part: “Facebook confirms that Ben Ling will be leaving the company in the coming weeks to pursue other interests. We wish him well and appreciate his great contributions to the early success of Facebook Platform.”

No surprise, but things got worse when the discussions quickly turned to the terms of his departure. Ling was only a few months away from his “cliff” for vesting one-quarter of the equity he got for coming to Facebook.

Facebook offered to either accelerate that completely or even make an offer of some of those shares, but only if Ling stayed on the Facebook payroll–taking a two-month vacation–and did not accept an offer from Google or anyone else in that time period.

In addition, deeply sensitive to the perception of a high-profile Google hire going back to the mother ship, Facebook wanted the deal to include a provision barring an immediate announcement that Ling would return to the search giant.

Obviously, given that the original story had been all about talent leaving Google to come to Facebook, the opposite was a much less palatable plot.

Still, this kind of request to refrain from going right to work for a competitor in exchange for shares is not untypical, and companies almost always ask for strict nondisparagement clauses.

But in the hothouse blogging environment of today, of course, to ask for help stopping such news from leaking is like asking to hold back the ocean waves. External optics on Ling’s departure clearly became too much of a focus of Sandberg, Schrage and others.

More to the point, although he did consider delaying acceptance of the job at Google, even though there were other contenders for the position, Ling did not want to agree to Facebook’s messaging about his departure.

Said one Ling supporter: “How could he guarantee that someone was not going to find out and then he would have had to tell a lie about his plans? Especially, given that Facebook is the leakiest place in the Valley?”

Good point and thank goodness! Valleywag wrote about Ling lunching at Google and I wrote of the details of Ling’s new YouTube job on Friday.

Facebook sources, though, said Ling threatened to badmouth the company if they did not pony up. “He insinuated he was going to talk badly about all of us, and we did not want to deal with him acting like that,” said one source.

Sources supportive of Ling said this was not the case and that he was not ever going to impugn Facebook, although Ling was, of course, unhappy.

“Why they didn’t give him some credit for his work and align his interests with theirs by being more generous is a mystery to all of us,” said one Facebook exec, who noted that Ling was prominently featured onstage in the most recent rollout of platform changes at Facebook. “His fall from grace makes you think anyone could go from valued employee to bum pretty quickly.”

Other sources at Facebook disagree, noting Ling was simply a hire who did not pan out as expected and that the fault was in not dealing with the issue sooner.

They also note that the company would never have agreed to put Ling prominently onstage if they had known he was considering a move to Google.

But once again, if Facebook was unhappy with Ling’s work, why put him onstage at all?

It’s hard to get a good answer to that question, which–to me–underscores the disorganization around Ling’s leaving.

“Ben is a really smart guy and Google is probably a better place for him,” said one Facebook exec. “He will probably do well, but he did not do well here.”

Actually, neither Facebook nor Ling did very well in dealing with the disintegration of the relationship.

Ling got a new job at YouTube and a fat signing bonus, but no Facebook shares, some of which he probably deserved for his work on the platform.

And Facebook learned yet another hard lesson about growing up. It is doubtless going to be one of many, many to come.

Please see this disclosure related to me and Google.

Paul Kedrosky at Infectious Greed says Yahoo has bought itself some more time–and litigation:

I think what has largely happened here is we have bought time and lawsuits. If I was a Yahoo shareholder I’d be seriously pissed. Microsoft pulled us out of our recent share price slump, but management was too cutesy and territorial to take the money and run. My guess is that Yahoo’s share price falls quickly on Monday, and then finds support in the low-$20, a price reflecting a belief that this is not yet over. Only then, once some key shareholders pipe up and once Yahoo has to defend itself against the inevitable lawsuits, will we know how likely it is that its brazen move sticks.”

Mini-Microsoft says Microsoft’s decision to walk restores his faith in the company:

Out of this had best come a new reorganization of our online properties. Out with the old already. We had reached a bet-the-company point in going after Yahoo to make up for the lack of performance out of MSN/Search/AdCenter in an attempt to leapfrog forward. I think we need to hang up on the good-enough consensus culture for a while and put in a strategy czar to get things done vs. expecting something to arise out of the dysfunctional ecosystem we currently have.”

Over at ZDNet Larry Dignan opines that there are better ways for Microsoft to spend its $44.6 billion:

Windows needs work. Vista has image problems. The operating system is under attack from multiple fronts and needs to become more lightweight and modular. Windows is what made Microsoft and there are serious questions about its future. The biggest knock on this entire Microhoo saga: It was a distraction that could take focus away from the real cash cow. If you think the negotiations were a distraction, just imagine how dealing with regulators and integrating Yahoo would have diverted attention. Despite all the Microhoo chatter, Windows 7 (all resources) may be the thing that determines whether Microsoft stays relevant or not.”

And the Seattle Times’ Brier Dudley agrees:

Thank goodness the tide finally turned and Ballmer came to his senses. Imagine what Microsoft could do just with that “extra” $5 billion. Ballmer could buy most of the Web start-ups in Seattle and Silicon Valley, plus a few biotechs and energy ventures for good measure. Yahoo CEO Jerry Yang will now go down in history as the obstinate founder who blew a chance to milk the world’s richest software company at the peak of its midlife angst.”

Meanwhile, Mathew Ingram says Yahoo CEO Jerry Yang’s days are numbered:

In my view, Yahoo CEO Jerry Yang has gone way beyond fiduciary duty and has been effectively blocking this deal in any way possible. I expect to see the stock tank, and deservedly so. If I were a shareholder, I would be calling for Yang’s head. This deal was by far the best opportunity the company had to achieve some value.”

And over at Valleywag, Owen Thomas says Microsoft CEO Steve Ballmer’s days may be numbered as well:

Emails are flying out of Redmond with this speculation: Microsoft CEO Steve Ballmer’s botched $50 billion bid for Yahoo could mean the end of his career. While Microsoft’s board reportedly gave the CEO considerable leeway in handling the deal, his dithering approach and his failure to sell the deal both to Yahoo’s board and Microsoft’s own executives don’t reflect well on the sweaty screamer. The only problem: Microsoft has no obvious successor for Ballmer.”

At paidContent, Rafat Ali suggests some other business partners with which Microsoft might ally:

One would have to believe that Facebook will be back in play. Microsoft is already the advertising provider for the social-networking service, and also owns a small part in it. This would give it a strong toehold in the social-media space and help it experiment more with new advertising models, among other things.
Then, to block and isolate Yahoo further, AOL’s buyout would be a possibility. Time Warner (TWX) is certainly interested in spinning it out, and is still speaking to Yahoo on a combination. Google (GOOG) is a 5% shareholder of AOL, so things might have to work around that.
Certainly, if Diller really wants to get rid of IAC’s (IACI) disparate companies in this spinoff, then Microsoft could be a ready buyer.
The other smaller possibility includes CNET (CNET), though it’s hard to see synergies between the two companies.
Further down the money chain would be tons of other companies like Twitter, Digg, Meebo and any other $50 million to $500 million company.”

CNET’s Stephan Shankland wonders if an ad deal with Google is really a viable option for Yahoo:

But relying on Google for ads, even in a limited way, is in effect admitting defeat in a key part of Yahoo’s business. Even if it gets more money from the higher revenue per click generated by Google’s ad technology, relying on its biggest adversary raises the possibility that a central part of the company’s business could be hollowed out.”

BoomTown’s Kara Swisher agrees:

While Yahoo might not have wanted to be acquired by Microsoft, its alternative to goose its revenues by relying on Google in an outsourced online search-ad deal is one it might regret even more if struck.”

At CenterNetworks, Alan Stern suggests Yahoo shack up with AOL:

I’ve said for years now (many years before CN) that Yahoo and AOL needed to merge. It would have been a mega-merger years ago but would still be huge even today. I touched on it a year ago on CN. Both AOL and Yahoo are consumer-facing Internet companies. Microsoft is not and to try to just plug Yahoo would be very difficult. While there is a good bit of overlap with AOL and Yahoo, the ability to maximize the mainstream is the key. AOL is looking to launch a large number of content sites this year, they have Platform-A for advertising and the number one IM client out there. Don’t forget Bebo as well. Yahoo brings some semi-powerful social apps and a huge content network along with some leading Web apps.”

While Silicon Alley Insider’s Henry Blodget feels Yahoo should move ahead with its Google outsourcing deal:

It allows Yahoo to focus on businesses it can win, instead of throwing money at a war it has already lost.”

And, finally, DealBook wonders if Microsoft is going to walk away from the biggest deal of its 33-year history.

It certainly appears that way at the moment. Which means there’s really only one thing for certain come Monday: Yahoo’s shares will sink deep into the mud, and Yang and Co. will be hard pressed to placate investors. Seems that in the end, the only so-called “sacred cow” Yahoo CEO Jerry Yang will slaughter is his company’s share price …”

Last night, dressed in my kindergarten soccer-coach best (sneaks, sweats and athletic socks–glam!), I ventured over to the Tenderloin district of San Francisco to attend VentureBeat‘s party in honor of the launch of its new digital media blog.

Held at the Ambassador club on Geary Street, it was as if 1999 had never ended, and the huge crowd was partying like it was, well, 1999.

Shoulder to shoulder–or, in my puny case, shoulder to stomach–entrepreneurs, PR folks and a healthy smattering of press jammed into the venue, chattering about valuations, venture deals and other vacuous topics of Web 2.0.

Attendees included Mashable’s Pete Cashmore, Craigslist’s Jim Buckmaster, blogger Dan Gillmor and Microsoft-man-in-Silicon-Valley Dan’l Lewin (who gave us bupkis info about the deal, as you can see in the video).

Also in the video, in order, Meebo Co-Founder Seth Sternberg (fresh from a big funding); VentureBeat’s new editor of its digital media blog, Eric Eldon; Lewin; Gillmor; Valleywag’s Owen Thomas; and, finally, VentureBeat Editor and Founder Matt Marshall.

So what prompted TechCrunch Editor Michael Arrington to pen a pugnacious piece on how blogs should not be raising so much venture capital and instead roll themselves into a “Dream Team,” with the unusual title of “More Bloggers Raising Money. Here Comes Politics. And Here Comes My Rant” yesterday?

Well, besides garnering Arrington a big dollop of traffic and attention, which is perhaps one of the blog entrepreneur’s most impressive talents, could it have something to do with the fact that he’s been busy recently talking to several well-known tech blogs about joining a roll-up organized by TechCrunch itself?

Or that he has told several people I spoke to that TechCrunch was considering doing this by raising as much as $15 million, giving it a $35 million valuation?

Reached by email last night, the voluble Arrington declined to comment.

Thus, a BoomTown translation of his TechCrunch piece is Job No. 1!

Arrington wrote: More blogs are raising venture capital, we’re hearing from people they’ve pitched. Newcomer Silicon Alley Insider is looking for a $3 million to $5 million round, if reports are correct. And paidContent is pitching for a second round in that same range (paidContent raised a round of “less than $1 million” in 2006). We’re also hearing that paidContent is trying to sell the company for $15 million or more, and just bail out with some spending money.

Translation: If that scalawag Henry Blodget thinks he can steal even an iota of my thunder, he better get ready to rumble. And while it is entirely incorrect that paidContent is selling itself or raising that much money, I love the smell of napalm in the morning and FUD in the blogosphere!

[BoomTown actually contacted paidContent's founder, Rafat Ali, who strongly reiterated that the site might raise a very small amount of money, nowhere close to $3 million to $5 million, and was not trying to sell the company at all.]

Arrington wrote: These rumored deals come as funding for bloggers is heating up in general. Just a month ago VentureBeat reported a $320,000 raise. In 2007 we saw Sugar Inc. ($10 million), GigaOm ($1 million), Xconomy, Blogher ($3.5 million) and The Huffington Post ($10 million) raise venture capital. That’s at least $25 million in 2007 invested in blogs and blog networks.

As far as we know, no significant investments were made in blogs in 2005. Weblogs, Inc. raised around $300,000 in 2004, but before they got around to spending it they had sold themselves to AOL (TWX) for an estimated $25 million. The investors, including Mark Cuban, received 15x on their initial investment.

Translation: And if that elfin Jason Calacanis can score, where’s MY payoff!?! I mean, I am the Jason Calacanis of Web 2.0, aren’t I!? The Mac Daddy of the widget economy! The Sultan of Zing! And did Calacanis ever have the chutzpah to pose for a picture lighting cigars with a handful of crisp, flaming Benjamins! I think not!

Arrington wrote: But apart from that first 2004 investment in Weblogs, Inc., there haven’t been any sales or liquidity events to suggest these investments will be a success. And back then blogging was a cakewalk. Most bloggers linked to each other constantly in a state of brotherly or sisterly love. No one was making any money or getting much attention, so for the most part people got along (with notable exceptions like engadget/gizmodo, who play to win).

Translation: The rain may never fall till after sundown./By eight, the morning fog must disappear./In short, there’s simply not/A more congenial spot/For happily-ever-aftering than here/In Camelot.

Arrington wrote: Those salad days are long gone. Writers suddenly want to be paid market wages, far above the $5 per post that they received two years ago. No, we’re talking a big salary, with benefits, and stock options. There went half your margins at least.

Translation: Wages?! Big salary!? Benefits!? Stock options!!!??? Half your margins!!? Who do these people think they are? The Web 2.0 shooting stars I write about incessantly in TechCrunch?

Arrington wrote: And writing good content is only half the battle. You have to figure out the complex, dynamic web of politics between bloggers and mainstream media before you post to know where to get support. And you’ll need support in the form of links from other prominent bloggers. An early push can take a post and make it a headline on TechMeme, which leads to page views and notice by sponsors. But since blogging is almost by definition a conversation between bloggers, fights tend to break out over emotional issues. Cliques develop. Can you count on them to support you down the road?

Translation: TechCrunch is from Mars, Valleywag is from Venus.

Arrington wrote: Personally, I’ve found that if a fight is necessary, fight clean and fight hard. Make it as bloody as possible and end it fast, with no loose ends dangling about. Leave no lingering emotional stone unturned. When everyone gets up and dusts themselves off, the issue should have been resolved one way or the other, and both sides should be happy to shake hands and tango another day, even if the handshaking is done privately. Those that aren’t capable of doing that tend to push themselves to the outskirts of the blogosphere, where their main job is to lob in attacks at random intervals, pursuing long-forgotten insults.

Translation: Bloody tango? Ouch. Ew. Yuk. And handshakes after that seems unhygienic. But let’s solider on. Aha! Another Broadway musical clue! The Jets are gonna have their day/Tonight/The Jets are gonna have their way/Tonight/The Puerto Ricans grumble/”Fair fight”/But if they start a rumble/We’ll rumble ‘em right.

Arrington wrote: So today, at best, I’d describe the blogosphere as a frontier town with no lawman (I mean, O’Reilly has a badge on, but no gun and no jail). You can do just about anything you want, but the politically savvy folks tend to arm themselves to the teeth and gang together to protect their property. Everyone else is in the middle of chaos, either fighting blindly for attention or politely asking (by linking early and linking often) if they can join the big Gang.

Translation: Wait, now the metaphor has shifted to the Old West? OK, we can keep up: Anything you can do, I can do better./I can do anything better than you./No, you can’t./Yes, I can./No, you can’t./Yes, I can./No, you can’t./Yes, I can, Yes, I can!

Arrington wrote: And now that the big guys in the Gang are being injected with capital, hiring tens of employees and expanding their businesses, they suddenly have a lot more to lose. Linking is never done just because. Rather, links are your political capital that must be expended appropriately. Don’t link at the right time and in two weeks when you’re pushing your own headline, you’ll wish you had. When you stop seeing other blogs as people you admire and want to discuss things with, and start to see them as your competitor, your brain shifts and you stop linking the way you had previously.

Translation: Hey, how did we get to Washington, D.C. and the inside of Sen. Hillary Clinton’s cerebral cortex in the midst of yet another compromised political calculation? It’s like we’re on “Fantastic Voyage”!

Arrington: Luckily, the newbie bloggers are there to fill in the links when they’re needed. That’s why, if you are a mid-level blogger, you are likely courted by the bigger blogs looking to get your support. If you know what’s going on and are willing to play the game, you can see your blog rise very, very quickly. Choose the wrong blog, though, and you may find yourself alone and lonely in your forgotten blog.

As an aside, when I see a young but promising blogger, I’ll start linking to him or her constantly to build them up (others, like Winer, Scoble, Jarvis and Rubel did that for me). The goal is to help move them up to a position of influence as quickly as possible. The more non-crazy influencers in the game, the easier it is to ignore the noise generators and the better the overall conversation becomes. Over the last year, for example, Silicon Alley Insider, CenterNetworks, LouisGray and Mathew Ingram I’ve been pushing hard. These guys rarely agree with me, but when they talk I listen because they’ve put some thought into what they are saying and how they are saying it. Those guys haven’t hit the big politics yet, and tend to link out a lot to everyone. They are a very important part of the ecosystem–pushing their link votes toward stories they find interesting and helping those other bloggers get headlines and maintain their place in the Gang.

Translation: Next stop, the stylings of Mr. Michael Corleone! There are many things my father taught me here in this room. He taught me: keep your friends close, but your enemies closer.

Arrington wrote: So what’s the point of this rant? Well, all this money flowing into the blogosphere is disrupting the complicated and emotional, but also stable way things are done. Bloggers with money and employees and health care programs and boards of directors and shareholders have to play politics with a whole new group of people, splitting them away from what they do best–Fighting the Blog War. Their behavior can become erratic as they have to decide to tone down their writing to get a certain type of sponsor on board, which in turn lets them make payroll. Investors want to see growth, so more and more blogs are launched, but perhaps without the right talent to grow it into a long-term business.

If a VC hands you a check, their intention is not to hang around for 20 years while you build a nice lifestyle business for yourself. What they want to see is an exit, preferably a 10x or higher exit, within 3 to 4 years. But something tells me that few of these networks are going to be able to grow quite as easily as they think and reach those liquidity events. The talent is, increasingly, locked up. Even when new talent is discovered or trained, every niche has serious heavyweights already there with page views and advertising dollars to back them up for a long fight.

Translation: Finally, the point! Which is: Assimilate or Die!

Arrington wrote: At some point it’s going to become painfully obvious that the only way to get to a massive valuation is for the top talent to band together in a company where they each have an equity stake and therefore a reason to work all night on that next great story. They’ll each have their own space to stretch their legs and let their personality run around a little. Someone needs to pony up a big round of financing around an existing blog, or perhaps a new entity, and then start rolling them up into a big fat CNET-crushing $200 million/year in revenue business.

Translation: This is my sneaky but clever way of floating a trial balloon of an effort I am already trying to organize. The existing blog? Mine! The new entity? Run by me! The $200 million a year? Mine, again! Now, enough about me–what do you think of me?

Arrington wrote: It can happen. In fact it’s almost certainly going to happen. But if you bloggers go out there and raise $3 million to $5 million on say a $10 million valuation, you’ve just priced yourself out of the roll-up. That option will be closed to you, and you’ll be stuck out in the cold, taking life-support payments from Federated Media or another ad network, and having a generally awful time running your business.

Translation: Luca Brasi sleeps with the fishes.

Arrington wrote: What I’d like to see, and even be a part of, is the blogger equivalent to the 1992 U.S. Men’s Basketball Dream Team. That team could take CNET apart in a year, hire the best of the survivors there, and then move on to bigger prey.

Translation: After we are done bloody-tangoing with Neil Ashe at CNET (CNET), Owen Thomas and his evil overlord Nick Denton better sleep with one eye open.

Arrington wrote: Just the thought of being a part of something like that has held us back from raising any outside capital at all. I believe we have the beginning of a team that can play a role in this new Dream Team.

So think twice before taking that venture money, guys. You may be shutting more doors of opportunity than you realize.

Translation: By saying we have held back from raising any outside capital at all, what I really mean to say is that I am going to do it.

Resistance is futile.

OK, the interview she did with Facebook Founder and CEO Mark Zuckerberg at SXSW on Sunday was a little silly at times and she probably annoyed people when she flacked her new book. (Full disclosure: I have written two books, so I can relate to the unfortunate impulse to do so.)

But to make such a big hairy deal in blogs and on Twitters seems a bit of overkill, doesn’t it?

Even including a wee bit too much girly hair-twirling by Lacy into the equation (which looked like simple nervousness to me), I just don’t get the uproar.

If Britney Spears had mounted a mighty steed and ridden naked down Hollywood Boulevard, trampling cute little bunnies as she went–it could happen!–it would not engender the level of vituperative online bloviating that the encounter of Lacy and Zuckerberg did.

Were there no other pointless blogging debates to be had yesterday? Aren’t there indignant Digg-for-sale stories to chew over? Wasn’t there a good open-source kerfuffle to get into angry exchanges about? Didn’t Robert Scoble do something that we can endlessly argue between and amongst ourselves?

I guess not and that’s too bad.

Arrington got it exactly right (except in singling out only journalists for the Lacy-bashing, since it was, well, everyone piling on), when he wrote:

“Perhaps they just got caught up in the fun of a witch burning. But whatever drove them to write those articles, it certainly wasn’t journalism. Nor was it professional. And, worst of all, it wasn’t accurate.”

And Thomas made the most salient point of who should have been the focus of the interview, when he wrote:

“I agree with the popular take on Sarah Lacy’s Zuckerberg interview at SXSW to this degree: The audience was revolting. Lacy threw an unbecomingly petulant tantrum onstage. But the Twitter reaction was equally self-indulgent. The debates over her performance obscured the man who should have been under the microscope: Mark Zuckerberg.”

Well, exactly.

I am, in fact, probably going to be interviewing Zuckerberg onstage at our upcoming D: All Things Digital conference in late May. I hope it goes well, but you never know.

But here’s an offer: If everyone promises to stop needlessly pummeling Lacy for her SXSW interview, I’ll consider twirling Zuckerberg’s hair during my interview with him.

Twitter that.

Also, here’s the video of the Lacy-Zuckerberg interview, so you can make your own judgment:

Today, Daryl Lang of PDNPulse, a blog from Photo District News, reported that it contacted more photographers whose pictures were used in the popular Web 2.0-mocking video by the San Francisco-based singing group, the Richter Scales.

Four of them responded that they also did not like the use of their work one bit, some objecting to the credit given, others to the non-payment and still others to not being asked for permission to use their photos.

Some objected to all three issues, all of which have to do with “fair use” under copyright law.

“I’m totally against the unauthorized use of my image,” said Ramona Rosales, whose picture of TechCrunch blogger Michael Arrington was used in the video and who said she was going to ask that the photo be removed, to PDNPulse. “I was never asked permission nor have I received any compensation for its use; furthermore I don’t feel it is justified simply because they gave me credit.”

As BoomTown reported last night here, the Richter Scales posted a new version of its “Bubble” video after photographer Lane Hartwell had the first one taken down from YouTube, because they used a picture she took of Valleywag’s Owen Thomas without her permission or payment.

In Version 1.1, the singing group added a full list of credits, which were also on the video. They also replaced the Thomas picture with one of me.

(At its start, the video also uses a quote from BoomTown’s video interview with investor Peter Thiel, which you can watch in its entirety here, which BoomTown has since approved of.)

After the second one went up last night, Hartwell said she was still sending the Richter Scales an invoice for the first version of their video, which uses Billy Joel’s “We Didn’t Start the Fire” as the tune in its parody and has been a viral hit on the Web.

I emailed Rosales for further comment, and will update this post when I hear from her.

About the new comments from other photographers quoted by PDNPulse, the Richter Scales’ Tom Shields said: “We have not heard from any other copyright owners regarding our video. If we do, we will attempt to reach resolution with them, hopefully in a civil, private conversation and not in the blogosphere. We are not trying to make a point, or looking for a fight, we’re just a bunch of hobbyists who like to entertain people.”

Ironically, Arrington–in a series of not-so-entertaining exchanges with another commenter, blogger Shelley Powers, in the Globe and Mail’s Mathew Ingram’s blog–felt Hartwell was wrong.

So, until this video also gets the copyright hook, here’s the new version of “Bubble”:

[Updated with Richter Scales comment.]

They have a full list of credits here and also on the video, and have a blog post on the problems related to the music video here.

Here’s the new version of “Bubble”:

The popular and viral video was removed from YouTube after photographer Lane Hartwell filed a DMCA take-down request with YouTube over copyright issues related to a photograph she took of Valleywag’s Owen Thomas that was used in the first video without her permission or credit.

Now, the Thomas picture has been replaced by one of, um, me. (At its start, the video also uses a quote from BoomTown’s interview with investor Peter Thiel, which you can watch in its entirety here.)

Hartwell has responded to the new video here, saying she was sending the Richter Scales an invoice for the first version of their video (apparently, it got a million plays on YouTube).

She said she would use the money to pay for her lawyer and donate the rest to Kids With Cameras, a nonprofit organization that teaches the art of photography to marginalized children in communities around the world. Hartwell said this was the offer “I proposed to the Richter Scales that they chose to disregard.”

Hartwell also noted, in part: “In the end, the band opted not to work with me toward a fair resolution of the issue. I have to say that I’m very disappointed with the members of the band I negotiated with in good faith. I question whether they would have acted differently if they’d been contacted by Billy Joel’s management or the stock photo agency Getty Images.”

The video is indeed using Joel’s “We Didn’t Start the Fire” as the tune in its parody.

That’s because, although it has been widely reported, the hot social network will not fall under the Securities and Exchange Commission’s old “500 shareholder rule,” which would have forced it to report such information when the number of shareholders, including those holding just stock options, reached 500.

While companies like Google got caught in that net several years ago, the SEC actually recently changed that rule to exempt those just holding options, which the vast majority of Facebook’s growing legion of employees (about 400) have been given.

In fact, said many sources, Facebook only has several dozen individual shareholders who actually own stock and that number is unlikely to rise in the future.

That’s because new employees, for example, since the start-up’s recent $300-million financing that put its valuation at $15 billion, will be getting mostly “RSUs,” or restricted stock units–grants of stock valued in terms of company stock, which are not issued until later.

These units are essentially a promise that employees will receive stock in the future, but frees them from vexing tax problems such as alternative minimum tax issues.

That also means few will be able to sell any Facebook stock until there is an actual liquidation event, such as an IPO, which company investors like Peter Thiel of the Founders Fund have said would not occur until at least 2009.

Until then, don’t expect much selling from major owners, such as CEO and Founder Mark Zuckerberg, who owns 20% of the company outright and has options representing another 7%.

While it’s a good story to imagine them trying to hedge their bets on the future of Facebook, many sources have told me neither Zuckerberg nor other top execs have done so.

So Valleywag’s Owen Thomas (pictured here in this lovely self-portrait) was right to retract his story over the weekend about Zuckerberg selling $40 million worth of his own shares in the massive financing the company recently got from Microsoft and Asian billionaire Li Ka-sing.

I was in the unusual position of getting the story sent to me by Thomas on my Blackberry Friday night, while at a holiday party that Zuckerberg was also attending.

So what did I do? Well, shove the device in Zuckerberg’s face, of course!

Zuckerberg took a look at the story and quickly denied cashing out in any way, saying to me: “Well, that’s just not true at all.”

In yet another bizarre Yuletide twist, I was headed to the Valleywag party right after that, so I told Owen–who was looking dapper in tux and red shades–that reaction (well, I kind of yelled it at him, to be honest, starting with a festive “Oops, you’re wrong!”).

In other words, it was too good to be true. And, as readers of this column know, so will Facebook’s valuation be until it garners those hoped-for advertising revenues to back up the big numbers.

So posits Valleywag’s Owen Thomas in an excellent short analysis of the deal for NBC Universal to buy women’s media cable channel and Web site company Oxygen Media for $925 million announced Tuesday.

“The fact that I’m describing it as, yes, a ‘cable-TV channel’ speaks to Oxygen’s failure,” wrote Thomas yesterday. “Conceived in 2000 as a multimedia empire that would bridge the Web and TV, Oxygen failed to thrive in either medium.”

While it seems like about a million years ago, the Oprah-backed Oxygen, headed by TV veteran exec Geraldine Laybourne, had a very splashy debut only seven years ago and sported a slate of prominent backers like talk show behemoth Oprah and also a spate of dot-com luminaries of the time.

What was stressed then was the tight integration between the cable network, original television programming and pricey Web site, which actually included very good early versions of what would later be called blogs and other small innovations. It was all supposed to herald a cross-promotional matrix of untold influence.

None of this came to pass, of course, and NBCU, said one longtime television exec to me today, was essentially only buying itself a women’s cable play to add to its stable of other cable properties, more than any doubling down in the Web space to aid NBC-owned iVillage.

Thus, the search for multimedia nirvana goes on.

In her post late last week that I missed (I was traveling and therefore not aware of her cruel, cruel taunts), she pointed with dread to a recent promise I made to try out a new wearable camera I saw at the TechCrunch40 conference earlier in the week, a la Justin Kan of Justin.tv.

Writes McCarthy:

One thing to keep in mind about this new development: Swisher, unlike Kan, is tiny–about 5’2″, if that. Any hat-camera she wears will be eye-level with Silicon Valley’s chest. We look forward to watching her conversations with Walt Mossberg’s sweater.”

First off, I am 5’2″ (really!!) and not a “little person” as one VC once called me.

Second, Walt never wears sweaters.

And third: Chest-level was the plan, if you must know!

Silicon Valley’s chest=big traffic!

Or as Valleywag overlord Owen Thomas added to the post in note wherein he also harasses my innocent employee, Digital Daily’s John Paczkowski:

Rowr.

(Megan had asked for some advice about the fine art of covering parties–that is, making an interesting story where there is not one–since I started my career covering parties for the Washington Post.)

Thomas, whom I have know for many years, is the new managing editor of Valleywag, a gig he got in July after many years as an editor and writer at Business 2.0 magazine.

Here is a talk with him about the state of the blog and Valleywag’s focus under him, as well as an appearance by McCarthy, and more info after the jump:

Thomas has a lot of digital experience, too, as a contributor to the legendarily snarky Suck site, and he was an early convert in the mainstream media to the inevitability of the digital space. His last job at Business 2.0 was as online editor for the Time Inc. title.

Thomas’s predecessor was Gawker publisher and impresario Nick Denton, in fact, who took over writing the blog after he sacked its first editor, Nick Douglas (who still writes posts regularly for Valleywag). Soon enough, Denton fired himself and hired Thomas.

In his post on the move, Denton said: “You see, Thomas isn’t just a veteran of business journalism, with excellent sources in the tech industry (most of which he will burn).”

And indeed, so far Thomas has been busy slapping around the denizens of Silicon Valley (including me for being too nice to Yahoo U.S. sales head Dave Karnstedt) with the newfound vigor of a man freed from the mainstream media.

Not everyone likes it, finding some posts too snarky and cutting, but everyone does seem to read it.

I put up a simple funny illustration that looked at the striking resemblance between Walt and Anton Ego–a character from the current Pixar animated film “Ratatouille”–and my good friend Owen Thomas, the new head wag at Valleywag, tries to spin it into a faux feud I might be having with my most illustrious partner, Walt Mossberg.

Perish the thought!

In the movie, which I have not even seen as yet, Ego is apparently dour and humorless–although I understand he is redeemed by the end–which seems about right for the food critic he is. Also, I might add, he is a CARTOON.

While Walt might not be actually animated, his personality and writing surely are, and he can also be very funny. And I have nothing but admiration for him, except when he mocks my deep love of Barry Manilow (that’s right–I am a Fanilow!), about which we shall speak of no more.

I mean I wouldn’t jump to the conclusion that Owen necessarily giggles were one to poke him in the stomach, for example, even if I were I to, say, compare him to the Pillsbury Doughboy (although he is most certainly Pop ‘n’ Fresh).

First, the news that Owen Thomas, who writes the most excellent blog Beta for Business 2.0 magazine’s Web site, where he has worked in a variety of reporting and editing jobs, will take over as lead writer and editor of Gawker Media’s Valleywag. His last job at Business 2.0 was as online editor for the Time Inc. title.

It’s an interesting move by Gawker Media, the gossipy blog network that is Valleywag’s parent company, and its publisher Nick Denton, to hire a more experienced and essentially mainstream reporter like Thomas, who has deep sources in the Silicon Valley community and is well respected.

Denton has actually been writing the blog about the business and often personal foibles of Silicon Valley since November, when he sacked its first editor, Nick Douglas. At the time, Gawker execs made it clear that the young and green editor was too inexperienced and not authoritative enough (although Douglas still writes posts regularly for Valleywag).

But traffic to Valleywag has tripled to 1.5 million monthly page views under Denton, who covered the Valley in the late 1990s for the Financial Times and who was well described by venture capitalist Fred Wilson as an “evil genius.”

This is due to the fact that he has focused more on deals and business and less on the–let’s be honest, mostly dull–personal lives of players in the tech sector. Denton has broken a number of juicy stories, as well as providing up-to-the-minute coverage of a missing python at Google’s New York headquarters.

But one of his biggest misses, he wrote me in an email, was being wrong twice in his ongoing effort to determine the identity of Fake Steve Jobs–including incorrectly naming AllThingsD.com’s Digital Daily evil genius John Paczkowski as the mystery writer of “The Secret Diary of Steve Jobs.”

Interestingly, it was Thomas who managed to get FSJ to send him this picture as part of a recent poll on Business 2.0′s Web site.

“The coverage of Silicon Valley has been a labor of love, and hate. It would have been hard to give up Valleywag to just anybody,” wrote Denton to me. “Owen Thomas is the first person I ever approached about the job. And I hope he’s the last.”

And, this past weekend, I let New York Times reporter Matt Richtel use my home to throw a book party for his first novel called “Hooked: A Thriller About Love and Other Addictions,” which officially debuts this week.

The book, which is set in the Silicon Valley environs and has a heavy digital bent complete with evil-genius venture capitalists, begins with an explosion in a San Francisco cafe and never stops from there. “Hooked” is getting excellent customer reviews on Amazon, and Richtel has a number of readings around the Bay area and elsewhere in coming weeks.

So here is a short movie I did at the party, talking to Matt, as well as Wired writer Fred Vogelstein and Craigslist founder Craig Newmark, about Matt and other stuff.