TechCrunch is reporting that secret merger talks between blog search engine company, Technorati, and Canadian blog network, b5media, have collapsed.

The reason given was a personality clash between b5’s CEO, Jeremy Wright, and Technorati’s Richard Jalichandra and, according to b5 “a lack of transparency on Technorati’s part during due diligence.”

Judging by that, this “merger” didn’t really stand a chance. One wonders if Technorati took it seriously.

Toronto-based b5media has apparently been looking for “merger partners or acquirers” after failing to raise more VC money — it has so far received stage-one funding of $2 million. It seems Technorati has also had its financial problems.

The notion of a mass roll-up of blog networks to make ad sales more attractive and economical has been around a long time. Personally, the dynamic of that approach has still to be proved to me, especially in the current financial gloom.

Technorati has a big name, but is largely associated with a failure to live up to its billing. B5media has relentlessly stuck to its remit and expanded to 340 blogs.

I’ve long since lost faith in this horizontal model, which basically claims that small-scale content sites multiplied n-hundred times add up to a better business than three or four wowsers, or a tight-niched, product-based network, like Glam or TechCrunch. In this case, less is almost certainly more.

No “blog” network has really scaled up to the point where direct-response ads can be replaced with brand advertising. To sustain a company the size of b5 in personnel terms alone, that’s what it takes.

I’ve no doubt b5media will disagree, but they are faced with a double whammy : the brick wall of scaleability in the middle of a credit crunch.

Declaration of interest : I worked for b5media for a few months when it started up, and I am now the owner of a rival content network, Syntagma Media.