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.

Last Christmas I wrote a post with 10 predictions for blogs and blog networks over the coming year. It was meant to be humorous, so not many came true.

This season it would be difficult to do the same as most of the buzz has disappeared. Top bloggers have gone pro, and startup networks have become serious and less inclined to gossip — except incomprehensibly on Twitter, where it’s like listening to one side of a telephone conversation spoken in code. So I’m not going to do ten predictions this year.

2007 has been the year of unblogging. Blogging about blogging has hit the deadpool. The tedium just turned us off in the end, as it always does.

That’s good. When the medium becomes the message something is out of kilter. To say that A is B is gobbledigook since, if true, there would be no need for B. Now the message is clearly the message and we can all get back to simple basics, i.e. content, and use weblog software for what it was meant to be, an easy way to publish our thoughts online without giving an interminable running commentary.

Has that taken some steam out of the blogosphere? You bet it has. Google spotted this and is currently downgrading all but the very best examples of the blogging art. Money will be much tighter until the next boom, which may be some years away.

Advertisers too are reining in their drive into blogs, converting big downpayments into PayPerClick models. Who can blame them? Goldrushes never last.

So I’m going to make one prediction for 2008. It will be much harder financially for everyone, and only the best will survive. The credit crunch will squeeze out those who haven’t put something by for the hard times, and leave the dabblers stranded.

It’s going to be a long, hard haul, but hey, that’s where the fun is, isn’t it?

Chins up and mind how you grow.

Trees fall in the forest. People die. Businesses fail. Get over it.

However, the fallout from business failure is occasionally brutal and usually damaging to the participants. Bank accounts lie empty, egos are bruised, anger flies thick and furious.

Take the crash and burn of Blognation — a UK-based blog network that has been praised by a set of luminaries, including Robert Scoble.

Started by Sam Sethi, who also ran the ill-fated TechCrunch UK, Blognation is now the subject of a blogging firestorm. There’s an open letter to Sethi by Oliver Starr on TechCrunch, while the author puts it up on StarrTrek, his personal vehicle. I won’t go into the details, they’re extremely depressing, but read it yourself if you like a good weepie.

All this is a downbeat prologue to a review of a new, very positive book on startups and funding by the man who “invented” the British venture capital and private equity industries, Sir Ronald Cohen.

Cohen is reported to be a close friend of new British Prime Minister, Gordon Brown, and a donor to the Labour party. Despite all that he can claim real and spectacular achievements in his long business career.

Cohen is the founder of a private equity company, Apax Partners, and has written an interesting book covering his business activities and philosophy : The Second Bounce Of The Ball: Turning Risk Into Opportunity. Gems of wisdom from the book include, “Start young, think big and stick with it.” And, “Seek out uncertainties. Risk is where the money is.”

Although Cohen started out as a rather poor immigrant to Britain from Egypt, his education was of the best : a degree at Oxford and an MBA from the Harvard Business School, where he met the people who would be his partners in later life, and the contacts who mattered.

The second bounce means trying to spot what comes next. Using our first example, what comes after blog networks? As a network owner myself, I know the problems inherent in that question. Recently, Google has severely downgraded the PageRanks of blogs and networks in particular. Many highly rated blogs have dropped from PR6 to PR 3, which now seems to be the norm. Syntagma has only just recovered to a 4, while some of our other sites are settling down to 3s and recovering from zero.

It’s not easy to run a business which is in the hands of another company’s self-interest. So Cohen’s suggestion is to stay ahead of the game by working on “the second bounce of the ball”, while never forgetting that risk is where the money is.

Our second bounce? : “a long-term plan to create specialist information products for high-worth niches, published privately or behind subscription walls.”

We’re already looking toward the third bounce.

Juicy Quotes

Risk is an emotive word that masks the value of uncertainty.

Stop worrying about failure and put that energy into winning the race.

Investors back jockeys not horses.

Fulfilment lies in reaching a balance between what you do for yourself and what you do for others.

I’ve read many books on entrepreeurship in recent years. This is undoubtedly one of the best, being both illuminating and readable simultaneously.

Highly recommended for merchant adventurers.

I’m coming late to this meme which peaked yesterday. Basically, it’s another example of the cultural cringe and sense of inferiority still found in folk who make — or try to make — their livings online.

Jeremy Wright takes the prize as the best respondent with his highly-informative Ensight post on how much the unionization of a blog network would cost. #

On digital networks in particular, the problem arose when someone called them an “industry” — a certain J. Wright of Toronto in fact. But given the quality of his post, we’ll forgive him for that.

If blog networks really are an industry then clearly they must comply with industrial standards embedded in law. But not by any stretch of the imagination can they be put alongside General Motors, Rolls Royce or Microsoft. They are a sector at best — a branch of the Content Producers Guild, which is a bunch of disparate individuals in most cases, not public joint-stock companies.

Jeremy’s post, though, covered all the exits. As I’ve written here many times, there just isn’t enough money in online, original content creation to comply with every jurisdiction where you may have bloggers. At peak, Syntagma had writers in nine different countries. I have difficulty keeping up with our own laws, let alone the world’s legislative extravagances. Around 4000 new regulations for business were handed down from Cloud Nine (Parliament and Brussels) last year alone. Most just pile rigidities on top of complexity.

However, there are still some ragged-trousered half-bakes around who consider the Web as a substitute for the old Soviet Union. At Performancing, no less, someone’s even writing about “collectives”. Stick that red flag in the washing machine, you may need it before long.

The internet is about individuality, not collectivization. We have enough of that drab science in the real world, thank you very much.

I’m all for open source and charity. But they should never be forced down people’s throats or the best part of humanity will be choked off at birth.