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Here’s the latest action:

Six Apart evolves into an ad network — The blogging company behind MovableType, TypePad and Vox is offering a new advertising program which will give publishers more control over ads and revenue from their sites. The company claims its ad network will be better than the many others out there (with more popping up everyday) because it has the best experience with advertisements specific to blogs. The company also launched Six Apart Services after acquiring Apperceptive, a New York-based company that has helped build communities for large sites such as The Washington Post, The Huffington Post and Boing Boing. Six Apart vice president, Anil Dash has more.

Microsoft acquires Xobni, maybe — The email startup, which Bill Gates has called “the next generation of social networking,” has supposedly signed a letter of intent to be purchased by the software giant, sources tell TechCrunch, apparently for $20 million. But not so fast,  we reached co-founder Matt Brezina on his cell, who said it was too early to comment. He said the company remains focused on rolling out product for general release. He did seem remarkably relaxed, suggesting the deal may not yet be in final stages, but it was hard to tell. He was sauntering on the Penn State campus, about to start a lecture to students, providing tips about entrepreneurship. Now we’re seeing other sources say no letter has been signed and that the company plans to remain independent until it gets its product out. Our guess is that Microsoft has offered, but that no deal has been signed yet. Xobni works as a plug-in for Microsoft Outlook and allows users to easily view past related conversations and search quickly through mail — which sounds a lot like Google’s Gmail.

Sequoia adds another partner to start broader investment initiatve — The WSJ’s Rebecca Buckman follows up on rumors that Sequoia is seeking to broaden its activities, confirming the hiring of Eric Upin and Keith Johnson, both of the Stanford Management Company. They’re creating an investment fund that would “invest in multiple asset classes, instead of just venture capital… The new vehicle — if it gets off the ground — likely would mimic the investment style of university endowments and other private funds that put money into stocks and bonds but also ‘alternative investments,’ such as buyout funds, venture capital and natural-resources investments.”

23andMe admits personal genetics have no medical purpose — Google raised eyebrows when it made investments in both genetic screening company, 23andMe (started by Google co-founder Sergey Brin’s wife) and Navigenics, another company that allows you to see your genome. Now under scrutiny in states like New York, services like these are being forced to admit they are little more than a vanity. “23andMe’s services are not medical … they are educational,” 23andMe spokesman Paul Kranhold told Forbes.

Attack of the Mac clones — Computer maker Psystar continues to grab headlines with its OS X-enabled (Apple’s operating system) computer. Apple does not allow 3rd parties to create Mac computers, whereas dozens of manufacters make Windows-based PCs. But with Apple’s market-share and demand on the rise, there certainly seems to be a market out there for a very low-cost Mac. Apple’s Mac Mini is currently the cheapest they offer at $599, but this Psystar system would be $399 with no software installed. Naturally, the legality of making these systems without Apple’s blessing is an issue.

John Battelle is first “John” in Google, shows Google is broken — Look, we all like John Battelle, the founder and chairman of Federated Media (which runs some of the ads on VentureBeat), but come on, he’s the number one result when you type “John” into Google’s search box? “I mean, I am ahead of Lennon. The Gospel. Er…McCain,” Battelle himself notes. I could go on: John Adams, John Hancock, John F. Kennedy, etc. With all due respect, I think it’s fair to say that most of the world has no idea who John Battelle is, yet that’s who they’ll find when they search for one of the most common names in the English language.

This story will be very familiar to VentureBeat readers. Federated Media, a company that sells and runs ads on more than 200 blogs and other web sites, including this one, has raised $50 million from private equity firm Oak Investment Partners.

We’ve been reporting the gist of this story since last month, when a source told us that Sausalito, Calif.-based FM was closing a round with the pre-money valuation of $200 million. A second source confirmed the valuation just the other week, although FM wouldn’t confirm it when they briefed me on the funding news last Friday. Note: My second source incorrectly but understandably heard the investor to be Oak Hill Capital Partners, another private equity firm.

FM says it has been profitable since last year. Our first source told us that it made revenue up to $23 million last year (to be clear, that’s revenue, not profit), and was on target to make up to $60 million this year.

The paradigm for making money on the web has been direct-response advertising, led by Google and its click-based ads, but Federated Media envisions bringing brand advertisers online. As large media companies already know, brand advertisers care just as much about what content their names are associated with as they care about click-based conversation rates. To this end, Federated Media’s core strategy since its founding in 2005 has been to work with high-quality sites that have a clear relevance to certain, niche audiences — say, sites that write for investors and entrepreneurs. I has also more recently started helping large companies like Dell and BMW integrate marketing campaigns inside of third-party applications on Facebook.

It’s “insanity” to think that brand advertisers won’t move more of their advertising dollars from traditional media to the web, Chas Edwards, FM’s chief revenue officer tells me, despite the skepticism sometimes expressed by others about this potential.

Edwards says that even with a recession and a corresponding dip in adveritising spending, the migration to the web is unavoidable. “It’s not a matter of whether or not we’ll do more revenue in 2008 than 2007,” he says, “the question is, will we double, triple or quadruple it.”

Federated Media will use the money to expand its services for publishers, to flesh out its efforts on social networks and on other social web properties, and to work more closely with large advertisers.

Oak Investment Partner’s Fred Harmon, who led the round, will join FM’s board of directors.

The ad network Federated Media has raised $50 million at a $200 million pre-money valuation from private equity firm Oak Hill Capital Partners, I’ve heard from a source, with investment bank Savvian helping to broker the deal.

A couple of weeks ago, a separate source told me that FM was close to raising $30 million at the same valuation. At that time, Valleywag reported that fundraising wasn’t as far along as my source claimed.

Federated Media isn’t commenting on this latest rumor, and it tells me that it will let me know if or when it has news to share.

The Sausalito, Calif.-based company generated roughly $20 million to $23 million in revenue last year (not profit), according to one of the sources. Both sources say that FM is on target to make around $60 million this year, with some profit.

Many people looked at the deal and passed, said one source, but apparently it has had a solid bite.

FM sells ads for more than 200 web publishers [Disclosure: Including VentureBeat]. Some, like one commenter on our last story on FM funding, are questioning whether or not FM is actually worth this much money, as there are many advertising options available to publishers.

But Federated Media keeps on growing, and it has also been trying out some interesting forms of advertising on social networks. It has run a successful campaign with Dell on Facebook application Graffiti, an effort by Dell to brand itself as being environmentally friendly. Graffiti is an application where users can share their digital art with each other, so in this campaign, Dell held a contest for users to submit “green”-themed art.

More recently, FM and Graffiti have done the same sort of contest, but with car-maker BMW. The theme isn’t “green” — users answer the question “what drives you?” with art. Check it out here, sample below.

The world’s largest sports website, ESPN.com, is walking away from advertising networks, opting instead to sell ads directly. After recently leaving Specific Media, the site has turned down offers from other ad networks according to Mediaweek. This is the latest, and perhaps most significant story in a series of anti-ad network sentiment that has been traversing the Internet lately.

The key issue here is that ESPN.com feels it can sell the ad inventory on its site without having to give a commission back to the ad networks. Being a massive site with a highly coveted demographic, they are likely right. The question is, if ESPN.com is successful in going it alone, will other sites follow suit?

Ad networks function by utilizing a large network of advertisers to sell ad space on sites. This allows the site to focus on creating content while the ad network manages much of the business. However, with larger sites now able to hire their own sales teams, ad networks roles in those sites are decreasing.

While reporting that ad network Federated Media (which VentureBeat utilizes) was nearing a $30 million round of funding last week, we asked how it could maintain its base of publishers while taking a 40 percent revenue cut. Upon seeing this ESPN.com news, some of the larger publishers may be asking themselves the same thing.

This discussion is not entirely dissimilar from the one currently going on in the music industry. Quite a few notable artists including Radiohead and Nine Inch Nails have experimented with selling their music directly to fans, bypassing the labels. Such a move allows the bands to make a higher return off of sales — the same outcome ESPN.com is likely to see by walking away from ad networks.

Current online ad networks are also under attack from larger entrants in the arena. Yesterday, Forbes unveiled plans to launch its own ad network for up to 400 financial blogs. Google, also recently started testing out a new service called Ad Manager, a new advertising service that will allow users to take care of their own ad sales and fill in the rest with AdSense ads (our coverage).

Federated Media’s founder John Battelle is very aware of the problems current ad networks are facing. By focusing too much on building impressive platforms rather than addressing the core need of advertising that engages, “ad networks have become the problem,” Battelle notes. He lays out more thoughts in a Q&A with CNET.

Updated

Online ad network Federated Media, which serves Web sites like VentureBeat and hundreds of others with ads it gets from large companies, is close to raising a $30 million round at a $200 million pre-money valuation, according to a well-placed source.

In January, news leaked that the company had hired a small bank, GCA Savvian, and was trying to raise up to $50 million at a $125 million valuation, after having rejected a $100 million buyout offer.

Then, in early March, other leaks suggested that Sausilito, Calif.-based Federated Media was trying to raise between $20 and $30 million, while entertaining various offers and aiming for a substantially higher valuation.

The company has grown quickly over the last three years. It sells advertising across a wide range of blogs and other web sites, expanding from tech blogs to include things like parenting, and its experimenting with new-fangled forms of advertising, like widget advertising in social networks.

The company is like many other startups that have grown large over the past several years — aiming for large amounts of funding at nine-digit valuations despite the larger questions about the stability of the national economy. The company may be getting while the getting still is good. After all, social network Bebo managed to sell itself to AOL for $850 million last week.

But we and others have been wondering if the window of fundraising opportunity is closing. [Update: In fact, Valleywag reports the deal may not be as far advance as we've heard.] We reported on Monday that fast-growing IM aggregator company Meebo is looking to raise a round valuing it at up to $250 million. Widget company Slide raised $50 million at a $550 valuation last December — a deal they rushed to finish before the economy got worse this past year. Social news site Digg put itself up for sale last fall, as well, hoping to sell for $300 million — it may be looking at a smaller amount, now, and hasn’t yet sold.

Of course, while companies like Bebo, Meebo, Slide, and Digg have yet to figure out significant revenue models, Federated Media has. It takes 40 percent revenue from the sites that run its ads — and those sites are making some good money. It has previously raised $7.5 million in two rounds from Panorama Capital, a group formerly part of JP Morgan Partners, The New York Times and the Omidyar Network. For this round, we and our source suspect that the investors will be larger private equity firms and hedge funds.

A larger question for Federated Media: How will it continue to maintain its large, influential base of publishers — while taking a 40 percent revenue cut — even as at least some of those publishers are considering joining forces on their own?

Skeptics of social networks like Facebook and MySpace and their ability to produce value for advertisers gleefully pointed to more evidence last week: Google said its keyword advertising program on MySpace isn’t making as much money as Google had hoped.

“So what?” is the response I typically hear from the many people who have staked their business on making money through social networks , and who are making money. “I’m doing great and this information isn’t relevant to me.”

Advertisers are finding that they can more efficiently reach social network users who care about their messages — something they currently pay billions in television and print advertising to do. Meanwhile, musicians and other content creators are finding users enjoy sharing their music and videos on these widgets, which in turn drives album sales. Software developers, in turn, are making money from building widgets and applications to reach millions of these users, and let advertisers and content creators make money through their reach.

Here are some examples that may eventually help answer the question of “How can Facebook be worth $15 billion?”

Advertising: Dell in Facebook, via an application

Dell is taking major steps to become more environmentally-friendly, and it wants every consumer to know. It is building its computers to use less energy and it is reducing greenhouse emissions at its manufacturing plants, among other efforts. The company is working with ad company called Federated Media and a Facebook application that lets you draw artwork and feature it on user profiles, called Graffiti. Dell backed a contest for top drawings around its theme of environmental “ReGeneration,” where contestants created visual answers to the question “what does green mean to you” within the Graffiti application. The contest, which ran over two weeks in January, generated more than 1 million votes on more than 7300 Graffiti entries. Check out the top 150 here (as well as the ones pictured, above and below) — you’ll be impressed.

This campaign was a success because Dell both promoted something people cared about and reached out to them through a medium they cared about. The Graffiti application has more than 8.6 million total members and 253,830 daily active users (as of today). Because Graffiti is a Facebook application, users also learned about the contest through Facebook’s news feeds and user profiles. Federated Media (which, in full disclosure, runs ads on sites like VentureBeat), also featured ads about the contest on sites popular with Graffiti users, including sites like Boing Boing and Make. These ads pointed users back to the Graffiti application.

Even though this was one of the early efforts by a brand advertiser to reach social network users, Federated Media and Graffiti made money from Dell, Federated Media’s publisher, Chas Edwards, tells me. More thoughts on the campaign from him here. Dell, meanwhile, accomplished what it set out to do, which was to reach hundreds of thousands of users and have them engage with its brand in a positive way. Whether Dell actually sells more computers as a result of the campaign is still open to question. This was a brand-building exercise, not a direct-response campaign, and so the idea is that Dell will be able to sell more computers in the future.

Content creators: Musicians making money from MySpace and blogs

The level of “chatter” about an upcoming album release among music bloggers and social network users correlates to the number of album sales, according to a recent study by researchers at New York University. The study looked at more than 108 albums released in the first two months of 2007, comparing the number of blog posts and MySpace friend requests about a release to its later sales. The correlation most likely exists because 1) blogs and MySpace users pick up on the best new music early on, and 2) because by talking about what they like, they spread the word to many more people than would otherwise hear about the latest jams. More here from Ars Technica.

So if you’re a musician and you want maximum exposure to drive album sales, you make sure to get the word out on blogs and social networks. This has created new business opportunities for startups. Take Nabbr for example. It distributes music and videos for major media organizations like Sony BMG, EMI and Universal on widgets that it says reach more than 36 million users. It both syndicates content through other widget providers and builds its own widgets.

Nabbr isn’t a technology company so much as a virtual promoter. Like the guy who walks into the bar and leaves a bunch of flyers everywhere, but on the web. Nabbr will take a new release, such as a 25th year anniversary commemorative release of Michael Jackon’s Thriller, and try to distributed it to the largest group of users it can, specifically the 110 million monthly active users on Myspace. Then, Nabbr watches which group of MySpace users watch and share the content the most. It introduces more, similar content to those users. In the case of Thriller, the company found that kids liked it far more than classics like The Beatles. Now, Nabbr knows, these same kids will likely be receptive to other throwback releases.

The company is funded by investment bank Allen & Company, which also counts many media and tech companies as clients. Allen & Co. appears to be trying to get in on the future of media — to help its more traditional clients find new audiences online, if not to make money from the widget phenomenon.

Software developers: SGN, maker of Facebook games, making money
The Social Gaming Network (SGN), which among other things builds games designed to work entirely within social networks, has some good reasons to be bullish on social networking platforms. It gained more than one billion page views within the first 100 days of launching a set of games built within Facebook’s developer platform, such as Warbook (pictured) StreetRace and Fight Club. In total, more than six million users have installed its applications on Facebook. Among those, half a million play games daily.

The company is making money, president Shervin Pishevar tells me, from selling advertising that targets users who play its games. For example, it it making “pretty good CPMs” on video ads that run before a game (in contrast to video ads that run before a video), he says, although he wouldn’t provide specific numbers. Targeting content and ads to individuals through social networks is going to happen more and more, through in-game ads, sponsorships, and virtual goods, among other aspects, he says. This same information about user preferences can be used to promote new games to users, based on other games users have already enjoyed.

Conclusion:

One should view the Google-MySpace ad deal as another early and obvious effort to monetize social networks. It’s a shared-revenue agreement, whereby Google and MySpace make money from ads that MySpace users click on, and which are contextually related to whatever MySpace page the user is on.

That program may not be doing well. But keyword ads were irrelevant to other folks trying to make money on  the social networks. Pishevar, the guy we mentioned above who runs the gaming company, displayed his scores from games on his Facebook profile and through his news feed, and his ten year-old son saw them, and the two are now locked in fierce Facebook gaming competition. Pishevar is making money from this sort of activity.

At the end of the day, distribution channels and social data contained in social networks and applications make them worth something. This is what startups large and small are madly experimenting with. Social networks in turn can make money from these platforms through ecosystem supporters like ad networks and payment systems. Facebook and others are working on these things. It’s early days, and the early birds are already making money. It sure feels like there’s going to be a lot more room for other people, too, going forward.

[Updated: We've corrected the article below, based on further reporting. Regulatory filings about venture capital financings are tricky, because they're often late, and misleading. That's why the proposal to bring more transparency is a good one.]

Federated Media, a popular but sometimes controversial ad network for blogs, has raised another $4.5 million in funding, according to PE Hub’s read of the company’s recent regulatory filing.

Returning backers include New Enterprise Associates and Omidyar Network, according to the filing; FM has raised nearly $3 million to date, PE Hub reports. [Update: We're told NEA didn't invest, and its not clear why PE Hub reports this. The lead investor in FM has always been Panorama Capital, a group formerly part of JP Morgan Partners.].

Disclosure: VentureBeat uses FM services.