The specifics in this case involve the alleged Balloon Boy hoax and a 25-year-old student who says he was involved, unwittingly, in the stunt. Last week, Robert Thomas announced, via Business Insider, that he’d sell his story to anyone willing to pay him $5,000 to $8,000. Denton’s company wrote a check for the tale, though it says it paid much less than Thomas’s ask.

This is becoming standard practice for Denton, who announced in July that he was willing to pay for juicy stories, tips and other stuff he could publish. In August, he shelled out for video of “Grey’s Anatomy” star Eric Dane, his wife Rebecca Gayheart and another woman in various states of undress.

Seminaked semicelebrities draw more eyeballs than stories about delusional reality-show aspirants, apparently: The “McSteamy” clips have generated more than four million views this fall, while Denton predicts the Balloon Boy saga will ultimately do one million.

My question: Does paying for this stuff make sense? After announcing a year ago that advertising was going to fall off a cliff, Denton now says he’s been making good money after all. So does this kind of checkbook blogging produce more profit? Denton’s answer, via email:

Hard to measure profitability. Short-term effect. Balloon boy story will probably go to 1m views. But you know one can’t easily sell advertising into a spike. And video hosting costs pretty significant–though not this time.

Why you think just two bought stories? We paid 10k for that Photoshop expose a couple years ago. Not really a new thing.

A story is a story. We’re not squeamish about the means. And the paroxysms of the j-school ethicists add to the satisfaction.

You were expecting a more straightforward answer? Ha!

If you want, you can check out Gawker’s rate card, make some assumptions, and conclude that Denton can’t afford to pay his story-sellers that much and still end up in the black, even at one million page views. And I’m reasonably confident that Denton is very interested in measuring profitability and has worked out an equation that pays his story-sellers in proportion to traffic, but without breaking his bank.

But the last part of Denton’s missive–quivering ethicist strawmen aside–is what really rings true. He really does get a huge kick out of this stuff: Entertaining himself with his blog empire, tweaking enemies real and imagined, and shrugging about it publicly.

It would be wrong to say you can’t put a price on that. But whatever that price is, Denton can afford it.

Be patient, says a new report from Bernstein Research, which predicts that mobile ads will reach $2.2 billion by 2013. That’s a decent chunk of change, but still a small portion of the estimated $32 billion that will be spent on Web ads that year. And for Google (GOOG) and Yahoo (YHOO), it won’t be nearly enough to provide a meaningful boost to their business.

Bernstein analyst Jeffrey Lindsay isn’t down on mobile, by the way. Just realistic. He argues, sensibly enough, that mobile Web use is different from the kind you do at work or home: When you go online via your phone, you tend to look for specific bits of information, then hop off, as opposed to endless surfing from your desk or couch.

Which means that even as people transition to phones with good Web browsers like the one on Apple’s (AAPL) iPhone, their mobile Internet time won’t replace the time they spend on their PCs, but just augment it. Translation: By 2013, Lindsay figures that mobile will make up about seven percent of Web page views. Click table below to enlarge.

What does this mean for Yahoo and Google, both of which have been talking up mobile as a big growth sector? Not that much, Lindsay says. He figures U.S. mobile ads could generate $300 million for Yahoo in 2013–about four percent of revenue.

And he thinks Google, which dominates mobile search in the same way it dominates the wired world, could generate $600 million–less than two percent of its revenue. Lindsay’s math (click to enlarge):

Not included in Lindsay’s analysis: Any mention of mobile ad opportunities specific to the app ecosystem Apple is creating. As I noted earlier this week, Apple has now pushed out two billion apps to iPhone and iPod touch users, and the majority of these could support ads if there’s a market for them.

[Image credit: mistress_f]

The story went up on VF.com six days ago and has generated just under two million page views since then, says executive online editor Michael Hogan. (Disclosure: I’ve been a free-lance contributor to Vanity Fair’s “New Establishment” list in the past and will be again this year). Had Palin not made her blockbuster announcement on the Friday before the Fourth of July, the piece would be doing even better: Vanity Fair generated more traffic on the Tuesday the story was posted than the day after Palin made her news.

Still, it’s a big coup for the magazine’s site. The only way to generate more attention would be to run a slideshow featuring young attractive women.

Which the site can also do: Its story-and-photo package on Jessica Simpson, which ran in May, attracted 5.5 million page views to the site over a two-day period. Vanity Fair has generated 85 million page views so far this year, Hogan says.

And if you really want to generate traffic, run slideshows featuring very young attractive women. Last year the magazine’s 18-picture slideshow featuring a kind-of-topless Miley “Hannah Montana” Cyrus attracted some 18 million page views in a couple of days.

None of that will be terribly surprising to people who’ve wallowed in Web publishing for any amount of time. What surprised me a bit, though, was Vanity Fair’s decision to publish the piece in its entirety from the start. Doesn’t that cannibalize newsstand sales?

Maybe, says Hogan. But “it’s an open question as to what costs newsstand and what doesn’t.” And as the magazine tries to figure that out, he says, it has been experimenting. Some stuff goes up online before the magazine hits newsstands, while other pieces won’t appear on the site until a month later.

In the case of the Palin piece, the magazine had originally prepared to run an excerpt/summary of the story at first, then make the whole thing available by the end of the month after the news cycle was extinguished.

But on Friday, June 26, a few days before the excerpt was scheduled to run online, the magazine rethought its plan, assuming that the piece would be widely quoted and discussed before most people would ever see it. “The PR department started getting concerned that it was going to be controversial, and they wanted people to read the whole thing, and draw their own conclusions,” Hogan says. The final call went to Editor-in-Chief Graydon Carter, who, I gather, isn’t really much of a Web guy.

Meanwhile, I’m still waiting to read Michael Lewis’s latest piece for the magazine, on AIG’s (AIG) notorious “financial products” division. That one’s only available, for now, in excerpt form online, which means I’m actually going to have pay cash to read it, or wait a few hours–Hogan says it should be available in full later today.

Plans for the move were first reported yesterday by the New York Observer.

The swap is really a testament to the power of Google (GOOG) and the long-tail theory: Even though Condé had been running Portfolio.com with a skeleton crew since the beginning of the year, the site was still generating four to five million page views a month, primarily because of search queries, says Condé Nast Group President David Carey. So that alone made Portfolio.com worth saving.

It will now serve as the central hub for ACBJ, a collection of 40 local business publications (including one I used to work for many moons ago). But it won’t just be an aggregator, insists ACBJ President Tim Bradbury. He intends to rebuild the site’s staff–he’s keeping two of the last Portfolio.com employees and intends to launch with a full-time editorial staff of five, plus freelancers–and pump out new content.

Bradbury says he’d “like to get the old band back together,” but I’m not sure exactly what that means. In the last few months of Portfolio.com’s life, the site was essentially a blogging platform for the excellent duo of Felix Salmon, who covered finance, and Jeff Bercovici, who covered media. But Salmon jumped ship for Reuters prior to the shutdown, so he’s presumably locked up. No word on Bercovici’s plans. But even if Bradbury can’t get those two back on board, I’m guessing there’s no shortage of applicants for full-time and contract slots.

Here’s the release:

New York, NY, May 20, 2009 – Portfolio.com will become part of the American City Business Journal’s bizjournals.com effective in July, it was announced today by Tim Bradbury, President, American City Business Journals, New Media, (ACBJ) and David Carey, Group President, Condé Nast. ACBJ and Condé Nast are units of Advance Publications.

Bizjournals.com will oversee both the editorial and business sides of the site. The Portfolio.com editorial team and sales staff will be based in New York. In addition to newly created content, the site will share content with other Condé Nast sites including Wired.com, GolfDigest.com, and WWD.com, as it did previously. The site will also be the home of the archives of all the popular content published by Portfolio’s print and digital properties over the last two years.

“We are excited about continuing Portfolio.com and including the site in the bizjournals network because we were impressed by Portfolio’s strong web presence, its clean and crisp design, and its voice in the business journalism marketplace,” Tim Bradbury, President, American City Business Journals, New Media said. “We believe our readers will benefit as the re-launched Portfolio.com will have a stronger focus on industry news and a greater mission to offer information relevant to today’s business professionals.”

On top of its existing strengths, Portfolio.com will be able to leverage the collaborative skills and insights of the more than 600 ACBJ business journalists around the country. The site now will have access to local market intelligence and work collaboratively with ACBJ newsrooms across the country, presenting the most important local insights through a national lens and making it unique among national business media.

“We knew that Portfolio.com was a highly valuable asset, with an established digital brand, strong direct navigation by users, and a solid long tail of traffic from content published over the past two years,” David Carey, Group President, Condé Nast said. “We saw ACBJ as a perfect match due to its great editorial resources in the business arena, and view this as a win for both Portfolio.com’s readers and the company.”

Condé Nast Portfolio magazine and its website Portfolio.com, launched in April 2007 and the magazine closed in April 2009. The site provided insight into the day’s top business stories, with analysis from bloggers and columnists. During those two years Portfolio.com grew to 2.8 million monthly uniques and won industry praise with awards such as the MIN:  Best of Web 2008, MIN: Hottest Launch of the Year 2007, WebAward: Outstanding Achievement in Website Development 2007, and Webby nominees in Best Business blog and Financial Services categories.

But while Hearst isn’t ready to declare victory, it does say that the first two months of seattlepi.com’s life have been “encouraging.” Via a press release, Hearst offers up a bevy of traffic stats that show the site has grown even as its staff has shrunk. Hearst doesn’t offer up any info about revenue, but does say that its “sales and marketing team is highly energized.”

I sincerely hope so, and I sincerely hope it works. I still don’t get the math: Hearst says seattlepi.com is attracting 4.3 million monthly unique visitors. Chris Batty, who runs sales for Nick Denton’s Gawker Media empire, figures that traffic could support a staff of perhaps a dozen editorial workers at one of his sites–not the 20 or so that Hearst has working in editorial.

And bear in mind that Gawker’s titles have a national focus, not a regional one, which makes it much easier to sell than Seattlepi.com.  There may be a thriving business for regional/local online ads one day, and we’ve been hearing about the potential for many years. But it’s not there yet, and it’s not close.

Still, better to have Hearst says it’s encouraged than to have Hearst pull the plug after a few days.

Two months after becoming the nation’s largest newspaper to move to an all-digital news model, seattlepi.com’s year over year numbers show that it has more users this April than last April, when the Post Intelligencer was still publishing with an 80% larger staff, an amazing feat for an online venture with a newsroom of 20.

In April, its first full month of operation, seattlepi.com had 4.3 million unique visitors, up 1.6% from 4.2 million in April 2008 (source: Omniture). Total page views for the month were 37.3 million.

During the last week of April, the site broke its one-day unique user record since going online-only. There were 324,000 unique visitors on April 30—the 4th highest day in terms of unique visitors in 2009—breaking previous records set since going online only on April 29 (290,000) and April 27 (283,000). Total page views for those days were 1.5 million, 1.4 million and 1.5 million, respectively.

Two months into our online-only experiment, we are encouraged by this growth in visitors and expect our numbers to improve as we continue to establish new partnerships.

We get a lot of feedback from readers cheering us on and thanking us for continuing to bring them the local news and information they want and need. It’s great to see that not only have we not lost readers, we’ve actually gained new ones.

A new team of more than a dozen sales and marketing representatives and managers has been tasked with building advertising and marketing partnerships and creating a unique Seattle digital advertising agency.

Our sales and marketing team is highly energized to be working with such a vital and dynamic product. We will leverage existing partnerships with Yahoo!, Kaango, Metrix4Media, and others to create what is essentially a local digital advertising agency offering unique opportunities for business in the Seattle area and across the country. Advertisers and other partners understand that seattlepi.com is in an unrivaled, popular destination for news and information, offering tremendous value for exposing their products, services and brands to a large and very desirable audience.

Time for some image repair, don’t you think?

The AP is trying to do this at this very moment by distributing an 11-point FAQ that attempts to clarify exactly what it’s thinking. But that document is still a little vague and overly formal. Good thing I got on the phone yesterday with the pleasant Jim Kennedy, who oversees strategic planning for the AP and who speaks in clear, concise English.

Much of what we talked about was a rehash of what we talked about Monday afternoon, when AP Chairman Dean Singleton first riled everyone up with his “mad as hell” speech. But given the rampant confusion of the past few days, I thought it was worth going over again. Some excerpts from our chat:

On the AP’s plans to chase down people who “misappropriate” its content: Kennedy stresses that the news organization isn’t planning on creating a Wall Street Journal-style pay wall around its content. And it’s not concerned about bloggers who link to its stories. His beef is with sites that are reprinting AP’s stories on a regular basis without paying for them. “The activity that we’re trying to limit is the systematic harvesting of news without trying to license it,” he says. “The people who are building a business by taking the content and trying to recreate a news report. That’s what we’re trying to address. We’ve had success doing this.”

On the AP’s plan to promote its work more effectively. This has been construed in some quarters as a plan to create a search engine or news portal. But it’s really just an attempt to upgrade the AP’s search engine optimization strategy–that is, trying to get its stuff to show up higher on Google’s (GOOG) search results. It will do that via “search pages,” or “topic pages,” which are par for the course in the Web world. Check out this New York Times (NYT) page on Somali pirates, or this Huffington Post page on newspapers, and you’ll get an idea of where the AP is going.

If the search page plan works, the pages will be generating plenty of page views when people land on them, and it’s possible that the AP will sell ads on that inventory, Kennedy says. But their real function is to shuttle searchers to the original source material from the AP’s members.

On the AP’s beef with Google: It’s real. But many of the stories published this week conflated the AP’s gripe-essentially, that it’s not getting paid enough by the search engine for the use of its content–with its saber-rattling against aggregators who aren’t paying the AP at all. The AP may indeed end up suing people in the latter group. But it plans on resolving its Google problem with a new contract that will replace the one that expires this year.

Kennedy is vague when it comes to specifics about the Google contract and what he’d like changed: “It’s just a reevaluation of the situation,” he says. But he’s clear that the company intends to keep working with the world’s largest Web site. “When we’re talking about Google, we’re talking about our future business relationship,” he says. “When we’re talking about misappropriation, we’re talking about people who have never contemplated a business relationship with us.”

On the confusing message that the AP presented to the world this week: Guilty as charged, says Kennedy. But he argues that his group has indeed given some thought to what it’s doing, even if it hasn’t communicated that clearly to date. “The future is going to be a lot different than the present and the past on the Internet, and we’re trying to get ready for that process,” he says. “To the untrained eye it looks like we’re stupid. But we’re looking forward to a totally new space where we have to get ready to do things in a totally different way. We’re trying to be smart business people and we’re trying to stay in business.”

Instead, the New York-based company has just raised a $4.5 million Series B round that its CEO, 22-year-old David Karp, says will fund it for two and a half years. Union Square Ventures and Spark Capital, which led the company’s first $750,000 round a year ago, also led this financing. My educated guess is that its investors now value Tumblr at around $15 million.

Tumblr is a “microblog” platform that is supposed to let its users quickly create nice-looking posts with a minimum of effort; it sits somewhere between Twitter and full-fledged blogs like Blogger and TypePad. It is popular with a relatively small but prolific user base: Its 500,000 users have created pages that draw 15 million unique visitors and 61 million page views a month, Karp says.

Money? Nope. Tumblr is free–and has no ads cluttering up its hipster vibe.

Way back in 2007, those kinds of numbers would have been catnip for the likes of Google (GOOG) or Yahoo (YHOO). Now, though, even deep-pocketed buyers aren’t racing to snap up revenue-free start-ups. But Karp says raising money from his previous investors was easy: “These guys came to us with a deal that made us incredibly comfortable.”

Karp says he’s going to start generating money in early 2009. Not by selling ads on his members pages–Karp thinks the site will eventually incorporate ads in some way, but not yet–but by selling users “premium” services, most of which he’s not ready to describe. He does promise they will be “really sexy.”

More practically, Karp points out that other Web services, like the WordPress blogging platform and Yahoo’s Flickr photo service, have been able to upsell many of their users with goodies like extra storage. He figures many of his users will pay up, too.

The new money means he’ll have time to prove his thesis. Karp has just doubled his staff–which means there are now all of six people on payroll. One of them, hired in September, is John Maloney, Karp’s former boss at Urban Baby, where he started his Web career. Maloney is now in charge of business operations.

The money also means there are heightened expectations. Karp has done much more than people twice his age (and has the press clips to prove it). But the newest funding round means his investors think the company will be worth as much as $50 million by the time he sells it or raises more cash. In order to prove them right, he’s got a lot of work ahead of him.

[Image Credit: David's Log]

While it’s true that Time Warner’s (TWX) magazine unit is embattled, there are bright spots in the portfolio. Take People.com: The gossip magazine has always been one of Time’s strongest performers (good luck trying to find a discounted subscription). Now its companion Web site is, too.

The site boasts 8.6 million unique monthly visitors, per comScore (SCOR), up 36 percent in the last year, and generates a staggering 700 million page views per month–per Omniture (OMTR). Meanwhile, once-hot sites like TMZ.com (another Time Warner property) have tailed off.

Much of the credit for that goes to Mark Golin, the awesomely sharp and frumpy editor best known as the man behind Maxim magazine’s rise, way back in the late 1990s. He’s successfully broadened the site beyond just Britney/Paris/Lindsay news by adding features like a game channel, a shopping channel and the like.

One of the most successful expansions came via acquisition: When People.com bought Celebrity Baby Blog back in May, it was generating 6.9 million page views per month. Now it’s doing 30 million, Time execs say. And before my fellow journobloggers dismiss the work that the people at Celebrity Baby Blog do, ask yourself this: Did you know that Ashlee Simpson has named her kid Bronx Mowgli? Aren’t you glad you know now?

In any case, all those page views are translating into actual dollars–not digital pennies, as NBC’s Jeff Zucker would say. Time Inc. says People.com is now one of its 10 most profitable titles–that’s out of all of the company’s 174 properties, on or offline.

The company won’t attach numbers to that claim, of course. But given that Time Inc. generated $162 million in operating profit during a very lousy third quarter, you can get some sense of the property’s success. Now Time just needs many more just like it.

One of note for MediaMemo readers: The departure of Ned Desmond, a longtime Time Inc. vet who was most recent title was President of Time Inc. Interactive. Ned’s bio is here; nice-to-know-you memo from Ann Moore follows:

To:        Time Inc. Employees

A.M.                 J.S.