Michael Arrington of TechCrunch fame still dreams that blogging will eventually produce a media business capable of dwarfing even tech news giant CNET in size (that was also on his mind when I spoke to him 18 months ago.) These days, though, Arrington has a new plan: a “dream team” of star bloggers that would bring together the biggest talents - and egos - in the blogosphere.

His pitch today for this Uber-Bloggers’ Cooperative sounds a bit of a stretch. The most interesting thing about it, in fact, is what it says about Arrington’s thoughts on how to catch up with CNET: maybe it’s not as easy as just starting a handful of blogs and trying to raise hell after all.

(Incidentally, the post has a nice explanation in it of how the tech blogosphere really works: a loose  alliance of leading lights - Arrington calls them “the Gang” - with a mutual self-interest in cross-linking to each other to sustain their position. The commercial realities of building an audience, turning former allies into competitors, are starting to disrupt that cozy scene, Arrington says.)

Mark Zuckerberg scored a coup on Tuesday by recruiting one of Google’s top stars to take the number two spot at Facebook, the fast-growing social network.

Among other things, Sheryl Sandberg’s appointment as Facebook COO will bring some adult supervision to a company that, for all the buzz and excitement,  manages every so often to remind the world that it is being run mainly by twenty-something computer geeks.

Sandberg, 38, graduated near the top of her class from Harvard College and Harvard Business School before serving as chief of staff to US treasury secretary Lawrence Summers during the Clinton administration. She joined Google in 2001, where she was responsible for developing the search giant’s wildly successful ad sales programmes. She also played an important role in launching Google.org, the internet group’s philanthropic arm.

Having captured the attention of millions of internet users, Facebook’s biggest challenge over the next year will be to deliver its own equivalent of AdWords - a technology capable of turning all those eyeballs into a reliable revenue stream.

Facebook tried to do just that last year with the launch of several new ’social’ ad technologies, including Beacon, a messaging service that broadcasts purchases made by users on outside web sites to their Facebook friends.  Mr Zuckerberg hailed the new technologies as a once-in-a-hundred-years innovation in advertising, only to see them overshadowed by a user revolt over privacy.

With Ms Sandberg on board, Facebook has an opportunity to move beyond this somewhat ham-fisted attempt and find a sustainable revenue model that takes advantage of the social connections between the site’s millions of users. There is no doubt that the raw materials are there. It may just take an experienced hand like Ms Sandberg to make things fall in line.

Jerry Yang must be starting to understand how Alfred Chuang of BEA Systems felt when Larry Ellison of Oracle came calling last year. Like Chuang, the Yahoo boss has just been landed with a takeover offer at such a big premium that he can’t possibly just ignore it. Also like Chuang, the options for other deals - or for staying independent - are shrinking fast. Here are the other partnerships or alliances that Yang could have grabbed at in the last year or so, and the chances that he can turn to them again now as he looks for an alternative to Microsoft:

News Corp, sensing the chance to consolidate its position on the internet, at one stage proposed combining MySpace with Yahoo in return for a large stake in the internet portal. For Rupert Murdoch, the opportunistic move would have meant trading the hot social networking site for a slower growing but far more stable property, but Yahoo saw less value in the idea. To judge from the noises emanating from around News Corp today, there’s little interest in trying to revive the idea.

Time Warner has also at times considered something similar for its AOL unit, merging it into Yahoo and keeping a piece of the action. If Yahoo falls to Microsoft, Time Warner will be robbed of its two most obvious partners as the online advertising market consolidates, so Jeff Bewkes might be expected to try to intervene. However, people close to Time Warner seemed distinctly underwhelmed by the thought of wading into the fray against Microsoft.

This has been one of the more intriguing options. Yang is said last year to have considered out-sourcing Yahoo’s search advertising to Google. Project Panama, the overhaul that was meant improve the efficiency of Yahoo’s search advertising system, has been only a qualified success: Yahoo could boost its earning per share by 25 per cent by partnering with Google instead, according to Mark Mahaney at Citigroup. As Yahoo searches for ideas to boost shareholder value while staying independent, this looms as the most likely alternative. Much will depend on whether Google wants to go head-to-head with Microsoft in such a direct way.

  A higher offer from Microsoft to win over Yahoo’s board seems the most likely outcome. A year ago, before Yahoo’s shares hit the skids, Microsoft was willing to pay $60bn, according to one well-placed source. Times have changed and there’s no way Yang can hope for that kind of happy ending any more, but holding out for a bigger pay-day still seems his best option.

MySpace has confirmed that Josh Berman, COO, will leave the social networking site to take on a ’senior role’ at Slingshot Labs, a new venture backed by News Corp, whose mission will be to incubate internet startups. Rumours of the move had been circulating since last week when Chris DeWolfe, the MySpace founder, told the New York Times about the incubator.

MySpace also said it would brief reporters next week on details of its bid to open up to outside developers. The FT revealed in June that MySpace that the popular social networking site hoped to take a page from Facebook, its smaller rival, by launching its own equivalent of the Facebook Platform. In November, MySpace announced that it had joined forces with Google on OpenSocial, an open alternative to Facebook’s platform.

Now that MySpace is preparing to launch its platform, internet-watchers will be looking for further details about the kinds of incentives it will offer to developers. Facebook set a high bar by allowing its developers to advertise freely within their apps - just not on the Facebook home page. The pressure will be on MySpace to follow suit.

The entertainment industry thinks it has found a new opening in its fight against online piracy and is working hard to make it count.

Internet service providers are being pushed into the front lines of this battle - some willingly. In the US, AT&T was pretty open a couple of weeks ago about lining up behind NBC Universal to stamp out illegal content passing over its networks. In France, President Sarkozy gave the media industry hope when he came up with a plan that forces ISPs to cut off pirates on the third offense.

To John Kennedy, head of music industry trade body IFPI, this is the beginning of something much bigger. In the IFPI’s annual report today he calls for ISPs to take a central role in monitoring internet traffic - and for governments to follow France’s lead in making the internet a medium where "we protect our culture":

There must be obligations on the ISPs to warn, suspend and eventually disconnect infringing users and apply filtering measures… 2007 was the year ISP responsibility started to become an accepted principle. 2008 must be the year it becomes reality.

It hardly needs saying that the implications of this are far-reaching. Should ISPs be forced to monitor what passes over their networks, make decisions about what is or isn’t legal, and act unilaterally on the results?

In the US, this is quickly turning into the next eruption of the net neutrality debate. The Federal Trade Commission has already said this month that it is going to investigate Comcast’s move to block file-sharing traffic on BitTorrent.

It is easy to understand why ISPs would use the piracy issue as an excuse to try to exert more control over the economics of their networks. But do they really want the policing responsibility that would go along with it?

  So it’s official, Meg Whitman is to leave after 10 remarkable years (sullied by some mishaps of late.) As Youssef Squali, an analyst at Jefferies, puts it: "She will be remembered as one of the best CEOs of the dotcom [period], who made it successfully through the bubble and the nuclear winter."

This also means a broader reshuffle. Rajiv Dutta may have been passed over for the top job (see note below) but he’s clearly been made John Donahoe’s number two with the new title of executive vice president and Donahoe’s old job of running the marketplace division. One-time contender Bill Cobb is out, and will retire from the company at the end of the year.

Meanwhile Donahoe has decided to reset the bar, with a prediction that eBay’s revenues will grow by only 12.5 per cent this year. That is shocking - revenues were up nearly 30 per cent in 2007. It suggests that much more is going on than a tinkering with eBay’s fee structure, a move that had already been in the air, and that the fundamental model on which eBay has functioned is now under scrutiny. After three years trying to revive the marketplaces business - with only modest success - Donahoe seems to have decided that something far more drastic is needed.

Update: extra details revealed on the analyst call this afternoon showed the slowdown isn’t quite as severe as it seemed. Leaving aside the effects of the falling dollar and acquisitions, revenues in 2007 grew only 21 per cent. But this is still a big adjustment to the eBay model. As eBay lowers its listing fees (and sees the volume of listings rise), much rides on a better search engine to sift out the best goods at the best prices from the sellers who give the best service. Promises from eBay in the past to improve the quality of search have been a disappointment.

"The subtext of this show is that the internet has won."

So declared Intel executive vice president Sean Maloney when I met him for breakfast at the ungodly hour of 7am in Las Vegas today.

To which the obvious response is: Well, up to a point.

As at other recent Consumer Electronics Shows, bringing internet services and content into the consumer electronics realm has been a big talking point at this years’ event. Sharp and Samsung showed off TVs that can draw content straight off the internet, no PC required. Microsoft added some more partners for its Xbox Live video marketplace.

Yet given how big the expectations -and the hype - have been, this seems very little to brag about (and anyway, doesn’t viewing weather forecasts from USA Today on your Samsung TV somehow feel very 1992?)

Robbie Bach, Microsoft’s top consumer honcho, was putting a diplomatic face on things when I met him later. He pointed out that the big TV networks are all trying out ways of distributing shows online, even if they can’t agree yet on a business model, and the movie studios are releasing more titles, even if they generally still feel safer for now with the familiar video-on-demand model rather than download-to-own.

Privately, other senior tech industry executives I’ve spoken to in the last couple of days have been far more sceptical than him. According to one, all the heat surrounding the Blu-ray / HD-DVD format war shows that Hollywood is looking the wrong way: it should instead be rushing to build an online distribution business as fast as it can, before it is overtaken by the same fate that has befallen the record labels.

It seems fitting that the biggest buzz at this year’s show has surrounded Pansonic’s 150-inch TV and Sony’s ultra-thin OLED screen (the same model that went on sale in Japan late last year, though in only very limited numbers.) Perhaps you’re too cheap to pay $2,500 for an 11 inch TV, but these are still the dream screens that the consumer electronics industry believes you should be aspiring to. Only, don’t ask whether they come with a USB port on the back.

The consumer electronics industry’s big annual bash in Las Vegas got off to its usual start on Sunday evening - a speech from Bill Gates, boss of a company that still often seems to be struggling to locate its own consumer gene.

Gates’ CES speeches (this will be his last) are a useful reminder of just how many eggs Microsoft has in the consumer basket. No matter if HD-DVD has all but lost the next-gen DVD format war, Microsoft is also pushing ahead fast with Xbox Live Marketplace, a venue for selling downloadable video (some cynics, in fact, claim that this is where its real long-term interest lies and it only ever saw HD-DVD as a diversionary tactic to try to stall Sony’s Blu-ray.)

To coincide with CES, Microsoft issued a deluge of fresh data about its consumer businesses. But what do all the numbers really add up to?

Windows Vista. 100m licences in the first year. This compares with 67m licences in the first year of XP - but then, there are many more PCs around now. Consumers certainly didn’t take quickly to Vista. The new Aero interface was meant to produce a "wow" effect but that was quickly drowned out by problems with incompatible device drivers, insufficient machine memory, and other glitches. With a de-bugged service pack release due soon, though, Vista’s early bad press should eventually fade.

Xbox 360. 17.7m sold to date. A good headstart in the next-gen console race. But the Wii shows no signs of slowing down, and the apparent defeat of HD-DVD gives the (Blu-ray enabled) PS3 a much-needed boost.

Xbox games. 1.6m copies of Mass Effect sold in the first six weeks, and plenty of buzz among Xbox’s core users. Finally, a game to stand alongside Halo?

Zune Social. More than 1.5m registered users. That’s not a bad start for the social networking play that is meant to do for the Zune player what Xbox Live is starting to do for the console. That’s no replacement, though, for actually selling the hardware. Tellingly, there were no numbers on how many Zunes were sold over the holidays.

Beijing Olympics. 3,000 hours of exclusive online video from NBC will be powered by Microsoft’s Silverlight. That will be a great showcase for a technology that is fighting it out with Adobe’s Flash player. However, the joint NBC/ MSN site for the Olympics will carry adverts that are sold and served up by NBC, so no success here in extending Microsoft’s online advertising reach.

… it would crash repeatedly for no obvious reason, refuse to restart until you rebooted the engine, then lock you out until you simultaneously pulled the handle, turned the key and yanked on the radio antenna.

OK, so this was originally a joke told at Microsoft’s expense, but it also points to a truism about a development process widely favoured in the Valley: ship products before they are ready, then rely on rapid improvements to bring them up to scratch. Now it seems that Silicon Valley upstart Tesla Motors is doing its level best to keep the old joke alive.

The electric car company set up by PayPal co-founder Elon Musk (we profiled him earlier this week) has been struggling for some time to produce an advanced transmission for its hotly anticipated sports car. Rather than put off the launch of its first vehicle yet again, it has now opted for a familiar Valley alternative: a beta version.

This is how new Tesla CEO Ze’ev Drori explains it in a blog post this week:

To help speed delivery of cars, we will begin production in 2008 with an interim transmission design. These transmissions will meet high standards for reliability and durability, but the car will not meet the original performance spec for acceleration, reaching 60 mph in 5.7 seconds instead of the promised 4 seconds. When the final transmission is ready, we will retrofit all cars, at Tesla’s expense, to meet the promised performance specifications.

Valley luminaries like Larry Page and Sergey Brin, who top the Tesla waiting list, shouldn’t mind - they know all about putting out products before they are ready (In fact Google Product Search, formerly known as Froogle, is still in beta after more than five years, which must go down as some sort of record.)

Wal-Mart has the shelfspace to make or break a new DVD release, but its attempt to take that power to the Web has just bombed. The mega-retailer quietly closed its video download store in the run-up to Christmas. So underwhelming was the service that its failure is only just getting noticed.

Leaving aside Wal-Mart’s own particular failings, this is another sign that the movie download business has been going nowhere fast. Earlier this week we reported that Apple’s iTunes store will soon be trying out a new approach, offering movies from News Corp’s 20th Century Fox studio for rental.

A second feature of the Apple/ Fox deal looks even more intriguing: besides slotting it into a DVD player, people who buy a traditional movie disk will also be able to rip a (DRM-protected) copy of the movie to their iTunes collection, then watch it on an iPod. For Apple, this is a great way to suck more content into the iTunes ecosystem from what remains the dominant channel for movie distribution. For Fox, it’s a great way to add more value to a DVD ("Watch this film on your TV and your iPod!")

This all highlights once again the lack of appeal for mainstream consumers in movie downloads. Even those who feel comfortable plugging into an online service and paying full DVD prices are left with a digital file that they’ll have difficulty transfering to the TV screen. Without significantly lower prices, it’s an idea that seems to be struggling.