The after-math of Vonage's IPO has taken a new and strange twist amid a report in the New York Times that Vonage is willing to reimburse underwriters who take a financial hit if Vonage customers refuse to pay for shares allocated to them. While a deal is supposed to be a deal, some of the 10,000 Vonage customers who enthusiastically bought into the IPO can't be happy that Vonage shares have tumbled more than 25% from their issue price of $17 a share. I guess it's a nice, low-cost goodwill gesture by Vonage to cover the costs of the brokerage firms that could be left holding the bag if investors balk at coughing up for their shares but it demonstrates just how badly the IPO came off - as well as putting the spotlight on who actually invested in the IPO and why. Can anyone explain to me why Vonage was able to raise more than $500-million despite the fact its balance sheet is awash in red ink and it competes in a competitive market with low barriers to entry? For more insight, check out Michael Urlocker, Silicon Valley This Morning and IP Democracy.

Update:  Vonage now claims it does not plan to buy back shares allocated to customers who want to renege on their stock purchases following the stock's tumble over the past week. In a statement, Vonage said its 10,000 customers who bought shares are "obligated to purchase their share allocation from the underwriters".

There's enough comment about Tim O'Reilly's decision to trademark "Web 2.0" (his response to the controversial issue is here) but the hailstorm of criticism it generated demonstrates how the blogosphere loves to chatter about itself among itself - something one could describe as cyber-navelgazing. The amount of time and energy devoted to whether O'Reilly has the right - or was right - in making a claim onWeb 2.0 (which he didn't invent) has been astounding but perhaps no one should be surprised by it. The blogosphere (and I'm a flag-waving member) loves nothing better to talk about what about people within the blogosphere are talking about to the point where it becomes a vicious circle. Is this a bad thing? No, because it demonstrates how enthusiastic and engaged people are about what's happening. But the O'Reilly firestorm does put the spotlight on one of the blogosphere's annoying habits that many of us who sit very close to the "fire" (or as my friend, Stuart MacDonald says, those us so close to trees we have bark marks), are often blissfully unaware about.

It looks like the advertising community has not only embraced the Internet but giving it a great, big bear-hug as online advertising in the first-quarter jumped 38% to $3.9-billion from a year-earlier, and 6% from the fourth-quarter, according to the Interactive Advertising Bureau and PWC. In a classic case of understatement, PWC's Peter Petrusky said "The Internet continues to shape the media landscape as more advertising dollars are going online. It is abundantly clear that marketers are seeing a compelling opportunity to leverage the Internet as a powerful medium that drives both branding and sales results." While paid-search continues to account for most online ad spending (and lines the coffers of Google), video is gathering a growing momentum as advertisers look to combine the branding power of television and the measure-ability of the Web. Before anyone gets too excited about online advertising, it should be noted it only accounts for about 5% of total spending. Still, the market is growing and it's having a huge impact on the business models of newspapers, television broadcasters and radio stations. My industry - newspapers - need to jump hard on the online advertising bandwagon by providing clients with opportunity to place advertisers around relevant content. And the sooner newspapers forget about trying to sell online subscriptions, the better because Google News killed that business model a long time ago. The Guardian has a story about how online advertising in the U.K. will surpass newspaper advertising by the end of 2006. Wow!