The great Web fire sale

NEW YORK (CNNMoney.com) -- With media, tech and advertising giants lining up to throw cash at Internet startups, it must be a wonderful time to be a dot-com entrepreneur.

After a flurry of deals that saw online advertising companies DoubleClick, Right Media, 24/7 Real Media and aQuantive (Charts) get scooped up by Google (Charts, Fortune 500), Yahoo!, (Charts, Fortune 500) WPP Group (Charts) and Microsoft (Charts, Fortune 500), respectively, now it looks like several big traditional and online media firms are eager to purchase more online content companies as well.

In the past few weeks, Google has acquired RSS management provider FeedBurner, News Corp's (Charts, Fortune 500) Fox Interactive Media has bought image editing tool companies Photobucket and Flextor, and CBS (Charts, Fortune 500) has purchased financial news video blog WallStrip and online radio firm Last.fm.

Experts say that the wave of mergers won't ebb anytime soon.

"We will see many more deals ahead. A lot of the major media players are expanding and making commitments in other areas online. They realize that long term, online advertising is going to be a big market," said Glover Lawrence, co-founder of McNamee Lawrence & Co, an investment bank based in Boston.

Online video companies are the most likely takeover targets, Lawrence said, given the increased focus on broadband video by the major media firms. To that end, companies such as Metacafe and DailyMotion have been frequently mentioned as possible acquisition candidates.

Lawrence also said he would not be surprised if social networking site Facebook, which has been the subject of takeover rumors in the past year, eventually sells out. In addition, another social networking firm, Bebo, has been mentioned in several reports as a possible takeover target.

And since so many deals have already been announced, that might lead to a greater sense of urgency on the part of companies that have yet to make significant acquisitions. So the mergers market for dot-com start-ups could heat up even further.

"The deals are happening at an increased pace. It does become a bit of an arms race where companies believe they need to keep up with competitors," said David Gurwin, chair of the entertainment and media law group and technology transactions group with Buchanan Ingersoll & Rooney, a law firm based in Pittsburgh.

And what makes this environment even more of a free-for-all is that there is a seemingly limitless number of companies that could be interested in acquiring an online ad network or content company.

Just look, for example, at the four major online ad deals. Google and Yahoo made a name for themselves as pure-play dot-coms. But Microsoft is primarily a software company and WPP Group is one of the top Madison Avenue ad agencies.

"Obviously the pool of buyers is increasing as a number of people are trying to figure out how to best take advantage of advertising on the Internet. All the remaining players in media need to take a look and decide if they are comfortable where they are," said Morton Pierce, head of the mergers and acquisitions group at Dewey Ballantine, a New York-based law firm.

But not all online media companies are holding out for the best possible bid. Some companies still hope to stay independent.

Dan Nye, the chief executive officer of LinkedIn, a company that is popular among the business community since it allows professionals to set up networks for contacting one another, said his firm is intent on not selling out and instead is hoping to eventually go public.

And Dina Kaplan, the chief operating officer of Blip.tv, a privately held online video site that hosts shows and video blogs, said companies that are more concerned with an exit strategy than growing their business could be making a mistake.

Blip.tv announced Tuesday that it had received a new round of funding from Ambient Sound Investments, a venture capital fund started by the four founding engineers of Skype, the Internet telephone company now owned by eBay. Kaplan said that Blip.tv plans to use this new financing to bulk up its advertising sales force as well as hire more content developers.

"It's interesting to read about all these acquisitions but it's not something that concerns us or is overly exciting to us," Kaplan said. "Personally, I see a huge opportunity to attract advertising on our site. Honestly, that's what my focus is on, not on positioning us to be acquired by another company."

Nonetheless, experts said it's clear that this is only the beginning of a massive wave of consolidation in online media. So even though some companies may choose to hold out and go it alone, many of their competitors will probably succumb to the urge to sell.

"It's just a matter of time before even more and more money will migrate to the Internet. The business models are still fleshing out and the big players aren't going to sit around and let things change without them," said Lawrence.