This time, it’s an ethics debate about whether or not John Battelle’s arrangement, whereby bloggers in the FM network answered the question "When did you know your business was People Ready?" on their blogs and, in return, Microsoft placed cost-per-click ads on the network.

Valleywag called them out, specifically Michael Arrington, Om Malik, Paull Kedrosky, Matt Marshall and Fred Wilson (who was in the eye of the last blogstorm), calling them "spokesbloggers."

And then, the blogosphere went ape.

Om Malik was quick to respond, apologizing and calling for FM to pull the ads:

I have requested Federated Media, our sales partners, suspend the campaign on our network of sites, and they have. We are turning off any such campaigns that might be running on our network. Would I participate in a similar campaign again? Nothing is worth gambling the readers’ trust.

John Battelle agreed:

Well, we certainly stepped in it….Microsoft was attempting something new, certainly something entirely new for the company, in any case – it was inviting authors into the marketing conversation. We tried to do it in a way that was transparent, that had integrity, where no editorial space was purchased.

Michael Arrington, though, was a bit more defiant:

 So here’s my position on all of this: Go pound sand. People understand that if there’s text in an ad box, someone is paying for it to be there.

The main thing I’m pissed off about right now is that they pulled all the ads, which mean we’re taking a revenue hit. We’re running a business here, and have payroll to make. We run ads to make that payroll. Those ads have now been pulled.

For those of you that are too Midwest suburban, "pound sand" is explained at the Urban Dictionary, which won’t explain to Arrington’s employees why their paychecks bounced, or why it’s not really Valleywag’s fault.

Whichever side you take on the issue, Fake Steve Jobs opines about which side the bloggers took it (complete with illustrations):

He [Arrington] ends up sounding like a gal who’s trying to convince you that she’s not a "prostitute," she’s an "escort."

What makes this delicious is that these "spokesbloggers" are the same sanctimonious tw*ts who are constantly spouting bullsh*t about the glories of "citizen journalism" and patting themselves on the back and congratulating themselves for being so much more ethical and independent than the dreaded "Mainstream Media."

Ouch.

Battelle notes in his lengthy post at FM that he still thinks there is a future for conversational marketing, and some of the more objective (if there is such a thing) bloggers have noted that the whole scandal could have been avoided with full disclosure about the campaign.