TechCrunch As We Know It May Be Over.

It’s a dramatic headline to describe the ongoing machinations about the world’s most popular technology blog in the wake of Michael Arrington’s decision to start a new start-up focused VC fund called CrunchFund…and the decision by AOL, which owns TechCrunch, to let him because TechCrunch is a “different property and they have different standards”.

While Arrington is no stranger to investing in start-ups, the recent creation of a $20-million fund is fascinating given TechCrunch covers the start-up scene so extensively and plays an influential role in their success. For TechCrunch and Arrington to blatantly play both sides of the fence – investing and editorial coverage – sets off the alarm bells.

In a blog post that accompanied the headline above, TechCrunch blogger MG Siegler made a passionate argument about how people and the New York Times (which published a strident story about Arrington and TechCrunch) don’t understand how TechCrunch works, and how its coverage of start-ups would never be influenced by Arrington or his personal investments.

This is completely normal argument by reporters/bloggers who thrive on editorial independence and objectivity. But the difference in this case is TechCrunch (which is now part of the AOL empire) is not your “normal” news operation given the role played Arrington, who has become not only the major source of start-up coverage but an investor, advisor, conference organizer, influencer and now a VC.

While Siegler can jump up and down about objectivity and independence, he’s battling a key issue: perception and reality. The perception is TechCrunch could be biased by CrunchFund’s investment activity. As a result, it changes how start-ups, readers and investors look at TechCrunch, Arrington and CrunchFund. From the outside looking in, it’s no longer an influential tech blog but a multi-pronged kingmaker with editorial and investment ambitions.

The biggest issue is Arrington wants to eat his cake and have it too. He wants to invest in start-ups and write about them, albeit for free after AOL caved into pressure about Arrington still being on the TechCrunch payrole after the launch of CrunchFund.

The trouble is he can’t it both ways any more. When Arrington sold TechCrunch to AOL, it meant a huge change in direction for TechCrunch. And now that Arrington wants to become a VC, there is even more changes.

As hard as it might be for Arrington to walk away from TechCrunch, it’s become a necessity if Arrington, TechCrunch and its army of bloggers want to head in a new, exciting direction.