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Techdirt, the ever-opinionated analysis blog, has weighed in and found Demo's lineup of startups and new products more compelling than last week's TechCrunch40. Why? Mike Masnick doesn't come out and say it, but his implication is clear: Unlike the parade of Web 2.0 one-note-Johnnies drummed up by TechCrunch editor Michael Arrington and entrepreneur Jason Calacanis, most of experienced Demo organizer Chris Shipley's picks were focused on useful improvements to existing technology, not gimmicky new ideas. Arrington and Calacanis launched TechCrunch40 because they felt that it was somehow wrong for conferences to charge startups to present. Nonsense, of course. I think that the fact that Demo charges presenters — reportedly $18,500 apiece — was actually what makes it a stronger event.

Remember when Bill Gross launched the search engine, later Overture, and shocked the industry by ranking listings by how much advertisers were willing to pay? At the time, his pay-per-click model was ripped apart as cynical and sleazy. But paid search ads, it turns out, were the right idea. The willingness of an advertiser to pay, among other factors, was actually a useful criterion for determining whether an ad might be effective, and it's a practice that's making billions of dollars for Google.

I think there's a similar effect here. There was no downside for TechCrunch40's presenting companies; if they gave a lousy presentation, all they wasted was the audience's time. One of the best-received startups was MusicShake. Note that MusicShake is based in South Korea, which means that its founders flew across the Pacific to make their debut, at considerable expense. They may not have paid Calacanis and Arrington anything, but unlike most of their peers, they actually had skin in the game.

Contrast that to the sloppy demos given by some Bay Area startuppers who only had to roll out of bed to get there — and looked like they just had.

By contrast, every company at Demo had some money at stake. It might not have been a big risk, but it was enough to make them take the event seriously. Shipley told me earlier this week:

Demo is involved in helping companies launch their products, and there are costs associated with that. That doesn't remove the hurdle of qualifying and being selected to participate. The fee is a commitment for a small company. It does signal a seriousness of intent — it is a bit of a bar for a company, and if you're able to clear that hurdle, that means that there's more at stake and the company is perhaps more viable.

Exactly right, of course. (More's the pity for the companies that tried to two-time Demo and got kicked out.)

The irony is that when I reported that DemoPit, TechCrunch40's for-pay sideshow that required startups to buy a ticket to the event, Calacanis blusteringly defended his event along much the same lines as Shipley, citing the costs of putting it on. Of course. But by making startups share those costs, Shipley is putting the invisible hand of capitalism to work as a useful sorting function. You know her companies won't waste your time. Why? They have money on the line.