Wetpaint is putting on a new coat, transforming itself once again as the heavily-funded Seattle Internet company looks to become the premier destination on the Web for entertainment news. The new direction -- which includes a revamped logo, an editorial staff of 30 writers, editors and freelancers and 15 micro sites built around TV shows like Glee and Gossip Girl-- puts Wetpaint squarely in competition with giant publishers like Entertainment Weekly as well as online brands like Seattle's BuddyTV.

Wetpaint CEO Ben Elowitz believes that there's an "insatiable demand" for entertainment news and that his team has simply figured out a more compelling way to deliver it to targeted niche audiences. That method includes old-fashioned news gathering -- hence the New York-based editorial staff -- and a smart use of digital media technologies. If done properly, the combo may result in the chance to build a "media company of the future," Elowitz says.

"Even with all of the entertainment coverage out there, they've all been an inch deep and a mile wide," says Elowitz. "Internet content is getting more and more fragmented because the audience is looking for deep expertise."

In order to meet the new demands of online consurmers, Elowitz says that media companies not only have to be "authoritative" on a given subject but they must leverage technology to "fundamentally change the cost structure" of producing content. And that's what the serial entrepreneur is setting out to do with the new-and-improved Wetpaint.

The company is not abandoning its traditional wiki platform, which over the years has grown to include more than 1.5 million sites built around topics like technology, weddings, education and sports. Elowitz says that the wiki network -- which now attracts about 10 million unique visitors per month -- is profitable on its advertising and editorial partnerships. However, monetizing many of those sites proved harder than the 5-year-old company originally anticipated.

As a result, more than a year ago, Wetpaint began to dig deeper into the entertainment category. It was a natural move for the 35-person company. Over the years, Elowitz had noticed that the most popular wikis on Wetpaint had connections to big entertainment brands. (TV shows, movies, video games, etc.)

After running the wiki network and the entertainment hubs on Wetpaint, Elowitz believed that the company had struck on an interesting formula to make digital publishing profitable on a larger scale. That's the holy grail in the online media business, a challenge that titans such as Time Inc., AOL, Yahoo and others are struggling to solve.

"Old media and new media are all trying to find a formula for digital publishing and no one has gotten it yet because it is tough. The audience is super fragmented," said Elowitz. "We set out to say: 'Let's modernize publishing. And let's do that from the standpoint of applying data and technology to changing publishing from the ground up."

In that regard, Wetpaint eventually is positioning itself against Demand Media which has built automated content factories around sites such as eHow, Trails.com and others. Elowitz, however, is quick to make a distinction between Demand Media and Wetpaint.

"What Demand Media is doing for really boring, evergreen, Google-driven content -- we are doing to create really first-class media titles," says Elowitz, adding that Demand Media is "sweeping up" between the cracks of highly-regarded media sites.

"Demand Media lives and dies by Google," adds Elowitz. "What we are talking about is ignoring Google. What we are saying is: 'Hey, Google is not the point.' The point is to build a real first-class media title. And to do that, you need to appeal to the audience, not the search engine."

The first of Wetpaint's categories revolves around entertainment. But Elowitz says the technology behind Wetpaint could be used to roll out new niche content sites in sports, lifestyles or other topic areas. (He doubts they'll expand into politics or breaking news, which he said are hard categories to crack).

Visitors to the new Wetpaint site will see a visually stimulating home page, with large photos serving as entry points into the latest entertainment news. A drop-down menu allows visitors to dig deeper into individual TV shows, finding out the latest news, participating in polls, browsing hot fashions or playing games.

Writers for each of the TV micro sites will generate about 10 to 20 new posts a day, with about 30 percent of that content generated by the company's editorial staff. The remainder will come from editors curating content from other sources. "We are really the fan's extension," says Elowitz, adding that large advertisers are "in love" with the idea of extending their brands beyond TV.

In early tests, the concept has met with success. The seven prototype sites -- built around Glee, Gossip Girl and other TV shows -- have already attracted more than 500,000 Facebook fans. Facebook is driving about 40 percent of the traffic to the prototype sites, with those test sites alone attracting about 3.5 million monthly page views.

While the entertainment category may appear crowded, the company believes that there's plenty of room to operate. Only one other Web site (celebrity gossip site TMZ) drives more than one million unique visitors in the core demographic of women aged 18 to 34, according to Wetpaint chief operating officer Rob Grady. "It is incredibly underserved, " he said.

Of course, Seattle's own BuddyTV is trying to make a mark in this very same niche. But while Elowitz admits that his crosstown rival is doing a good job of covering TV, he says they are "not really completing that experience for the fan of a particular show."

In terms of Wetpaint's new direction, Elowitz says it will boil down to the daily (or hourly) relationships that TV fans develop with the individual sites. The company may consider at some point charging for premium content, but for now the big focus is on advertising.

"I think we need to create unique experiences that are worth paying for," says Elowitz. "I actually don't believe in paying for content. I think content is a commodity. Fifteen seconds after it is published, it is cut-and-pasted someplace else. But people will pay for unique experiences."

Backed by Trinity Ventures, Accel Partners, Frazier Technology Ventures and others, Wetpaint raised $25 million in venture funding in May 2008. That brought total funding to about $40 million.

UPDATE: I asked BuddyTV co-founder Andy Liu about Wetpaint's new focus, and here's what he had to say:

"Generally speaking, we think of TV fans as an ecosystem and not a "zero-sum" game. The more fansites there are, we think it will just increase the consumption of entertainment content online. So, we think having Wetpaint place a big bet on TV as a good thing. I'm sure we'll find ways to be friendly competitors with them online. We are going to make sure that we are still a go-to site for all TV fans and we don't mind if fans visit 10 other sites as well as long as we're in the consideration set. As far as where we're going, we'll keep you posted in the next couple of weeks about our big mobile initiatives that will be going live for the upcoming Fall TV season."

The new Glee page on Wetpaint