Two-minute summary: AOL buys the Huffington Post

Feb. 08, 2011 | by Mark Higginson

AOL has paid $315 million for the Huffington Post

According to Tim Armstrong, AOL CEO, the acquisition demonstrates:

“We believe in brands, quality journalism, and the positive role of communities in the world… (this) has the potential to make AOL the most influential company in the content space.”

Armstrong’s Internal Memo To AOLers About The HuffPo Deal (TechCrunch, 6th February 2011)

Earlier this month Business Insider was able to get a copy of ‘The AOL Way’ which lays out a number of ambitious targets:

“By April, he (Tim Armstrong) wants AOL editorial to increase its stories per month from 33,000 to 55,000. He wants pageviews per story to jump from 1,500 to 7,000. He wants video stories to go from being 4% of all stories produced to 70%. He wants the percentage of stories optimized for search engines to reach 95%.”

LEAKED: AOL’s Master Plan (Business Insider, 1st February 2011)

I was most interested by the break-even points of different content types, e.g. a ‘premium article’ costs $250 and ‘needs’ 40,000 pageviews.

Nick Denton, of Gawker Media, was typically acerbic:

“I’m disappointed in the Huffington Post. I thought Arianna Huffington and Kenny Lerer were reinventing news, rather than simply flipping to a flailing conglomerate. AOL has gathered so many of our rivals— Huffington Post, Engadget, Techcrunch—in one place. The question: Is this a fearsome Internet conglomerate or simply a roach motel for once lively websites?”

AOL’s Tricky HuffPo Marriage (The Daily Beast, 7th February 2011)

The Economist takes a cooler view:

“The truth is that AOL’s content is really meant to appeal to search engines, rather than humans of either sex. The champion of this approach is Demand Media, a so-called “content farm” that recently went public and is now worth more than the New York Times. Its articles, produced on a shoestring and served from sites such as eHow and livestrong.com, are what you have to fight your way past whenever you Google anything. AOL’s content, which includes various specialist blogs and a network of local-news sites called Patch, is of higher quality, but it is essentially playing the same game: find ways to generate content as cheaply as possible and then try to sell advertising around it.”

Why AOL wants the Huffington Post (The Economist, 7th February 2011)

It’s interesting they highlight Patch. Business Insider had the following comment from before the HuffPo acquisition:

“AOL now has about 800 Patch editors nationwide. The number is supposed to swell to 1,000 by year end. Each editors makes $40,000 to $50,000 per year. Add in payroll taxes and some benefits and you have to figure Patch’s people alone cost AOL around $50 million each year. What is AOL getting for this money? About 3 million unique visitors per month, according to the New York Times. That is an absurdly small number.  By contrast, Gawker Media, with a headcount around 120, reaches around 30 million people each month, according to Quantcast. ComScore says the Huffington Post has 25 million unique visitors each month.”

Patch Is A Huge Waste Of Money, And It Has Us Worried About Tim Armstrong’s Ability To Run AOL (Business Insider, 26th January 2011)

What’s clear is there is lot of hostility from various quarters around this deal and it raises big questions about what the priorities are for content on the web. Most important of all is what the HuffPo’s readership make of all this. Wait and see.

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    Comment (1)

    • Tamsin Hemingray

      Great round-up Mark. I'm really interested in this HuffPuff campaign being championed by Adbusters - where Huffington Post contributors / readers are being encouraged to boycott and actively place their words and attention elsewhere. http://www.adbusters.org/blogs/adbusters-blog/huff-puff-it-down.html The strength of feeling over who actually owns HuffPo and its content is a real reminder of the shift in power and perceptions of media "ownership" that we've seen over the last few years online.Feb 14, 2011 08:19 pm

     
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