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AOL buys Huffington Post for $315mm in cash (allthingsd.com)
224 points by akharris on Feb 7, 2011 | hide | past | web | favorite | 89 comments



I think the key news bit here is that Ariana Huffington will be in charge of all of AOL's blog/news properties.


That would make her Arrington's boss, among others, wouldn't it?


Correct. Paul Carr's words:

"I have no idea how any of this will affect TechCrunch. So far AOL has kept true to its promise not to interfere with our editorial and there’s no reason to suppose that will change under Huffington. That said, it would be idiotic to think that our parents’ content strategy – particularly the SEO stuff – won’t have annoying trickle-down consequences for all of us in the long term."

[edit- Corrected source of the quote.]


For those who haven't read it yet, AOL's "Master Plan" for its blogs and news sites:

http://www.businessinsider.com/the-aol-way

  AOL tells its editors to decide what topics to cover based on four considerations:
  traffic potential, revenue potential, edit quality and turn-around time.

  AOL asks its editors to decide whether to produce content based on
  "the profitability consideration."

  The documents reveal that AOL is, when the story calls for it, willing to boost
  traffic by 5 to 10% with search ads and other "paid media."

  AOL site leaders are expected to have eight ideas for packages that could
  generate at least $1 million in revenue on hand at all times.

  In-house AOL staffers are expected to write five to 10 stories per day.
Every time AOL buys another site, I mourn.


In other words "content farm". But since it will be done by "leading" blogs it will be considered an ok thing to do. Makes perfect sense, huffpo and TC was never too far from being a content farm. These sites are rarely about quality but quantity. They often rewrite news they find in their rss feed.


I said it before and I'll say it again: take TechCrunch as it currently exists, bolt-on a section for high-end electronics reviews, and you'd goose their revenues without any actual human who reads TechCrunch noticing. (The reviews rank based on on-page optimization plus the earned trust of TechCrunch, and the eCPM would be out of this world relative to any article TechCrunch publishes.)

http://news.ycombinator.com/item?id=1734020

Traditional publishers are cottoning to this tactic, too.

http://topics.nytimes.com/top/reference/timestopics/subjects...

Think like that, but 100x more aggressive. Will it degrade the NYT brand a little bit? Meh, it is the NYT: they'll still be the world's preeminent newspaper, they'll still make money from advertisements, and they'll still be able to credibly threaten Google with PRmageddon if Big Daddy G gets uppity about it.


Two things here!

1) Tech Crunch doesn't really operate in an eCPM world, they operate in a "real" CPM world with advertisers that are largely paying for branding rather than conversions.

2) The CPMs on electronics reviews (high end or otherwise) are significantly lower than the CPMs on "content a CTO would want to read".

SEO for a publisher really only serves the purpose of getting organic traffic to more premium ad campaigns, much like paid traffic (where a publisher buys CPC ads). The catch with this is that inbound search engine traffic needs to roughly match the demographics you've sold ads for or you end up shooting yourself in the foot. You can do short term traffic buys to inflate ad views with otherwise shitty traffic, but only rarely and it's still dangerous.


"Quality is Job 3!"

(For those of you old enough to remember the Ford "quality" commercials.)


As a quick counterpoint: I'm curious how much you pay directly for the quality writing/journalism/investigative reporting that you consume each day? So far, journalism knows only two business models: direct sales or ad revenue. The first is dying/dead, and until someone invents a new business model for content producers, expect this to be the new reality moving forward.


I pay for my digital newspaper subscription. I pay to read stories (McSweeney's Small Chair) online. I use the tip jar on blogs I like and I buy their merchandise. I'm also planning to get into Kindle Singles [1] (I just don't like Amazon's proprietary ebook format, I'm hoping another etailer comes up with something similar using ePub).

So no, I don't think direct sales are dead and I'm willing to pay not to see ads.

[1] http://www.amazon.com/b?ie=UTF8&node=2486013011


Well, good thing that these businesses know that Samuel_Michon is just one data point, and what he does doesn't necessarily reflect the majority of the market.


Not every business chases the majority of the market, and aforementioned businesses do just fine. I'm convinced there's always money to be made offering quality content, without having to rely solely on selling ad space.


Probably true, but the money to be made is probably less than what can be made by catering to the 80% of people who buy supermarket tabloids and are influenced enough by the ads therein to drive the ad supported economy...


I predict that Arrington will create another faux controversy (Angelgate, Engadget blogfight) with Huffington before TechCrunch's next major event. That's become his modus operandi. Lame, but seems quite effective in generating eyeballs.


It reminds me a little of the time when Pixar bought Disney for -$7bn.


Or when NeXT bought Apple. I only see good things from this.


Disney bought Pixar. Not the other way around.


Note the negative sign in front of $7bn.


Hence the - in the -$7bn


Breaking News: TechCrunch announces new name HuffPostTECH, fires staff, annonces columnists instead, and a new focus on curated links from blogosphere.


Also leaves David Eun (AOL media boss) in an odd spot.


I'm just amazed AOL still has money


When AOL merged with Time-Warner they kinda traded half of their wealth with eachother. AOL's half turned out to be worthless.


Doesn't AOL still make a couple of $billions per year from old dial-up internet subscriptions?


http://www.sec.gov/Archives/edgar/data/1468516/0001193125102...

$244.8m in subscription revenue for q3 last year, but falling fast (as people figure out they're still signed up, I guess).


A large chunk of whom don't actually know they're still signed up, if I recall correctly.


I wonder if there'd be a business in finding out who's subscribed and for a small fee helping them get unsubscribed from AOL.


Be sure to incorporate where they can't sue you and get a domain name ICE can't seize.


Curious as to why this has been downvoted. Do you suppose AOL will sit by idly while you undermine part of its business model? What legal methods of obtaining the subscriber list do you suggest? Do you think a business helping people to unsubscribe from a $10/month or so service will be valuable enough to defend against a legal challenge from a major corporation, valid or otherwise? Am I missing something?


No, they don't. They make money mostly by ads.


Should've gotten a prenup!


> When AOL merged with Time-Warner

AFAIK, AOL went and bought Time Warner, the deal didn't work out though.


"In 2000, a new company called AOL Time Warner, with Steve Case as chairman, was created when AOL purchased Time Warner for US$164 billion. [...] The shareholders of AOL owned 55% of the new company while Time Warner shareholders owned only 45%, thus the smaller AOL bought out the far larger Time Warner."

http://en.wikipedia.org/wiki/Time_Warner#2000

So yes, AOL bought Time Warner, not the other way around.


It's amazing what kind of revenue you can make when you own some of the most popular websites on Earth. </sarcasm>


They're a totally different company nowadays. Hard to hate when they're doing so damn well for themselves. :)


What's the definition of doing well? Spending money to acquire others? IIRC their new blog/online strategy has yet to be profitable.


TechCrunch, Bebo, and MapQuest are all owned by AOL.

And MapQuest still has the greatest market share somehow...

edit: AOL sold Bebo in June


> And MapQuest still has the greatest market share somehow...

No. Google maps has the greatest market share. Mapquest is #2.

Disclaimer: I'm interning at MapQuest.


Google Maps has a larger market share then MapQuest by quite a bit: http://www.hitwise.com/us/datacenter/main/dashboard-10133.ht...


AOL really screwed up MapQuest. They had:

- the largest market share in consumer free web maps (probably as recent as 4 years ago)

- the holy grail for marketers. The brand reached "verbing" status. People used to say "MapQuest it"

- a health paid API biz. But sold that part of the biz to Microsoft's MapPoint (I was a customer of this and they basicly said I was SOOL when it happened)

It is clear they screwed up MQ but I'm more hopeful with AOl's recent moves. They know their strength lies in making content and getting eyeballs and the companies they grow/acquire reflects that.


    MapQuest still has the greatest market share
link? I've never heard this


Tim Armstrong is getting AOL to do all the deals that Bartz should be doing at Yahoo.


Immediately an article I saw in December comes to mind:

AOL Investigation: No Proof TSA Scanners Are Safe

http://www.aolnews.com/2010/12/20/aol-investigation-no-proof...

Back then my first thought was: Wait, AOL does investigations?

I think this is a win for both parties and for readers. With a sort-of 'proper' news site maybe AOL's own journalism can be taken more seriously, and conversely maybe they can make HuffPo more journalistic in the first place!


While some of the HuffPost I do find interesting and even occasionally well written, I'd still have to say your argument amounts to: if we take one steaming pile and combine it with another steaming pile it'll come out smelling like roses.


Send your comments and feedback to arianna1950@aol.com


Is HuffPo really worth 7-8 times what AOL paid for Weblogs, Inc. and TechCrunch?


In terms of unique visitors, HuffPo beats TechCrunch 10:1.


And in terms of demographics, I mean, my mom reads Huffington post. Ariana Huffington is well-known enough to have done the talk-show circuit at least once.

Tech crunch is a niche demographic (silicon valley gossip is only interesting to people inside that particular bubble). I'm honestly not sure what weblogs inc is.


Weblogs, Inc. was the company that created Engadget, AutoBlog, Joystiq, etc. That acquisition essentially became the backbone of the content-oriented company into which AOL is transforming.


Also to put it into "tech world" context, Weblogs, Inc. was started by Jason Calacanis.


Not to mention that your mom is far more valuable from an ad revenue perspective. Chances are you've never clicked on ads displayed on TechCrunch.


Thinking about it, my mom is actually extremely savvy.

One of the first people on Amazon (the free swag and shipping era), one of the first people using Google (got an email response from Sergei when she complained about an inappropriate search result), doesn't like Facebook, is into blogs, podcasts and web radio. So she probably doesn't click through the ads displayed on HuffPo unless it is something that she wants (in fact, I think she uses Adblock).

That said, she is fiercely loyal to companies that she sees as supporting her ideals. So if she does need something, and a product that has that functionality advertises on one of her media... she will get that product over another (perhaps better known or cheaper) product.

This actually contradicts the implication of my above post; that my mom reads it, therefore it must appeal to the masses. The truth is, my mom likes it, and she is an excellent market indicator.


I would have to disagree there. The TechCrunch audience is a relatively self-selecting group of technology and startup enthusiasts. This is valuable. There are companies that want to reach these people.

Huffington Post, I imagine, is mostly liberals of all genders, income, and level of education. I think there are far fewer companies that want to reach all of HuffPo's diverse readership.

Consider why popular, prestigious sites like washingtonpost.com have ads for Mesothelioma lawsuits and home mortgage refinancing.


Ariana Huffington was in an episode of Family Guy as a panelist on a fake episode of Bill Maher's show.

That either means she's jumped the shark or is a rising star.


Revenues:

Weblogs, Inc: $1,000,000.

TechCrunch: (guestimating) $12,000,000.

HuffPo: $65,000,000.


I'm not sure on the math, but the first thing that comes to mind is that they are a more general interest type of web property.

AOL needs content it can direct users too, my mom isn't interested in TechCrunch, but she might be interested in HuffPo's content.


As a non native English speaker, the first thing my head thought was AOL paying with banknotes.


How long would it take AOL to make $315 million + profit from HuffPost?



This after the About.me buy. I'm excited to see how this reinvention pans out.


AOL is very different from what a lot of us remember it as. The moves they are making will position it very well as a strong content provider. It's kind of nostalgic in a way in that AOL started out providing premium content in a very organized fashion for the web.


How is it that different? It still makes most of its money off dialup subscriptions. Considering how much crap content they pump out, it's amazing they don't make more from that.


1+1 = 11. Inspired idiocy. Or something.


I don't know if this a good thing or bad.

First AOL is a giant when it comes to news these days. Along with Fox, CNN and MSNBC. I guess this allows for another competitor to hit the market. But also allows for News to be under control again by a large corporation and that corporations views on how the world should be reported.

I would gladly see Huff Post move to Television and Maybe more investigative like Reuters.

Those area's would gladly and happily be invested in, if I owned a large New Corp.


I wonder if AOL will try to buy Gawker too.


Buy Gawker would definitely ensure that they are covered in most, if not all, blogging genres.

They also own Engadget, though, and I would love to see how that would comply with owning Gizmodo.


I suspect Gawker isn't interested in being bought.


How is Ariana going to justify not paying almost all contributors now?

Amazing that she built this on the backs of authors, most of whom got paid nothing. Am I alone in finding this exploitative?


I think it is not exploitative if the authors knew it beforehand and agreed to it. They've got exposure as a compensation.

What I find more exploitative is their working method - often, they took some hard news (which is quite expensive to produce, requiring real reporter to go somewhere), and then their blogger (siting at home in pajamas) took the best quotes and facts from that article, wrote some quick fluff around those quotes and hola!, we have content.

Yes, this is essentially what blogging is about, and if someone does this as an amateur to express his opinion, that's ok. But I feel it is a bit exploitative to make business out of work of journalists working for other media.


the worse part is seeing Huffington post valued at $330m, while the New York Times market cap is "only" 1.64B. The NYT company does investigations, produces photography and video, has foreign bureaus etc.

For me, this means there's more value rehashing content than producing original content


Was she forcing them to write articles for her? If they agreed to do it for free, then where is the exploitation?


I think a lot of authors and journalists voluntarily write for Huff Post to raise their profile... and I think it's great! If I were a journalist, if Huff Post or Talking Points Memo published articles that I authored, I'd be ecstatic, especially considering the economic situation a lot of journalists find themselves in these days.


This is the exact same argument that is used for people in-favor of 'SPEC' work. Which gets down voted to nothing on HackerNews, yet this and its parent are getting upvoted.

Interesting.


It's all about context:

If someone asks me for spec work I tell them no, if I ask someone to do spec work for them to raise my profile I'm hoping they don't tell me no.


Profile doesn't pay the rent.

http://www.penny-arcade.com/comic/2002/4/29/


I think the theory is that high profile is an investment that makes it easier to find rent money down the road.


Yes but the practice is there's always someone a year younger than you who thinks that too, and so he's working for free and hoping the same thing. Then a year later, another one...


True, but next year you shouldn't be working for free anymore. There are always going to be clients who care most about getting something cheap or free, and there are always going to be clients who care most about getting something good. Do a few deals for the cheaply oriented clients so you have something that will impress the quality oriented clients and then move up quickly, don't lollygag in the cheap valley very long.


A year just isn't that much experience in many fields. You'll be competing with people who are 90% as good as you but cost infinitely less (as in, nothing).


Just ask world-renowned David Prowse.


I know this is not what we're talking about, but you must be very careful using this line of argument. Would you apply it equally to prostitution?


Just wondering: where are all those hookers who perform their services for free?


Disregard the payment: his argument is that "They knew what they were getting into" doesn't make it moral. People can (and often do) enter into exploitative relationships knowingly, with open arms. Ever been by a lottery counter?

Exploitation is about power, not the money that's involved.


>Exploitation is about power, not the money that's involved.

Yes. I was also talking about the fact that sometimes circumstances force people into exploitative situations.

Heroin/crack addicts often face a choice between prostitution or death from withdrawal symptoms.

The obvious answer is to jump up the ladder and say "well they chose to start taking drugs;" it is often not as simple as that either unfortunately.


Chrome and Android make google lots of money, yet people that aren't google employees still commit to the projects. Google pays them nothing.

I don't find this exploitive, and I think this is very similar.


Licenses of open source projects warrant that the work can be used, modified and even forked by anyone. Similarity seems only superficial.


Chrome makes Google lots of money directly? I'm not so sure about that.

A post on the Huffington has advertisements alongside it making the company money. That alone makes it much more a grey area than contributing to an open source project.

It seems it is a trade off good writers are choosing to make and if there is more value in their writing a competitor will come along and steal the best writers.


Chrome makes Google money in the same way that articles make the Huffington post money.

The Huffington Post makes money on ads. Every user who uses Google Chrome is a user that isn't using another browser. This means Google makes more money on search ads because they aren't giving a cut to Mozilla, Apple, etc.


Now Thats a price which certainly deserves attention. This is the second acquisition after about.me from AOL. Lot to come i am sure, but anyways users would be benefited,




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