Internet company AOL Inc. is buying news hub Huffington Post in a $315 million deal that represents a bold bet on the future of online news.
AOL, once the king of dial-up Internet access known for its ubiquitous CDs and "You've got mail" greeting in its inboxes, is in the midst of a turnaround effort as it tries to find ways to boost online ad sales to offset declines in the access business. The acquisition announced early Monday is among the most aggressive strategic moves engineered by AOL CEO Tim Armstrong in an effort to reshape a fallen Internet icon.
Perhaps just as important as picking up a news site that ranks as one of the top 10 current events and global news sites, AOL will be adding Huffington Post co-founder and media star Arianna Huffington to its management team.
The thing I personally find interesting here is that I'm sure this'll effect HuffPo's perspective on any news regarding AOL or Time Warner, in general. Which is really interesting, since they're the ones predicting the doom of civilization over the NBC/Comcast merger.
Congrats to the HuffPo for going a very long way in a five-year period.
(edited by It's False on 7.2.11 1153)
"Going up the stairs and going down the stairs and going up the stairs and going down the stairs! And going up the sideways stairs!"
Originally posted by Dan Lyons at The Daily BeastThe big problem that everyone in online media faces is that advertising rates keep falling. Advertisers simply are not willing to pay as much for online ads as they will for ads on TV or in print publications.
One response to that has been to say that if each page is worth less, then we must have more pages. Thus we now have “content farms” like Demand Media which flood the Web with low-cost, low-quality content that is basically spam. But this drives advertising rates down even further.
Last summer when I did my article about Huffington Post for Newsweek, I estimated that they had about 25 million monthly readers and would generate about $30 million in revenues in 2010. That meant they were getting a mere $1 per reader per year!
Compare that to the world of cable TV or print newspapers and magazines which collect hundreds of dollars each year from each subscriber, and then generate hundreds of millions in ad revenue on top of that—and you see the difficulty of the business that AOL and Huffington Post and all the rest of us are in.
But here lies the bright spot in the HuffPo acquisition, and the probable reason for it. If the problem is that we have too many organizations chasing after the same ad dollars, why not roll everyone up and give advertisers fewer choices? Then we can bump the ad rates up. It worked in broadcast TV, when we had three big networks and they operated an oligopoly.
“The age of the Internet content roll-up has begun, all in a desperate effort to pump up CPMs [i.e., advertising rates] and let Internet content reach at least a shadow of the profitability of traditional content,” says Michael Wolff, editorial director of Adweek Media.
I hate content farms. I am certain that they are the main reason we can't get any decent attention from Google because I will never get our "SEO" in a state where we can compete there. I would love to get all sorts of visitors, not so they'll click on our ads, but so that they'll register to NOT see our ads, and just maybe add to the discussion as well. I've made no secret that our "ad revenue" is either just enough to keep us breaking even or slightly behind and Aaron and I seem to switch off every couple of years when it comes to paying the server bill (it's him, currently) but we've never been particularly interested in using this site as a source of income...despite what you may occasionally hear coming out of The W home offices in Portland, we're both way too lazy to put the time in to make The W another TechCrunch, or Deadspin, or PopEater, or....what's a popular message board? Are those still around in the 2011 Internet?
There was a point in here, but I seem to have lost it. Oh, right - I was bemoaning the fact that people are too stupid to NOT deliver enough incremental income to parked domains, content farms, sites which are nothing but misspellings of "real" sites, &c. to keep it profitable, so for ME, ad rates can't fall far enough and fast enough to make these kinds of tactics financially unfeasible so that they'd just go away, already, and leave us with an Internet free of that kind of pollution so we could all go engage in our idiot right vs. idiot left debates on (insert political blog name here).
I think what I'm getting at is one of two things will happen - AOL will slowly choke off all these acquisitions until they are irrelevant (most likely scenario), leaving their audiences to look elsewhere OR they'll succeed wildly as "high quality" content and somehow render the "low quality" stuff irrelevant and obsolete AND raise other "high quality" places up above in the process. (Here is where I naively think we keep The W in the "high quality" arena.) Win/win for The W? I'm still ready to sell out for $3.15M - that's a mere 1% of HuffPo's price! A BARGAIN!
Ultimately, ALL of this means nothing'll change here, of course.
I was listening to the coverage on NPR and the general thought is that it will help AOL go from cold monster to at least have some humanity. Now what that humanity will be is going to be in eye of the politics of that viewer. However, after how bad the Time Warner/AOL deal went, if I were Ms. Huffington I would call one, Ted Turner to get some advice on dealing with them. I am not a fan of big corporations taking over "news" organizations. I also agree NBC/Comcast is going to be a disaster.
- AOL will slowly choke off all these acquisitions until they are irrelevant (most likely scenario), leaving their audiences to look elsewhere OR they'll succeed wildly as "high quality" content and somehow render the "low quality" stuff irrelevant and obsolete AND raise other "high quality" places up above in the process.
The recent bit of fanhouse.com being gutted and basically sold as a new brand for Sporting News points to choice A, but the Business Insider article from earlier last week (and linked inside your link) seems to point to a third choice - if you can't beat the low quality sites, try to be more like them.
- 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."
And so is born another Bleacher Report gallery. (Which is a differently owned site, I know.)
That's a good recipe for some bad content. Users need to stop supporting these sites, but it's going to take Google rejiggering their search algorithm to prioritize quality for any real change to happen.
The most surprising thing to me is that The Huffington Post is really worth anything to begin with. I knew people were collecting paychecks and the place was making enough money to get by, but most of their stories don't seem all that original, but the order that they put things in is unique.
The site always felt like a supplement to what is going on with a slant that I feel a little more in tune with, but it's never really a place I go to get a full story. I'll usually skim through it and if there is a topic of interest I'll take another look somewhere else.
As for ads, I will almost never click them because I have no idea what is being attached to my computer, not that I know how to defend it anyways.