Salvaging something from the rubble of Patch

If you haven’t heard AOL chief executive Tim Armstrong’s nauseating conference call with Patch employees — complete with the mid-call firing of Patch creative director Abel Lenz, who had the audacity to take the great man’s photo — then by all means avail yourself of the opportunity. (Via Jim Romenesko, who has been diligently tracking the story of Patch’s woes.)

The end seems to be near for Patch, AOL’s network of hyperlocal websites, which never had a business model that made sense. Given that Patch is failing in precisely the way it was predicted to fail (see, for instance, this archive of Patch articles at Business Insider), Friday’s conference call was a time for Armstrong to show some decency and humility — not to strut around like a ’roided-up rooster.

The cuts Armstrong announced were devastating — over the next week, hundreds of employees will be laid off and around 400 Patch sites will be closed or somehow partnered with other sites, according to Darrell Etherington of TechCrunch. That’s nearly half of Patch’s 900 or so sites.

At this point, the most merciful thing Armstrong could do is shut down the whole thing and help the hard-working local editors become owner-operators. I suspect many of these sites could be viable if the corporate bureaucracy AOL has laid on top of them were removed.

Howard Owens, publisher of The Batavian, an independent online news site in western New York, makes a compelling case at NetNewsCheck that the economies of scale AOL promised not only haven’t materialized, but that putting together a vast network of hyperlocal site actually costs more than launching independents. The problems, he writes, include enormous tech investments and highly paid supervisors at corporate headquarters:

Armstrong chased scale: IT infrastructure scales, server farms scale, message systems scale, cloud computing scales. But local news does not scale.

Widget makers understand scale. The most expensive widget is the first one. Each new widget is comparatively pennies on the dollar.

In the news business, the first story costs just as much as the third or the 30th or the last. Online, it’s possible to get more production out of a single reporter, but time is not elastic. At the end of the day comes the end of the day.

What Armstrong should have done, Owens adds, is fund independent start-ups — an idea that AOL could still pursue, writes City University of New York journalism professor Jeff Jarvis at his blog, Buzz Machine. Jarvis  offers this advice to Armstrong:

Set up independent entrepreneurs — your employees, my entrepreneurial graduates, unemployed newspaper folks — to take over the sites. Offer them the benefit of continued network ad sales — that’s enlightened self-interest for Patch and Aol. Offer them training. Offer them technology. And even offer them some startup capital.

You could end up better off than you ever were by being a member of an ecosystem instead of trying to own it.

Whether AOL steps or not, at least one other funding source for converting Patches into independent news sites has emerged. Over the weekend Debbie Galant, co-founder of the pioneering hyperlocal site Baristanet and now the director of the New Jersey News Commons at Montclair State University, announced on Twitter that her program was ready to offer grants and training to New Jersey Patch employees who lose their jobs. (There are 89 Patch sites in New Jersey, according to Patch’s online listings.)

As I found in “The Wired City,” hyperlocal online news is alive and well, with a variety of nonprofit and for-profit sites thriving. But as Owens says, local doesn’t scale. Independence and grassroots control are keys. Chain ownership was deadly to the newspaper business, and it was never a good idea for online news, either.

If the demise of Patch can lead to something better, then let’s get started.

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AOL would be profitable without Patch

Talk about burying the lede. The New York Times today reports on the latest regarding AOL’s long, slow slide into oblivion. Near the end is this:

Other ideas include closing Patch, AOL’s local news initiative that has reporters in 850 towns. Eliminating the money-losing service would free $160 million and lift AOL into profitability.

AOL chief executive Tim Armstrong insists he’s not going to abandon his strategy of transforming the service into a profitable content-provider. But the Huffington Post side of things brings in so many more visitors, with fewer employees, that you really have to wonder how long he and his shareholders can resist the urge to close Patch.

Not to repeat myself (OK, to repeat myself), but I don’t wish Patch ill. Given that it is hiring young and some not-so-young journalists, I’d like to see it find a profitable place in the local-news media ecosystem. But it’s never been clear how Patch can make money. Business Insider has been especially withering, but its negative outlook is hardly unique.

Will HuffPo prove to be AOL’s MySpace?

Click for full cartoon at Politico

Does AOL have a MySpace problem?

You may recall that MySpace was a social-media phenomenon when Rupert Murdoch bought it back in 2005 for $580 million. It wasn’t long, though, before Facebook zoomed past it, rendering Murdoch’s new toy all but worthless. The site is now for sale. A large part of it may have been that Facebook was simply better technologically. But surely some of MySpace’s lost cachét was due to a perception among users that anything owned by Murdoch wasn’t cool anymore.

Which brings us to AOL and the Huffington Post. When AOL chief executive Tim Armstrong forked over $315 million for HuffPo, he no doubt thought he was acquiring, among other things, an army of unpaid bloggers. But not so fast.

AdBusters reports that there’s a boycott under way:

Socialite Arianna Huffington built a blog-empire on the backs of thousands of citizen journalists. She exploited our idealism and let us labor under the illusion that the Huffington Post was different, independent and leftist. Now she’s cashed in and three thousand indie bloggers find themselves working for a megacorp.

Follow it on Twitter at #huffpuff.

Two old Boston Phoenix friends have weighed in as well.

Al Giordano writes that he cross-posted 26 of his stories on HuffPo between 2007 and 2009. He stopped, he says, because he “grew uncomfortable with how that website was transparently becoming more and more sensationalist, cult-of-personality generated.” Now he’s removed his posts, replacing them with this:

(As author and sole owner of the words in this story, I did not write them for AOL, and do not wish to have any association with it imposed upon me. The original text may still be found at http://narconews.com/thefield – Al Giordano, February 7, 2011)

On Facebook, Barry Crimmins adds:

What Ariana Huffington sold for $315 mil was a lot of bloggers who work for free and all the eyeballs they attract to HuffPo. Feeling exploited? Stop working for free for HuffPo and stop providing HuffPo with the value of your visits. Believe me, there will be alternatives. True alternatives.

Dan Gillmor says that, at the very least, Huffington ought to start paying people.

It’s hard to know to what extent HuffPo’s unpaid bloggers fit into Armstrong’s plans. At the very least, though, it’s beginning to look like he did not get what he paid for. He could ask old Rupe about that.

A great day for the Huffington Post’s investors

Arianna Huffington

My theory as to why Arianna Huffington would sell her successful website to a troubled company like AOL is that her investors wanted to cash in and weren’t particularly interested about the future of the Huffington Post.

Writing for the Guardian, Graeme Wearden says the beneficiaries of Huffington’s $315 million deal will be three venture-capital firms and a few private investors. Wearden adds that “some shareholders must be sitting on very large returns, as the company has received just $37m of funding over the last six years.”

HuffPo’s business model has three prongs: paid, original journalism by the likes of Howard Fineman and Sam Stein; extreme aggregation that summarizes off-site content so thoroughly there’s really not much reason to click through; and free content from numerous bloggers.

I’m guessing that the latter two prongs will be endangered by the acquisition, as media companies take a new look at HuffPo’s aggregation practices and bloggers who were willing to write for free for a site that they saw as somehow theirs balk at doing it for a corporation like AOL.

Check out this piece by Mayhill Fowler, HuffPo’s star of the 2008 presidential campaign, explaining last September why she would no longer write for free. Although I still think Samuel Johnson put it best.

Perhaps skeptics like me will be proven wrong, but I don’t see what AOL brings to the table. Yes, it has acquired content sites like TechCrunch and Engadget, and its hyperlocal Patch sites are springing up everywhere. But I don’t understand how adding HuffPo creates the “synergies” AOL chief executive Tim Armstrong is talking about.

Indeed, “synergy” has become a punchline from years past, with the ill-fated merger of AOL and Time Warner being a prime example.

Ken Auletta recently wrote a terrific story on AOL for the New Yorker, which, unfortunately, is not freely available online. Auletta portrayed AOL as a company that may be on the brink of financial collapse, and Armstrong as a smart, energetic leader whose content-heavy strategy may nevertheless prove to be flawed and outdated.

By far my favorite part of the story was the revelation that AOL still gets 80 percent of its profits from subscribers, and that perhaps 75 percent of them are older people who don’t realize they don’t need the $25-per-month service now that they have broadband. Not exactly a recipe for success.

With few exceptions, media sensations like the Huffington Post have their moments and then fade away. Arianna may prove she can defy gravity. But she has just made her job harder, not easier.