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Tuesday, February 8, 2011

AOL + Huffington Post = disaster?

Arianna Huffington is selling Huffington Post to AOL. Photograph: AP/Mark Lennihan

by Emily Bell, guardian.co.uk
If a company is to enjoy success in the world of media in general, and content creation in particular, then two ingredients have to be present. One is a strong culture and the other is scale. It explains the success of any number of brands – News Corporation, the Daily Mail, the BBC, the Financial Times – in the recent difficult past.

For companies that have scale but lack a culture, or vice versa, the obvious yet so often disastrous solution is to merge. Nothing creates greater comedic value or destroys actual monetary value quicker than trying to acquire a culture in pursuit of scale and getting the whole thing wrong.

This is why AOL's purchase of the Huffington Post is causing such intense media interest. It is not the $315m price tag, or the query over whether content businesses have a future, it is really the thought of Arianna Huffington, the Madonna of new media, striding into the AOL boardroom, where many unfairly imagine there are still shovels in the corner. AOL is not only a competitor for the world's uncoolest media brand, but is also to corporate mergers what George W Bush is to US foreign policy.

Tim Armstrong, who joined AOL as chief executive from Google in 2009, wants both the culture and the growth. He has to try to destroy the memory of AOL's two most infamous mergers – first with Time Warner in 2000 and then with social networking platform Bebo in 2008. If there were a competition for worst media mergers in history, these could happily expect to place one and two without any serious competition. Armstrong has been on a content-expanding rampage of late, first investing tens of millions of dollars in Patch.com, a hyperlocal network of low-cost sites, which now has 800 centres, and then a foray into buying high-profile blogs including TechCrunch last September and now the Huffington Post.

A terrifying leaked document entitled The AOL Way pinged round the US media business last week containing the company's "secret sauce" for success in creating journalism for the internet. Quintessentially that seemed to be increasing the number of pieces writers produced, for less money. "Scaled content production" is the rather sobering term for this. It does not look like a set of numbers that Arianna Huffington would feel very at home delivering, although the strategy of Huffington Post, which is all Big Politics on the left hand side of the site and Kim Kardashian on the right, is much closer to AOL's own strategy than one might immediately think. Indeed, Huffington achieved a miracle for web publishing in 2005, by getting high-profile contributors to write for nothing, through a mixture of charm and brand association. One can imagine now, with the money for their labours residing with AOL, that bargain will abruptly come to an end.

Part of Huffington Post's success was its vibrance and its position outside the establishment. It has now not only joined an establishment, but joined one where most people feel about as close to the brand as they do to Walmart.

One has to wonder in this context what is in it for Arianna Huffington (apart of course from a substantial part of the $300m)? What Huffington Post delivered her was a perfect platform for high-profile politicking and talking about her interests, which are wide ranging. The daily grind of editorial wrangling within a large corporate entity is a million miles from the start-up loft of Huffington Post's early days and the next phase of development carries none of the fun and much more of the risk than the early days.

A rather troubling aspect of the whole episode has been the baffling message, repeated by Huffington in an editorial on the site today, that this merger is "1 + 1 = 11". One hopes that this does not mean, for the sake of the HuffPo staff and the AOL shareholders, that the deal is quite literally nonsense.