By now you may well have heard that AOL has acquired Huffington Post for $315m. Looking at HuffPo and now AOL there are three elements which show how large news businesses might look in the digital age:
- HuffPo has achieved revenue scale (forecast $60m this year, up from $31m in 2010)
- They have combined a low cost journalism model with a reputation for quality – a small core staff complimented by over 3,000 guest bloggers including Barak Obama and Madonna (I don’t have information on their profitability, but the capital raised to date is only $20m)
- AOL now has a portfolio of sites – HuffPo, Techcrunch, Engadget etc. – which maybe a model for real scale in this industry
Regular readers will know that I’m bearish on the prospects for traditional news businesses like News International. Print media circulations are falling fast, their classifieds revenues have collapsed and they are mostly failing (and will continue to fail) in their attempts to charge on the web. I have often cited Huffington Post and Techcrunch as models for the future, with their lower cost approach to journalism, but the question I have struggled with a bit is: how does this scale, and how will quality journalism get funded?
HuffPo and the AOL strategy of combining multiple niche sites in one house might provide part of the answer. Of particular interest is their strategy of taking posts from a large number of guest authors (a strategy they share with Techcrunch) which allows them to get quality contributions on a wide range of topics from individuals with strong personal brands, who in a symbiotic relationship with HuffPo both contribute to the site and get their status enhanced by the association. Along with the broad fact coverage coming from the resurgence of news agencies like Thomson-Reuters and the AP this might be the way we get quality coverage of war zones (and similar) in the digital age.
There is a lot to prove before we can say that this is definitely the answer, not least profitability and whether AOL can successfully keep the individual brands alive and wring out some synergies on the back end, but I have a feeling that we will see others copying these models.