Thursday, January 16, 2014

AOL Goes to Great Lengths to Save Patch

In the current climate of dying newspapers and shrinking subscription bases, local reporting seems to be a lost cause. One of the only large companies that has been seriously fighting for traditional local reporting is AOL, believe it or not. Their website Patch, founded in 2007, is a network of over 900 community focused websites.

Patch was the brainchild of Tim Armstrong, a former Google CEO and current CEO of AOL. It was inspired when he noticed that there was no online sources of information about events happening in his hometown. It was acquired by AOL just after Armstrong became CEO and was meant to bring AOL into the modern age and away from its roots of scamming elderly people out of their retirement.

Unfortunately, the experiment seems to have been unsuccessful for AOL. According to this article from Reuters AOL has surrendered control of Patch to a joint venture with Hale Global a firm that, according to the article, specializes in saving online media companies. This is after Patch was forced to lay off about 50 percent of their employees last summer to meet the financial expectations of AOL.

Looking forward, the future of Patch is uncertain. The new joint venture has not announced how it plans to right the heavily listing ship that is Patch, but rest assured how they deal with this will speak volumes about the future of local reporting and community beats.

1 comment:

  1. A few things to note about this. First, Patch was not started by AOL. It was entrepreneurial, starting with just a few towns and then spreading out. The major growth came after AOL bought it and threw money at it to expand. This may have lead to its current predicament. Instead of growing organically--that is, from within--it was sort of force fed AOL capital, because as a big company AOL needed Patch to be big. So when the revenue did not align with the overhead, AOL had to cut back.

    I have no inside information, but it may well be that Patch can survive if run at a modest size, where costs equals today's revenue--rather than the projected revenue AOL hoped to generate with its get-big-fast strategy.


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