The Controversial Huffington Post-AOL Merger: 7 Questions That Matter
News that the Huffington Post had been bought by AOL, a company with more than$2.5 billion in revenue, for $315 million, almost all in cash, was quite a shock -- to the chattering classes, to millions of HuffPo's readers and to commenters. It was also a shock to the site's thousands of bloggers, who have been providing free content for the privilege of being part of the public discourse and promoting their efforts at a place they knew to be independent and welcoming of strong opinions.
Initially, the sale was understood in the media as an amazing accomplishment for Arianna Huffington and her partner Ken Lehrer, who together started the Huffington Post six years ago with a modest investment, and saw it grow via a potent combination of personality branding, aggressive content, and the mastering of the social networking and search engine optimization tools that have come to rule the web.
The sense was/is that Huffington is quite the marvel; Slate media critic Jack Shafer called her a "first-rate entrepreneur, incubator of talent and media visionary." But then a second reaction set in: outrage that Huffington had partly profited from the unpaid labor of bloggers, along with concerns that the new partnership would be very bad for journalism and hence a vibrant democracy.
Los Angeles Times writer Tim Rutten led the second wave of critics by saying that "to grasp the HuffPo business model, you need to picture a galley rowed by slaves and commanded by pirates." He continued,"The fact is that AOL and the Huffington Post simply recapitulate in the new media many of the worst abuses of the old economy's industrial capitalism — the sweatshop, the speedup and piecework; huge profits for the owners; desperation, drudgery and exploitation for the workers."
Harsh, yes, and not altogether fair. Nobody coerced the bloggers, and the Huffington Post has a robust staff of well-established quality journalists and editors.
But the fact that the Huffington Post has come to dwarf most of the giants of traditional journalism, with a product that often has little to do with journalism, is a tough pill to swallow for the shrinking journalism profession. The deeply reported, long-form investigative piece is having a hard time getting the light of day amidst the overwhelming plethora of cheap content, with headlines designed to attract the mechanical mind of the search engine.
So the sale of HuffPo to AOL has set off a giant debate, not only about the future of journalism and the Internet, but the consequences of huge financial takeaways and the impact of the deal on politics and change. One of the major themes among critics is the question, asked by Washington Post's Dana Milbank: "Did Arianna Huffington just sell out her fellow progressives?"
He adds, "In the literal sense, she undoubtedly has...a large pile of cash going to Huffington herself means this powerful liberal voice is formally joining the 'corporate media' its writers have long disparaged."
And also sold out "in the ideological sense and committed the Huffington Post to joining the mainstream media -- the evil 'MSM' of 'HuffPo' blogger ire. Announcing the deal, she and her new boss went out of their way to say that the new Huffington Post would emphasize things other than the liberal politics on which the brand was built."
Here's what AOL Chairman Tim Armstrong had to say about that: "Arianna has the same interest we do, which is serving consumers' needs and going beyond the just straight political needs of people."
Of course, this may be overstated, because one of the roles of the Huffington Post is to bring quality political journalism to its giant audience.
All these issues raise big questions. Is this deal a loss for progressive, independent journalism, or even journalism itself? What does it mean to be beyond right and left? And how will the odd couple marriage of the long-suffering AOL brand and the hot media darling HuffPo work out?
I try to tackle some of these questions as the debate about HuffPo/AOL will no doubt rage during the days and weeks ahead. And it is one of those subjects where just about everyone will have an opinion. Join the fray!
1. Who are the winners and losers in the purchase of the Huffington Post by AOL?
Clearly the biggest winners are Arianna Huffington and her partner, former AOL executive Ken Lehrer, who parlayed their modest investment, along with some significant venture capital along the way, into a $315 million payoff.
But there's more than all the dough. As Jack Shafer points out at Slate,"AOL handed Huffington the keys to its entire editorial kingdom—national, local, financial, as well as MapQuest and Moviefone—and christened her president and editor of AOL's Huffington Post Media Group."
This means that not only does Arianna have many new millions in her purse, but her audience and influence has increased manyfold, catapulting her onto a whole other level of American media superstar status.
Also, until proven otherwise, Tim Armstrong has to be considered a big winner. AOL has been floundering, and has a bad odor from some of its failed efforts to rejuvenate its offerings and brand. And while AOL may have some quality niche sites, its ad revenue has headed south, dropping 27 percent in the third quarter of 2010, a bad sign.
So Armstrong, needing to create some excitement for AOL, lassoed both Huffington and her partner Ken Lehrer. And Armstrong may have solved another of his problems -- the difficulty of marketing and getting respect for the range of AOL partner sites and properties. Now Huffington, an indefatigable marketer and creative promoter with vast media connections will be personally invested in the whole panoply of AOL sites. On top of that, Huffington says she "wants AOL to be her last act." So there is no sense she is going to skip out. Investors take notice. And this women does not know failure. It is not in her vocabulary. So again, a win for Armstrong.
As for losers. Well, there are a lot of opinions about that. Progressive politics and journalism potentially make the list, while the AOL staffers losing their jobs definitely do.
Rutten of the LA Times says, "It is already clear that the merger will push journalists more deeply into the tragically expanding low-wage sector of our increasingly brutal economy."
There is plenty of handwringing over HuffPo politics shifting to the center, but as I discuss in question number three, that has already been the case for quite some time. Yes, the Huffington Post projected a vibrant brand and media relevancy that may be tarnished or undermined by AOL. But never underestimate Arianna Huffington, who may be the hardest-working person in politics, with one of the most creative minds. I have a hard time imagining she will suddenly drop her concerns -- after all, her latest book is called Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream. Until there is ample evidence to the contrary, I would put my money on Huffington continuing to play a positive political role.
2. Does the huge payday for HuffPo mean that progressive content has more influence than some think?
FireDogLake's Jane Hamsher thinks so. She told Politico: “The AOL-HuffPost deal demonstrates how overwhelmingly popular the progressive political perspective is online.”
She continued, “Just as Twitter and Facebook are connecting vast numbers of people who oppose an oppressive Egyptian regime, likewise the Huffington Post has informed and connected a technologically sophisticated audience who support progressive change in the United States. Notably, there is no Tea Party counterpart to the Huffington Post. The numbers don’t lie.”
Karl Frisch, the progressive strategist, suggested that, just as Drudge had inspired the Huffington Post, the Huffington Post had inspired sites with more conservative viewpoints. “With her new perch, Arianna will be able to broaden her reach,” Frisch said. "I think the progressives have a lot to be excited about here, but I think people who follow Beltway journalism have a lot to be excited about too.”
On the other hand, Arianna Huffington told Politico that only 15 percent of their traffic goes to the political content on the site. While not surprising, this information might be somewhat sad news to those 6,000 bloggers who thought their audience was super-sized. (AlterNet averages 2.5 million unique visitors a month. Fifteen percent, of say, 20 million HufPo uniques, is only three million for politics. So any bloggers who are feeling sold out, feel free to head to AlterNet if you want an alternative.)
3. Will the Huffington Post change its political stripes? Or perhaps the better question is, hasn't HuffPo already changed?
The answer to the second question seems to be, absolutely. Huffington explains that a shift has long been underway. Politico writes: "Some on the left worry that the sale to AOL could mean an end to HuffPo in its current incarnation — away from its roots in the progressive community, which were its first bloggers, commenters and readers, and toward a more middle-of-the-road posture, to make it more broadly appealing. But Huffington insists that’s no change at all, and that the transition away from progressive politics has been underway for some time."
The addition of a swarm of mainstream journalists and editors to the Huffington Post (Tom Edsall, Washington Post; Howard Fineman, Newsweek, Timothy L. O'Brien, NY Times editor, and Peter Goodman, NY Times economics correspondent) seemed designed to add mainstream journalistic gravitas to their quality young writers (Sam Stein, Nico Pitney, Ryan Grimm, along with Arianna intimate and insider who makes much of everything tick, Roy Sekoff).
The addition of mainstream journalists certainly did not signal that Huff Po was working to maintain its progressive cred. Rather, they seemed to be more or less getting more mainstream, and at the same time, more journalistic. But then HuffPo always was a giant projection screen, being many things to many different people. In fact, that is part of Arianna Huffington's brilliance. To a large degree, the value of the HuffPo brand lies in Arianna's ability to create a very large tent among media, intellectuals, progressives, moderates, insiders, outsiders, and even conservatives, all pleased to be playing on Arianna's stage.
Celebs love HuffPo, political leaders use it as a soapbox, and thousands of more regular folk--writers, bloggers, advocates -- get a potentially robust platform and a thrill, often proudly telling their friends they're "blogging on HuffPo" (for free, of course). But the genius of the model is that thousands of those proud bloggers and their reader fans and HuffPo commenters use Twitter and Facebook to get their friends to read the blogs and push the links to their posts, and to other sites and blogs. It all adds up to a lot of traffic and is a brilliant trick that only Arianna Huffington could pull off.
Perhaps, as HuffPo was building a more mainstream editorial team, they saw not only an IPO down the line, but the Daily Beast as their main competition, where another batch of newspaper and magazine refugees now work (lead by Howard Kurtz, the former media columnist at the Washington Post). And of course, we should get ready for some media-generated drama between Arianna and Tina Brown, who now has Newsweek magazine in her expanded portfolio, along with deeper pockets, thanks to the addition of Sidney Harman as the co-owner along with Barry Diller.
4. Should HuffPo Bloggers continue to write for free after the big payout and given AOL's deeper pockets?
That would be a decision of personal conscience, but clearly the whole deal is upsetting to some of the writers, and to a lot of the commenters.
One writer wrote on Facebook: "Yeah, speaking as a professional journalist and writer, it's high time to call out Ms. Huffington for getting rich while refusing to pay the writers who have produced all that value she's now selling off--even though she herself is a writer."
A friend jokingly posted to my Facebook page, "Hmm, 6,000 bloggers, $315 million dollars. That works out to 315m / 6k = $52,500 -- a nice living wage for all those bloggers."
Another HuffPo blogger wrote, "Does Arianna know what side of the toast has the butter or what?!? Would be interesting for someone to hold a forum on whether left bloggers should keep giving HuffPo free content."
My guess is that if HuffPo loses bloggers, it would probably be those who are most progressive, and as some have pointed out, that likely doesn't matter so much to the new HuffPo, which, while wanting diversity, is "beyond left and right." And maybe it would be a mistake for progressives to bail, since a lot of the ideas and points of view should be available to as wide an audience as possible. That is in part why the Huffington Post is so successful; because of the perception, accurate or not, that HuffPo bloggers are a special breed reaching the masses. Most bloggers are looking for a big audience; often they're trying to promote their own brand, career, book, leverage other media appearances...you name it. Lots of people put the description "Huffington Post blogger" next to their names -- even though there are 6,000 of them, not exactly a small circle. So count on the great majority of HuffPo bloggers continuing to post.
On the other hand, HuffPo commenters may be a different story. They appear to be more hostile, since they primarily care about interacting with each other, although probably some of the needs for exposure that bloggers have also apply.
The Daily Beast, a competitor,offers, "The Huffington Post has earned a reputation for involved users, who leave comments by the dozen, the hundred, or the thousand on even the most arcane stories. Little surprise then that Arianna Huffington’s announcement Monday ... drew nearly 7,000 comments within the first 24 hours."
So how did these users feel about the deal? Pretty lousy, it turns out. The Daily Beast took the temperature of The Huffington Post community by wading through those comments, and randomly selecting 500 that expressed a clear opinion for or against the sale, taking care to avoid counting repeat commenters and also pulling data from all times of the day. From this large sample, a whopping 81 percent (405) opposed the acquisition in terms that ranged from confused to pessimistic to, most frequently, downright livid. Only 19 percent (95) were optimistic, though many of those were far closer to neutral.
“We made HuffPost and we are being abandoned,” one aggrieved reader wrote. “They will aim for the center. That’s where the big money is.” Another added: “Corporate greed and intelligent analysis don’t merge.” Others couldn’t even bear to read the news: “I have no interest reading about yet another monopoly creation and the slow erosion of diversity in terms of news sources.”
5. Will Arianna's reframing of American public discourse as beyond left and right result in a new way of doing politics?
Let's start with what Huffington told Politico: “We don’t see ourselves as left ... And I think it’s one area where news consumers are ahead of the media, because they know that continuing to see everything that’s happening as a right-left issue is missing what’s happening, and is also making it much harder for us to be properly informed.”
I happen to agree with her on this point. The tendency of the corporate media and for that matter progressives, to automatically categorize everything as left and right, is actually quite a disservice to the left. Why? Because progressive ideas, when polled on their own, are often very popular with large segments of the population. But the terms "left" and "liberal" are not popular at all. For years, they've been mindlessly trashed by the right and much of the media, who've helped to create a certain toxicity around those terms. Large majorities of Americans do not call themselves liberal or left. So framing ideas and people as left tends to tarnish good ideas and the progressive brand, keeping the audience for them smaller than it should be.
However, as soon as you say there is a "third way," beyond left and right, it often just means more conservative. That said, I'd much rather have Arianna leading a third way in politics than the super-centrists like the former DLC, the conservative Blue Dogs and think-tanks like The Thirdway, who are overly corporate friendly and tend to buy into ideas like billionaire Pete Peterson's personal obsession to crush social security.
6. What does the purchase of HuffPo by AOL say about the future of journalism?
The answer to the question about journalism's future is: it doesn't look so good. And media critics would tell you the Huffington Post is probably the most obvious example of why people fear that journalistic principles are heading south. But maybe that is the wrong question. Because while there is certainly some good journalism on HuffPo, it is not why it was worth $315 million. Its worth is much more based on how HuffPo grew and embraced the online media future using all the social networking and SEO tricks available and created some of their own, while redefining journalism as lower-grade "content."
As Slate's Shafer observes, "The journalistic limitations of the Huffington Post actually gave Huffington an advantage over other sites—Slate included—that hewed to old-media standards. Old-media types don't feel right about rewriting the copy of their competitors and calling it a story. Huffington Post glories in carving the meat out of a competitor's story, throwing a search-engine optimized (SEO) headline on it, and posting it. Arianna even claims to believe that she's doing the originator a favor by sending traffic back to it via a crediting link. "
7. Should we be in fear of Yahoo, or even Rupert Murdoch, eventually owning AOL?
This is a serious question. No one thought Murdoch would get the Wall Street Journal, and we know what happened there. News Corp has fared badly on the web, making their bet on the carcass of MySpace as it was being supplanted by Facebook, which is worth about $50 billion. Google is rolling with YouTube, but where does the Murdoch empire make its online dent? True, they made a sweet little deal with Steve Jobs to kick off the Daily, a web publication for Apple's iPad, but that is very small potatoes compared to the traffic, eyeballs and revenue potential wrapped up in the AOL-Huffington Post deal. After all, AOL is a publicly traded company, and could be vulnerable to bidding its stock price for a takeover. AOL-Time Warner stockholders got one AOL share for every 11 shares they held in Time Warner stock, when that merger was dissolved.
The biggest owners of shares in AOL are investment holding companies, like Capital Research Global Investors, Dodge & Cox, and BlackRock Inc.
As for the AOL board, it is not dominated, as some corporate boards are, by other major corporate honchos in what are often interlocking relationships. Included on the AOL board are respected journalistic figures like former PBS president Pat Mitchell, now head of the Paley Center for Media, and Susan M. Lyne, who was editor of Premiere magazine and Martha Stewart Living, and worked for Disney.
Colin Powell's son Michael is also on the board, following a tumultuous stint as Chair of the FCC under Bush, and also a time as an adviser to Dick Cheney. The board also includes Fredric G. Reynolds, retired executive vice-president and CFO, CBS Corporation, and the visionary venture investor William R. Hambrecht, founder, chairman and CEO, WR Hambrecht + Co.
Clearly this seems like a sensible, reasonably diverse board, not one stacked with heavy duty corporate powerhouses, and a board that would likely be very supportive of Armstrong (and perhaps even more supportive of Arianna Huffington, but that is for further down the road). Armstrong also owns 1 percent of the shares of common AOL stock.