— Capital New York’s Tom McGeveran compares The Huffington Post’s content farm to AOL’s, noting how the “AOL Way” document jibes with the HuffPo m.o., and notes the peril for this business model:
All of this is very necessary if you’re getting the kind of low-end ad rates they get at giant places like Huffington Post and AOL.com. Instead of chasing advertisers for premium ad placements, which would require content they see a perfect narrow deep target market for, you’re chasing audience, to bring in the kinds of numbers that add up when you’re getting $1.50 for every thousand ads you sell. There’s almost no upper limit to how much crap you can sell to a wide audience, in theory. Except for one thing: Of course there is. And when that happens you have to look inward for more revenue opportunities that do not depend on giant, faceless audiences. But by the time you’ve made a product that works for cheap advertisers and ad networks, with comments from total bozos messing up your pages, you’ve lost the brand you need to have to find those kinds of revenue. You can’t ask your advertisers for more money.
This is something Gawker Media has always understood. Arianna has made more money in the short term, but the arts practiced at places like HuffPo and AOL will become “Black arts” eventually, to borrow a phrase from Jarvis.
If you’re like me and tend to think of places like The New York Times and The New Yorker and Gawker and Huffington Post when someone says “media” to you, rather than AOL or Yahoo! or Google, then this big purchase looks like even less of a “bet on news” than it does to most people actually in the business. The bet here is that a site can attract enough readers on a small enough budget that advertising will bring in significant profits without having to charge readers for reading. And at the moment, plenty of people think that is a long-odds bet already. It probably only really happens at the low and high end of the scale, for now, that kind of monetization.
(h/t Jay Rosen)