AOL announced another big shake-up this morning, shutting down another 25 brands and shuffling management responsibilities.After talking to a couple of sources at the company, here’s our sense of what’s really going on:
- AOL is refocusing its resources on its winners and starving its losers. After the prior re-org, the company still had a whopping 56 brands to manage. Now, after another 25 brands are folded into Huffpo, this will be down to a more manageable 20.
- The company is doubling down on the Huffington Post model at the expense of traditional “blogs” and online magazines. Huffpo’s content management system, commenting system, and blogging system will now be the back-end for most of the company’s properties. And the Huffpo combination of aggregation, blogging, and original reporting will form the basis for most of AOL’s sites, including Patch
- Former COO Jon Brod is being stripped of some power, in that he will now be responsible for only AOL’s local site network Patch and Mapquest. The other way to look at Brod’s change of responsibilities is that Patch desperately needs more attention. In its current form, the model basically doesn’t work. But it is growing rapidly and can perhaps benefit from more management focus.
- The re-org simplifies the company’s reporting structure, and in so doing, tightens the relationship between sales and editorial. In a prior re-org, the company separated editorial management into a separate reporting line than the business side. Editorial will now continue to report to Arianna Huffington–and, through her, to Tim Armstrong. Tim, meanwhile, will directly oversee 5 General Managers, who are responsible for the business side of the content business.
AOL continues to invest aggressively in Huffington Post. It will soon be launching several international versions of the site (England, France, etc.), and it will also launch new local versions in places like San Francisco.
Importantly, Huffington Post’s approach to local is working vastly better than Patch’s. Four of Huffpo’s local sites–New York, Los Angeles, Denver, and Chicago–have more total traffic than all of Patch’s local sites combined, a source says. And this is with only a handful of staffers, as opposed to Patch’s 800.AOL’s recent Huffpo-i-zation of Patch does appear to be working: The addition of 5,000 unpaid bloggers to the network has apparently given an immediate lift to traffic. This is a step in the right direction, but we think AOL should eventually go farther–pulling the plug on Patch and redirecting the $120 million a year it is investing in Patch to Huffington Post.
Overall, though, today’s re-org seems smart. These are exactly the sort of decisions AOL needs to make if it is get the business firmly headed in the right direction. And we suspect it will be making several more.
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