AOL, which just sold ICQ for $187 million and has an Internet access business throwing off lots of cash, has plenty of money to burn.
It’s trying to use that money to turn itself into media giant — a Time Inc. for the 21st century.
For a couple of those dollars — something less than $5 million — AOL should buy Newsweek, the magazine the Washington Post just put on the block.
So far, AOL has taken a three-pronged approach to achieving this goal. It’s launched Seed.com, which will pays freelancers tiny amounts to write search engine-friendly content. It’s hired fancy name-brand writers for its branded blogs. And it’s acquired and expanded Patch, a network of local news blogs.
AOL plans to spend $50 million and hire 290 people to expand Patch to hundreds of new cities this year.
To augment Seed.com, AOL will probably spend some of its money — less than a $100 million — buying Associated Content, which has Google-gaming down pat.
But what about AOL News?
In November, AOL launched Sphere.com and intended to make it AOL’s “all-encompassing” news site. An about page which described Sphere.com as “, the next phase in the evolution of AOL News” explained: “Here you will find original reporting, analysis and commentary from our ever-growing cast of top-notch journalists.”
Didn’t work! By January, Sphere.com began re-directing to AOLNews.com.
The truth is, ever since AOL first hinted at its new media strategy way back in early 2009, it’s had a hard time creating sites that readers go to on their own, as opposed to being funneled to them through AOL.com.
By our last count there were about a dozen AOL sites, led by Engadget and TUAW.com, that actually stood on their own. Most of these working destination sites have one thing in common: AOL didn’t build them, it bought them.
This is why, sticking with what works, AOL should throw a couple bucks at the Washington Post, and land itself Newsweek.com. (Obviously, AOL would quickly shutter the print magazine and fire most of its staffers.)
Here’s our quick pitch:
- Newsweek is cheap. Bloomberg bought a similarly failing weekly, BusinessWeek, for about $5 million (plus liabilities).
- Newsweek lost $28.1 million in 2009, but that will go way down after AOL fires most everybody and kills the print magazine.
- AOL could add as many as 10 million uniques, acquiring and optimising Newsweek.com, which had about 8 million uniques back in November 2008, but is down to 5 million now.
- Re-directing AOLNews.com and Newsweek.com to AOLNewsweek.com, we’re talking about a site with 15 million uniques — about the size of NYTimes.com. (FYI, NYT Digital booked $90.4 million revenues in its last quarter.)
- AOL keeps trying to develop a news brand by hiring fancy old media journalists. Won’t work. Readers don’t pay any attention to who they’re reading. They do care about brands. AOL’s biggest hit, Engadget, proves this. That site has had plenty of turnover since AOL bought it, but it keeps chugging along.