Its the eyeballs, not the content, duh! :)
One of the things about working in technology like I do is that you learn change is the only constant. As a result, paradigm shifts in what was once tried and proven way of doing things is indeed the norm. Therefore, it came as a surprise this week when someone I know pretty well and whom I used to work with some years ago “swatted” a Facebook status update I made about content being in its “golden age” after the Huffington Post was acquired by AOL for a staggering US$ 315 Million. He started an “argument” with me of sorts where he asserted that its not about the content but rather its about the audience. I took offense to his harsh remarks on the whole issue and the conversation kept going till just yesterday. It finally dawned on me that we we’re both saying the same thing, but in different ways, and from different perspectives.
Let me use this blog as an example. Why do you come here? Why do you read what I am writing about? I am guessing (and hoping?) that you like what I have to write about, which is more often than not all about technology in Kenya, and sometimes the rest of Africa. Right? Yes? OK, assuming that this is indeed the reason, and lets say I wanted to monetize this blog for a living, would I be able to do so? I hope so, based on the assumption there would be enough to traffic to this blog (read: your eyeballs) to make it work. Now, take another perspective. The Huffington Post being bought for US$ 315 million by AOL. Its an eye popping amount of cash for what is essentially a souped up and diverse blog. Yes. A blog! With good content that’s updated regularly. But. That’s not really it. Is it? Really?
So, here comes the punch line. AOL did not buy a blog. No. They bought the eyeballs that gaze lovingly at the Huffington Post. Those millions and millions of eyeballs that in January 2011 amounted to 28 million – that’s more than half the population of Kenya – that’s loads and loads of people. For AOL, those 28 million eyeballs amount to a massive opportunity to sell more advertising and to also “own” them for the offerings they may want to sell them, long term. So. Really. Its not the content. Really. Its the eyeballs. Duh!
As everyone races for the content honeypot in Kenya and the rest of Africa, what they should really be thinking is do they have the ability to scale the way that the Huffington Post did to make a significant dent on the status quo? In this case, the Huffington Post grew organically (more or less with the occasional funding) to where it is today and they made US$ 30 million last year. They have an exceptionally good editorial approach that has endeared the eyeballs to them. When old school media is falling away they are only getting bigger and bigger (African media can you see whats coming? Change!). Good content always counts but its the eyeballs that matter most – that’s the value – that’s what AOL bought – Its a sweet deal for 28 million eyeballs!
Note: Thanks for stretching my thinking Ath – I needed that “content” reality check! 🙂
I don’t believe the AOL/Huff deals is really about just eyeballs. I believe it is bit more nuanced. For example;
According to Comscore’s 12/2010 figure’s AOL is still 5th largest USA web property; dwarfing Huffington Post’s traffic. What I believe this deal is about is;
Brand — AOL gets control of major emerging mainstream news site with channels not covered by existing AOL properties.
Content Formula – Huffinton Post copies liberally from existing blogs and has experts post on various topics without having to pay for content. As AOL recently stated corporate strategy is to ramp up content based on its advertising value, Huffington Post’s formula of generating content fits well with AOL’s plans. Futher, with local Patch play, AOL/Huff has opportunity to overlay Huffington Post content generation formula on local Patch editions.
Personality — AOL gets celebrity blogger Arianna Huffington to head up the content generation formula across most AOL properties.
Therefore, in my opinion this deal is more about content generation then eyeballs, per say. (My bet? AOL will tarnish the Huffington Post brand and the content generation formula will not scale)
By the way, liked your Dealfish post. Good luck with that.
Interesting and valid observations Brian. There is a lot more to this buyout. Glad you liked the Dealfish post.
great comment, but quick question to Brian, where would you place your money… a great blog with great content and ten recurring users… or a website about your-mama jokes with ten thousand recurring users? as moses aptly put it while we were having the Â¨argument on facebook”… content is the honey that draws the eyeballs. i still believe the value is in the eyeballs… and very exceptionally rarely in the content (as in say a picasso painting). and how many of us are picasso? looking back at history… trade flourished cause of distribution channels… i.e. eyeballs, people bought what they knew about. its still the same today… for instance, what valuable content makes facebook worth as much as it is today? pictures of myself on holiday? really? how about maybe its because millions of people congregate and communicate there? hmmm… what do you think? i do agree content is great. but its not the end… its the means to an end. and unfortunately, in kenya at least, content is considered by many to be the Â¨end”. thatÅ› all i am saying.
I don’t dispute that eyeballs are important but that is not what this deal is about. Huff Post has a perceived scalable strategy of generating ‘branded’ content. AOL stated goal is to generate lots and lots of content with which to entice advertisers. My opinion is what drove AOL, in part, is the mechanism that Arianna pioneered of generating content that can then be applied to other AOL properties, such as Patch, and around which advertising revenue can be generated. The value of the brand and the content generation formula and not per se the “eyeballs” are what made Huff Post attractive to AOL.
Here is a link to article in todays, New York Times, that discuss the same topic http://www.nytimes.com/2011/02/14/business/media/14carr.html?src=tptw
Just because old media has gone to new media it doesn’t mean the old money formula has changed. Media $ = Content x Distribution