Today is a watershed day in new media, whatever it is that we're calling it in 2011. Why? Because AOL is now truly doing something interesting in the content business by buying one of this cycle's best content properties, the Huffington Post, for $315 million.
Sure, AOL spent 40% of its available cash on the property. Yes, there will be a culture clash as HuffPo is integrated into AOL. And of course, we've heard of issues with AOL's integration of TechCrunch.
But this isn't the same AOL that distributed tons 
of these discs via mail for more than a decade. It's a company led by someone with experience at a market leader who has a vision for the future. That vision requires that AOL repeatedly produce profitable content -- something that old media has certainly struggled to do lately.
The TechCrunch and now HuffPo acquisitions, however, tell me that AOL has determined that it is a better strategy to buy great properties than to build them. Why? I'd posit three reasons: 1) these are properties that have discovered how to create quality content sustainably, 2) these properties make money, 3) AOL's experiments with Patch and Seed likely have not succeeded as they've hoped.
But the last reason isn't necessarily a criticism of AOL. If you look at business across the United States, one megatrend that we're seeing is that big, relatively antiseptic brands are winning the war for $$ and mindshare against local businesses with local/regional flair. Like it or not, eyeballs and attention flock to Chili's, the HuffPo, and the NFL instead of Billy Bob's Bar & Grill, the Smalltown Gazette, and high school football. The American experience is homogenizing right before our very eyes, and as such brands that specialize in products with mass appeal will likely win in the long-term over local providers that struggle to effectively reach a local audience. Niche businesses will survive, but a vast majority of local businesses are going to continue to suffer as the local experience gets more corporate.
I'd argue that these trends are driving the content business and will continue to do so.
We will see what happens with AOL's play -- one that puts it in Demand Media's neighborhood and clarifies competition with old media. It's on. I think the early advantage is in companies like AOL & Demand who are driven by the unit economics of creating content far more than old media as a generalized whole.
Old media has two other distinct disadvantages: 1) significant overhead, and 2) traditional "journalistic" standards. But as an industry it is much, much larger than AOL or Demand Media and can still compete if meaningful changes are forthcoming. And you can argue that neither AOL nor Demand Media have quite yet figured out how to scalably create great content for profit. It will be an interesting battle to watch in coming years. Consider also that of the major tech players only Apple, Yahoo, and Amazon have made major content plays. Are Google, Facebook, and Microsoft next to jump in?
It's possible that as old media continues to be disrupted, that content is the next bubble. We'll see how the industry responds.
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