Saving Patch - And AOL.....

Lots of potential.. if...

In 2007, Tim Armstrong and Jon Brod founded Patch Media, a hyperlocal news site (or network of sites), after Armstrong grew frustrated that he could not find out anything about what was happening in his hometown of Riverside, Connecticut.

When Armstrong became CEO of AOL, replacing Randy Falco, he bought Patch (for $7 million), brought it into the AOL family and made it the foundation of an attempt to build a national hyper-local network.

In order to facilitate that, Armstrong has poured $150 million a year into the site, with little success.

Now, some are calling for Armstrong to close Patch down.

In an article in the Harvard Business Review this week, Max Wessel disagrees. He says AOL should "Double Down" on Patch. 

"Patch has the potential to be a truly disruptive business. The startup is trying to build a platform that could replace a disaggregated network of local news sources. Consider the market. There are approximately 54 million school-aged children in the U.S. Most of those children don't care about the articles featured on nytimes.com or HuffPo, but almost all of them are online. They do care about the news that is featured on their Patch. Those children have parents who care about the goings on of the world, but also need to know about the community issues that will affect their families. They care about the issues Patch is covering and it shows: In just one year, Patch's readership has grown to six million monthly uniques.

Patch is currently trying to build itself by hiring a network of professional journalists and sales people to create the content.

This is what is killing the business.

It's a model that AOL has lifted from conventional media and it is wrong.

AOL, which was once on the forefront of the Internet Revolution has fallen back to being an old media company in its thinking, which is both predictable and too bad.

Consider Youtube.

Here is a site with no 'professional' TV or video producers on it, yet it contains an astonishing 56 billion hours of originally produced content. It would take NBC and their 'professional' producers 3,000 years, working full bore, to replicate what Youtube has delivered in 5 years.  Admittedly, most of it is junk, but the wise person can see the potential is there. It needs only to be trained, focused and directed.

You won't find any 'professional' journalists filling the content needs of Facebook.

And you won't find any 'professional sales people' working over at Craigslist - the online site that killed the newspapers.

Every local community is filled with local bloggers and videomakers who would love to have a chance to create content for a site that their neighbors saw and read and watched. This doesn't mean that they would do this for free. But such a site, if successful, (and here I think Max Wesssel is right), would attract enough readership or viewership to generate enough ads to pay the contributors on a per-piece basis. And who would not like to pocket a few hundred dollars a week for a few videos or a line of blogging?

The answer to AOL is to think small.

If you can cut the cost of production on the sites, which I think is emininently do-able by sourcing out journalistic content creation go the local people who are already doing it, and reward them for it, then you can cut the break-even point for ads to the point at which the local butcher shop and the local shoe store and the local pizza place can afford to advertise without a massive sales force to 'sell' the ads.

There is, ironically, a similar discussion going on in the UK at this moment about local TV.

Unlike the US, where every city and town has at least one, if not more, local TV station, in the UK there are almost none.

Jeremy Hunt, the Culture Secretary in David Cameron's government has called for Local TV in 65 of the UK's cities.

Now the British Blogosphere is filled with the 'argument' about how this is possible.

They have, mercifully, trashed the idea of a 'central core' for a new national network that would 'support' the local operations.

Their problem, like AOL's, is 'overbuild' and the 'overhead' that comes with it.

Get rid of the offices, the carpeting, the lights, the meetings, the building, the 'professionals', the 'management'....

The rest is already in place, ready to go.