AOL Still Needs to Patch Up Patch

by Jonathan Berr | January 14, 2013 12:23 pm

Last week, AOL (NYSE:AOL[1]) CEO Tim Armstrong admitted that about 11% of its Patch hyperlocal news sites were profitable (100 out of 900). The online media company wants to put the overall network in the black by year-end — though the odds of that happening are daunting.

The problem with Patch isn’t a question of content as much as it is timing. New York-based AOL acquired Patch, which Armstrong helped found, in 2009 and quickly ramped it up without first working out the kinks in its business model. That’s like opening 900 new burger restaurants at once.

Though the fix-as-we-go mentality is part of the ethos of the Web, it just hasn’t worked out with Patch. In 2011, the network reportedly lost $160 million. The sites probably lost money again in 2012 even though costs are down as Patch decided to rely more on social media and less on paid bloggers.

For Armstrong to meet his goal, AOL will have to shut down some Patch sites and merge others where readership overlaps. Patch, however, has other problem, and here content is an issue. In my experience, it’s pretty pedestrian. The graphics look cheap, and the design is pretty unimaginative even though it’s supposed to be cutting-edge. Photographs shown on a Patch site in a town near where I live[2] in New Jersey were all taken at odd angles. No one is looking directly at the camera. In one shot, people’s heads were cut off.

Even stranger was a story on the search for contestants for Jeopardy. Patch is supposed to be hyperlocal and exclusive. A post on one of TV’s most popular game shows is neither. Ditto a story on New Jersey Governor Chris Christie’s State of the State address, which was covered by every news organization in Jersey.

Sadly, much of the news Patch has made lately hasn’t been positive. Editor-in-Chief Brian Farnham[3] left last April. A month later came reports of layoffs. The network was a focal point of Starwood’s unsuccessful proxy fight against AOL last year. Though AOL celebrated its victory over Starwood, the questions that the investment firm raised about Patch are legitimate.

Though I’ve been among the many skeptics about Patch, I don’t think its problems are insurmountable. The sites should stick to their original mission to provide quality local news with an emphasis on information that readers can’t find elsewhere. That is, they should be like newspapers used to be before their budgets were cut to smithereens.

At times, local happenings aren’t the most exciting news in world, but they’re nonetheless important. That’s evidenced by the growth in Patch’s traffic, which apparently has been tapering off some.

Here’s a real-life example of what I am talking about. This week, I put my trash, bottles and paper out for the regularly scheduled pickup. At the end of the day, I noticed the paper container hadn’t been emptied. Later, I learned that the pickup was delayed because my local department of public works didn’t have enough workers available.

My town of 6,000 has no community newspaper, and if Patch had a site that covered our town, I would have consulted it for news about the DPW.

If Patch is to succeed, it needs to execute on the fundamentals of storytelling such as being engaging and accurate. Pointing the camera in the right direction will help, too.

Jonathan Berr is a former AOL contract writer. As of this writing, he didn’t own any securities mentioned here. Follow him on Twitter @jdberr

Endnotes:
  1. AOL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AOL
  2. a town near where I live: http://moorestown.patch.com/articles/moorestown-makes-history-twice-in-one-night#photo-12862380
  3. Brian Farnham: http://moorestown.patch.com/articles/moorestown-makes-history-twice-in-one-night#photo-12862380

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