Outside.in vs. AOL Patch: Win-Win?

Matthew Ingram at GigaOm has a nice profile of Outside.in and interview with CEO Mark Josephson. The piece points out that AOL is planning to spend $50 million to build Patch into a giant local network, and asks whether sites like Outside.in should be worried. First here’s what AOL said in a 10K filing about its plan for Patch:

The Patch acquisition did not significantly affect our consolidated financial results for the year ended December 31, 2009. As part of our plan to expand our local strategic initiatives, we currently anticipate investing up to $50.0 million in Patch during the remainder of 2010.

Should Outside.in be worried?

In the GigaOm article, Josephson correctly points out that “If AOL spends $50 million and brings a lot of attention and advertisers into online hyper-local then we all benefit.” Indeed, the entire segment will win if advertisers wake up to the real potential of local online, which they’re now starting to (almost as an indirect result of mobile). 

It will also be really interesting to see how “good” Patch is. The $50 million is undoubtedly for headcount and writing fees to those creating original content. The danger as with Examiner.com is that you get a lot of mediocre stuff. Outside.in’s approach is one of aggregation of existing content, which is both cheaper and more scalable. 

Outside.in has received about $14 million in funding. AOL ought to take a hard look at buying Outside.in if it’s really as serious as it claims to be about “hyper-local.”

5 Responses to “Outside.in vs. AOL Patch: Win-Win?”

  1. David Mihm Says:

    “AOL ought to take a hard look at buying Outside.in if it’s really as serious as it claims to be about “hyper-local.””

    Totally agree, Greg. Josephson has built an amazing platform that actually works, and it’s gotta be cheaper for AOL to buy it than re-invent the wheel–let alone the positive brand associations for Patch.

  2. Greg Sterling Says:

    If I were AOL I’d hire an editor for each property and have a freelance budget but I’d use aggregation like this as a starting point. The quality of content being created is going to be better than churning it out for the purpose of building an archive and gaining SEO exposure.

  3. Chad Says:

    I think the driver with Patch, and others, is owning the long term asset which is the content. If your strategy is solely about leveraging content that you don’t own you bear a risk down the road. Aggregation as a foundation makes sense, but you need something more defensible down the road. My $.02…

  4. Greg Sterling Says:

    Thanks Chad . . . Hope all is well

  5. Tim L Says:

    I think the comparison of Patch to Examiner.com is a bit unfair. The local editors for the Patch web sites, who do most of the writing, are legitimate journalists who are paid a decent wage, upwards of $50,000 in some instances. And they are overseen by regional editors who are also legitimate journalists. They are doing actual, original reporting.

    Examiner.com is largely made up of opinion and how-to pieces that, as you say, are pretty mediocre because most of the writers do it as just a diversion or earn a couple bucks here or there.

    That said, I am rather skeptical of AOL’s ability to make a profit, given the amount of money they are spending on salaries and freelance budgets for each site. But at least they seem to be willing to invest a lot of money now and hope revenue grows over time.

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