Will AOL Purchase Associated Content?

When AOL's new CEO Tim Armstrong, a co-founder of Associated Content who reportedly still owns a 20% share in the company, recently announced his intention to create a huge library of highly searchable, monetizeable content based on popular Internet search queries, rumors about AOL and Associated Content began flying faster than a Kenyan at a marathon. The business model described by Armstrong sounded a lot like, well... Associated Content.

Internet media pundits instantly started making marriage plans for the two companies, a match that seemed to be made in heaven or, at the very least, by eHarmony. Instead of re-inventing the wheel, AOL could just gobble up Associated Content, like a Pac Man consuming a dot.

Far from quelling these rumors, Associated Content CEO Patrick Keane seemed to hold the door wide open for such an acquisition in a November 23, 2009 video interview with Henry Blodget on the Business Insider website. When Blodget asked Keane, "Shouldn't we just put both companies together and call it a day?" Keane replied, "You'll have to ask Tim that."

A business story published on the AOL website today lavished praise on Associated Content's success: "With a 1.75 million piece content library across 60,000 topics, the organization continues to be the fastest producer of quality Web content with 10,000 new pieces published every week; this represents a year-over-year content library growth of 115%." A publicists' dream, the AOL news story went on to laud Associated Content's "best practices in content curation, keyword taxonomy, and user rewards."

As AOL's CEO, Tim Armstrong has already purchased another company in which he was an early investor, Patch Media, a compendia of ultra-local content, ranging from announcements of church suppers to obituaries. Armstrong did not profit from the acquisition, according to an internal memo he sent to AOL employees. He not only recused himself from the decision to purchase Patch Media, he declined to accept profits from the sale, recouping only his initial investment in the company.

Inevitably, blogsters have taken cheap shots at both Associated Content and AOL for their stated aims to create content based on what topics people actually search for rather than what topics editors think people should search for. When old-school media outlets joined the on-line world, many of them clung to their paternalistic hard copy journalism model, a practice that would be akin to Target or Walgreens stocking mostly vitamins instead of candy for the public's own good.

If AOL does not purchase Associated Content, competition between the two companies for writers could heat up, potentially escalating the pay for premium freelancers. Conversely, AOL and Associated Content could outsource content writing to India and other countries where labor costs are cheaper. Such a move, however, would jeopardize the companies' status with search engine giant Google, which could change its algorithm to exclude either sites' content from its search results if the quality of the content spiraled downward.

Another possible, but less likely scenario, would be for AOL to purchase an Associated Content copy cat website, such as Helium or Suite 101, companies that sprung up in the last few years after observing the stunning success of Associated Content's business model.

Sources:

Ex-Googler Patrick Keane Explains Why Associated Content Will Rule The World (GOOG)http://www.businessinsider.com/business-news/nov-23-associated-content1-2009-11

AOL's First Acquisition... Associated Content?
http://www.businessinsider.com/business-news/nov-23-associated-content2-2009-11

http://money.aol.com/article/associated-content-skyrockets-to-top-50/804910

http://kara.allthingsd.com/20090611/back-to-the-future-aol-adds-local-with-two-acquisitions-including-ceos-start-up/