The Huffington Post was sold to AOL for $315 million. But wait–didn’t they just return to where they started? While readers’ comments everywhere this morning lament the corporate takeover of HuffPo, they may be missing the point. The guy who’s been running HuffPo from the beginning, Ken Lerer, former PR flack for David Letterman, came from AOL in the first place. He was Executive Vice President of AOL for quite a while. So let’s not kid ourselves when Arianna Huffington and Tim Armstrong say he just called her up one day out of the blue. Their connection was cemented a long time ago.
Next: HuffPo was sued last November–the same time that Arianna and Tim say they began talks–by two consultants who claimed they gave Huffington and Lerer the idea for a blog involving liberal Democratic views. Reports in November questioned why the consultants had waited so long, and why they filed at that exact moment. More: also in November, maybe coincidentally, Michael Perlis, of Softbank Capital, the investment firm behind HuffPo, left SoftBank to run Forbes Media. According to this morning’s San Francisco Chronicle, Softbank along with Greycroft Partners (Alan Patricof) and Robert Pittman (one of the founders of MTV) put $10 million in HuffPo over two rounds of funding.
See if you can follow this: before Tim Armstrong ran AOL, he was at Google and also chairman of the board of Associated Content, that firm that regurgitates news anonymously for the web. He was succeeded by...Michael Perlis.
But the real winners may be Oak Investment Partners, who put $25 million into HuffPo at a $100 million valuation. They own 25% of the Huffington Post.
What does the sale of HuffPo mean for real people? One thing I’ve never understood–that name writers “blog” for the site for free. There are hundreds, maybe thousands of them. Will they still be blogging or editorializing for free now that AOL owns the site? What would be the purpose of that? When it was just Huffington Post, blogging for them seemed cool and insidery. But AOL pays writers–even if it’s a little bit–for their work. Why shouldn’t they pay all those free contributors to HuffPo? But AOL, it would seem, wanted HuffPo for that blogger model–lots of contributors, no money out. It remains to be seen if that volunteer network will hold.