AOL version 5.0?

In a bold move AOL Inc. announced that it is buying The Huffington Post for $315 million.

While the speculation is rife as to whether this is a good deal for AOL or for the Huffington Post, I think what’s far more interesting is what it tells us about traditional versus digital media.

Tim Armstrong, AOL’s CEO, has shown through this move he has a far better understanding of the future of online news than the 26% hit AOL recorded in 2010 revenues would suggest. As an ex Google Inc. executive, he clearly has a vision that AOL needs to put its reputation in dial-up and internet access behind it if it’s to become a leader in the future of Internet content.

Clearly AOL probably needs this deal far more than the Huffington Post does given the success it’s had in becoming one the most successful online news sites. However, for Arianna Huffington, the benefit of becoming editor in chief of all of AOL’s content sites, which include Endgadget, TechCrunch and Patch.com, will give her the opportunity to build a media and entertainment powerhouse.

At times like this I’m reminded of the number of occasions people have bemoaned the demise of traditional media and professional journalism in the face of the rising power of online media where anyone with access to a computer can become a publisher of information.

As the rise in power of bloggers and citizen journalism took hold, the common question became who can you trust; where is the professionalism; and will the abundance of information ultimately make it all valueless?

My personal belief has always been that as in any period of significant change, time becomes a leveler. The true authorities on specific subject matter will bubble to the surface and those with a less transparent or misguided agenda will fade into the background.

I believe that over time, we will see similar brands to The New York Times and The Economist emerge online with equal impact and authority. The Huffington Post is just such an authority and what has distinguished it from its traditional (but now online) counterparts is that it was built with digital in mind from the outset.

It has proved that understanding technology, algorithms, participation and sharing put it in a place to compete with long established brands and become a formidable competitor. This isn’t about the destruction of old models — it’s about the creation of new ones.

By understanding this to the level that Arianna and her team did, they not only prove that an online trusted brand can bubble to the surface amidst the cacophony, but it also has a better understanding of the new cultural norms that technology makes possible, which makes such insights invaluable…..or at the least worth somewhere close to $315 million.

Aedhmar Hynes
CEO, Text 100
New York, NY