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AOL Buys TechCrunch, but the Real Crunch Will Be in Culture

AOL (AOL) has announced that it bought TechCrunch, the prominent technology news web site. It's not the first time that the Internet powerhouse ... uh, acquirer of Time Warner (TWX) ... hmm, Time Warner spin-off ... do I hear content firm?

Well, whatever historic or current term you want to apply, the "You've got mail!" company has finally done the deal. My BNET colleague Ben Popper thinks that it's in large part because of the database of company information that TechCrunch has. It could well be. Also, having a large funnel of readers doesn't hurt if you think you can then direct them to other AOL sites and expand page views ... and revenue.

The question is whether the acquisition will do what AOL wants, or whether the TechCrunch fleet of sites, conferences, and strange-bedfellows roster lists will eventually pop out again like nothing happened. This will be a difficult marriage to make work.

There's no mention of the terms, although I suspect TechCrunch founder Michael Arrington will walk a good deal more well heeled than he already is, and he's by no means an impoverished publisher and writer.

Did Arrington take stock? Given the AOL revenue chart that TechCrunch ran in a post called AOL's Messy Transition, I would think not. Here's a telling graph:

As TechCrunch's Erick Schonfeld wrote in early August:
But AOL's advertising business, which is supposed to be its engine going forward, did even worse. Its revenues declined by $110 million.If you drill down into just the advertising portion of revenues, every single segment is down: its third party ad network (down 42 percent), search and contextual ads (down 28 percent), and even display ads (down 13 percent). AOL is de-emphasizing its third-party ad network, so that too was expected. And as it closes down properties in Europe and growth stalls, that means fewer searches (and search ads) on its owned-and-operated sites. But what is going on with display advertising? That is where AOL is supposed to shine. And the rest of the industry is showing a recovery. Yahoo, for instance, saw a 19 percent jump in display advertising revenues during the quarter.
That's a company on whose stock you might not want to double down your bet.

Not that Arrington is necessarily shy of holding stock. In fact, he has been a regular investor in the tech segment and a highly influential power broker. For the good reporting that he and his site have done, more than one person has accused him of conflicts of interest. Arrington has denied these charges, saying that he and his company disclosed any potential conflicts. However, that certainly didn't keep TechCrunch from writing about devices when the company was trying to fund potential competitors -- all without disclosing the conflict in the story.

Nitpicking? I don't think so, and others have more thoroughly called him to task. However, say for a moment that it is petty and out of scale. Even if that is true for a small private company, everything looks different when you talk about a publicly-held entity. Would AOL want the potential of charges that it was trying to manipulate markets? I don't see how it allows TechCrunch's freewheeling ways.

There's also the matter of Arrington being so strongly identified as owner of the site. Notice that AOL doesn't stand for "Arrington is Our Leader." The TechCrunch writers -- who, through their work, help make the site's name -- now become a few among many employees, a growing number of whom have significant accomplishments and resumes of their own. And it's not as though AOL's content pages have no tech coverage; Engadget is pretty well respected.

We'll also have to see how independent TechCrunch's coverage can remain when owned by a subject of said coverage. If all things AOL become off limits for driving stories, that potentially takes some significant areas of coverage off the table.


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