AOL's Death Spiral--Confirmed

Arianna Huffington signed a deal earlier today that hands ownership of The Huffington Post to AOL in exchange for $315 million in cash and stock. Arianna's a smart businesswoman: she demanded most of the deal in cash, eschewing the stock of a company that almost certainly overpaid for the progressive news portal.

The sale is said to give Ms. Huffington significant editorial control of AOL's news content, which means that it will lurch hard left.

I can therefore draw only one conclusion: AOL is circling the drain.

• AOL is collecting $250 million a year from people who don't know it's free -- "For five years, AOL has been cashing in on users who don’t know they can cancel the paid service and still get all the benefits." -- Not exactly a sustainable business model.

• HuffPo's huge cadre of bloggers who work for free are unlikely to continue doing so now that Arianna's had her massive payday -- "It always amazed me that HuffPo bloggers (not the handful of well paid staffers, but the great unwashed) thought they were so special by being allowed to blog at HuffPo, when in fact they were being treated as unindentured servants.  They were able leave, but they were working for free to help Arianna build a business." -- Methinks many of the site's bloggers will resent the fact that they were paid nary a cent.

• Moving to the left as the country moves right is a recipe for disaster -- the U.S. as a whole is far more conservative than liberal and Gallup's polling indicates the trend is accelerating. AOL could very well be in the process of transforming itself into Air America.

Now that AOL is in overpayment mode in a bid to stay relevant, may I suggest some other strategic acquisitions?

• Daily Kos for $95 million
• Democrat Underground for $25 million
• Rosie O'Donnell's blog for $7.5 million
• Media Matters for a bottle of A-1 Steak Sauce and two snow tires


Hat tip: Memeorandum.