Peter Kafka

Recent Posts by Peter Kafka

Layoffs Are Last Week's AOL News. This Week: "Giving Back," Starring Twitter's Biz Stone

Last week’s AOL news: Major layoffs in the wake of the Huffington Post acquisition.

This week’s AOL news: All sorts of let’s-move-ahead-and-get-on-with-it pronouncements from CEO Tim Armstrong and content head Arianna Huffington.

For starters, I’m told, the company plans to announce a 30-day “giving back” campaign, where AOL employees will be encouraged to volunteer, and a series of articles in the Huffington Post will profile worthy charities and needy families.

Given that AOL just got rid of hundreds of people–and slashed the incomes of many other workers, by cutting off the freelance work it used to dole out–this one will prompt some eye-rolling.

But do remember that unlike many of the people who are writing about the AOL/Huffpo merger and layoffs, most of the company’s users/readers don’t have a personal stake in what’s going on there. And for them, a charity/volunteerism campaign may just sound like a charity/volunteerism campaign–a good thing.

That same audience may also be impressed that Huffington plans to announce she’s signed on Twitter co-founder Biz Stone as a “strategic advisor for social impact”.

What’s that mean? I’m not entirely sure, but apparently it will involve, among other things, Stone appearing in AOL-produced videos about philanthropy and good works–stuff he’s been interested in for some time. He’s not coming aboard for free, though–he’ll get some AOL equity as part of the deal. (I’m told this is a Huffington/Stone deal, not an AOL/Twitter tie-up.)

About the layoffs: They’re terrible for the people involved, some of whom I know. But they weren’t a surprise in any way. As soon as AOL announced its $315 million purchase of Huffington Post, it warned that it would spend $20 million on restructuring charges. That’s corporate shorthand for “money we’ll spend on severance and other layoff costs.”

It’s also not a surprise that Huffington is replacing a large swath of AOL’s editorial group with a smaller group of her own people. For one thing, that’s what happens in a regime change. For another, Huffington has recently handed out some expensive (for journalists) multi-year contracts to land editorial people from places like the New York Times. So no surprise that they’re staying.

Most important: Swapping out a big staff for a smaller staff is one of the big points behind the AOL-Huffpo deal in the first place.

Recall that the Huffpo people have proven to be very, very effecient at making a lot of Internet traffic from a small staff: Pre-merger, AOL was reaching about 112 million people in the U.S. every month with a staff of 5,000. Huffpo, with a staff of 200, was reaching 26 million.

Weirdly, the party line from AOL/Huffpo is that the company is not focused on cost-cutting, and that it’s going to replace most of the editorial people it just got rid of with new hires.

Given that Tim Armstrong’s team had previously told Wall Street it would be be able to wring $20 million in cost-savings out of the combined companies, something doesn’t add up here. But let’s see what Armstrong and Huffington have to say on Monday.


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work