Blog Post

AOL Does Some Damage Control on Its Blog Sites: No Budget Cuts; Just Cost Control

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

After yesterday’s story about some trimming at AOL (NYSE: TWX), including its Weblogs Inc blog unit, AOL has sent out another internal memo to its blogging team, which it says supersedes previous communication on the same subject. It stresses that there are no specific budget cuts, just trying to keep costs within budget. It also clarifies it is not asking its bloggers to stop posting on certain blogs, but asked them to reduce the number of posts each day, again, to control costs.

The full memo, below:

“Dear Bloggers,

I’m sending this note to provide some context and hopefully clarity to the budgetary situation we’ve been dealing with these past few days. Some of our communications on the subject have not been helpful and certainly could have left the impression that there is something less than healthy about our business, when in fact that is emphatically not the case (we are big, growing, and profitable). This note is intended to supersede all prior communications on the topic.

The most important point I want to make is that the Weblogs budget is NOT being cut. Rather, our situation is one in which, over the past several months, our post rates and costs have increased significantly faster than expected. As such, we are now in a position of significantly exceeding our 2008 budget unless we take measures to slow down our posting costs until we can get back into line with our budget.

It’s really that simple, and there is absolutely nothing grave about the situation. In fact, the Weblogs budget has increased significantly in each of the past two years, and we expect it to increase again in 2009. Why? — because our business is thriving both in terms of Revenue and traffic, which bodes very well for our future.

Nevertheless, I understand our recent discussions and communications about belt-tightening and cost-management have been disruptive to our normal routine. So in order to minimize the disruption, I’d like to outline explicitly the approach we are taking to get our costs back in line with our budget.

First, and very importantly, we are NOT stopping posting on our blogs. More after the jump…

Rather, for most of our blogs, we are temporarily reducing our post-rates until we establish the proper run-rate for each blog to align with our budget. In this interim period between now and August 1, it is critical that you discuss directly with your leads and/or producers what the posting parameters for your individual blogs will be, as each blog must continue to thrive.

Second, going forward, each blog will be given a monthly budget that will allow each producer and blog team to operate with maximum flexibility within that budget — and most importantly, avoid disruptions like this in the future — because each blog will be able to manage month-to-month to a specific cost number. We’ve never done this at Weblogs (we’ve always had one big uber budget), but the business has grown so large that it’s become unworkable unless each team can manage its own budget in real-time.

I sincerely apologize for this disruption and ask for you to bear with us while we work to establish our new “run-rates” that will keep us within budget. Soon there will be much posting to be done on all of our blogs, so please work closely with leads and producers to keep things humming along.

Please also feel free to reach out to Brad directly if you have any questions.

Many thanks,

Marty and Brad”

3 Responses to “AOL Does Some Damage Control on Its Blog Sites: No Budget Cuts; Just Cost Control”

  1. It is ironic that AOL is supporting Weblogs more in 2008 ("budget is significantly increased") yet all this noise about cuts is actually about Weblogs making sure they do not exceed the increased budget. Clearly Brad is doing the right thing.

    As Joseph points out, bloggers can abuse a system of pay per post if they simply post with "mind numbing frequency" with no calibration to impact. My take-away is AOL is managing their business appropriately.

    Rafat – can you get #s on revenue and profit for Weblogs – from the internal memo, it seems to be growing significantly as well as highlighting that AOL is plowing more money into the business in 2008 (when their ad revenue has been slow in Q1 and based on their earnings call was going to be in Q2 as well – thus wondering how this area is doing (and their roll out of all their passion point sites you have covered here) with that backdrop). – Alex

  2. Here's his memo from Valleywag when the model was introduced

    "Gawker has been equally backward. Sure, we pioneered the pageview bonus system, which rewards all writers for a site's performance. But, let's be honest: those bonuses have been allocated subjectively. And, in the large, writers have been rewarded, at $12 a post, for mind-numbing frequency. When we've paid a higher rate (the $200 "feature" rate) we've often not been rewarding better pieces; merely encouraging the padding of perfectly good, short items."

  3. This sounds like a lot of the compensation problems they've had at Gawker media with blogger compensation, hence the need to keep lowering compensation rates (per page view), even as page views increase. At one point when defending some tweak to the pay-per-pageview model, Denton criticized the mind-numbing frequency of posts on some of the sites.

    And this stuff about allocation a specific budget to each blog… how long before Weblogs Inc. adopts Gawker's pay model?