Conservatives hate AOL and Arianna Huffington because she's a liberal and, thus, a traitor to her class.
Investors should hate her because she acts like a member of her class.
That class, of course, is the 1%, or at least the bogeyman we've built around the 1%. Those accused of wealth and guilty of education. Those who seem to demand the law give them everything they want and make the rest pound sand.
The problem with AOL, as a company, is that it's run just that way. The 1% get what they want and the rest pound sand.
The latest reorganization of the company doesn't change this. It simply makes the final break-up of the company a little more practical. The part that is making money – the dial-up operation – is now distinct from the parts that aren't making money – the “journalism.”
It's the “journalism” that is the problem. And note that I put the word in quotes.
Ever since she launched the Huffington Post, Arianna Huffington has told the rest of the media that you don't need to pay journalists any more, that they will write all you want them to write for free, and that her company is uniquely positioned to capitalize on this.
As proof she got more traffic onto New York Times stories than The New York Times did, with scaled feedback and comment threads that drew readers to the same story many, many times in order to yell at one another about it.
But some people do make money at AOL. Top journalists like Howard Fineman, let go by faded institutions like Newsweek, have flocked to her banner, and gotten big contracts, based on their celebrity and ability to appear regularly on TV.
That's not what journalists do, of course. A journalist's job is to do compelling stories that grab audiences and hold them. It's not to sit in a studio and spout off alongside radio gabbers, academics and former members of the X Administration.
Fineman, and those like him, represent the 1%. Real journalism isn't done by such people. It's done by the 99%, by groups of people organized to go through big files, or to hide in plain sight amidst danger, or to talk to lots of people and identify patterns. And those are the people Huffington doesn't pay. So those are the stories Huffington doesn't get.
You know who should get paid first at any true journalism company? Publishers. People who organize industries, places and passions, who figure out who the readers should be, who find the advertisers looking for those people, and who then get journalism that advocates for those shared interests.
This process still works. Journalism isn't about writing at all. It's about creating and building marketplaces.
Huffington never put money into that. AOL bought and built a few things that worked this way, such as TechCrunch. But even in that case they ignored the crucial role played by the publisher – Michael Arrington (above) in this case – in driving the correct identification of the market, and adding passion to the mix. He was allowed to walk, and that was the tell that this company was clueless.
So sell it short, break it up, and find someone with a clue to invest in.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.