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Gordon Kelly


The Digital Divide & Conquer

In 2003 TrustedReviews was launched. It came about because its founders grew frustrated at the inability of their respective publishing houses to see the potential for online media. How times change…

This week AOL paid $315m (£195m) for blog/aggregator the Huffington Post. As part of the deal Arianna Huffington became president and editor-in-chief of 'The Huffington Post Media Group, a newly formed division within AOL as well as other AOL captures Engadget, TechCrunch, Moviefone, MapQuest, AutoBlog, Patch and more.

"The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers," declared AOL chairman and CEO Tim Armstrong. "Together, our companies will embrace the digital future and become a digital destination that delivers unmatched experiences for both consumers and advertisers."

The pros and cons of the deal have been tossed around the press, but the bigger picture is the sum paid shows just how desperate publishers are to follow Armstrong's lead and "embrace the digital future". It also shows how desperate investors are to cash in.

Last week hyped up iPad-only digital newspaper The Daily launched. It came with a $30m development cost, $500,000 per week operating budget, 100 full time staff and locked itself to a single platform, (for now) a single device and parent News Corp saw shares rise 2.6 per cent. Suddenly newspapers are flavour of the day. Content is king, or more precisely: exploitable content for premium digital redistribution.

This week saw shares in The New York Times, Media General, Lee Enterprises and Gannet Co rise 2.7 per cent, 2.7 per cent, 3.6 per cent and 2.8 per cent in what have been struggling industries. The death of the newspaper? More like the realisation of the evolution of the newspaper. What will be the winning formula remains to be seen: exclusive apps? Pay walls? Certainly free with advertising no longer appears to be the long term game plan of these major publishers.

So where has this sudden confidence come from? Why are publishers and investors performing such a digital u-turn? I'd suggest you look no further than eBooks. Just last month Amazon CEO Jeff Bezos revealed "Kindle books have now overtaken paperback books as the most popular format on Amazon.com. Last July we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected." The exact figures were 115 eBooks sold to every 100 paperbacks, a significant margin.

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