Patch and Profitability

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The best or biggest deal, assertion, investment or other strategy this week.

Who: Patch

What: Spends $150k per year to run each hyperlocal site

Deep-ish into a story about AOL’s growth this week. The Wall Street Journal tucked this tasty nugget of information: AOL is spending about $160 million a year on Patch, which equates to about $150,000 to run each individual Patch site annually, according to an analyst’s estimate. 

This estimate begs the obvious question of whether AOL will — or even can — make a profit from the hyperlocal network. A recent Street Fight post by Alex Salkever on the advantages of mom-and-pop hyperlocals have suggests probably not. Using West Seattle Blog as a successful example, he estimated that ad revenues for the site total about $7,500 a month, or $90,000 annually. Enough to provide a fine living for a married couple in Washington State. Sure. Enough to power a publicly traded online company? Perhaps not.

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