Posted by Renee Schmidt

 

Michael Arrington of TechCrunch is “CRUNCHED” by Arianna Huffington and AOL. 

Let’s face it; the last time you logged onto your AOL account was sometime around 1998… and anytime you hear the acronym AOL (short for America Online), the first thought that pops into your head is that classic mailbox alert; “You’ve Got Mail!” that used to make you feel like you had a life.  So why all of the AOL news all of a sudden?!

I was on FOX News Live earlier today with Kimberly Guilfoyle explaining the TechCrunch-AOL, baby momma drama. Check out the clip:

TechCrunch is one of SheBytes absolute favorite tech blogs!

So we were deeply saddened and slightly alarmed to hear the recent news that Michael Arrington; TechCrunch’s founder, has been fired. Because the details are sketchy and the story as a whole is confusing, SheBytes is going to break it down by focusing on the two main players; AOL and TechCrunch, to make everything digestible:

 Background

Michael Arrington, co-editor of TechCrunch has been fired by AOL because he also invests in tech companies.

 AOL

AOL revenues have been declining for years as its dial-up Internet access business dried up.  To bring in new revenue, AOL started acquiring media companies to build a media network conglomerate.

AOL acquired Huffington Post for a whopping $315M; grossly overpaying.  As part of the deal, Arianna Huffington took control of all of AOL’s editorial content. Now the company is at the mercy of Arianna.

AOL also acquired TechCrunch earlier this year for $30M.

 TechCrunch

Tech Crunch is a well-respected news source, and inspiration in many ways, and from the perspective of a reader and consumer it would be disappointing to see that fall apart in any capacity.  And I always say; “If it ain’t broke, don’t fix it!”

 Who is Mike Arrington?

A former Silicon Valley lawyer, who started TechCrunch in 2005 and turned it into one of the most trafficked blogs in the tech world, with over 3.5 million visitors in July. Mike is the blog’s co-editor.  In April he told AOL that he was going to continue to edit the site, but resume investing in some of the companies that TechCrunch covers.  In his content, he’s been transparent about his interest in those ventures.

 The Firing

The firing was a reversal of the position AOL had taken earlier in the week, when Mike Arrington announced he had started a venture capital fund, called the CrunchFund, with a $10 million dollar financial investment from AOL itself!

The question is: can writers be allowed to invest in and trade on the news they publish?

Without opening a whole can of worms just yet, apparently AOL doesn’t think so.

Mike Arrington now alleges that AOL violated a promise it made prior to the TechCrunch acquisition-that the site would remain editorially independent.  Mike has since threatened publicly to quit (wait, wasn’t he already fired?) unless:

1.            AOL remove TechCrunch from Arianna Huffington’s control, or

2.            AOL sells TechCrunch back to its original investors.

Removing TechCrunch from Arianna Huffington’s control would mean a direct, public rebuke of Huffington herself. So it’s going to be interesting to see how AOL handles the situation.

What’s the issue?

The $20 million CrunchFund is in hot water over a traditional journalistic rule- that reporters should avoid conflicts of interest by maintaining distance from the issues they cover.  This raises questions of whether industry bloggers are journalists.  Or whether TechCrunch, for example, is successful precisely because the network of its editor; AKA: Michael Arrington feeds TechCrunch its stories.

Could TechCrunch survive without Mike Arrington?

Probably. With a new editor in place, the blog would be fine, but content and readership may be quite different because Mike’s network is what feeds the site’s scoop.

I personally think the public is better off having access to this guy’s thinking, all things considered, even if he’s got his own agenda.  At least he’s being transparent about it.  But yea, in many ways his value is in his Rolodex.  Coverage in TechCrunch (in other words: getting “Crunched”) can make or break a start-up, but what about companies that are not “Friends of Mike”?

What do I think will happen?

Mike Arrington will leave both TechCrunch and AOL, probably sooner rather than later. I think he’ll get his full payout and operate his new “CrunchFund” under a different name.

How will this impact AOL, TechCrunch and the Huffington Post:

AOL recanting its firing would be a public embarrassment and rebuke for Arianna Huffington, making it highly unlikely.  Mike abandoning the CrunchFund is also unlikely.  And finessing the issue, as has been done for the past week or so, would just mean buying more time.

Regardless of what happens, the situation is a COLOSSAL mess and a big embarrassment for AOL.

AOL acquisitions have come with a price– and I’m not speaking in just dollars.  For example, when AOL acquired Huffington Post, they also acquired Arianna Huffington as their editor in chief.

Arianna is a good business woman – after all, you don’t get $315M payout for your company without being cunning, but she’s widely disliked by journalists for censoring content.  If you went to a party full of journalists, no one would say ‘hey, you know, I love that Arianna Huffington!”

What Arianna says is what goes and what happens here with TechCrunch will happen with the other sites in the AOL network.

From what I have heard from other journalists within the AOL network and I know this is irrelevant: Arianna has outlawed the gratuitous use of heels in editorials. Her reason being that she is a tall woman and she doesn’t feel comfortable wearing them. She wants it to become commonplace in American culture and elsewhere that heels are just not cool- she’s pulling for flats.  I mean, if that’s true, it seems it’s her insecurities that shine through in her business dealings.

Tech and fashion should be in the voice of the writer.  And in many ways, it’s Mike Arrington’s knowledge of what’s happening in the VC space that makes TechCrunch so interesting.

 
  • http://www.sonshi.com Thomas Huynh

    Very cool and very professional!

    • http://shebytes.com Renee Schmidt

      Thanks for the positive feedback!