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The company, which focuses exclusively on local news, began with a handful of sites in New Jersey and Connecticut and is now in about 900 communities. It had an editorial staff of about 65 as of May 2014.
AOL bought Patch in 2009 for $7 million and announced in early 2010 that it would take its network from 30 sites to “hundreds” by the end of the year, pouring $50 million into the company in the process. AOL reported putting $75 million into Patch in 2010 and $160 million in 2011. It expected Patch to lose money in 2011, and other reports confirmed this, with one estimating its losses at more than $100 million and another reporting its revenue as $13 million against expenses of $160 million.
AOL did not give overall Patch profit figures, but reported that 100 of its 900 Patch sites were profitable at the end of 2012. Patch’s revenues increased in 2012 to $34 million, but it also laid off about 20 employees and consolidated its geographic regions in May 2012 and made further layoffs and regional consolidations in May 2013. Patch reportedly remained unprofitable at the end of 2012, and AOL expressed a reset goal to have it profitable by the end of 2013.
In mid-2013, AOL reported that about 300 Patch sites had a “viable business model,” and said it would try to close, sell, or find partners for 400 other Patch sites that it said were not on track to profitability. It reportedly laid off nearly 500 of its employees and segmented its sites into staffed (for its highest-traffic sites), lightly staffed, and unstaffed operations. AOL was reported later that year to be winding down its Patch operations, though AOL executives denied that they were shutting down the network. AOL sold the majority of Patch to the investment company Hale Global, which took over operation of Patch. AOL and Hale both initially said all of Patch’s sites would remain open, but two weeks after the sale, hundreds of Patch staffers were reportedly laid off. The network was reportedly profitable in early 2014, on pace for $21 million in revenue in its first year.
Patch has been met with various criticism over its staffing, revenue model and ability to reach local audiences. Incidents of plagiarism at Patch sites in California and New York and concerns about the overall quality of Patch reporting led some to question the experience of staff writers as well as the hours and workload those journalists face and the pay they are given, as well as their pressure to produce quantifiable results. Several critics have said Patch expanded too quickly without determining a stable business model, and some wondered at the time if Patch would be able to secure the amount of advertising from local businesses necessary to sustain sites and pay reporters. One result of the expansion of Patch sites nationally has been the reallocation of journalism to local reporting from newspapers.
After AOL acquired The Huffington Post in 2011, Arianna Huffington, who became editor in chief for all AOL media properties, announced the company would be investing more in Patch and hiring as many as 800 new employees. In May 2011 the company launched the Local Voices program, a blogging initiative that would invite community members to blog on various topics for their Patch site. The model is similar to the blogging platform used by The Huffington Post.
In July 2012, Armstrong announced that Patch would be moving toward a model based on classified-type listings and commerce. Its network-wide redesign began rolling out in September 2012 and had reached 100 sites by May 2013. Patch also launched a daily-deals project called Patch Deals.
AOL at one point announced plans to set up a $10 million venture capital fund for local-media investments.
The Sacramento Press is a for-profit online local news organization that covers Sacramento, Calif. The Press was launched publicly in 2008 by Ben Ilfeld, who ran the site until 2013, when he sold it to local marketer David Terry. It had an editorial staff of three in 2012, along with numerous unpaid contributors, about 110…