Yahoo (Nasdaq: YHOO) announced Tuesday it will acquire Associated Content (AC) for approximately $100 million, according to marketing news publication Ad Age. Some sources say the price is closer to $90 million.
The purchase of AC, the freelance-writers Web site that resells content on a wide variety of subjects, is part of Yahoo CEO Carol Bartz’s strategy to expand its content offering to match similar steps taken by AOL’s Seed and Demand Media.
The Bartz plan includes increasing ad revenue at Yahoo from additional content produced through AC.
�We see it not so much as AC�s content being on Yahoo, but as Yahoo now having this massive group of people that can provide content on any given subject,� said AC founder Luke Beatty.
AC taps 380,000 contributors for articles and snap shots, it says, of which, approximately 50,000 pieces of content are actually reviewed each month.
AC is among several similar Web sites offering low-cost content to customers seeking a boost to their offerings. Regular customers of the content industry include Cox Newspapers, Thomson Reuters and Gannett Company.
Yahoo’s move to snap up AC has elicited mixed reviews.
Now that Yahoo has bowed out of the search engine game, boosting content and associated ad revenue makes a lot of sense, with most analysts lauding Bartz for capitalizing on a powerful emerging trend on the Net.
�Yahoo needs growth, not cash, so this is a smart use of [approximately] $100 million. It’s also a business Yahoo (mostly) understands, so the company will be less likely to screw the integration up,� said Henry Blodget, CEO of Business Insider.
Others disagree. Yahoo’s strength lies with its home page and sub-pages where consumers have come to expect premium content, not content geared toward performance-marketing commonly offered by some second-tier web sites. Since the details of how AC fits into the Yahoo revenue model haven’t been fully disclosed, detractors of the acquisition may appear to have jumped the gun.
Yahoo’s Media VP James Pitaro explains: its all about attracting a niche audience, which Pitaro feels Yahoo can expand into quickly through the AC acquisition.
�This is about extending our content offerings so that we�re relevant to both a mass and a niche audience. It�s the next phase for our content business,� said Pitaro.
Pitaro said the acquisition helps Yahoo round out its media sites, provide local content, offer a platform to fit content to advertisers, and offer content to respond to the needs of niche audiences, �which is by the way something we�ve done historically but really will be able to scale now.�
Two years ago, Denver-based Associated Content’s Beatty offered to sell the company he founded in 2005 for $150 million. AOL chief executive Tim Armstrong is an investor in AC, and previously pursued the purchase of the company last year until Time Warner nixed the deal during the AOL-Time Warner separation. AOL has since started its own content creation system called SEED following its spin-off from Time Warner in December.
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