Over a week ago, Jeff Bercovici at Forbes wrote a massive takedown of Arianna Huffington, focusing on the fact that, with Tim Armstrong’s blessing, she was extravagantly hiring reporters and big names to the AOL-Huffington Post team, at a rate that might pose serious financial problems for the media company down the line. The questions Bercovici raised about expenditure at AOL-Huffington Post were similar to ones that analysts and shareholders are asking her at an investor day that AOL is holding right now. Bercovici posts her responses:
In response to an investor’s question about how “your interests are aligned with ours,” Huffington sought to defuse the notion that she’s on a shopping spree using AOL’s credit card. “I have a budget, and I have a long runway still in my budget,” she said. “I’m living within my means.”
“When we changed the freelancer model and let go of 90 percent of our freelancers, that budget became available to hire full-timers,” she said. “That’s the budget we’ve been using to hire. There has not been any increase in editorial budget. I inherited the budget that was there.”
As Bercovici notes, Huffington has hired some 75 new journalists since she arrived at AOL. That hiring was offset by the “by the dismantling of AOL’s network of more than 1,000 freelancers.” So Huffington’s claim that she is sticking to the budget is certainly reasonable. The only question is whether 75 reporters plus unpaid bloggers is worth more than 1,000 freelancers to a news organization. Tough to tell at this point, but it’s a compelling experiment for new media.