Each Patch Costs $150k A Year?!?

One analyst has estimated that AOL is spending $150,000 per year on each of its roughly 1,000 Patch sites, the WSJ says.

That’s insane.

We know that each Patch has a jack/jill-of-all-trades editor who makes around $40,000. Then there’s the freelance budget (roughly $26,000 a year, we hear) and the salary for each regional editor who oversees a number of individual Patch sites. Let’s estimate that each regional editor makes $100,000 and oversees five sites. That’s $20,000 a year per Patch.
Then there are the ad sales people, roughly $40k a year, but they must work on more than one Patch each; let’s be conservative and assume 3 sites per salesperson.

That’s $93,000 per Patch per year.

Someone at AOL want to tell us where the rest of the money is going?

At any rate, the $160 million per year AOL is reportedly spending on Patch pales in comparison to the $315 million it spent earlier this year to buy the Huffington Post; AOL also spent nearly $100 million last year to acquire TechCrunch, 5min Media and Thing Labs.

The Wall Street Journal argues that AOL is spending more than it can hope to make back.

“If you sell lemonade for $1 and it costs $800 to make it, that’s not a great business,” Robert Peck, managing partner at Quasar Capital Advisors, which advises Internet and technology companies, told the WSJ.

On the other hand, AOL CEO Tim Armstrong said that things are looking up: AOL’s domestic display-ad business should start growing in the second half of the year.