Patch lays off hundreds of employees

Patch, a hyperlocal news website that had pages devoted to 900 cities nationally, yesterday laid off hundreds of its employees after an ownership change. A source told Jim Romenesko that 80% to 90% of Patch employees were fired.

In the Bay Area, The Alamedan website reported that one editor, Autumn Johnson, is now overseeing 20 local Patches in the East Bay. The names of other local editors on Patch sites have been removed, presumably because they have been laid off.

AOL sold a majority interest in the money-losing website to Hale Global, an investment firm that specializes in turning around troubled companies.

Hale plans to keep all 900 Patch sites open, but instead of providing local reporting the website will become a content aggregator, presumably using stories generated by newspaper and TV station websites.

The fired employees will receive their yearly AOL bonuses, a payout for accrued vacation time and two months’ severance, according to TechCrunch, an AOL property.

"Patch had long been a sore spot on AOL’s balance sheet," TechCrunch's Matt Burns wrote. "The outlet failed to become profitable after Aol acquired it in 2009. Patch is estimated to have cost Aol between $200 million and $300 million to run. In 2012 Aol CEO Tim Armstrong made a commitment to turn Patch around. In 2013, sites were consolidated or closed and staffing was cut. Still, nothing seemed to help."

Patch was the latest attempt by a company to crack the local news niche online. Before Patch, there was Microsoft's Sidewalk/Digital Cites/RealCities (late 1990s) and Backfence.com (2005-2007).

Patch to close as many as 300 sites, layoff 200-500

Patch, the hyper local chain of websites owned by AOL, will be firing 200 to 550 of its employees and shutting down hundreds of its websites, according to TechCrunch, which is owned by AOL.

AOL CEO Tim Armstrong is avoiding the word “layoffs” and calling those being shown the door “impacts.”

Armstrong said he is hoping to salvage some of Patch’s websites by finding “partners” in their communities.

Jim Romenesko said his sources say that up to 300 of Patch’s nearly 1,000 websites will close.

Today (Aug. 9) Armstrong said in a conference call with all employees that the site closings will happen over the next seven days, according to Romenesko.

Just three minutes into the call, Armstrong fired an employee, creative director Abel Lenz, who started taking pictures of the meeting, Romenesko reported.

“Something at Patch has been missing and missing for some time and that’s leadership – leadership with a capital L,” Armstrong was quoted as saying.

Selling ads on the hyperlocal websites has apparently been an uphill battle. Romenesko quoted one insider as saying that managers in some markets celebrated $150 sales each day while paying the rep $200 a day to sell these deals.

Sales rep says Patch.com won't work

"Sales have dropped dramatically so there's a tremendous morale problem within Patch," said one of the hyperlocal website's sales people told BusinessInsider.com. "The editorial staff has been worked to death and they've already changed it over once, effectively. The same thing is going on the with sales force."

BusinessInsider didn't name the sales rep who spoke out about Patch.com. The anonymous rep is also quoted as saying:

• "When it gets down to paying the editors, paying the sales staff, paying the management and the requisite expenses that go along with that, the numbers just do not compute. The advertising cannot support the local Patch model the way it stands. From a dollar standpoint, it simply will not add up."

• "The problem with Patch is that if you really look at the model, banner ads have been around for 15-20 years online, and it's essentially an old product with a new twist on it from a local news standpoint." 

• Patch.com wants to launch a Groupon-like product but hasn't been able to figure out the phone app part.

The anonymous rep blamed a lack of leadership for Patch's problems, saying the company was so hasty in trying to be the first to market in the hyperlocal segment that they "forgot that quality people are essential to getting anything off the ground."

"I've never seen anything as bad as Patch, ever," the rep said.

Patch declined to comment to BusinessInsider.

Jim Romenesko of Poynter has postedM an e-mail from Patch communications vp Jannie Iamunno that gives the company's point of view. Major points include:

• "Patch is filling the gaps in local journalism. In analyzing study findings for your readers, I hope you’ll consider the below facts on Patch’s growth, commitment to providing hyperlocal news coverage in a prolific and consistent way, and editorial accomplishments via its nearly 1,000 professional journalists." 

• "Patch currently publishes nearly 5,000 articles per day across its 827 sites, and posts new content every 12 seconds." 

• "Last week, Patch broke the story of Gov. Chris Christie’s use of a state-funded helicopter to attend his son’s high school baseball game; national outlets including the NYT, WSJ, CNN, NBC News, ABC News, Fox News picked up the story and credited Patch."

Patch editors told to boost production

The website Street Fight, which covers the hyper local news industry, has obtained an email from Patch Editor-in-Chief Brian Farnham telling his local editors that they should increase the number of items posted each day on Patch's local sites. Patch has 800 sites nationwide including 30 in the Bay Area. Each site is devoted to one city and has its own staff reporting local news.

Farnham's argument is that unique pageviews will increase if editors post more items. Patch currently requires every site to post a minimum of four times per day.

... right now we’ve got 68 sites producing 6 or more articles per day, so we know it can be done. I can also say that because “article” does not have to mean “800 word piece.” And I can say that because of this: in South Florida, 14 sites just completed a three-month test that proved you can do 7 posts a day, hit your UV goals, come in under budget, and cut the LE work hours to between 40-50 hours/week. ... So not only is more production possible, done smartly it’s possible to do with less pain. ... 

If one of your sites is producing less than 4 posts a day (and unfortunately, there are a lot of these — nearly 350) immediately talk to that editor about it. This should not be a punitive conversation, it should be a collaborative discussion about how to improve things. (Are they spending too much time reporting and writing long articles? Are they too caught up in editing freelancers?)”

When Street Fight asked Patch about the memo, a spokesperson said both the figure of 68 sites producing six or more stories a day was wrong as well as the figure of 350 sites producing less than four stories a day.

Farnham, in an interview with Street Fight, confirmed that Patch's new emphasis is on "quick hits," including smaller bits of news as well as daily photo posts.