News aggregator site Huffington Post has just made its first acquisition: Adaptive Semantics. It's a tech firm whose systems will help HuffPo with is main business of bringing together content, and comments from readers. Most publishers are satisfied with licensing someone else's technology to do this sort of thing. So why did HuffPo decide to buy? Because the business is hotting up.
Huffington Post has a long history of controversy, blended with an innovative business model that has challenged many preconceptions of how a news publishing business can work. The company has often been faced with accusations of outright content theft, and indeed in some of its modes of operation it's been hard to see its wholesale content capture-republish mechanisms as anything else. But Ariana Huffington's site has also embraced technology--even employing a system which game-tested automatically generated headlines for stories by seeing how well customers clicked on different versions before settling on the optimum headline which would, in theory, garner the site the most income from paying ad partners.
It's unclear exactly how HuffPo will use Adaptive Semantics tech any more than it already does--the site has long used the startup's code to help moderate its 100,000-plus daily comments. But since HuffPo was the biggest customer before the purchase, we can imagine that it'll be business as usual, and the acquisition is more about protecting HuffPo from competitors using or even buying up some of its core tech.
The acquisition is also about the future: The two-person Adaptive Semantics team (Elena Haliczer and Jeff Revesz) will be overseeing HuffPo's research and development. As HuffPo attempts to double its ad sales revenue, the site will demand ever more creative tech. Plus as social media becomes truly ubiquitous, it's possible that HuffPo will be looking to exploit its commenter base in novel ways.
The Huffington Post has to pursue an aggressive strategy to expand its business as the market is getting more and more competitive. AOL, for example, recently announced that it would be adding thousands of new content generators to its staff. This will push its volume of "news" content published daily sharply upwards, and to compete in the aggressive market HuffPo will have to make some very smart business decisions very fast.
And as the traditional news sites begin to lock away their content behind paywalls, it's even possible that some of the news wells that HuffPo used to tap will begin to run dry.