| All Things D
| Pando Daily
| The Hook
AOL released its first-quarter earnings today
, posting a 5 percent rise in advertising revenue and a 14 percent drop in subscribers to its Internet access business compared to the first quarter of last year. Domestic display ad sales declined by 1 percent, which Peter Kafka says will be "fresh meat for AOL critics
" like investment firm Starboard Value, which believes content is "a high cost strategy,"
that requires "substantial in-house editorial and sales personnel." It also says it thinks AOL's Patch has a "structurally flawed business model."
AOL's first-quarter report says "Patch grew traffic and advertisers over 40% year-over-year and revenue over 100% year-over-year."
During a conference call Wednesday morning, AOL CEO Tim Armstrong said that "there's a lot of noise about Patch" but it remains "a very long value proposition for us." Patch has already booked revenue for 2012 that exceeds revenue booked in 2011 and will be profitable by the end of 2013, in part by lowering expenses, he said. Expenses have been lowered as town and regional staffs have "smartly organized the editorial process." Armstrong also said Patch is planning a new product. Despite that growth, Kafka notes that "Traffic is down 4 percent to AOL's own properties over the last year." Armstrong said that in the first quarter total unique visitors grew, in particular at Huffington Post, Moviefone, Patch and AOL Autos. Huffington Post, he said, had one billion page views from Jan. 1 through March 31. Accompanying information, though, shows unique visitors at AOL properties are down since the second quarter of 2011, when it reported 113 million uniques; this quarter the company reports 108 million.