Arianna Huffington, pirate publisher or media saviour?

She's a former right-wing Republican who, in the 1990s, eagerly embraced Newt Gingrich's Contract with America. Today, she's considered one of the leading thinkers of the progressive wing of the Democratic party.

No stranger to the big flip, she once wrote a book in which she called the women's movement "repulsive" and argued that it would only "enslave" women, and mostly benefit those "with strong lesbian tendencies."

But now she is hailed as a powerful role model for women in business and the media.

She also believes she has developed a model that will help save newspapers. Her critics say it will have precisely the opposite effect.

A few years ago, Arianna Huffington, a 59-year-old immigrant from Greece, secured millions of dollars of other people's money to launch an internet newspaper modestly called the Huffington Post.

Now, nearly five years later, with the mainstream media reeling, the one fact about Arianna Huffington that is not in dispute is that she and her Huffington Post are clearly bucking the trend.

Success story

Want proof? How about the fact that the site is closing in on 10 million unique visitors a month, putting it well ahead of the web versions of such storied competitors as The Washington Post and The Wall Street Journal, and within sight of the mighty New York Times, with its monthly total of 16.6 million individual visitors.

What's more, those 10 million viewers represent a 150 per cent improvement over last year, defying the predictions of many who thought readers would lose interest once the passions of the hotly contested 2008 presidential campaign subsided.

Topping it off, the Huffington Post is actually making money.

It posted revenues of between $12 and $16 million in 2009 and the company itself is estimated to be worth over $100 million and rising, at a time when revenues and profit margins of many mainstream media outlets are on the down slope.

And while those same media companies are busy chopping thousands of journalists from their payrolls, Arianna Huffington is actually hiring!

The company now has 89 full time employees, up from 49 a year ago.

Eleven of those people are charged with the task of producing original content for the site. That's four more than last year.

So what's not to like?

Well, let's start with those 11 reporters. That's about enough to staff a small-town daily.

Add up Huffington's entire editorial staff and you have about 50 people responsible for thousands of pages of online content on politics, business, showbiz, sports and almost any other subject you can imagine.

By contrast, the editorial staff of the New York Times numbers more than a thousand people. 

So how do those Huffington Post journalists do it? Well, they don't of course.

The amount of original material generated by Arianna's tiny army of paid reporters and editors is minuscule.

The vast majority of content comes from two sources: dozens of mainstream print and broadcast sites, and an army of about 4,000 unpaid bloggers.  

These two sources have one thing in common — it costs the Huffington Post practically nothing to post that material on the site.

Meanwhile, the New York Times spends about $200 million a year on newsgathering.

Free content

Not a bad business model. No need for a large, profit-sucking staff if you're getting your content for free.

During a recent appearance (with Huffington) at the Monaco Media Forum, Mathias Dopfner, CEO of the giant German media company Axel Springer, couldn't resist stating the obvious. "If we didn't pay our journalists," he noted, "our profit margins would go up to 80 per cent."

But Huffington is unapologetic. "We don't pay for opinion pieces," she asserted in a recent interview.

"But then again, bloggers have no deadlines or commitments. They contribute when they want and as often or as infrequently as they like."

For their part, it's not surprising that thousands of bloggers are keen to get on the Huffington Post blog roll.

Where else can they get that kind of visibility and exposure to build up their own individual brands?

'Distributive journalism'

Even so, the idea that writers should receive no compensation for what they do rubs many people the wrong way.

Last year, for example, when Arianna Huffington received a lifetime achievement award from the Syracuse University School of Journalism, one critic, writing in Advertising Age, was outraged.

"The school which exists to train journalists should know better than to honour a woman who thinks journalists should work for free," declared columnist Simon Dumenco.

Even more troubling, according to many critics, is the site's liberal use of mainstream media content, and its refusal to pay for what it "repurposes."

This, they believe, poses an existential threat to the future of journalism.

"You can't have a situation where old-school guys are paying to provide smart content," Axel Springer's Dopfner argued, "and new-school guys are stealing that content and selling it to advertisers and not returning anything to the providers."

Not surprisingly, Huffington takes strong exception to the word stealing. She likes to think of it as "distributive journalism."

"Our model has always been to point to the best content available on the web and to drive as much traffic as possible to the sites providing that content, including newspaper sites," she says.

So far from being responsible for the death of newspapers, Arianna Hufffington sees herself as their saviour.

She will drive traffic to their sites, making them more attractive to online advertisers, thus boosting their bottom line.

But it hasn't really worked out that way.

Online eyeballs are not as valuable to advertisers as print eyeballs, so the ad revenue lost in print will never be recouped online.

Besides, many readers feel no need to click on the entire original article once they've read a generous portion of it on the Huffington Post.

With friends like this, the mainstream media won't be needing enemies.

Brew your own

In a recent interview with the Los Angeles Times, Huffington insisted that "our site is not built around the freebie."

But she also acknowledged that the question of how to fund journalism and pay a living wage "is still being worked out."

For his part, Dopfner believes it needs to be worked out quickly for his industry to survive, even though his own newspapers remain profitable.

And he is not alone. The battle between content aggregators, like Huffington, and content providers is clearly heating up.

Rupert Murdoch, CEO of News Corp, says he's tired of rolling over for "content kleptomaniacs" like Arianna Huffington. He's threatening to put all his print and broadcast content behind a giant paywall where they and other consumers can't get it, unless they're willing to pay for it.

For Dopfner, the key to solving journalism's current crisis is producing stories so compelling that people will be willing to pay for them, whether they're in print, or online.

There is no sustainable business model, he insists, that starts with the assumption that users should not have to pay for content.

"If you want to offer beer in the supermarket for free that's fine," he told Huffington in Monaco. "But if you do that, just brew your own beer. Don't take mine and offer it for free."