In a post announcing the launch, editor-in-chief Arianna Huffington noted that “when it comes to media, Japan presents unique challenges and opportunities.” Mobile permeates the market, and “the Japanese are voracious users of social media and social-networking sites — not only Facebook and Twitter, but smartphone [social messaging] services like Line, Comm and Gree.”

Along with topics like zen meditation, tea ceremonies and crying baby contests, Huffington notes that HuffPost Japan will be covering “one of my favorite subjects, sleep — from capsule hotels to the abundant photoblogs of people sleeping on trains.”

Thursday’s ruling comes as part of a case that begin in early 2011 when two Democratic political operatives, Peter Daou and James Boyce, filed a lawsuit stating that they had presented the idea for HuffPo in 2004. The pair claim that Huffington and Lerer then cut them out of the process, launching the site in 2005 and claiming the idea as their own.

In October 2011, New York Supreme Court Judge Charles Ramos threw out seven of eight claims in the case but allowed one claim — based on the state claim of idea misappropriation — to go forward. Since then, the parties have been wrangling over procedural issues and Daou and Boyce filed an amended complaint.

In addressing the amended complaint, Ramos allowed the idea theft claim to go forward as well as those for fraud and unjust enrichment; he tossed a fourth claim for breach of implied contract.

“Plaintiffs have adequately alleged that defendants took the information that plaintiffs provided, secretly shared it with another person, camouflaged the origin to make it appear as it came from that other person and, in effect, stole the idea and developed it with that other person,” Ramos wrote in letting Daou and Boyce go forward with the fraud claim.

In the same ruling, Ramos rejected Daou and Boyce’s request to subpoena the CEO of AOL, Tim Armstrong, rejecting arguments that Armstrong had essential knowledge about the founding of the Huffington Post. AOL bought the Huffington Post for $315 million in the spring of 2011.

Today’s ruling does not mean that Daou and Boyce have won the case. Instead, it means they have cleared a crucial procedural hearing and, thanks to the added claims, can proceed to a trial with a stronger hand.

“The court has made only a preliminary decision based solely on the uncontradicted allegations of the complaint and without any consideration of the proven facts,” a Huffington Post spokeswoman said. “As we have said from day 1, there is no merit to these allegations. They are make believe. With this ruling, we will now be able to move for summary judgment and lay out the actual evidence in this case. We look forward to the opportunity to present the full record to the court.”

Here’s the ruling:

Order upholding HuffPo complaint.pdf by

This story was updated at 8:30 p.m. ET with a statement from the Huffington Post and at 9:30 p.m. ET with a slightly updated version of the statement from the Huffington Post.

Maymann, who co-founded a content distribution company acquired by AOL in 2011, will be tasked with growing traffic and revenue at Huffington Post and at the site’s big video investment, HuffPo Live.

He will report to the site’s founder, Arianna Huffington, who is now president and editor-in-chief and with whom Maymann has worked closely in building HuffPo’s international brand.

AOL bought the Huffington Post in February of 2011 for $315 million, a move that surprised media watchers and that set off drama and turf wars as top figures jostled for position. In recent months, AOL has been hitting its stride as it appears to have found a way to manage its media properties like Huffington Post and TechCruch from a distance.

Maymann recently spoke to my colleague Robert Andrews at a media forum in Monaco where he stressed that independent operations were the key to the HuffPo’s brand and success. You can find more of his observations and an audio interview here.

Speaking to me at Monaco Media Forum, AOL Huffington Post Media Group international SVP Jimmy Maymann said:

“I can say for sure AOL is not shopping Huffington Post. But there has been a lot of interest.”

“It’s not on the cards. AOL is the owner. But I cannot stand here and say, some day, ‘AOL will not sell it if the price is high enough or there is a better owner’. But, right now, AOL is a good owner for Huffington Post and we’ll keep it.”

Maymann said investors had come forward.

Putting things right

Controversy and in-fighting dogged the post-acquisition integration, even as AOL effectively charged HuffPo with running and reinventing all AOL content itself.

“It came down to a few comments Arianna made around the integration,” Maymann told me. “No-one went out and said ‘that’s not the case’.

“One of of the things we potentially didn’t get right at Huffington Post was that it was totally integrated in to AOL, with the same tech team, HR and finance.

“Now we’ve taken a step back — Huffington Post, within AOL, is a standalone business. Only with that way can you unlock the full potential of it and have people feel that it is still Huffington Post DNA and culture.”

Going global

HuffPo has rolled out to post of its five non-U.S. markets by leaning on partnerships with legacy newspaper publishers.

“There are at least 10 more markets that we need to cover off,” Maymann told me. “We are giving a two-year period to break even and (launching) where we believe we can be in the top three or five in the news category in a given market.”

Although HuffPo launched in to the UK’s fiercely competitive news market minus a newspaper partner, Maymann revealed: “There has been interest from some of the players in the UK market to do a partnership after the fact.”

He told an earlier Monaco Media Forum panel: “Asia is the next tier of markets on the list. We expect to announce a partnership in Japan in the next couple of weeks. We expect to launch our first (Asian) editions beginnings of next year.

“We are negotiating in South Korea and in India. China is very interesting but also a very difficult market to do anything in unless you want to be regulated by the government, which is not the DNA of Huffington Post.”

TechCrunch is here to stay

Despite rumours, Maymann also committed AOL will retain the technology news site.

TechCrunch is a very interesting property that we have high ambitions for. We are going to see some very international growth plans for TechCrunch and it will stay in the AOL family.

“There were some hiccups and bumps on the road. But no-one is bigger than the brand and the brand is still thriving.”

Election numbers

Maymann said Huffington Post clocked 10 million unique visitors on U.S. Presidential election day. On the new HuffPo Live video initiative:

“It’s still early days. we’re still two weeks in. We’ve seen some very good early numbers.

“We will support it even more next year. We need to see the model works commercially in the U.S. before rolling it out elsewhere, but it is the plan to take it elsewhere too.”

“Across HuffPo Live, we had more than a million people taking part (on election day).”

The network launches with ten hosts, “eight hours of live programming out of New York and four hours out of Los Angeles each weekday.” Highlights will be shown overnight and on weekends. Huffington Post reporters, bloggers and editors “will be an integral part of the programming, making regular appearances that will give viewers a real-time sense of what is happening on verticals all across HuffPost.”

Users can weigh in from smartphones, tablets and webcams. Each story is accompanied by a large red record button and “Join This Segment.” Users are asked to explain what makes them “a good guest on this topic” in 140 characters or less, provide contact info and then record their take. Coming this morning are segments about Mitt Romney’s choice of Paul Ryan for Vice President, Arianna Huffington talking about work/life balance, and how gun control measures in Australia could be a model for the United States.

Each video segment is accompanied by a set of “Resources,” links back to “key articles” (both from the Huffington Post and elsewhere), tweets, polls, maps, photos and charts.

The hosts are Marc Lamont Hill, Abby Huntsman, Alicia Menendez, Alyona Minkovski, Nancy Redd, Mike Sacks, Ahmed Shihab-Eldin, Jacob Soboroff, Janet Varney and Josh Zepps. The hosts come from a variety of backgrounds: Ahmed Shihab-Eldin worked for Al Jazeera, for example; Abby Huntsman is the daughter of former presidential candidate Jon Huntsman, and Nancy Redd is an author and speaker on women’s body image and former Miss America finalist.

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

The Huffington Post’s transformation from an upstart collection of unpaid bloggers and over-aggregators into a traditional media entity seems virtually complete now that it has become a weekly magazine — a virtual iPad magazine, but a magazine nonetheless. The title/app, simply called Huffington, was launched on Wednesday with a New York-style party befitting its eponymous founder and by Thursday it was reportedly the number one app in the Tunes store. But isn’t the Huffington Post supposed to be a creature of the web and the age of social media? Is launching a subscription app for the iPad a smart way of branching out, or a sign of old-media thinking run amok?

The magazine — which costs 99 cents for a single issue, or $19.99 for an annual subscription — looks and feels very similar to many other magazine apps for the iPad. As Joe Pompeo noted in his article on it at Capital New York, it is designed and laid out to mimic a traditional magazine, with the short items up front as a kind of appetizer section, followed by meatier long pieces in the middle, some eye-catching photo features, and then some shorter links as dessert at the end of the magazine. And it doesn’t take hours to download as some iPad magazines do.

One obvious reason to have such a thing is to appeal to advertisers — since online advertising is notoriously low in value, and print (even the digital illusion of print) is still worth more. And there could be readers who are looking for a weekly summary or longer read. But at the same time, magazine apps are also a very old-media thing to do: apart from Sir Richard Branson’s abortive experiment with the standalone iPad magazine Project in 2010, most apps come from existing media entities like Conde Nast and Time Warner and are clearly an attempt to duplicate the old scarcity model traditional media outlets are so fond of.

So is Huffington Post magazine a savvy strategic decision aimed at broadening its appeal for both readers and advertisers, or a throwback to the bad old days when media tried to control the platform the content appeared in? Here’s a breakdown of what is smart and what isn’t:

• Smart: Having a print or digital magazine in addition to a free website is arguably a smart move, since it might appeal to a different market. The Christian Science Monitor stopped printing a daily newspaper but continues to put out a print edition weekly, and has seen some good results from that strategy — and Politico has a printed version despite being a digital-native entity. Some people will always prefer the old style of content consumption.
• Dumb: As Jason Pontin of MIT’s Technology Review recently pointed out, magazine apps often don’t accomplish much and cost a lot in terms of time and resources. Tech Review has dropped its app strategy completely and is looking into developing subscription content and features through its website instead. As John Borthwick of Betaworks mentioned recently, focusing on the container is not always a good thing.
• Smart: You could argue that having a number of options when you are a media company makes sense, whether it’s some kind of paywall or subscription model, or an app that people pay for — media industry analyst Ken Doctor says that success will come from many different things, not a single magic bullet. And since web-based advertising is not enough as a standalone revenue source for most digital media companies, why not try an app?

• Dumb: One of the downsides of an iPad-based strategy is that you have to cut a deal with Apple to be part of the Newsstand, and that means you have to pay 30 percent of your revenue to the company. Publishers such as the Financial Times have decided that this isn’t really worth it, and have moved to a web-native HTML5 approach, which cuts down on development time for an iPad app and can be used anywhere — and gives the media company 100 percent of the revenue.
• Smart: Huffington Post has included a number of things in its app that set it apart from the mainstream magazine app, and one of those is reader comments. This is something many publishers ignore, but it is one of the core parts of the Huffington Post experience (whether you like them or not) and it drives a huge amount of engagement: one of the stories in the app had 1,300 comments when I last checked, all of which can be read and replied to on the iPad version.
• Dumb: As nice as it is, Huffington is still a weekly magazine, and so it suffers from all of the flaws that any other weekly like Newsweek or Time suffers from — such as the fact that some of the content is going to be stale. The most recent version had an item about British Prime Minister David Cameron forgetting one of his children at the pub, which was interesting a few days ago but not so much now. Perhaps some people still like the weekly read, but how many of them are there?

In the end, the magazine might be a worthwhile experiment for AOL — which is trying desperately to generate new revenue streams — and might help to burnish the image of the Huffington Post as it tries to become a reputable and mainstream media outlet. But despite its strengths, it is still a backward-looking approach that has more to do with paywalls and other old-media gambits than it does the kind of web-based creativity the Huffington Post was once known for. Will it work? Perhaps. But that doesn’t mean it will say anything interesting about the future of media.

The story of the site’s founding is the subject of a bitter lawsuit filed by two Democratic political advisers who claim Huffington blatantly stole their idea for a leftwing alternative to the conservative Drudge Report.

In October, a New York judge dismissed a number of claims but allowed Peter Daou and James Boyce, both former advisers to Presidential candidate John Kerry, to go forward with a state claim based on theft of an idea. The judge later allowed them to conduct document discovery of the defendants.

The discovery process produced a number of emails and minutes from meetings that are described in the amended complaint filed today.

The complaint argues that the emails help show that Huffington and her business partner Kenneth Lerer built the Huffington Post on a stolen idea and that they actively recruited others to help them implement it while stringing along Daou and Boyce:

Huffington and Lerer likewise were secretly communicating in December 2004 with a political activist named Andrew Breitbart in an effort to persuade Breitbart to participate, without Boyce and Daou [..] the timing of these discussions exposes Defendants’ fraudulent intentions, because Defendants were already in discussions with Breitbart about Plaintiffs’ ideas … at a time they were still pretending to be working with Plaintiffs. [...]

Breitbart’s “quick first email pass at the idea” identifies the very same two primary components of the website that Plaintiffs had previously identified for Huffington and Lerer: [...]  This “quick idea” – which became The Huffington Post – is the very idea that was stolen from Boyce and Daou.

The late Breitbart was a prominent conservative journalist who, after falling out with Huffington, claimed that he “created the Huffington Post” and that  “I drafted the plan. They followed the plan.”

The new complaint also includes emails from Daou to his aunt, writer Erica Jong, in which he claims credit for founding the website. In another email to President Obama’s former press secretary, Robert Gibbs, that was allegedly forwarded to Huffington herself, Boyce refers to being “involved with the Huffington Post” from the beginning.

In public statements and legal filings, Huffington and Lerer have downplayed the role of Daou and Boyce and claimed that the ideas they presented in an ideas memo are different from what the website actually became.

The new complaint also contains allegations of a cover-up based on minutes of a meeting held between Huffington, Lerer, Breitbart and an editor in which the group debated what “narrative” to offer the media about the Huffington Post’s origins:

Breitbart proposed this answer: “I knew what was missing in the blogosphere, I just needed the rolodex to be able to put it all together, and Arianna provided that. … Arianna called Andrew to talk about an alternative to the Drudge Report. Andrew called Arianna about the group blog – there’s nobody he knows besides Arianna who could make this work.” [...]Deceitfully, however, the “narrative” wrote Boyce and Daou out of the picture entirely.

The emails and other documents cited in the new complaint don’t appear to contain smoking gun proof that Huffington schemed to cut out Daou and Boyce after stealing their idea. But the new allegations, including an email in which Huffington appears to have forwarded a confidential business plan written by Boyce to a subordinate, could strengthen the plaintiffs’ case.

The plaintiffs also use the documents to reassert new claims for fraud and breach of contract that the judge had initially struck out last October. The overall legal process is likely to drag on for many more months.

AOL bought the Huffington Post for $315 million in the spring of 2011. The acquisition has proved rocky in recent months and led to rumors that the two entities might part ways.

Here is the amended complaint:

Amended HuffPo Complaint

The plot seems to be thickening at AOL, at least when it comes to Arianna Huffington’s role at the former portal. She confirmed to the Wall Street Journal that her role within the company has been reduced, something that was the subject of much speculation after a New York Times story last month said her power base had actually increased and also revealed later that private-equity firms have approached her about taking HuffPost private. But how would the site fare if it was removed from AOL’s grasp? And if that did happen, would it be the beginning of the end for the faded Web giant?

The New York Times piece in April portrayed the changes in Huffington’s role as largely positive, with a headline that said, “Huffington gains more control in AOL revamping” and noted she had been given back the control over various aspects of Huffington Post — such as the technology side and the marketing side — that had been absorbed by AOL. As the Wall Street Journal story makes clear, however, these gains also came alongside a substantial loss of power over other parts of AOL that used to fall under Huffington’s purview, including the Patch hyperlocal unit and sites like TechCrunch.

If private equity makes a bid, would Arianna jump?

At the Guardian’s Activate summit on digital media in New York on Thursday, the Huffington Post founder joked about a “billion-dollar Kickstarter” fund she was raising to buy back the network from AOL, but she maintained that her relationship with CEO Tim Armstrong was just fine and that she had no intentions of leaving the company. She did admit, however, that private-equity funds had approached her about possibly mounting a bid to extract the Huffington Post from AOL and taking it private as a separate company, although she claimed to have no interest in doing this.

Huffington’s insistence that everything is fine between her and AOL’s CEO — and that she doesn’t mind at all having her power base at the company reduced and isn’t considering an exit or a buyback of her empire — may be 100 percent sincere. But there have also been persistent rumblings from within AOL of her dissatisfaction with Armstrong (and vice versa), her ambition to perhaps take over from him as chief executive, and her frustration with the way AOL has handled the merger of the two companies following the $315 million acquisition of HuffPost last year.

So it’s worth wondering what might happen if a private-equity bid for Huffington Post did actually become a reality. Would Arianna and a team of financial backers even be able to offer AOL enough to pry the HuffPost away from Armstrong or the AOL board? It’s become fairly clear in the year following the purchase that the Huffington Post’s assets are the primary engine of whatever editorial growth AOL has been able to produce — since whole swaths of AOL’s former content business were demolished to make way for Huffington-generated editorial — and the company would probably not give that up lightly.

Could a HuffPost sale be the beginning of the end?

Any private acquisition offer would also have to take into account the fact that AOL is generating a lot of the traffic that now goes to Huffington Post, thanks to the rebranding of the former AOL News and the way the company directs links toward its new acquisition in other ways. If the HuffPost were to be spun off as a separate entity, it would lose a lot of that juice and thereby a lot of the economic value of the advertising that comes with it.

There is one possible option that would solve both of these problems, but it may not be one Armstrong wants to consider: The sale or spin-off of Huffington Post could be bundled together with some of AOL’s other media assets as part of a dismantling of the entire company. The AOL CEO has allegedly been looking at a number of ways of generating some value from the former portal — whose dial-up business is in rapid decline — including a potential merger with the equally moribund Yahoo, a deal that would potentially include asset sales like the recent auction of AOL’s patents.

Whatever happens, the status quo doesn’t seem like it’s going to last very long. Arianna Huffington didn’t get where she is by sitting quietly in the background while someone else runs the show. Either she takes Huffington Post private and becomes the master of her domain once again — a deal that could involve gutting AOL completely — or she stays the course and makes the case to AOL’s board and its increasingly frustrated shareholders that she is the source of virtually everything that has any value in AOL, at which point she takes control over the whole thing. Sorry, Tim.

Huffington and Armstrong appeared at our paidContent 2011 conference, shortly after AOL announced its acquisition of the Huffington Post. Check out the video of their session, in which they spoke about what they had in mind for the then-new version of AOL. In the meantime, we’ll continue to discuss these media issues (and more) at our upcoming paidContent 2012 conference in NYC. Register today.

http://blip.tv/play/gZ5GgqqfGQA%2Em4v

Post and thumbnail images courtesy of Flickr users Robert S. Donovan and dutchmassive

It was quite a conveniently timed piece of gossip because, today at Business Insider’s Startup 2012, CEO Henry Blodgett had a chance to ask Huffington directly if she had any interest in taking her startup back from AOL’s corporate clutches.

Her breezy response: “I would like to announce a Kickstarter campaign to raise $1 billion… The first $1 billion campaign to buy the Huffington Post.”

Joking aside, she said, “I’m very happy, Tim Armstrong is very happy.”

But as the Huffington Post has grown, she added, private equity has expressed interest in it. (In its post yesterday, Business Insider said that in addition to the rumor about Huffington going to Armstrong with buyback intentions, it heard another bit of gossip about private equity approaching Huffington with designs to support her in a bid to re-purchase the site.)

When asked about whether she considered leaving Huffington Post after its sale to AOL, she said (as she’s said before) that her intention was never to exit, but to leverage AOL’s resources to make the most of HuffPo’s momentum. As evidence of that, she said, video views on the site are up 60 percent.

She also said that she’s focused on unlocking more of her site’s potential and making it more independent, but while sticking to a startup mentality when it comes to costs. “I still have the same budget I had at acquisition,” she said. “I’m a very frugal Greek peasant girl.”