Deep Cuts at Patch, AOL’s Local News Sites

The cuts were an effort to reach profitability in a division that has failed to gain traction with consumers and has suffered huge losses financially. Patch’s troubles have been a source of frustration for AOL’s chief executive, Tim Armstrong, who helped found the service in 2007 when he was an executive at Google. Shortly after arriving at AOL in 2009, Mr. Armstrong had the company acquire Patch.

Patch’s idea is to provide an online network of local news sites, filling the gap in coverage left by newspapers that have either closed or greatly scaled back their investment in reporting in response to declines in advertising revenue.

The company said it had analyzed the performance of the approximately 900 Patch sites and identified about 60 percent as high-performing ones that should remain intact. AOL said it would look for partners to operate 20 percent of the sites that are considered viable, and it would close or consolidate the rest. At its current staffing, Patch has more than 1,000 employees.

“Patch’s strategy will be to focus resources against core sites and partner in sites that need additional resources,” AOL said in a statement. “Additionally, there are sites that we will be consolidating or closing.”

The statement added: “Patch has become an important brand across many towns in America. The Patch team across the country has served and will continue to serve communities with journalism and technology platforms. Unfortunately, with these changes we are announcing today, we will be reducing a substantial number of Patch positions.”

Some investors, skeptical that Patch can succeed, have urged AOL to dump the service altogether. The company has told analysts that it expects Patch to be profitable by the fourth quarter of this year.

Mr. Armstrong has said he is confident in Patch’s potential. The company says that the service has 3.5 million newsletter subscribers and 4.7 million registered users, increases of 138 percent and 181 percent in a year-over-year comparison. It says that between April and June, Patch had a 10 percent increase in traffic compared with the same period in 2012.

Patch’s troubles were the backdrop for an embarrassing episode for Mr. Armstrong last week. During a conference call with Patch employees, he became angry with an executive who was videotaping the proceedings and fired him on the spot, as employees listened. He apologized on Tuesday for the manner of the firing.

In Utah, a Local Hero Accused

Mr. Johnson, 34 at the time, had never traveled to Haiti before. But his decision to stage a private airlift, using his own aircraft, did not surprise his friends and family. They were used to his impulsive acts of magnanimity.

Six feet tall, with unruly red hair and a toothy grin, Mr. Johnson was well-known around St. George for deploying his own helicopter to rescue hikers stranded in nearby canyons and for housing families fleeing from polygamous communities. One local resident who befriended Mr. Johnson when they were both Boy Scouts described him as “one of the most Christ-like people I have ever come to know.”

In Haiti, Mr. Johnson piloted his own helicopter, flying infant formula to remote orphanages, evacuating injured children and delivering 110-pound bags of beans and rice to outskirts of Port-au-Prince, said another friend, Daniel Gardner, who joined him on the mission. On the last day of the 12-day trip, Mr. Johnson gave away personal possessions — a baseball cap, his iPod — down to the hiking boots he had been wearing, Mr. Gardner recalled. Mr. Johnson flew home with his feet clad only in striped Paul Smith socks.

“When I think of Jeremy Johnson, I think of the most generous person I ever met,” said Mr. Gardner, an assistant loan officer in Provo, Utah. “Whatever he had, he would give and give and give.”

But what Mr. Johnson had to give — and it was quite a bit — may have come from consumers who got taken. The Federal Trade Commission says Mr. Johnson was “the mastermind” behind one of the largest and most intricate online marketing frauds ever perpetrated in the United States.

Mr. Johnson founded and ran a company called I Works, which, the agency says, marketed programs to help people get government grants for personal needs and earn easy money. According to a civil complaint filed by the F.T.C., the company lured consumers with online pitches for free or “risk-free” CD-ROMs that required only a nominal shipping fee and then charged their credit cards for recurring online memberships they were unaware of and had not consented to.

Over five years, Mr. Johnson, along with I Works, company executives and related corporations, supposedly swindled “unwitting consumers” out of more than $275 million, the complaint said. The company also discouraged dissatisfied customers from seeking refunds from their credit card companies, the complaint said, by threatening to report those customers to a company-operated consumer blacklist called BadCustomer.com.

All the while, proceeds from the enterprise were used to finance Mr. Johnson’s “lavish lifestyles” of helicopters and houseboats, classic cars and poker at a Las Vegas casino, according to a receiver’s report to the court on Mr. Johnson’s assets. Some details in the case file read as if they came from an Old West novel: according to testimony from a witness, Mr. Johnson supposedly amassed bundles of cash and buried caches of gold.

“This is the anatomy of a really interesting fraud done by a clever guy at the expense of the most vulnerable people,” asserted David C. Vladeck, a professor at the Georgetown University Law Center who worked on the case in his previous job as director of the F.T.C.’s Bureau of Consumer Protection.

Mr. Johnson has repeatedly and vehemently denied any wrongdoing; a court filing by his defense team describes the F.T.C.’s argument as “filled with half-truths, distortions and inflammatory rhetoric that is not supported by the evidence.” The purpose of BadCustomer.com, for instance, was simply to steer people to his customer service centers, he said in a court filing.

In addition to the F.T.C.’s civil case, taking place in the United States District Court of Nevada, he is now facing 86 related criminal charges — including conspiracy, money laundering and bank fraud — brought by the United States attorney in Utah. Mr. Johnson has denied those charges, too.

“We did not commit any fraud whatsoever,” he wrote in an e-mail to an F.T.C. lawyer in 2011.

Over the last 19 months, in an attempt to clear his name, Mr. Johnson has mounted a campaign that accuses federal agents of misdeeds, including interfering with his right to a fair and speedy trial. Because of his jeremiads, federal prosecutors asked a judge in federal court in Salt Lake to prohibit him from further public commentary. In May, the judge imposed the order on Mr. Johnson, along with others in the criminal case including defendants, defense lawyers and prosecutors, prohibiting them from making public statements about the case.

Melodie Rydalch, a spokeswoman for the United States attorney in Utah, said federal prosecutors could not comment on the criminal case because of the order. Peter Kaplan, a spokesman for the F.T.C., declined to comment on its case “given the posture of the litigation.” But in hundreds of court filings, federal regulators paint a portrait of I Works as an enterprise that went to great lengths to lure online users even as consumer dissatisfaction mounted. Rather than modify their business practices, an F.T.C. court filing says, “defendants adopted strategies that allowed their fraud machine to continue reaping millions of dollars from unsuspecting customers.”

Bits Blog: A New Google App Gives You Local Information - Before You Ask for It

Google has created a new mobile app that gives people facts about the places around them — unprompted, without the need to even ask for the information.

The app, Field Trip, offers historical trivia about a park, an architectural factoid about a building or reviews of a nearby restaurant. Google says it’s like having a local friend with you as you make your way through a city.

“The idea behind the app was to build something that would help people connect with the real, physical world around them,” said John Hanke, a vice president of product at Google who runs a small lab at the company building location-based and social mobile apps. “It’s always running in the background, so it knows where you are and is always looking to see if something interesting is in your immediate physical environment.”

While the app might seem small, it reveals a lot about the big directions Google wants to go.

Google, along with other companies and researchers, dreams of so-called ubiquitous computing or ambient intelligence — computers woven into the texture of life as opposed to being separate machines. Eventually, the theory goes, computers will be part of the environment, know where people are and anticipate what they want to know.

The Field Trip app is a small step in that direction, and an example of what Google is capable of doing. Another is Google Glass, the Internet-connected eyeglass frames with a small screen. With Field Trip, Google is trying to move beyond the first generation of mobile apps, which were not much more than desktop transplants, Mr. Hanke said.

Google wants to “move the device out of your way and put the information front and center,” he said, so people can “scan the environment and know what the Web knows about the places around you.”

Fans of “Iron Man,” “The Terminator” or William Gibson’s science fiction will recognize this idea of augmented reality, he said. “What we’re doing is essentially building the information framework and tools to enable that kind of experience in the future.”

More immediately, Field Trip is a big step toward helping Google get its services and ads in front of mobile users. While it has long been a dream of advertising companies to deliver ads to people on their phones when they are near a business, that is still relatively rare. But with Field Trip, Google is able to show restaurant reviews from its Zagat service or sell deals from Google Offers or city tours from Vayable, all based on a person’s location.

In addition to Google’s own services, most of the information in Field Trip comes from a few dozen publishing partners, some esoteric, including Arcadia Publishing, Atlas Obscura, Curbed, Eater and Cool Hunting.

Field Trip uses signals from nearby cellphone towers to determine a user’s location. Its users can choose from which publishers they receive alerts — so they could turn off alerts for Google Offers, for instance — and how frequently they want to receive them. They can also choose not to receive alerts, in which case they open the app to find information.

Users can also ask Field Trip to read them notifications if the phone is connected to a headset or Bluetooth or if they are driving — and the app will determine on its own that they are driving based on how fast they are moving.

Mr. Hanke, who co-founded Keyhole, a mapping start-up that Google bought to help it develop maps, was the head of Google Maps for several years. Last year, he decided he wanted to leave Google to found another start-up. But Larry Page, Google’s chief executive, persuaded him to stay, Mr. Hanke said, and start a small lab in San Francisco. He named it Niantic Labs, after a ship that traveled to San Francisco during the Gold Rush.

Field Trip is available for Android phones; Google is working on an iPhone version. To introduce the app, Google on Saturday is playing host at parties in New York, San Francisco, Los Angeles, Boston, Chicago and Minneapolis for people to explore the cities. Attendance is free. Registration is at FieldTripDay.com.

Aereo Distributes Local TV Channels via the Internet

These were not your standard rabbit ears. They were thumbnail-size slivers, neatly arranged in rows. Behind Mr. Lipowski stretched rows of rectangular shelving units with dozens of sheets just like the first.

“There’s enough in here to accommodate a half million people,” he said. “And that’s just the beginning.”

The army of antennas is at the core of the ambitious service Aereo is introducing, first in New York and then across the country. Aereo picks up local broadcast channels like Fox and ABC and streams them over the Internet to mobile devices and TV sets. Its subscribers, who can record shows to watch later, pay fees starting at $8 a month.

Aereo executives say they are looking ahead to a future in which many “television” watchers have never had cable, or even a TV, and grab their favorite shows piecemeal from a number of online sources. In that sense they are joining the many other companies, including start-ups like Boxee and hardware juggernauts like Apple, that are trying to position themselves for the next wave of entertainment and media spending.

“The goal is not to recreate the cable companies but to create an alternative for people who are coming into television from the Net side first,” said Chet Kanojia, Aereo’s founder and chief executive. “There’s an emerging population of people who have never signed up for traditional cable packages, who are used to customizing their own TV experience.”

The rows of antennas are helping Aereo walk a fine legal line. Broadcasters want to shut the company down, claiming that it is violating copyright law.

Repackaging television transmissions without permission or payment would ordinarily be a blatantly illegal endeavor. But Aereo says it assigns each subscriber two antennas, allowing live viewing and recording at the same time, and lets a customer watch only the programming that those antennas pick up. It claims this is not so different from a person’s buying an antenna and a DVR at RadioShack and hooking them up to a TV at home.

Aereo’s headquarters are in clear view of the Empire State Building, the source of most of the local TV stations’ broadcasts. The signals are converted into an Internet-friendly format and streamed live or funneled to hard drives for playback — with individual copies for each subscriber who has requested a show.

“A single copy for a single user is not a copyright issue,” Mr. Kanojia said.

Broadcasters do not see it that way. Soon after Aereo introduced its service in February, a group of 17 stations, including Fox, NBC, CBS and CW, sued Aereo, accusing it of illegally capturing broadcast signals in New York and saying it was stealing copyrighted content.

But in July a judge ruled in Aereo’s favor, denying a temporary injunction to shut the company down and allowing it to keep operating — for now. The broadcasters have appealed the ruling and say they will not rest until Aereo is out of business.

“We believe that upon appeal, Aereo will be found to be a copyright infringer in violation of the law,” said Dennis Wharton, a spokesman for the National Association of Broadcasters.

The other significant problem Aereo faces is luring customers. Dan Rayburn, an analyst at the market research firm Frost & Sullivan, said that the company’s service would appeal to a niche audience at best.

“Aereo says a large market would be 300,000 subscribers, but that’s not even 1 percent of the entire market of people who pay for TV in the United States,” Mr. Rayburn said. “That’s not disruption.”

Mr. Rayburn cited the service’s sparse content — a handful of channels per city — and its technical requirements. For now, Aereo requires an Apple mobile device and, for those who want to watch on a TV, a Roku box.

With Web Sites, Local Boutiques Grow

“Denim is always tricky,” said Ms. Pontius, 53, a retired nurse. “But they kept sending me different kinds of jeans until I found what I liked. That’s hard to do with a big store like Barneys.”

Totokaelo, which recently moved from a 1,000-square-foot store to one seven times bigger, does an average of 70 percent of its sales online, according to its staff. It’s one of a number of independent boutiques across the country whose Web presences are thriving, giving them breadth and influence beyond their neighborhoods. Managing to cultivate feelings of intimacy and loyalty in an electronic venue, along with an in-the-know atmosphere, they are arguably the 21st century’s answer to London’s Biba in the 1960s, or Charivari in the ’80s.

“We launched the Web site in 2008 and the business doubled overnight,” said Jill Wenger, Totokaelo’s owner. One reason? “Personal relationships and educating clients,” she said.

“How can I distinguish myself from massive Web sites that can crush me in terms of return policies and free shipping?” Ms. Wenger asked. “What Totokaelo can provide that those companies can’t comes back to relationships and people.”

All customers who buy online from Frances May, a store in Portland, Ore., get handwritten notes on library cards and carefully wrapped packages, said the owner, Pamela Baker-Miller.

“If you spend $500 on a dress, you want it to feel special,” said Ms. Baker-Miller, who said her store does about 30 percent of its business online, often sending measurements or answering questions in detail to help close a sale (quickly issued refunds do not hurt, either).

“We’ve cultivated a great group of loyal customers,” she added. “We give thorough answers. We know what they like and what size they wear.”

Frances May has online customers who live in Portland yet reserve items for pickup or trying-on later; it also has far-flung customers who were not even aware that there is a brick and mortar store.

“Not everyone can shop in the neighborhood,” said Joe Lauer, who owns Penelope’s in Chicago, which he said does 15 to 25 percent of its business online, “but our Web site really opens up our shop to a wider audience.”

Local boutiques are facing competition not only from department stores and larger online presences such as Net-a-Porter, Shopbop or La Garçonne, but also from Web giants like Zappos and Amazon, which in May announced an aggressive foray into the world of high fashion.

And shoppers are becoming increasingly savvy at playing the contenders off one another, as Amy Mautz, owner of Conifer in San Francisco, has experienced firsthand.

“A customer whipped out her phone and asked me if I could price match a pair of Swedish Hasbeen clogs with Amazon,” said Ms. Mautz, who did not match Amazon’s price (the customer bought them from her anyway). “It makes me feel like what I need to do is become more specialized, find smaller, newer lines, and get more things that no one else has.”

Alec Stuart, an owner of Stuart & Wright in Fort Greene, Brooklyn, does not compare his store to larger competitors.

“Being such a small business, there’s only a small staff and when everyone is really invested, it translates,” he said.

Jade Lai, who owns Creatures of Comfort, which has stores in NoLIta and Los Angeles, noted that “there’s always going to be a bigger online store than us.”

“It’s not going to change what we do,” she said, which includes giving logo stickers and canvas totes with orders, and sending cards at holiday time.

In West Hollywood, Calif., Joe Cole, an owner of Tenoversix there, said his online sales are up 30 percent this year from 2011, thanks in part to “more editorial flair” and improved functionality on the site.

“Our customer is not looking for the best deal,” Mr. Cole said, but rather a curated selection of clothing.

Owners of local boutiques stress that their personalized viewpoints give them an advantage in the crowded retail field.

With Web Sites, Local Boutiques Grow

“Denim is always tricky,” said Ms. Pontius, 53, a retired nurse. “But they kept sending me different kinds of jeans until I found what I liked. That’s hard to do with a big store like Barneys.”

Totokaelo, which recently moved from a 1,000-square-foot store to one seven times bigger, does an average of 70 percent of its sales online, according to its staff. It’s one of a number of independent boutiques across the country whose Web presences are thriving, giving them breadth and influence beyond their neighborhoods. Managing to cultivate feelings of intimacy and loyalty in an electronic venue, along with an in-the-know atmosphere, they are arguably the 21st century’s answer to London’s Biba in the 1960s, or Charivari in the ’80s.

“We launched the Web site in 2008 and the business doubled overnight,” said Jill Wenger, Totokaelo’s owner. One reason? “Personal relationships and educating clients,” she said.

“How can I distinguish myself from massive Web sites that can crush me in terms of return policies and free shipping?” Ms. Wenger asked. “What Totokaelo can provide that those companies can’t comes back to relationships and people.”

All customers who buy online from Frances May, a store in Portland, Ore., get handwritten notes on library cards and carefully wrapped packages, said the owner, Pamela Baker-Miller.

“If you spend $500 on a dress, you want it to feel special,” said Ms. Baker-Miller, who said her store does about 30 percent of its business online, often sending measurements or answering questions in detail to help close a sale (quickly issued refunds do not hurt, either).

“We’ve cultivated a great group of loyal customers,” she added. “We give thorough answers. We know what they like and what size they wear.”

Frances May has online customers who live in Portland yet reserve items for pickup or trying-on later; it also has far-flung customers who were not even aware that there is a brick and mortar store.

“Not everyone can shop in the neighborhood,” said Joe Lauer, who owns Penelope’s in Chicago, which he said does 15 to 25 percent of its business online, “but our Web site really opens up our shop to a wider audience.”

Local boutiques are facing competition not only from department stores and larger online presences such as Net-a-Porter, Shopbop or La Garçonne, but also from Web giants like Zappos and Amazon, which in May announced an aggressive foray into the world of high fashion.

And shoppers are becoming increasingly savvy at playing the contenders off one another, as Amy Mautz, owner of Conifer in San Francisco, has experienced firsthand.

“A customer whipped out her phone and asked me if I could price match a pair of Swedish Hasbeen clogs with Amazon,” said Ms. Mautz, who did not match Amazon’s price (the customer bought them from her anyway). “It makes me feel like what I need to do is become more specialized, find smaller, newer lines, and get more things that no one else has.”

Alec Stuart, an owner of Stuart & Wright in Fort Greene, Brooklyn, does not compare his store to larger competitors.

“Being such a small business, there’s only a small staff and when everyone is really invested, it translates,” he said.

Jade Lai, who owns Creatures of Comfort, which has stores in NoLIta and Los Angeles, noted that “there’s always going to be a bigger online store than us.”

“It’s not going to change what we do,” she said, which includes giving logo stickers and canvas totes with orders, and sending cards at holiday time.

In West Hollywood, Calif., Joe Cole, an owner of Tenoversix there, said his online sales are up 30 percent this year from 2011, thanks in part to “more editorial flair” and improved functionality on the site.

“Our customer is not looking for the best deal,” Mr. Cole said, but rather a curated selection of clothing.

Owners of local boutiques stress that their personalized viewpoints give them an advantage in the crowded retail field.