AOL will buy The Huffington Post for $300 million in cash and $15 million in stock, and put Arianna Huffington in charge of the AOL Local sites (MapQuest, Patch, MovieFone) as well as its growing collection of opinionated tech and vertical news properties, such as TechCrunch, Engadget and Popeater. AOL’s vertical sites, such as TMZ.com, run by David Eun — the former “MediaGlow” properties — will continue to be run separately.

The acquisition of The Huffington Post might be seen as the crown jewel of an AOL strategy that has rounded up some of the most provocative sites that bring consumers back to check multiple times a day. The Huffington Post will add its tabloid-like, huge headlines on its front page to AOL’s already successful funneling.

The service relies on the contribution of hundreds of inexpensive-but-often famous contributors who are happy for the exposure. It also relies on aggregated content. As such, HuffPo represents a different view of the industry’s future than Yahoo’s $100 million acquisition of Associated Content, which commissions content based on demand analyzed by search algorithm — although a content farm would fit too. AOL CEO Tim Armstrong was an original investor in Associated Content.

The Huffington Post gets a lot of mileage from its links to pictures of semi-naked women, and its provocative headlines, including, it seems, anything to do with Sarah Palin. It has a tabloid-like appeal and represents a liberal alternative to Fox News on the right. It receives more than 25 million unique visitors a month.

Strategically, however, The Huffington Post is more about its successful verticalization of 25 vertical headings ranging from politics, media and entertainment (the early ones) to newer ones such as green, books, divorce, comedy and college.

The vertical strategy, indeed, was first explored as The Huffington Post began to branch out in local, with city editions developed for Chicago, New York, Los Angeles and Denver. The irony is that local, after a big splash, has been backburnered by HuffPo as it saw a bigger bang for the buck by pushing more efficiently into the other verticals.

Will local become more of a priority under Huffington? It might, in a sideways manner. Editorially, Huffington noted on her site that Patch’s broad scale now provides “an incredible infrastructure for citizen journalism in time for the 2012 election, and a focus on community and local solutions that have been an integral part of HuffPost’s DNA.”

Business-wise, one of the reasons Patch has spent so heavily to launch so many editions so quickly is to scale nationally. That would allow it to heavily market the Patch brand — and attract national advertisers for geotargeting. With a broader collection of vertical content, the branding effort might now be more efficient. But the brand may not be Patch (or MapQuest, or MovieFone) so much as The Huffington Post.

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Huffington Post CEO Eric Hippeau defended the role of the site in journalism and said it is helping to herald in “a golden age of journalism” that has more content and audience participation than ever before.

Speaking at IAB’s Annual Leadership Meeting in Carlsbad, California, Hippeau noted that HuffPo is publishing 500 pieces of content a day, compared with the 100 pieces published by The New York Times. Each piece is curated constantly with the help of the site’s “hyper-efficient editor.” And it publishes 2 million comments a month.

Much of the content comes from newspapers and other media. But Hippeau argues, “I did not kill newspapers,” echoing the five-word acceptance speech of a Webbie award by site founder Arianna Huffington last fall. Rather, he says the site brings new users to newspaper sites by links, like Google.

In fact, he contends that newspaper sites are actually doing pretty well. It is the traditional print business that is hurting. Basically, it is a coincidence that “our business is soaring while circulation at newspapers is declining.”

“If I was starting a news business today, the last thing I’d do is hire a team of traditional journalists and buy a printing press,” he says.

Hippeau also contends that the site’s success in boosting usage is based largely on successful verticalization. While the site boomed during the Hillary Clinton vs. Barack Obama campaign, it is now only dependent on politics for 20 percent to 25 percent of its traffic. The site, in fact, has just launched its 13th vertical section: colleges. The section enables students to contribute campus-by-campus news for 50+ colleges.

The site also has four local editions (Chicago, New York, Los Angeles and Denver) and has also recently launched a sports site, which now accounts for 10 percent of its traffic. The timing was fortuitous as the launch occurred around the Tiger Woods scandals three months ago. “It is the gift that keeps on giving,” he says.

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