AOL CEO Tim Armstrong is giving more than a third of local Patch sites less than six months to live. Local towns that are still under-performing in revenue and traffic by the end of the year are going to be closed, sold, or merged. Armstrong and AOL are determined to make Patch profitable in the next two quarters.

In an effort to make the site more profitable, Armstrong has already reduced costs by 25% reported CNN. Now he and the staff at AOL are auditing the 900 Patch sites to see which can be saved and which ones need to go.

The Patch network reports local news from all across the country. They employ journalists with deep ties to the local community and drill down to the neighborhood level. Oftentimes, the Patch websites can become more niche than neighborhood print papers can. For example, Tampa is actually broken down into 23 different areas and North Atlanta alone has about 15 Patch sites.

Armstrong said there’s a chance that some areas will be able to consolidate their sites, which will increase traffic and decrease costs. Some however, may be shut down.

The problem is that Patch is caught in the middle between a local newspaper and a blog. It reports the news on a level of a paper, but was never actually in print. Conversely, Patch sites are competing with local blogs that people visit to find out what information is going on throughout the entire city that they live in. For example, someone might be interested in the news in their Orlando neighborhood, but they want to know what’s going on in the whole city too. Patch has the pitfalls of blogs and newspapers with the benefits of neither.

(Tampa Patch Websites)

Merging the copious Patch websites will take away the one good thing the pages have going for them: the hyper local connection. Now people will have to shift threw neighborhoods that they don’t live in or care about to reach theirs. Also, while this is a corporate move by a major tech company, the cuts will be felt on the local level. When people hear that a few hundred employees are laid off at a plant across the country, it feels far away, they’re disconnected. When their neighbor, friend, media contact, etc. gets fired, they understand the pain. AOL will become immediately unpopular in some segments of the country if they decide to close the hundreds of Patch sites and fire all the local reporters.

Armstrong and AOL really are damned if they do, damned if they don’t. Patch has struggled to make a niche for itself over the past few years, but ending the entire product makes the big, bad corporation look like it’s heartless towards the needs of local consumers. If AOL doesn’t play its cards right, it could end up with a ton of bad publicity and leave a bad taste in the mouth of consumers.