AOL On Its Own Again

The big news today is that AOL, the high flying company of the 90s Internet with the ubiquitous Sign Up Now for 500 hours of Free Internet CD’s that served as coasters at many a dot-com era social gatherings, has completed their split from Time Warner.

I did a big project at AOL in 2007-2008 and it’s always interesting to hear people’s perception of the company. There’s generally some sort of visceral reaction to AOL both good and bad. For many AOL was the company that first helped them get online, send email and surf the web. They kind of wonder what happened. How could a company that flew so high and came to symbolize an era be in such bad shape.

In this brave new world, the life cycle of companies move at warp speed. AOL was doing so well and worth so much at the height of the dot com boom – enough to buy Time Warner for more than a $100 billion – but just ten years later it is struggling for life and valued south of $3 billion. Where once they had more than 25 million subscribers paying $19.95 a month for their Internet access (a cash flow wet dream) they now have less than 6 million people (and less every month) paying half that. Their new business model will need to rely on the more fickle and competitive display ad market.

The new strategy of Aol. (now on their second re-branding of the decade after the original America Online was shortened to AOL) is to be an original content producer — writing topical, search engine friendly articles and developing niches to ride the long tail which they hope will draw lots of eyeballs to sell ads alongside those articles.

When I worked at AOL it was a gutted company. The workforce had endured wave after wave of staff reductions. The organization was very top down and the compensation and bonus system that I was privy to working with the HR Technologies Group awarded the top managers lavishly while the grunts were cycled in and out. There was not a lot of room for ideas to bubble up from the bottom. And like many years ago with their proprietary “Rainman” software, they had been slow to incorporate open source software in their product development leaving themselves behind the curve in a Web 2.0 world.

AOL also has a gigantic campus close to the Dulles Airport in Loudon Country, VA. As they morphed into a media and advertising company in recent years, the location left them far away from the action. While they did change their official headquarters to New York City in 2007, they still own the massive complex with six buildings that can hold upwards of 10,000 people and promises to be mostly vacant for years to come. (While I worked there in the summer of 2008, budget cuts meant they could no longer water the grass, and it all turned brown in the blazing Northern Virginia August heat. A powerful symbol and metaphor of how the once mighty had fallen.)

It will be interesting to see if the new management team (that includes many Google expats) can turn it around. While the new strategy does have it skeptics, the web is now fueled by real-time searching and if you can feed that monster there could be viewers and advertising dollars to follow. It would be an amazing turnaround.

The End of Handcrafted Content [TechCrunch]

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About brohanyc
interaction design, information architecture, content strategy.

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