AOL Abandons Exclusivity in Favor of Ads
Forbes.comAOl is depicted as being an also ran behind Yahoo as a portal and Google as search in it's attempts to grab a share of online advertising.
"AOL is abandoning its strategy of exclusivity and will free much of its music, sports and other programming to non-subscribers in hopes of boosting ad sales.The decision could help the company counter declining subscriptions as Internet users move to high-speed connections. At least that's the plan"
Historically AOL thrived on selling Internet access plus exclusive programming, mainly attracting newbies but as users matured they dumped AOl packages and although AOL moved to pushing broadband they never regained the lost users...
"The company now has nearly 5 million broadband subscribers, up from about 3 million a year ago. But overall the number of U.S. subscribers dropped to 23 million in September, down from a peak of 27 million two years earlier."
The article points out that the shift to an advertising model could not have been launched any earlier due to the following:
"AOL wasn't in the business of producing content until a few years ago. It used to subcontract that work to outside companies like iVillage, which sold the ads. Since then, AOL has built not only an in-house content-development team but also an advertising sales network to capitalize on it.
AOL has also upgraded its technology to make it more compatible with the outside world. It has gradually switched from a proprietary programming language, known as "Rainman," to the hypertext markup language that powers the Web at large. It also has standardized ad formats; no longer would Moviefone and Netscape, say, have different rules on how big ads were and where they were placed."
The future user offerings are to be a mutant hybrid with some free and some paid for services although they remain upbeat:
Chief executive Jonathan Miller said "because advertising has a higher profit margin than subscriptions the company's profitability can grow even if revenues don't.
Jonathan Gaw, research manager at IDC, said AOL has strong assets to work with, but remains in a bind. The latest reincarnation, he said, shows all signs of "a company that is struggling to stay on top of a rolling log."
posted by Jen @ 7:01 am
<< Home