Once the Web darling, AOL is now banking on its ability to create content to return the company to the glory it once saw as the dominant Internet service provider.
AOL is quietly receding from its old subscriber model — 35 million Americans got Internet service from AOL in 2002, but fewer than 5 million do today — yet the company is reaching far more people through its content, which Nielsen ratings say attracts the seventh-largest audience of any Web brand.
"The AOL brand has one of the biggest legacies in terms of what has changed the world in the last 50 years," said Tim Armstrong, a former Google executive who was named AOL's chief executive in March 2009.
Armstrong leads about 5,000 employees remaining after buyouts and layoffs slashed AOL's workforce by a third over the past six months. But AOL, which is once again independent, having spun off from Time Warner last year, is getting behind an audacious goal: it wants to be the biggest newspaper (and magazine and TV network and movie theater) on the Web. It will create millions of pages of news, reviews, statistics, how-to guides — any content around which it can sell ads.
There's a long way to go: In the most recent quarter, AOL's sites attracted 2.9 percent of the display ad market, behind Facebook, Yahoo, Microsoft and Fox, according to Comscore.
To help the effort, AOL has created or bought some of the most popular sites on the Web: Engadget.com, for gadget geeks; PoliticsDaily.com, for politicos; FanHouse.com, for sports nuts; and DailyFinance.com, for business news.
The business of online advertising is a tough one, as newspaper owners have learned in the past decade. Margins are thinner online than in print, where scarcity of ad space allowed for much higher rates. The Internet offers infinite space and endless content, driving down ad rates.
AOL thinks it has a solution. Rather than just creating news sites that cover the story of the day, it is using Internet usage data to create content on subjects for which people are searching. If news about the latest American Idol castoff is pulling in lots of users, AOL's sites will create more content about it. The more pages AOL creates, the more pages users see, and the more ads it can sell.
How many pages could AOL create? There really is no limit, executives say. The firm has a site, Patch.com, that is creating hyperlocal content aimed at communities block by block.
AOL's Fanhouse site is creating home pages for every professional athlete in every sport in every league on Earth. Really.
But to prevail, analysts say, AOL must create a lot of that content cheaply. To that end, it has started Seed.com, which pays up to $50 per news article to anyone who can reliably string sentences together. AOL fuses that content with its professional, higher-cost content.
For example, a writer could earn $20 by submitting at least 15 quotes of dialogue from the movie MacGruber, which might be used on moviefone.com. Or one could collect $50 by contributing Real Stories From Men Who Have Been Cheated On, the best of which might appear on AOL's men's site, Asylum.com. "What happened, what did it feel like, how did you react and most importantly, what did you learn?" the assignment says. "You must include a photograph of yourself or your submission will not be considered."
But AOL executives stress that even if they get it for next to nothing from readers, content has to be good. Their reason: Google. The search giant's vaunted algorithm gives heavy weight to content that's good enough to be popular and widely recommended — the more times a page is linked to, the higher it rises in search rankings.
"AOL is definitely on the map in the digital media scene," said Bant Breen, president of the New York ad firm Initiative Worldwide. "The world demands high levels of content curating, and AOL has the ability to do that."