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AOL Sets Out to Reinvent Itself – Again | BNET

Tom — Wed, 09 Dec 2009 02:39:40 +0000

AOL CEO Tim Armstrong

Tim Armstrong, the ex-Google advertising sales chief now in charge of Time Warner’s AOL division, got a laugh when he spoke in September at an interactive media conference in New York. If only that was what he intended.

A tall, dark-haired 38-year-old, Armstrong looks a bit like the actor Jon Hamm who portrays Mad Men’s Don Draper, and despite his new media credentials, he is an old-school pitchman. The CEO of AOL talked passionately about how his company is reinventing itself as a content creator with an ever expanding universe of niche sites catering to everybody from political junkies to fantasy sports buffs to weather geeks to World of Warcraft addicts.

The only problem was that Armstrong overstayed his welcome, surprising the audience at the end of his presentation by proudly rattling off the names of his company’s 75 Web destinations. “He went through all the brands,” says Karsten Weide, an analyst at IDC who covers AOL. “It just wouldn’t end. Everybody started to snicker.”

A lot of people are bemused by AOL’s attempts to reinvent itself. The company has re-jiggered itself almost entirely to prepare for its December 10 spinoff from Time Warner. It’s as if AOL, whose name was once synonymous with the Internet itself, is now trying to become the world’s largest publisher of tiny Web sites.

The strategy isn’t as laughable as it sounds. After all, this is a company faced with an existential dilemma. AOL still relies heavily on income from 5.4 million subscribers, many of whom login using antiquated dial-up connections. (Yes, there are still folks who do that.) Douglas Anmuth, an analyst at Barclays Capital, estimates that dial-up users will generate 43 percent of AOL’s $3.2 billion in revenues this year and 60 percent of its $1.1 billion in earnings. But these customers continue to flee, and next year Anmuth expects the number of subscribers to drop by 27 percent. Even worse, he doesn’t forecast any revenue growth through 2014.

Betting on Incremental Steps

AOL execs have been dealing with this dial-up decline for a long time, of course. And they have made some big bets to try to kick-start the company, including AOL’s $850 million purchase last year of Bebo, an English social network. It was meant to take on Facebook. Have you heard much about Bebo since? Neither have we.

Now under Armstrong, the company is taking smaller steps—albeit quite a few of them. It’s building the future on an Internet publishing model that has actually been in place for several years at AOL. While the company is letting go a third of its 7,000 employees, AOL execs say they’re on a hiring binge when it comes to snagging more editors and writers to spawn more sites.

“We’re still hiring journalists,” says Bill Wilson, president of AOL Media who is in charge of the content and overseas 500 full-time journalists and 3,000 freelancers who are already shoveling material into AOL’s ravenous niche realm. He describes it as “the rebirth of AOL.”

AOL’s Lost Decade

Shortly after Armstrong arrived at AOL in March, he made a curious statement to The New York Times. He said the company was plagued by “an incremental culture. By moving in very small ways, we miss the big opportunities.”

The new CEO was clearly trying to galvanize his new employees. However, Armstrong didn’t quite nail AOL’s affliction. The company has repeatedly swung for the fences—only to strike out. This is, after all, the creature from the dial-up era that bought Time Warner, home of Batman, CNN and Time magazine, for $163 billion in 2000. The deal will go down as among the worst in corporate history. But nobody ever accused its architect, former AOL CEO Steve Case, of thinking small.

Case argued that he could turn his dial-up service into an Internet media colossus by funneling Time Warner’s movies, music and magazines exclusively to AOL subscribers. Unfortunately, this was just when consumers began migrating to faster broadband services provided by their cable providers.

The old Time Warner contingent rebelled. Soon, Case was gone. His old company became a division of Time Warner, one that was dragging down the parent company’s stock. Perhaps not surprisingly, AOL floundered. “They’ve had a lost decade,” says Brad Adgate, senior vice president of Horizon Media, a New York ad agency. ‘It’s like Winston Churchill’s wilderness years in the 1930s.”

In 2004, AOL started switched strategies, offering its articles, videos and games for free. But Yahoo and Microsoft’s MSN—its key competitors—had already been doing that for years. And Yahoo, the pioneer of the group, had amassed an enormous audience.

Obviously, AOL made a big mistake by not tearing down the walls around its garden of digital content sooner. Today, according to comScore, Yahoo dominates sports and finance on the Web. Time Warner’s CNN, AOL’s corporate sibling, rules the news category.

AOL sought salvation in mergers and acquisitions. There was the Bebo fiasco. Time Warner also tried and failed to sell AOL to Yahoo last year.

Stumbling on a Business Model

The irony of all this is that AOL’s current strategy was born out of a much smaller deal, which it did almost on a whim. In 2005, just when blogs were emerging and changing Internet publishing, the company paid $25 million for Weblogs, a startup run by online maverick Jason Calcanis that created such blogs as Engadget, a technology site, and Joystiq, a magnet for video gamers.

AOL didn’t just get these rapidly growing sites; it snagged an intriguing publishing model. “What AOL wanted when it bought Weblogs was a more efficient, blog-centric publishing model that it could extend across the rest of the business,” says Peter Rojas, the former chief strategy officer of Weblogs who has since created blogs like RCRD LBL and gdgt.

That’s exactly that happened. AOL used the Weblogs approach to create new sites that were even more successful. The most notable was TMZ, a gritty celebrity gossip site launched in 2005 by AOL and Warner Brothers’ Telepictures Productions. TMZ distinguished itself—some would say disgraced itself—early on by breaking the story of Mel Gibson’s scandalous DWI arrest and offering up unflattering pictures of Britney Spears. It was a runaway success.

Today, TMZ is the third most visited entertainment news site, according to comScore. AOL had similar good luck with FanHouse, a sports site. It’s the Web’s ninth most popular sports destination with a team of refugees from the New York Daily News, the Dallas Morning News and the Chicago Sun-Times.

Giving Each Site its Own Brand

In some cases, these sites carry the AOL name. But in the case of Politics Daily, a new site edited by a former New York Times writer Melinda Henneberger, readers must scroll down to the bottom of the home page to find any reference to the mother ship.

The reason is fairly obvious. It’s been more than a decade since Tom Hanks and Meg Ryan exchanged love notes via AOL in “You’ve Got Mail.” These days, people aren’t as smitten with the company and what it represents. In the age of Twitter, AOL isn’t exactly bleeding edge.

And while Wilson says the sites are gaining momentum, AOL still has a long way to go. ComScore says its monthly unique visitors declined by 11 percent in October to 98 million. Meanwhile, Yahoo, Google and Microsoft’s sites saw their eyeballs rise.

So you can see why AOL is creating Web sites at such a furious pace—three in April of this year, four in May, two in June and four more in July. The company is also trying to ramp up and better target content production with a soon-to-be-launched site called Seed.com that will let editors see which stories are resonating with readers. AOL just signed up former New York Times tech writer Saul Hansell to run it.

Then editors can assign more pieces on these topics to the company’s army of freelancers. More content, more eyeballs, more ad sales. AOL hopes it’s as simple as that.

Big Sites Lure Big Advertisers

The test will be whether AOL’s sites can attract more of the lucrative display ads that flow to Yahoo, in particular. According to IDC, Yahoo had a 17 percent share of the U.S. display market in the third quarter of 2009 while AOL only had 9 percent.

The problem for AOL is that many ad agency executives don’t think these niche sites are hefty enough yet. “None of their properties seem to be must-haves from a media-planning perspective,” says Greg Stern, CEO of Butler, Shine Stern and Partners, a Sausalito, Calif., based agency whose clients include Mini Cooper, Adobe and Priceline.com.

AOL’s response? It says it can deliver mass audiences by selling ads across its niche constellation. For instance, Wilson says AOL is particularly good at targeting hard-to-reach 18 to 24-year-old males who travel back and forth between Asylum, its Maxim-like destination, FanHouse and Engadget.

“We actually get a large network effect,” Wilson says. “We have all these people traveling though out all these sites—sometimes without them even knowing there is a connective tissue to AOL.”

This is AOL’s path to salvation. If it doesn’t work, it’s hard to imagine AOL surviving. If it does, there will be no more laughter when Armstrong goes into granular detail about niche publishing.

More on BNET:

Perspective: Yahoo’s Turnaround Efforts Are Straight from Steve Jobs’ Playbook

Chip Conley: Should I Take My Burning Man Pics off Facebook?

Four Principles of Apple’s Successes (and Failures)

Taming a Type-A Culture Gone Wild

The First Step to Landing Your Dream Job? Leave the Country.

via bnet.com

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The 19 bloggers Inc. thinks you should read

Tom — Sun, 15 Nov 2009 15:55:28 +0000

« How to Get Found | Main

November 06, 2009

The 19 bloggers Inc. thinks you should read

Inc. named 19 bloggers that you should read. We’ve aggregated them all in one place: Inc19.alltop.

November 06, 2009 in Entre/intra-preneurship | Permalink

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Wrapping up 2008 – the goods and bads.

Tom — Tue, 13 Jan 2009 02:25:54 +0000

2008 has been one of the most exciting years of my life. I did more deal making and met more people than in the last few years combined. This produced many surprise insights about business and human nature, especially as I uncovered tons of my own false assumptions.

Here are some of the things I learned and loved in 2008. I’ve linked to posts that I wrote when exploring some of the concepts in more detail…

Don’t underestimate the importance of your time. Look to avoid time suckers, orbiters and other costly favors from strangers. Nobody will protect your time other than you. Stay focused, stay on task and ask yourself constantly will this activity or person help me reach my goals? Exceptions: Items that help you move towards your major purpose in life – charity, volunteering or doing good deeds – Karmic actions will always pay you back in stride.

Try and help people and make the world a better place. Stay focused on those who get it – those are the ones who matter. Strive to do something interesting and fulfilling. It doesn’t matter how many people don’t get it or find ways to take your actions personally (you have to expect some critics).. F*ck ‘em. Think of life with a legacy to be left behind, which brings me to ….

My Favorite read of 2008: Last Lecture. One of the most readable books of practical philosophies I’ve ever had the fortune to encounter. Both are fast reads of 2-3 evenings. “Time is all you have…and you may find one day that you have less than you think,” as Randy Pausch wrote. Live life.

Outcomes are not the starting point.

Money doesn’t change you; it reveals who you are when you no longer have to be nice.

It’s not helpful get a big head. This makes you careless and annoying.

It’s also not helpful to get depressed. This makes you lethargic and pessimistic.

Strive for unwavering optimism with attainable goals.

Figure out who the people are you want to impress – those people with characteristics you want to emulate. Avoid self-doubt and aggravation by trying to impress people you don’t like.

Within 30 minutes of waking, go for a 30-minute walk outside with a puggle (or partner of choice). Ideally, hitting a Starbucks for A Venti Starbucks Double Shot on Ice with an extra shot of espresso with a Turkey breakfast sandwich is the best way to start the day.

Regret is past-tense decision making. Eliminate complaining to minimize regret.

I will not invest in companies when I cannot influence outcomes. For the first time in my life of investing – I moved all of my investments into fixed-income instruments this year, setting aside 10% of my portfolio for angel investments where I can contribute significant management, strategic, and corporate partnership help.

For me, if someone was to ask me what was the best year of my life – it was 1999. There were global crisis (Y2K), there was a bubble starting on the internet – the world was in flux. It was a year of change for me, a year of ups and downs. Looking back what I like most about that year – I was very successful in living a life where I did not have work/life balance but a drastic work/life separation.

Well…we’re nearing the end of another great year, and, despite what we read about the outlook for 2009, we can look forward to a New Year filled with opportunities as well as stimulating challenges. My vision is for 2009 is to have the best year of my life.

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The two keys for financing entrepreneurial ventures in 2009

Tom — Thu, 18 Dec 2008 23:19:41 +0000

Bootstrapping and Angel.

Given the recent market climate for more ’secure’ investments – its becoming more clear that Venture Capital, as an industry, will need to reform. Will Silicon Valley see the same meltdown as Wall Street? Probably not, however, a key point is must VCs are busy supporting existing investments rather than looking for new deals.

Landing venture capital is tough, even in a good economy. But given the ongoing financial crisis, how hard is it for early-stage companies to get funded right now?

Venture capitalists say entrepreneurs face a much higher bar than in recent years. They liken the downturn to a period of natural selection, when weak businesses will fail but strong ones will prosper. New companies that prove themselves now, they say, are better positioned to thrive when the economy recovers.

Proving out the model, running a slim and refined business without alot of money will prove, to the investment community, that the management team is capable and strategy is solid.

Now, the conversation with the investors will be – ‘are you going to be exponentially more successful with my money’ rather than ‘are you going to be successful with my money’?

I will try to provide over the next few weeks some tips and techniques in bootstrapping.

Tags: bootstrapping, venture capital, angel financing, entrepreneurial ventures, economy

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Venture Capital Today: Key Numbers to Remember : Technology :: American Express OPEN Forum Venture Capital Today: Key Numbers to Remember Nov 24,...

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Top 10 Christmas Animations

Tom — Wed, 17 Dec 2008 20:37:06 +0000

Today Lineboil.com posted the Top 10 Christmas Animations – check it out and lemme know what you think… It’s similar to ColdHardFlash, but we’re covering ALL animation – stop-motion, CGI, traditional and all other world-class animation we see.

Lineboil.com was founded by Aaron Simpson, who previously founded the popular animation website ColdHardFlash.com. Simpson is also an Emmy-nominated Producer of Coconut Fred’s Fruit Salad Island, a Flash-animated series for Kids’WB! In addition, at Warner Bros., he produced over a dozen development shorts and developed Johnny Test for the 2005-2006 season. Prior to Warner Bros., Simpson was Senior Producer of Original Content at Sony, where he helped architect a forward-thinking entertainment portal, Screenblast. Simpson has also held the position of Vice President, Animation at JibJab Media.

Tags: Christmas, Animations, Flash, Aaron Simpson, CGI, Entertainment

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ZERO! Slash at US Fed — Panic buying to follow?

Tom — Wed, 17 Dec 2008 19:43:10 +0000

The central bank opted to lower the federal funds rate to a targeted range of between zero and 0.25%. That’s the lowest level on record, going back to 1954. Does it really mean anything? Not really, the market has priced in 0% for some time, now the US Fed has finally caught up.

NOW, the interesting part, in reviewing the Fed’s decision today, was seeing an implicit desire to buy mortgage backed securities and agency bonds. So really the US Fed is the lender of choice in the US right now with the implied pledge to pump limitless money into the market.

Maybe the US Government should have just bailed out consumers directly right at the start…Case in point, in 1999, Japan made some similar moves – these had no real impact. Given this is one of the last weapons left within the Fed, lets hope it works.

Here’s where it becomes interesting—

IF we view the current situation as a true crisis in confidence — ie. “Emotional Sales” are down drastically because people are worried – so people aren’t spending in retail (side note – November Video Games near $3B – still showing strength as a “recession proof industry” , big auto hurting and looking still for bailouts, people are not buying houses , and investors have the S&P ‘over-sold’ when compared to historical levels.

IF this latest move by the fed works — are we going to see PANIC BUYING across the board?

Tags: USFed, Zero interest rate, November Video Game Sales, retail spending, central bank

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Time for Change…

Tom — Sun, 02 Nov 2008 04:52:14 +0000

It’s been eight long years since the boys said wassup to each other. Even with the effects of a down economy and imminent change in the White House, the boys are still able to come together and stay.

So kudos to the boys – and “Change, that’s what’s up, Change”!

Here is the original Budweiser version is here..

Tags: Obama, vote, change, imminent, bud, wassup, youtube

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Interviews on the Throwback Entertainment Blog…

Tom — Sat, 06 Sep 2008 18:52:28 +0000

Forgot to mention here on my blog that Throwback Insider interviewed me a few months back — interesting fellow that guy — during my interview I reveal that Mike Myers is more than welcomed to join Throwback and produce a game with us.
‘
There are interviews with our entire team
— Eric Radomski (Three-time Emmy Award winning producer/director. He has been credited on animated properties such as: Batman the Animated Series, Spawn, Freakazoid, Xiaolin Showdown and Scooby-Doo Get a Clue)
— Ken Duer (While at Warner Bros Animation, Ken Duer oversaw production on such hit series as Tiny Toons, Animaniacs, Batman, Batman Beyond, Superman, Justice League and Scooby Doo. He also was producer of the direct-to-dvd release: The Animatrix )
— David Siller (co-creator of Crash Bandicoot. Among his other creations are Maximo: Ghost to Glory and Aero the Acro-Bat)
— Yash Terakura ( credited as being the creator of the Commodore 64 and VIC-20. The Commodore 64 is considered the best selling computer of all-time selling over 40 million units and possessing 40% of the global personal computer market! After his time at Commodore, Yash served as president of Hal America for 6 years)

Currently, TI and Whoa are looking for article content /interview questions… please contact them.

Here is the direct URL of the blog

Here is the RSS feed link

Tags: ThrowbackEntertainment, Immersive Entertainment, Throwback, Acclaim, Ken Duer, Eric Radomski, David Siller, Mike Myers, Commodore 64, Scooby Doo, Batman, Spawn, Crash Bandicoot, Maximo

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Davis LLP’s Video Game Blog

Tom Maduri — Fri, 11 Jan 2008 22:11:55 +0000

Davis LLP has accomplished many firsts in video game law…Namely, Canada’s first Video Games & Interactive Entertainment Law Group, the world’s first Video Game Law blog, http://www.videogamelawblog.com ( there’s even a facebook group representing their large and loyal international following), and the first Canadian law firm to open an office in Second Life: http://www.secondlife.com. As far as lawyers go, these guys are pretty cool.

The team of authors cover such areas as Free Expression, Personality Rights, Piracy, Mods and Chips. A few of the authors were embroiled in an ongoing dispute about whether the USS Enterprise could defeat an Imperial Star Destroyer in a one-on-one fight. Mr Sprately says no; Mr Bennett says yes. Ok, so they have geeky tendencies, but its a great resource for anyone wanting to learn more about the business of gaming.

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