AOL is planning to hire hundreds of journalists, editors and videographers in the coming year as it builds up its content-first business model. David Eun, president of AOL’s media and studios division, says: “We are going to be the largest net hirer of journalists in the world next year… Our mission at this company is to be the world’s largest producer of high-quality content, period.” He argues that “the content driving our traffic is home-grown, and 80% of it is now produced by folks on the AOL payroll.” AOL employs about 500 full-time editorial employees. The content operation, which includes more than 100 brands, including AOL Health and AOL Autos and brands such as Fanhouse and PopEater, will be reorganised into 17 separate “networks” that the company will package to advertisers. In addition to hiring staff, Eun also wants to ramp up the number of freelancers contributing to AOL. Currently, there are about 40,000 freelances contributing to AOL.
Buying a fledgling social networking site is the quickest way for a giant corporation to gain credibility with a youthful audience, but it is also the fastest way to waste a few hundred million pounds.
US internet giant AOL snapped up Bebo, the UK equivalent of Facebook, for $800m two years ago, only to announce last week that it was embarking on a “strategic review” that is likely to lead to its closure. At the time of the deal in March 2008, which made millionaires of Bebo’s founders Michael Birch, a Briton, and his Californian wife, Xochi, AOL described it as “a game-changing acquisition” that “puts us in a leading position in social media”. That lead evaporated remarkably quickly.
Back then, Bebo had a global audience of between 7.1 million (according to online ratings company Nielsen) and 40 million (said Bebo). Most agreed it was the third largest social networking site in the UK behind Facebook and MySpace, although it had struggled to gain traction in the US. According to figures from ComScore, Bebo’s global unique visitors in February 2010 totalled 12.8 million, down 45% on February 2009. Facebook had 462 million visitors, MySpace nearly 110 million, and Twitter 69.5 million.
What went wrong? Being brought by a global corporation tarnished the cooler-than-thou image of an independent start-up that was particularly popular in school playgrounds. Aggressive expansion by Facebook also played a part. Like most social networking sites, Bebo also benefited from a novelty factor that can disappear as quickly as it emerges. News Corp, the media conglomerate controlled by Rupert Murdoch, bought MySpace for $580m in 2005, only to watch its appeal diminish along with its value as it loaded the site with adverts.
ITV took a gamble on another UK start up, Friends Reunited, paying £120m in the same year, only to sell it at a huge loss last year. Company insiders criticise AOL for failing to invest in Bebo, and point out that an acquisition by a corporate giant tends to stifle creativity. That may hide a more uncomfortable truth, however, which can make a mockery of the savviest owners. Social networking sites are businesses based on the fickle behaviour of internet users, who are free to move on to the next site when a competitor emerges and are offered few reasons to stick with their existing site. In that sense, Bebo was a fad.
It may not have fallen into the trap of letting naked commercialisation scare its teenage users away, but nor did it evolve in the manner that many of its competitors did. Facebook is used by adults as well as children. Much of Twitter’s power, influence – and likely longevity – derives from the fact it has become a professional tool, rather than an online outlet for gossip posted by its users.
Start-ups rarely fare well when they are taken under the wing of a bureaucratic corporate parent, and Bebo may also have suffered by hitching its wagon to AOL, a business that has itself seen better days. It is owned by Time Warner, an American media giant that owns CNN, Time magazine and a host of other assets, but the $162bn deal that brought AOL and Time together is now regarded as one of the most disastrous in corporate history.
Buying Bebo was an attempt to build on AOL’s status as the world’s first internet provider by bolting on a new audience, but internet users are notoriously promiscuous. For Bebo’s young users, the site turned out to be the online equivalent of a teenage crush – intense while it lasted, but it didn’t last…
Faded Internet star AOL is reinventing itself as a digital age news operation with an army of freelance writers wielding online tools. Fresh from being spun off by Time Warner in December, AOL launched Seed.com to groom freelance writing talent to crank out stories for its array of websites on topics ranging from pets and sports to politics and technology. “AOL is repositioning itself as a news and information company,” Seed programming director Saul Hansell said Tuesday as he demonstrated the website at the annual South By South West (SXSW) gathering of technophiles. AOL editors post assignment descriptions on an online Seed bulletin board. Pay for writing jobs ranges from five dollars to 300 dollars per article. Writers then submit their versions of a story along with headlines and pictures. AOL editors sift through queues of submissions deciding whether to accept, reject or kick stories back for improvement. Authors names are displayed on stories at AOL Web properties without “asterisks saying ‘look at the cute little citizen journalists,'” Hansell said. Freelancers that have proven themselves may be given personal assignments and invited to pitch story ideas. Seed is in a testing phase and is expected to evolve with feedback
More than 200 new sites have adopted hNews microformatting, the new transparency system for organising metadata in news stories, the Associated Press has confirmed. hNews, a past winner of the Knight News Challenge, attaches location and authorship information to news stories. It also provides the subject matter of the story, where it was written, any usage rights associated with it and any news principles to which it adheres. Part of the Value Added News project, it was launched by the Web Science Trust – of which Sir Tim Berners-Lee is a trustee – and the Media Standards Trust. This month’s new sites join hNews existing partners OpenDemocracy, AOL and TownNews. In July 2009 the AP announced it would trial the microformat on all AP news stories and launch an AP Developer API in beta, making news stories in the new microformat available to third parties.
AOL is pushing ahead with its focus on creating content by launching two websites, Owl and Seed, which allow users to post “expert” advice and get paid for submitting essays and photographs. Despite being in the midst of a major redundancy programme, AOL is pressing ahead with new launches as part of chief executive Tim Armstrong’s strategy of doubling its content properties in the next 12 months. Owl, which is currently in Beta, claims to be a “breathing library where useful knowledge, opinions and images are posted from experts the world over”. It covers topics such as arts and entertainment, health, lifestyle, money, science and technology and sports. The site encourages users to upload and share their thoughts by submitting content via Seed. Seed, also currently in Beta, gives writers and photographers the opportunity to submit work either on any topic they like or in answer to a brief posted by AOL. Payment to writers for open submissions is 50 percent of AOL’s profits if the piece is exclusive or 20 percent if it is not. Where pieces are submitted in response to a brief AOL takes exclusive rights over the content in return for payment calculated by a formula taking into account advertising and page views for the pages where the content lives. The site will be housed within AOL’s Media division, which was rebranded last year from MediaGlow.
US Internet company AOL announced on Tuesday that it intends to close its French and German offices as part of a worldwide round of job cuts. AOL began meetings at its European offices on Monday, when it announced plans to shut down installations starting in Spain and Sweden. AOL, which was spun off from media giant Time Warner last month after a troubled merger, had announced in November it would take a 200-million-dollar charge as part of a restructuring as it regained independence. In December, AOL said the reduction in the workforce, representing about 2,500 jobs, was to be voluntary, with involuntary lay-offs to be used only if the restructuring target were not met. But only 1,100 employees took the voluntary departure programme, AOL spokeswoman Alysia Lew said on Monday. In the United States, the New York-based company said it began notifying “a limited number of individuals” affected by the lay-offs on Monday, with the majority of the pink slips being delivered on Wednesday. AOL, which employed 19,000 people in 2006, will have 4,400 employees after the restructuring plan is completed. The company is currently the number four gateway to the Web after Google, Microsoft and Yahoo, while its dial-up Internet access business has been gradually supplanted by high-speed broadband services.
AOL is putting the finishing touches on a high-tech system for mass-producing news articles, entertainment and other online content, the linchpin of Chief Executive Tim Armstrong’s strategy for reviving the struggling 25-year-old Internet company after Time Warner spins it off next month. Mr. Armstrong’s goal is to make AOL, which has been losing visitors and revenue, a magnet for both advertisers and consumers by turning it into the top creator of digital content. He hopes to do so in part by turning some media and marketing conventions on their ear, and potentially blurring the lines between journalism and advertising. AOL is betting it can reinvent itself with a numbers-driven approach to developing content, based on what Web-search and other data tell it is most likely to attract audiences and sponsors. Instead of waiting to sell ads until an article or Web video is produced, AOL—which has scores of niche sites, such as beauty and fashion site Stylelist, in addition to its AOL brand—says it plans to offer marketers the chance to work with its editorial team to create custom content. AOL says that its ad model will allow advertisers to be affiliated with the content but not control what is written or created. Media experts and others say that disclosing when articles or videos have been shaped by advertisers will be crucial to AOL’s credibility.