AOL's two top honchos spoke today (webcast here) at Merrill Lynch's Media and Entertainment Conference shedding more light on the reorganization of Time Warner's online unit. Platform A is the overarching umbrella term for the integration of a bundle of AOL-owned sites, and other properties, into a broad framework aimed at "monetizing" the welter of AOL brands, applications and services.
It all seems to hinge on Advertising.com, but there is a lot more going on. For one thing, a lot of AOL's "verticals" have been or will soon be relaunched, with fresher looks and added content. (One bit of content-related news: Jim Cramer will start blogging for AOL's Money & Finance vertical, CEO Randy Falco said.) Other products, including aging Mapquest, are also being overhauled.
AOL has rejiggered its search function in the hopes of mitigating any further losses to Google. It has done so by...working with Google. "We have stemmed the tide of people leaving us by working closely with Google and incorporating some of their functionality," Ron Grant, President and COO said.
But, one interesting feature is the unbundling of AOL, breaking down the components of various AOL services, sites and applications into handy bits that can fit into other web sites, including those not owned by Time Warner. This unbundling feature is at the heart of the new architecture of AOL.
"All of them [portals] can be dissambled," Grant said. "We're introducing this on a platform that can allow unbundling."
So, AOL is loosening the reins a bit to set free content (such as sports coverage) and applications that can be embedded throughout other sites. This unbundling approach is particularly relevant to AOL's international market, which the company hopes will also become another source of growth. AOL has big global expansion plans and is readying a push into Europe and Asia.
What AOL doesn't plan to do in the short-term is sell-off its domestic access business, a vestige of the days when AOL was a dial-up giant. Despite its switch-over to a free, ad-supported business model, the company still has nine million dial-up customers.
"We still have nine million very valuable customers who generate an enormous amount of page views for us," Falco said. "I think about it a lot but I think 'do I really want those nine million users in the hands of a third-party?'"
Posted by Cynthia Brumfield at 7:47 PM | Print | Comments (0)AOL is moving its headquarters location from Dulles, VA to New York City as part of a "realignment" that parent company Time Warner hopes will boost ad sales revenues. As yet another move in a long series of attempts to turn AOL into an advertising powerhouse, AOL is creating something called Platform A, a one-stop shop for advertisers to buy inventory across a wide-range of third-party affiliated sites as well as across AOL-owned properties, including Advertising.com, TACODA, Third Screen Media, Lightningcast and ADTECH.
The move is a big blow to the Northern Virginia Tech corridor, which owes its very existence to the rise of Loudon County-based AOL. Although the company contends that most of the 4,000 employees will stay at the sprawling campus near Dulles airport, local officials acknowledge that the decision to relocate management to New York is a "symbolic blow to the region."
Indeed, the town of "Dulles," which is AOL's official mailing location, didn't really exist until the ailing online company rose to dominate Internet access in the U.S. in the late 1990s. Before AOL, nobody talked about Dulles as being anything other than an airport. The scenic region now known as Dulles used to be cow pasture and forests in the foothills of the Blue Ridge Mountains, with nearby towns of Sterling and Herndon and Leesburg nothing more than charming and sleepy hamlets.
But AOL's rise turned the Dulles corridor into a concrete and six-lane highway hot-bed of tech start-ups and helped push out further the bounds of metro Washington. Now, with all the decision-makers located in New York, it's only a matter of time before Time Warner finds the bifurcated organization untenable and moves the rest of the operations to New York. (Assuming, of course, that AOL continues to even exist as a stand-alone entity and brand.)
Area officials are trying to spin this development in a more positive direction, but are having a difficult time doing so. Dorri O'Brien Morin, spokeswoman for Loudoun's Department of Economic Development said "It sounds like the sky is falling, but it's really not," Morin said.
Posted by Cynthia Brumfield at 1:40 PM | Print | Comments (0)The entire tech world is riveted, or soon will be riveted, by an event kicking off today, TechCrunch40. A brain child of meteroic blogger Mike Arrington and serial entrepreneur Jason Calacanis, TechCrunch40 is a Demo-type conference featuring 40 (it started out with 20) Silicon Valley start-ups.
All the mainstream tech reporters and top bloggers will be there to watch the 40 start-ups display their wares, and 100 additional companies will try to attract attention from something called the Demo Pit. A blog devoted solely to the event is here. A who's who of Silicon Valley helped shape TechCrunch40 and some seriously blue-chip sponsors are paying the tab. An A-list of established and emerging tech moguls are speaking there.
Even better: 800 people have paid $2,500 to attend this event and there's a waiting list to get in.
It may very well be that the 40 companies picked to display at this event are nothing more than frothy little things that won't go anywhere. My guess is that very few will be left standing two years from now. As Mark Evans points out, one of the "start-ups" demo'ing at TechCrunch40 is Flock, the social web browser that debuted in 2005 and promptly failed.
The real news from TechCrunch40 is how massively successful the event itself is and the big question in my mind is: how much dough are Arrington and Calacanis raking in from this baby? Let's see...if 800 people purchased tickets at $2,500/pop, that's a cool $2 million right off the bat. Assume the sponsors coughed up at least $500,000, although I'd bet the sponsor cash is more than that. Demo pit companies were charged half the regular fee, or $1,247.50 per pop, for an additional $124,750.
So that's $2.6 million, give or take a few hundred thousand, that will flow to Arrington and Calacanis. The costs of hosting the event can't be that high, and my guess it that The Palace Hotel in San Francisco, where the event is being held, will get around $500,000 for meals, exhibit space and other expenses. That leaves a profit of $2.1 million, give or take a few hundred thousand.
The 40 start-ups who are demo'ing at the event, then, may not be the brightest prospects that Silicon Valley has to offer. The real money-makers could end up being Arrington and Calacanis.
Posted by Cynthia Brumfield at 10:09 AM | Print | Comments (0)Competitive local exchange carrier Paetec is poised to given the two dominant U.S. telcos, AT&T and Verizon, a run for their money. The Fairport, NY-based business-oriented telecom provider announced this morning it is buying former CLEC superstar McLeod USA for $492 million in a stock-for-stock transaction. With Paetec's assumption of $65 million of McLeod's debt, the deal is worth $557 million.
The combined company will have 3.4 million access lines and a presence in 82 of the top 100 MSAs, with annual revenue of $1.6 billion and cash flow of $263 million. Although tiny when compared to rivals Verizon ($91 billion in annual revenue) or AT&T ($117 billion in annual revenue), Paetec is gunning for the most lucrative part of those giants' business -- the mid-sized and large business segment. And the company will have a nationwide footprint that covers 13,000+ intercity route miles and 4,000 metro fiber route miles.
Cedar Rapid, IA-based McLeod USA was one of the leading lights of the late-90s CLEC boom that gave rise to frenzied speculation in the telecom sector, only to see its fortunes fall with the telecom bust. The company ultimately filed for Chapter 11 bankruptcy, emerging in January 2006 as a privately held entity.
Paetec (which is an acroynm of the founders' family members' names) also arose during the telecom boom, but survived the shakeout and now provides service across 24 states. The 2,300-employee company, founded by CEO Arunas A. Chesonis and other executives, places a lot of value on its customer service and corporate culture, which it widely proclaims as "caring." Chesonis, who will also serve in the top slot of the combined company, keeps every employee's photo, name and title in his office so that he can memorize them.
Posted by Cynthia Brumfield at 7:38 AM | Print | Comments (0)
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