New York — AOL has announced a series of developments that it expects will expand, reposition and monetize its digital publishing business in 2009. AOL’s 2005 acquisition of Weblogs, a company that was host to dozens of blogs, provided a template for the low-cost publishing strategy. It has developed a novel business unit, MediaGlow, which will centralize its entire publishing efforts, with the goal of greatly expanding the unit’s global reach in the coming year.
AOL is planning to form two new divisions with some of the sites it purchased then, like Engadget, are now multimillion-dollar businesses. The new divisions include: People Networks and MediaGlow.
The announcement also fulfills AOL’s transformation to an advertising supported business. Since the past 18 months AOL has announced the formation of Platform-A, the largest domestic digital advertising platform, which exclusively maximizes online outreach for advertisers, as well as the creation of People Networks, the company’s social media unit, which leverages the power of community properties such as Bebo, AIM and ICQ to reach an audience of more than 92 million unduplicated users worldwide.
MediaGlow and its publishing assets will now join Platform-A and People Networks as the third core business for AOL.
"Rather than having a handful of front doors, we are creating dozens if not hundreds of front doors that are more relevant to advertisers," Bill Wilson, an AOL publishing executive, said in advance of his formal appointment Monday as president of a new business unit to organize the effort, MediaGlow.
MediaGlow represents the third leg of a tripod for AOL, formerly America Online, joining the company’s fledgling advertising operation, Platform-A, and its social networking services. Wilson, like other AOL executives, described the three tiers as a "total reinvention of the company."
AOL chairman and CEO Randy Falco says, "Our vision was to rebuild AOL into three core businesses — publishing, advertising and social media. With the launch of MediaGlow, we have completed our goal in less than 18 months.
"AOL now efficiently delivers the most relevant and engaging content and is able to uniquely maximize display advertising opportunities for advertisers and publishers across the Web. MediaGlow provides us with the ability to extend our publishing success and puts AOL in a very strong position for the future."
By organizing their content in new ways and thinking beyond the traditional portal-style Web site, the companies are placing bets on the fragmentation of the Web. The array of Gawker Media blogs, each with its own domain and specific demographic, is an oft-cited example. And Slate, the pioneering online magazine, has applied the same strategy by creating The Root (for an African-American audience), The Big Money (about finance) and, just one week ago, Foreign Policy.
"Our goal is to create a constellation of high-end editorial sites, with Slate as the biggest star," said Jacob Weisberg, editor in chief of the Slate Group, a unit of The Washington Post Co.
Similarly, AOL executives refer to its publishing unit as a "constellation of brands." While the AOL.com main page still draws consumers in, "we are not counting on that," Wilson said. "We are creating all these starting places."
AOL president, COO Ron Grant says, "Gone are the days when one general portal or social networking site addressed the needs of all consumers. Today’s fragmented online environment requires programming that targets people’s passion points at scale across a range of unique sites.
"Make no mistake, AOL has become a true digital content company. Over the past year, we have mastered the art of producing high-quality vertical and niche programming at scale. Now by centralizing and investing in this infrastructure, we will ensure that we are maximizing our potential for monetization."
For AOL — which has repeatedly and painfully cut costs across the board — these distinct sites are inexpensive and flexible. MediaGlow’s 500 full-time staff members will be supplemented with more than 1,000 freelancers who produce much of the content.
Among the titles in development are ones devoted to on-location game shows, horror films and children’s pop culture.
While investors have focused on its talks with Yahoo about a possible merger, AOL has been able to reorganize itself in "stealth mode," Grant said.
"Everybody has been focused on the musical chairs," he said, "and we have just been quietly going on, building this MediaGlow piece."