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AOL Struggling With Life Outside The Walled Garden

from the what-business-are-you-in? dept

Tue, Oct 16th 2007 8:20pm — Timothy Lee

On Tuesday morning 1200 AOL employees received their severance packages as the company continues trying to find its footing outside of the walled garden. Evidently, the transition to an advertising-supported web portal isn't going as well as they hoped. A memo from AOL CEO Randy Falco suggests a couple of the reasons they might be having problems. First, it's not clear whether they consider themselves fundamentally a technology company or a media company. Some of their products—especially email and MapQuest—face technology-focused competitors like Google and Yahoo who have been rapidly improving their products' capabilities. Others, such as "Food" and "Money & Finance," are competing more with traditional media outlets like CNN or the New York Times. The two types of companies tend to have different corporate cultures and pursue different business strategies, so being evenly split between the two might not be such a good strategy. Falco's memo also focuses a lot on AOL's advertising platform, but that seems like putting the cart before the horse; if you don't have a compelling product and growing traffic numbers, the best advertising platform in the world won't help. AOL may also be handicapped by the perception by many (including me) that AOL is the Internet for beginners. That was a great perception to cultivate when a lot of people were using the Internet for the first time, but it's not so great once most Internet users start to feel comfortable with the Internet and want to take the training wheels off. I have a feeling that this week's layoffs won't be the last of the painful changes at AOL.

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Filed Under: business models, media, technology
Companies: aol

7 Comments

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duh, 16 Oct 2007 @ 8:56pm

and...
What do you expect? You can't keep a workforce both here AND in india/china. Gotta cut 1200 here to pay 12000 there. That's business in the 21st century.
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anon, 17 Oct 2007 @ 12:04am

thank god
finally
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Haywood, 17 Oct 2007 @ 4:36am

AOL is the Internet for beginners
That is the nicest phrasing I can imagine. I would have been much more crude and cruel. For years I thought AOL-idiot was all one word. No quicker way to lose the respect of your peers than to have an @aol address.
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Anonymous Coward, 17 Oct 2007 @ 4:57am

Perhaps if AOL concentrated on cramming more ads down the customer's throat and distributing twice the number of "free" CD's they wouldn't be in this situation?
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Killer_Tofu (profile), 17 Oct 2007 @ 10:32am

America Off Line
Company on hard times? I bet the CEO (just like every other major corporation, and also our government) still gets paid buttloads when the company hits rough waters. Company starts to lose money, they still won't cut their multi million a year pay. Greed.
Anyone have the info on how much the CEO is making a year, even though they cut 1200 jobs?
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Bill Pytlovany, 17 Oct 2007 @ 1:52pm

AOL Name Change to Advertising OnLine
I was there in the beginning and have stood by the original intent of AOL but turning the company into a "global advertising network" does it for me.

I wrote more about it today in my blog.

Bill
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Malliobiana, 3 Jun 2008 @ 12:16pm

AOL Struggling
Gee. That's sad. I was ripped off by so many people with AOL addresses, I was beginning to think they were contered in Nigeria. But those freebie AOL startup CDs that allowed every street person to join, certainly made interesting coasters.
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