To summarize CEO Tim Armstrong's strategy for reviving AOL would take just one word: content. The company has aggressively expanded its role as a content provider, investing heavily in AOL Seed, a Demand Media-like publishing platform; it's gobbled up local-news startup Patch for $7 million and plans to sink another $50 million into growing the service; and it's developed intense methods for monetization, revealed in a leaked memo entitled "The AOL Way," which calls on editors to boost output to 55,000 stories per month and writers to churn out as many as 10 stories per day. AOL has also acquired a slew of media outlets such as Weblogs Inc., publisher of Engadget, and TechCrunch, each for in the neighborhood of $25 million. And in February, the company made its biggest gambit yet, purchasing the Huffington Post for $315 million.
In other words, content is the future of AOL--but it looks like someone forgot to tell its mobile team. Earlier this week, AOL unveiled AOL Editions, a personalized iPad magazine, similar to Zite, that learns and customizes content around your tastes. There's just one problem for those hoping to bolster AOL content: AOL Editions is not an edition of AOL. The app culls content from around web based on your interests, and treats AOL properties like any other news source--that is, it does not specifically leverage AOL content, nor does it put competitors of AOL subsidiaries (say, TechCrunch content against Mashable content) at any disadvantage. Editions is a remarkably unselfish product--but it's unclear why it's good for AOL's business.
David Temkin, who runs AOL Mobile, and Sol Lipman, senior director of mobile project, recently sat down with Fast Company for an Editions walkthrough. "We pull content from everywhere," Temkin said. But why? It seemed the Huffington Post could provide national and international news; Patch could deliver local news; specific sections like technology could be covered by world-class blogs such as TechCrunch and Engadget; and any blank spots could be filled by content from AOL Seed. Will there ever be an AOL Editions that is actually an edition of AOL?
"There might be," Temkin said. "But that's not what this is."
"No, it wouldn't have made a great--it's not the product we want to build," Lipman added.
In fact, the two indicate that Editions is essentially content-provider agnostic. The app's personalization algorithm treats AOL and non-AOL media outlets the same, even in many jarring instances. "If you look at the default configuration per section, we have N number of publications in each," Temkin explained. "Both The New York Times and the Huffington Post are in the news section. Does the tech section have TechCrunch and Engadget? Yes. Does it have Fast Company? Probably."
"As a default, they're all ranked the same," Lipman said.
In fact, because Editions is able to learn your interests and preferences, users can easily push AOL content aside. "If you say you like The New York Times, and don't really prefer content from the Huffington Post, you can get it all from the Times," Lipman said. Added Temkin, "You can say that you don't want any TechCrunch." Even Patch content competes with other local news sources.
That open thinking isn't going to help slow declines in AOL's revenue, which dropped 17% last quarter and has plummeted by billions of dollars over the past several years.
AOL's mobile team has undoubtedly created a sleek product, one that's a worthy competitor to apps such as Zite, Flipboard, and Pulse. But the company isn't in the business of making apps such as Zite, Flipboard, and Pulse. By not leveraging its own content, AOL is almost pretending that it hasn't spent hundreds of millions, if not billions of dollars, transforming itself into a global content provider.
But rather than use Editions as an opportunity to consolidate its content brands, AOL has continued to treat them like amorphous assets. "The root of the problem, say insiders, is that AOL's senior management has not yet articulated a clear content strategy, one in which they explain how all the parts will fit together," reported Business Insider's Henry Blodget in March. "They also believe that AOL may eventually be able to cobble its myriad divisions and properties and strategies into a more unified whole. But there's a huge gap between theory and execution, and right now, AOL's content strategy is a mess."
What's worse, it's unclear whether Temkin and Lipman believe such a unified future is even possible. "Our general belief is that nobody reads content from only one source," Temkin said. "I don't think we believe that if it's not written on the Huffington Post, then it doesn't matter," Lipman said in a follow-up. He's unsure about single-source products like The Daily, and, sounding very Huffington-esque, adds, "I think aggregation is probably the way to go."
There appears to be a significant disconnect between the pair's mobile team, based in Palo Alto, California, and AOL corporate, based in New York. "We definitely want to build a product that's good for the user--our focus was on the user, not on the publishing business," Lipman said. "That's the Palo Alto-New York difference."
"It's not like they're dis-aligned," the PR-rep representative quickly piped in during the discussion. "I really think our New York team is excited about this--we believe in our content, and if users like it, then this services them, and that's serendipitous. But I think the attitude across the company is that we can't live in that mindset because of where we are as a brand. There's a lot of honesty about that, which is a good thing. I wouldn't want you to think it's like New York versus Palo Alto."
That's not to say AOL hasn't thought of ways to monetize Editions, even when aggregating non-AOL content. Temkin says featured AOL content will have ads; additionally, full-page advertisements are sure to see integration in the future. "If you think about the big picture, you can monetize your own content, which is great and what we do now, but if you can also monetize certain general browsing habits, that helps," he said. "There's revenue here."
Yet despite how disloyal AOL Editions is supposed to be to AOL content, during my experience, the company's brands showed up quite often. On almost every other page, the app shows a feature article--a story that monopolizes the entire page, rather than being excerpted--and in every instance thus far, the feature has been from the Huffington Post. Lipman said this is "by virtue of the layout itself." Because of advertising issues, AOL Editions can only excerpt content from outside publishers; if you'd like to read the whole story, a browser will pop up and take you to the original source, meaning to read a full article from The Wall Street Journal, you'll have to head to the WSJ's website. But for feature articles, the layout requires a full story, which will most likely come from AOL content, as Lipman said, because "that's what we own." (He said the company may strike outside publishing deals in the future.)
But why not push out more AOL content? It's not only what AOL owns, it's what the company has spent millions to acquire--it's core to Armstong's long-term strategy to turn AOL from a diminishing dial-up business into a sustainable, ad-supported content network. So why would AOL be hesitant to thrust its content front and center?
After all, this isn't the early '90s, when consumers dialed up a thing called "America Online," listened to their 56K modems whirring, and were greeted by the iconic "You've Got Mail" voice. But Editions is, in some ways, reminiscent of that era, when AOL was a central destination--you'd open the AOL program and instantly have access to all AOL provides: chatrooms, Netscape, and whatever else we needed in the 1990s.
Today, however, AOL is more about content than the ways we access it. Is Editions just the modern, digital, iPad-based equivalent of AOL's old mailers. No, the two laugh.
"We joke about that stuff a lot," Temkin says, "like 'Hey, what's our mobile strategy? Sending CD-ROMs to mobile.'"
[Image: Flickr user jbhthescots]