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AOL Splits in Half and Gives up on Subscriptions!

Finally!

By Vlad Constandes, SEO News Editor

7th of February 2008, 21:36 GMT

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Time Warner's yearly and fourth fiscal quarter made it decide without very much trouble that it was about time to give the subscription business a well-deserved rest. It was a dying business ever since the early 2000s, but it was dragged along and, in turn, it dragged heavily every year. The split between the growing advertising network and its moneymaker of the 20th century was foreseen for a long time, but surprisingly it did not happen before.

It's quite a bad time to emerge as a full-scale advertising

platform and stake a claim in the business, because of the fervor the other three major competitors in the market, Google, Yahoo! and Microsoft. Nevertheless, of the two options Time Warner was presented with, it clearly bet on the more likely to be a winning horse. It took over five advertising companies over the last year, the latest yesterday, British buy.at. Some indication that it will still count on the revenue from advertising is the acquisition not so long ago of Goowy, a Flash-based webtop, that would improve its website.

The subscription service is going down a slope, that's how fast it's losing ground. From $7.8 billion dollars in 2006, 2007 saw only $5.2 billion, accompanied by a loss of 3.8 million subscribers. Now, do the math and note that, at this rate, they'll be running out of business in about two years. Once a gold mine, now heading to the dumpster. That should have the executives at AOL wind down in sorrow. No time for that, though, as there is a new direction they should be heading and if they intend to make this opportunity count, the time is now.

Some 15 percent office cuts are also predicted by Jeff Bewkes, Time Warner's CEO, to save about $50 million in annual savings.

TAGS:

aol | time warner | advertising | subscriptions

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