The notion that a company like AOL would claim to be investing in “quality” journalism has created a modicum of hope. At the same time, pessimists worry that the acquisition of such news veterans provides a veneer of credibility for a venture that might wind up essentially akin to “content farms” like Associated Content (recently purchased by Yahoo), Examiner.com, and Demand Media, where armies of low-paid freelancers churn out material in vast quantity and of varying quality on topics driven primarily by algorithms, producing only content that is predicted to attract the most users, and thus, advertisers.
That’s not going to happen at AOL, according to Armstrong. “We keep a Chinese wall between our ads and our content,” he says, but adds: “Even though there’s a Chinese wall, both sides could be looking at that Demand algorithm,” and what each does with that information could be entirely different. Armstrong, who was a co-founder and former chairman of Associated Content, argues that journalistic concerns about AOL’s algorithm are understandable but unfounded. The algorithms, he says, are “just helpful data.”
He has allies in this view, including Jay Rosen, the press critic and professor of journalism at New York University. Rosen says he understands journalists’ fears about them but he argues that if they are not abused, the use of algorithms—“learning what people are clicking on, searching for, and interested in now, today, and tomorrow” can be a good thing.
“Who wouldn’t want to know? It’s important data and if you treat it as anything but important data, you are making a mistake . Journalists missed the boat on data a long time ago and that’s one of the reasons why they’re in the hole they’re in,” he says. “Think about it: in what other industry in America could you sit there as the most valuable employees in the business and be ignorant about the data?”
Like Dubai, which is rushing to transform itself into a glittering playground of the Middle East before the oil under its sands runs out, AOL is scrambling to develop a new business model before its dial-up screech falls silent and its home page no longer reliably funnels dial-up subscribers to its various sites. Divorced from a rocky, ten-year marriage with Time Warner at the end of 2009, the company is in a race to reinvent itself.
The dial-up business remains lucrative, but is retreating before the march of broadband. Many rural areas of the U.S. don’t have broadband service. But in its most recent annual 10-K filing with the Securities and Exchange Commission, AOL acknowledged that this number is rapidly declining: dial-up households dropped from 44 million in 2004 to 10 million in 2009, while broadband penetration in U.S. households rose from 28 percent to 69 percent. The number of AOL’s dial-up customers, unsurprisingly, is down to about 5 million, from a peak of 26.7 million in 2002. According to its 10-K filing, the company derived $1.4 billion in revenue from dial-up in 2009, down from $1.9 billion in 2008. Advertising revenues also declined, as they have through the first half of 2010.
Armstrong is betting on user-data-guided content to extricate the pioneering twenty-five-year-old tech firm from its “You’ve Got Mail” dial-up roots and reposition it as a “You’ve Got My Attention” media company. To do that, he believes that content must reach a level of quantity—and quality—that will appeal not just to users, but to national advertisers. As part of that strategy, AOL is also making acquisitions. In late September it bought the popular TechCrunch blog, along with an online video-instruction company called 5minMedia.
AOL’s content flows out through multiple streams, a wide range of niche sites, or brands. Many of these sites—such as Games.com, Love.com, and the country music-oriented The Boot—offer little or no journalism content. Many others feature service journalism, such as KitchenDaily and StyleList, “real style for women who love fashion, beauty, and celebrity.” Experienced journalists are sprinkled throughout these service sites, primarily as editors.
The AOL sites most deeply rooted in journalism, and where many of the journalists hired so far are working, are in the news and information group: broad-based AOL News, which tries to provide national and foreign news and analysis edited by former New York Times web journalist Michael Nizza; PoliticsDaily, run by former Times journalist Melinda Henneberger; DailyFinance, run by former BusinessWeek reporter Amey Stone; Engadget, a popular tech site; WalletPop, on personal finance; and sports-oriented FanHouse, which is crammed with former newspaper sportswriter stars.