Continuing the tradition of selling bad Web businesses for less than they were bought for (in the vein of Cnet selling Webshots for $45 million three years after paying $70 million for it), AOL is trying to unload online storage service Xdrive. Three years after buying Xdrive for a rumored $30 million (never officially disclosed), the price it is now trying to fetch is $5 million, and going south, says a source. Maybe AOL should put it on eBay.
It is a sad ending for Xdrive, which now will be best known for giving birth to MySpace (both Tom Anderson and Chris DeWolfe worked there). In an e-mail to staff explaining why AOL is powering down Xdrive and other businesses, EVP Kevin Conroy explained (bold added for emphasis}:
The changes described below are in no way a reflection of the hard work and creativity of the people who built and maintain them.
– Personal Media: Bluestring, Xdrive and AOL Pictures will be sunset. These consumer storage products haven’t gained sufficient traction in the marketplace or the monetization levels necessary to offset the high cost of their operation. We have found that building media management applications within the context of a social experience is a more rapid and effective way to grow the business. For example, today the Bebo audience is uploading over three million photos per day. To effectively grow the XDrive online storage business we would need to focus on subscription revenues vs. monetizing through advertising revenue, and this business model is not in strategic alignment with our company’s goals. We are exploring plans to migrate our users assets to ensure the best possible transition experience.
Subscription businesses are so AOL, circa 1999.