One Vision For The New AOL: Redefine Online Content As Print Magazines Fail

There’s lots of speculation on what the soon-to-be independent AOL should do to drive user and revenue growth, and stay relevant in a world dominated by Google, Microsoft and Facebook. New CEO Tim Armstrong says he’s taking some time to take input internally and create a plan.

But some sources we’ve been talking to say that there’s a real push to remake AOL into an online media powerhouse – one that will rise just as the print media world is falling apart.

There are some real assets. First is that dial up business, which still brings in around $1 billion in free cash a year. The business is deteriorating rapidly, but it will bring in real cash over the next 18-24 months before it peters out. The company also has a social networking base with Bebo and AIM, and integration of those services into other AOL properties and third party sites continues.

But the real opportunity for AOL is to grab marketshare in a relatively open field, say some people close to the company. A contingent of AOL executives are said to be pushing Armstrong to embrace what I’ve heard is called the “Toyota strategy” by building and buying scores of great online media brands. AOL is the “Toyota” and the media brands are like the many car models that Toyota successfully pushes – Highlander, Camry, Pious, etc. The analogy isn’t perfect, but it gives you a good idea of how they’re thinking of organizing things.

The foundation for this strategy is already firmly in place, and has been since AOL acquired Weblogs, Inc. in 2005 for $25 million or so (that was three AOL CEO’s ago, when Jonathan Miller was running things). All those great Weblogs brands have continued to grow at a breakneck pace. Sites like Engadget, TUAW and Joystiq are all great niche brands on their own. And AOL has expanded into many other sub-brands through their MediaGlow division under Bill Wilson.

MediaGlow was unveiled a year ago. These are AOL’s content sites – music, finance, the blogs, and new sites like PoliticsDaily and Combined, these sites bring in 76 million unique monthly visitors (Comsore, May 2009). 27 of the Technorati Top 100 blogs are owned by AOL.

The MediaGlow team wants to pick up the pieces of the dying print media business. Advertising is falling off a cliff (billions of dollars in advertising has evaporated). Combined with the high structural costs of print media (high wages, and well, printing on paper and mailing to readers) and the result is a lot of high quality talent is suddenly willing to take a job in online, even at a much lower salary.

The plan would be to build and buy scores of new brands in every monetizable niche possible. If you see a magazine at the newsstand covering a topic, AOL will have their own online brand for that topic, in blog or other format. They’ve already got the publishing platform with MediaGlow. New brands can be inserted or built at little marginal operating cost. And the talent is out there for the taking right now.

That’s where all that cash from the dialup business comes in. They’ve got the runway of 18 – 24 months to buy properties and hire journalists to staff these new brands. And once they get going it’s unlikely any of the other big portals can catch up, particularly if AOL has hired the best talent out there.. Yahoo is the one competitor in a position to do something like this, but there’s been no indication from CEO Carol Bartz that she finds this direction interesting.

I like this strategy – it’s clear and bold. It’s not just following Facebook or Twitter. It’s not entering AOL into the soul-sucking search wars. But building out online content at a massive scale with proven journalists shed from the print world, all backed by dialup cash flow makes a lot of sense. It’s a war that AOL can win. All they have to do is fire the guns.