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Demand Media Up, AOL Down

Has content become too big a part of AOL's strategy?

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Demand Media Up, AOL Down
[ Business]

Demand Media and AOL have a lot in common, despite their very different histories. Web content is a very big part of both companies’ strategies, and both have had plenty of criticism. AOL’s strategy of late has tended to be much more content production oriented, while Demand’s, while still very content-oriented, has tended to be more about diversifying.

Both companies released quarterly earnings reports yesterday. Today, Demand Media’s stock is up (11.69% at the time of this writing), while AOL’s is down (-8.22% at the time of this writing). Yesterday, AOL stock fell nearly 30%. Demand Media’s jumped 17 in extended trade following the company’s earnings call.

AOL reported a revenue loss of 8% year-over-year, though ad revenue was up. Subscriptions revenue was down by 23%. Word on the Street is that investors are getting a little skeptical of AOL’s media business plans, which have so far included a number of content company acquisitions – most notably that of The Huffington Post. There is also talk that they’re not getting enough out of the hyperlocal Patch effort. The company said it’s up to 10 million uniques, but didn’t reveal much in the way of monetization of it.

Other recent content-based AOL acquisitions include: hyperlocal blog service Outside.In, tech blog TechCrunch, online video network and Goviral. Others include personal profile page site About.me and Thing Labs, makers of the social media reader Brizzly.

AOL’s strategy has seemed to be, for the most part (at least from the outside looking in), about building this giant Huffington Post Media empire of content sites, which includes expanding existing properies like the Huffington Post into more areas of coverage. Recent announcements from AOL include:

  • AOL Huffington Post Media Group Launches HuffPost BlackVoices
  • AOL Launches Editions by AOL, the Magazine That Reads You
  • AOL Huffington Post Media Group Announces Launch of Two Sites: HuffPost Women and HuffPost Parents
  • AOL Launches AOL HD
  • AOL Huffington Post Media Group Launches HuffPost San Francsico
  • AOL Announces Launch of AOL Government
  • AOL Huffington Post Media Group Announces Launch of Two Sites: HuffPost Celebrity and HuffPost Culture
  • Britain Wakes Up to The Huffington Post UK Today
  • Martha Stewart Encourages Kids to Get Creative with Inspired New Multimedia Brand “Martha & Friends”

Notice a trend? Content, content, content.

That’s all of the announcements on the company’s press page dating back to the beginning of July, save for a couple announcements about the appointment of specific editors (again more content).

Meanwhile, while Demand Media has certainly had its fair share of content announcements (mainly partnerships designed to boost the company’s content quality/reputation), you’ll also see announcements like:

  • Livestrong.com Applications Continue to Improve Lives One Download at a Time
  • Demand Media Acquires IndieClick
  • Demand Media Acquires RSS Graffiti
  • Demand Media and Google Renew and Expand Global Advertising Relationship

It’s not just content, content, content (which one might actually expect). It’s strategic acquisitions in different areas (ad optimization and social media app development), an important advertising partnership renewal, and news about a popular mobile app. The company also continues to have a thriving registrar business (revenue up 22%).

Clearly content isn’t AOL’s only deal, but the glory days of dial-up are behind us, and while AOL continues to put more and more emphasis on its content business, it seems like Demand Media is putting more emphasis on things beyond just content, content, content. Though to be fair, AOL’s ad revenue is up by 5% year-over-year.

Demand Media Up, AOL Down
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  • http://gravatar.com/nickp91 nickp

    When it made its bid for Time Warner during the first Internet bubble in January 2000, AOL’s market cap was $163 billion