America Online’s new channel line-up went into effect last week, as per the company’s early October announcement. To users of the service, the new channel lineup may prove easier to navigate, but behind the scenes, the strategy reflects the 9-million-plus member service’s increasing clout as the key distribution point for online content.
The Dulles, Va.-based company, which for years had paid content providers for appearing on the service, now finds itself in a position to receive payment from online media properties who want access to the AOL subscriber base. “We’re looking to have the right amount of content brand and mix of new things with the right mix of economic models behind them,” said Barry Schuler, president, creative development, AOL Networks. That economic mix doesn’t exclusively call for AOL to collect online rent, but encompasses a variety of arrangements in which AOL might instead pay for content, or engage in a form of barter in which AOL receives on-air promotion in exchange for giving media companies carriage on the service. However, because AOL now favors being paid by content providers, the overall number of companies that are providing material to the service is expected to diminish over time.
As part of the channel restructuring, partially-owned AOL properties The Hub, a joint venture with New Line Cinema, and Digital City, a joint venture with Tribune Co., are no longer on the channel home page. Digital City has its own channel, which has been renamed “Local.” The Hub is now what AOL refers to as an “anchor tenant,” located on the music and lifestyle channels and threaded throughout the service.
Plus, other content providers such as RollingStone.com, CBS SportsLine USA and Slate, which is published by AOL online rival Microsoft, have all paid for anchor tenant status in appropriate areas.
Though the amount that each of these companies have paid AOL isn’t known, an anchor tenancy runs along the lines of $5 million, Schuler confirmed. But he added that deals run higher and lower and span from one-year to multi-year.
One company that has been public about feeling the content provider cutbacks is Dow Jones, which did not have its contract renewed for The Dow Jones Business Center. The area will go down after the end of the year.
Schuler would not comment on the Dow Jones relationship. “We try to strike deals that make good business sense,” he said.
In the last year, AOL has grown enough to far outpace all other online services. MSN, which had once been viewed as a consumer-oriented rival to AOL, has seen its subscriber base stall at 2.3-million members.
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