A decade after broadband killed dial-up Internet, AOL is reinventing itself as a media company, according to The Economist. AOL's fourth-quarter earnings for 2012 showed growth for the first time in eight years, primarily because the company has invested in building new revenue streams with The Huffington Post and other media.
AOL's dial-up business still provides solid margins (Really? People still use dial-up?), but it is declining.
CEO Tim Armstrong has centered the company's turnaround strategy on its media business and innovative display advertising, introducing a supply-side platform earlier this month. Armstrong invested heavily in online video with AOL On and HuffPost Live, and AOL reportedly has the second-most video views in the United States, after YouTube.
But only 7 percent of AOL's $123 million in adjusted operating income came from its content business, The Economist noted. Content creation and ad sales are expensive, so while The Huffington Post took in $55 million, it is not thought to be profitable, while hyperlocal news site Patch hemorrhaged about $100 million.