BUSINESS BLOGS
BUSINESS BLOGS
category: business
18 Mar 2009

When looking for reasons why Tim Armstrong left Google for AOL is the possibility that this was a vote for content over technology.

Reading about how AOL is moving more and more aggressively into content via Media Glow - instead of simply aggregating it via its AOL.com portal - you can’t help but wonder if Armstrong’s move had more to do with content in general and less with Google or AOL.  Marty Moe is the senior vice president of AOL’s MediaGlow content division, but Armstrong’s personal investment fund has invested in other content plays such as Associated Content.

Over at Google, the cultural barriers to becoming a producer of news, rather than just a technology company that works with news outlets to distribute news, are steeper.  For years the company has held dear the dogma that it does not produce media content.

“We are a technology company, not a media company,” said Google spokesperson Jennie Johnston. “The tremendous amount of expertise that goes into news gathering, editors, journalists – it’s not something we have to be good at.’’

The focus across Google is instead on working with news organizations: “We want to help newspapers distribute their content online, engage their readers better.” Google’s ethos is to “create – but not be creative,” as Johnston put it. It’s an appealing model, and you can’t argue much with the results.

True.  Google’s results as a pure play tech company can’t be overlooked, but search advertising is becoming mature and display (yes, display) and mainly video advertising are the next growth areas.  To clarify: display is slowing down this year, but the real estate associated with display, which will make way for rich media ads, will soar.  That real estate is generally associated not with intent (as is the case with search), but rather: interest.  Interest is captured by content, not technology.

This explains the push into content creation.

Other portals are expanding their ambitions, too. Yahoo is moving steadily into web video, with the announcement on Monday of a new celebrity mom show, and there are rumbles that even Google’s Eric Schmidt is reconsidering the technology company’s longstanding aversion to creating its own content, according to one person familiar with his thinking.

As someone who manages relationships with Google (via our partnership with YouTube), I can tell you that while Google/YouTube is a great partner, they really are in many ways new to content and what that entails.  To give credit where credit is due: YouTube has grown up and improved so much since we signed a partnership, but for YouTube to be a multi-billion dollar revenue machine, they have a way to go.

As such, whether or not Google becomes successful in content remains to be seen.

AOL, meanwhile, who has the content gene via its Time Warner pedigree, has a better shot than many would expect to win in the next phase of the Web’s boom, which will be looking to cash in on the fact that 47% of people’s time is spent consuming content.  With social networking advertising fizzling (eMarketer once again reduced the estimates this week), then professional content’s value continues to soar.

If these companies do emerge as large-scale content creators, it will be worth noting that the once-dowdy AOL is leading the way. New AOL head Tim Armstrong may be inheriting a cargo boat of problems, but the company’s two-year-old drive to become a successful source of content is not one of them.
MediaGlow is home to hit machines like celebrity news site TMZ and niche-oriented, category-leading blogs like Engadget, which regularly breaks technology news, and car-nut magnet Autoblog.

The sites together average 73 million unique visitors a month, according to ComScore.

Of course, what better way for Google to catapult itself in the content game than by acquiring AOL, which it already owns 5% of, no?