AOL Made Bid for YouTube, Says Advertising-Driven Business Model Working

AOL’s chairman and chief executive officer said yesterday his company wanted to acquire YouTube Inc., but that Google Inc. was the only player in a position to put together the $1.65-billion all-stock offer that sealed the deal.

Said Jonathan Miller, speaking at the Web 2.0 Summit:

Anybody [in the Internet space] who wasn’t interested in YouTube was either asleep or not being honest.

Notwithstanding AOL’s inability to land YouTube, Miller reported that his company is making a relatively smooth transition to its advertising-driven business model from its previous paid subscription-based model. He said the company’s growth in advertising revenue has exceeded the industry’s pace of advertising-revenue growth in recent quarters.

Miller also reported that the company learned quite a bit from its unfortunate privacy scandal, which surfaced this past August when the company posted about 20 million search records from about 658,000 of its members on one of its research-oriented sites.

AOL apologized and scrubbed the customer-search data from its research website, but by then it had been downloaded and reposted on multiple Internet sites. The search records contained sensitive information, such as credit card, telephone, and Social Security numbers, as well as birth dates, full names, and personal addresses.

Miller declined to comment when asked if parent company Time Warner Inc. would consider selling or spinning off AOL. In a previous interview, which Miller since has disavowed, he was quoted as saying that Time Warner might be willing to engage in a discussion about a possible sale or spinoff of AOL.

Speculation persists that Time Warner is considering selling or otherwise divesting AOL in whole or in part, but the consensus view is that the parent company will wait until AOL is further along in its turnaround before taking action.

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