One more post in my series related to an article I read in BusinessWeek about AOL.  It seems to me that if AOL wants to build content destination sites, as it sounds like what their strategy entails, then they’re in for some steep and seriously entrenched competition (as I think they’re realizing):

  • Yahoo has a long-time core base of users who know the brand well and still use it as their main portal
  • Microsoft sites are so embedded in the Windows experience that it’s an uphill battle to change consumers’ habits to switch to AOL sites.
  • Other competitors, like IAC, are also entrenched in their respective users’ minds
  • Media companies have already built up significant bodies of content over the years that to compete with them will require a war on two fronts: better content (unlikely) and ways to deliver that content (on par)

Frankly, I don’t see AOL as being a strong content company.  Their roots are based in operations: running a profitable subscriber-based services firm is very different from being a production business.  They’d lose a lot of their operational experience in moving to this new model, and it will require significant changes in their enterprise architecture.

What if AOL, instead of being a content production company, focused instead on what they were originally good at: operations.  What if the company were to partner with content production companies to structure, build, and maintain their behind-the-scenes operations?  Although server hardware is a commodity business, the brains to run it certainly isn’t.  And separating that from the media companies’ content production business could be beneficial to both.

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