November 8, 2006 6:30 PM PST

AOL says portals are passe

SAN FRANCISCO--Now that AOL has moved to a free, ad-supported model, it wants to evolve its portal into something more useful to Web surfers, Jonathan Miller, chairman and chief executive of AOL, said Wednesday.

That's why the company bought privately held Relegence, a provider of real-time information to the financial services industry, he said in a session at the Web 2.0 Summit here.

"Essentially, portals have been pretty staid," Miller said. "We thought we could look at (Relegence) as broadly as we could and turn that into a consumer application."

He acknowledged that Time Warner subsidiary AOL was interested in acquiring YouTube, which Google recently purchased in a $1.65 billion stock deal. What stopped AOL? "Money," he said. "It's very hard for anybody to go and pay cash" and only Google has the stock price to pay for it in stock, he added.

AOL's decision to get out of the Internet access business and stop charging for its services, like e-mail, has already paid off, he said, noting that ad revenue was up in the most recent quarter. "Absolutely, strategically it was the right move," he said.

Asked if Time Warner would consider spinning off AOL into a separate company, Miller declined to answer, saying, "I got burned two weeks ago saying what I said in Europe...It was not printed correctly." The Daily Telegraph in the U.K. reported on October 22 that Miller said Time Warner was considering selling off AOL, but it was not clear if that was the report Miller was referring to.

Miller said AOL had learned a lot from its inadvertent publishing of searches conducted by hundreds of thousands of its users this summer. "It was entirely well meaning" by "people in the company doing something for an academic research project...And it was obviously a bad call."

Meanwhile, video is key to AOL's future, given the growth in broadband video-on-demand, he said. "On-demand video over IP (Internet Protocol) will be the...biggest form of (video) viewing in single digit years," he said. "It's under way already."

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America Online Inc., Time Warner Inc., portal, Google Inc., video

 

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