Sunday, January 25, 1998

America Online expands content, techology on Internet

By JOELLE TESSLER / Dow Jones News Service

NEW YORK (Dow Jones News) -- America Online Inc. -- staking its claim to the World Wide Web -- is making some of its most popular technology and home-grown content available to all Internet surfers.

The move comes as the nation's biggest online service faces increased competition from Web-guide companies such as Yahoo! Inc. and Excite Inc. as well as from companies that offer direct Internet access.

AOL provides a gateway to the Internet, but also is a major provider of its own services. Company officials said they see the World Wide Web as a huge opportunity.

"America Online has to continue to grow and diversify," said Ted Leonsis, president and chief executive of AOL Studios, America Online's content creation business. Around the basic brand and package (of the AOL Network), there are mega new business opportunities."

America Online's Web strategy is two pronged.

First, AOL Studios is launching a number of "channels," not only on the subscription service, but also out on the Internet for everyone to access.

And second, America Online has been transforming its Web site, aol.com, from simply a promotional page to a "destination site" by adding topical channels, search functions and messaging technology for all to use.

America Online has already helped to pay for and taken stakes in a number of start-up sites that began on the America Online service but then established a Web presence.

These include Preview Travel Inc., an online travel service that recently went public, the Motley Fool investor site, and iVillage, "The Women's Network."

But now AOL Studios is acquiring outright or developing in-house a number of "interactive networks." And it is launching them as non-AOL-branded sites -- destinations with their own identities -- both on the AOL service and on the Internet, including on aol.com.

Entertainment Asylum was the first internally-developed channel to be rolled out simultaneously on America Online and the Web. The property, launched in late October, is an entertainment site about movies, television and celebrities.

AOL Studios' second home-grown interactive channel, Electra, which targets women, was launched on America Online and the Web in early December.

And the company plans to formally launch a new version of Digital City, "an online city guide and virtual neighborhood," on America Online and the Web with the New York City guide in late January.

In addition, AOL Studios bought Real Fans, a sports site that America Online helped fund as a start-up, in late 1997.

And the company is also expanding sites now available only on the America Online service -- like LoveAOL, which will first have to be renamed -- to the Internet.

In addition to putting its properties on America Online and the Web, AOL Studios is also distributing these sites on key Internet gateways such as Netscape Communications Corp.'s Netcaster, the push component of Netscape Communicator; Microsoft Corp.'s Internet Explorer 4.0 browser; Internet service providers such as Earthlink Network Inc.; and search engines such as Excite.

Leonsis, president and chief executive of AOL Studios, said the distribution agreements are, for the most part, revenue-sharing deals and don't involve payments by either AOL Studios or its distribution partners. The idea, he said, is to distribute the sites on as many platforms as possible.

Leonsis' ultimate goal is to distribute America Online content not only throughout the Web, but also to license it to more traditional media, such as television. Already, Motley Fool has generated a few books. And this past holiday season, Ozzie the Elf, a character from AOL Studios' "Santa's Home Page," starred in his own holiday TV special on ABC. Ozzie has also signed his own book deal.

What America Online is doing, Leonsis said, is turning its content development into a stand-alone business separate from the America Online network -- just as many television and cable companies have separated their production operations from their distribution networks.

"Content fundamentally yearns to be distributed as far and as wide as possible," Leonsis said. "Content yearns to be free."

The company began transforming its Web site last spring. Today the page offers 16 channels that organize content, advertising and Web site links by topic. In March, America Online rolled out the AOL Netfind search engine, which is based on Excite technology, on the page.

In May, it added AOL Instant Messenger, a messaging function that alerts Internet users when friends are online and allows them to communicate in real time -- extending America Online's popular Instant Message and Buddy List technology to the Web.

And last month, America Online introduced AOL NetMail, which allows America Online subscribers to access their e-mail accounts directly from the Net, on aol.com.