AOL's Armstrong: Dial-up matters (a lot)
AOL CEO Tim Armstrong is doing his 100-day barnstorming tour and sitting down for interviews as the company prepares for life as an independent entity.
Based on interviews with PaidContent, BoomTown and Silicon Alley Insider, Armstrong has a lot of work to do, believes in content (especially the niche variety) and wants double down on areas where AOL is strong. In other words, there isn't a lot of new ground being broken here. But what stuck out for me is how much Armstrong talked up AOL's dial-up business.
Yes, that dial-up business. The same business that was being minimized, jettisoned and otherwise forgotten got a good bit of play from Armstrong. Turns out subscribers are a good thing after all. In fact, Internet access is now core. Armstrong said the dial-up business, which shows a lot of resiliency given it is being downplayed, illustrates how people will pay for AOL's content. In fact, that subscriber model is what many content companies are trying to nurture now.
In an interview with Silicon Alley Insider, Armstrong said:
Think of any news site on the web that sells subscriptions; AOL has four times as many people as the largest subscription service. We have people who pay to use our products and services, and they are heavily engaged in our content. If you erase the brand perceptions of AOL, and consider that people pay to use our properties, you would probably consider this one of the most valuable audiences on the internet.
Armstrong also sees the Internet access business as one with the advertising and content unit. Armstrong told PaidContent:
I look at it as one business. I look at the access business as a paid-for membership base that actually uses our products and services so it’s really distribution.
And Armstrong has no inclination to get out of the ISP business. After all, it throws off cash, but it's really about the distribution.
It's entirely possible that Armstrong is talking up Internet access to sell it off, but if a business generates cash flow why ditch it? AOL the ISP isn't glamorous but a subscription business is a nice way to cushion the recession amid weak ad spending.
Simply put, dial-up matters.
Also see: Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?