AOL CEO Tim Armstrong: Next phase of Internet is about content

The next phase of the Internet is about content, and AOL is positioned to be a major player in it, CEO Tim Armstrong said on Tuesday.
Written by Andrew Nusca, Contributor

The next phase of the Internet is about content, and AOL is positioned to be a major player in it, CEO Tim Armstrong said on Tuesday.

Taking the stage on the second day of the TechCrunch: Disrupt conference in New York City, Armstrong said AOL's latest moves were part of its plan on "being the largest high quality content producer for the digital medium."

"I do believe the next phase of the Internet is about content," Armstrong said, justifying his decision to lead the company. "I believe AOL has a very large set of assets in that space. It's virtually impossible to build a global brand on the Internet, or it takes a very long time...it's being able to go to a company that people were ready to win. There's a lot of fight in them. I spent first year unlocking their [desire] to compete."

Armstrong said in the past, the company had been measuring itself against itself, but now looks outward to the rest of its (newfound) industry.

"To 'beat the Internet' is not just a marketing phrase for us," Armstrong said.

Armstrong said he's learned a lot leading AOL into the content business, and reflected on the pros and cons of being such a large, spread-out player in the space.

"If you want to have a global company, you have to be able to work globally and communicate globally," Armstrong said. "There are downsides to it, but the upsides are that you have to be able to run a company...at scale."

Armstrong said the company has a "very specific and precise strategy" for dealing with its access dialup business, and said he was looking at and measuring AOL's push into the content businesses separately from the "access cash" from its legacy dialup business.

"We're planning on having our revenue beat the access revenue," Armstrong said. "We're in the process of hammering through that right now."

TechCrunch editor Michael Arrington asked Armstrong about the company's failed $850 million purchase of Bebo. Armstrong said the company had pared it down to only engineers.

"I don't know whether or not I would have bought Bebo," he said. "With the benefit of hindsight, the answer is no. The execution piece of it really fell apart. To be really honest about it, Bebo was a major distraction when I got to the company...candidly, Bebo did not fit in that strategic range."

Armstrong also outlined the internal structure of AOL's content business.

He said:

At the top of the food chain, there is distribution, unique visitors and advertising -- what we're aiming for. Underneath that, megabrands -- Moviefones, Black Voices, Engadgets, the AOL homepage. Next to that, we have "disruptor brands" -- Seed and Patch. We actually see content as larger than funding AOL properties. We're focused on quality. I don't know whether or not the world needs more low-quality content. When you talk about robotic content, that has a connotation that is negative -- I don't believe what we're doing is negative.

"A lot of the content we're creating fits into a lot of buckets," he added. "Some of it has no commercial viability. How do you best serve consumers at the broadest scale possible?"

Armstrong said AOL now has 4,000 journalists on the payroll, 500 of them full-time.

Arrington questioned the strategy.

"It's just about the biggest newsroom in the world, right?" he asked "Is that model going to work?"

Armstrong said it's all a matter of quality.

"The content engines we're building should enhance higher-quality content for our properties but also for other people's properties as well.

"We roughly have over 200 consumer-facing brands. I don't think all of the brands we're doing should be features inside other properties. We're going through a brand architecture right now determining what are features and what are brands."

Armstrong ended by discussing Patch.com, a local news venture with a lean business model that he described as "digitizing towns, putting them on one platform."

"Can you do 80 percent of the things at 15 percent of the cost?" he asked. "I think Patch is that kind of model for local journalism and local business."

"We're planning on rolling out Patches more broadly....it's a big white space. We're really taking local to a local level."

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