AOL Trimming Up For Sale; Sun Sets On XDrive, AOL Pictures, Mobile And Others

Rafat Ali
Friday, July 25, 2008; 1:07 AM

Some belt tightening has started at AOL ( NYSE: TWX), as it prepares and dresses itself up for a sale: It is discontinuing some of its tech projects, and also trimming some of its content blogs under the Weblogs Inc network. According to an internal memo sent by Kevin Conroy, AOL's EVP of Products and Marketing, products Bluestring, Xdrive and AOL Pictures "will be sunset," meaning closed down after a transition period. "These consumer storage products haven't gained sufficient traction in the marketplace or the monetization levels necessary to offset the high cost of their operation," according to the memo posted here by TC.

Some other changes:-- MyAOL will complete its HP deployments by the end of October and will transform the MyAOL platform from proprietary to industry open standards...meaning it will continue to be maintained, but that's about it.

-- On the mobile side, which is based in Seattle, it will stop further investment in AIMWorld (haven't heard of this one before) and "will sunset MyMobile next year in order to focus on our core revenue producing products (ie, mail, messaging, portal and mapping)."

-- The AOL Video Portal will merge with AOL Programming Video Experiences to "deliver a higher value product inside of the AOL Programming channels". The work to merge the two products is currently ongoing and will be completed in early Q4.

Meanwhile, Conroy's group will now focus on toolbar, mail, desktop apps, and expanding video search site Truveo. Coincidentally, we have also learned that Tim Tuttle, the former CEO of Truveo, which AOL bought two years ago, left the company a few months ago, though he is still on in an advisory role. He was the AOL VP responsible for video search and relaunched Truveo late last year as a consumer destination site.

Form Conroy, this quote is instructive of the tough times ahead: "There was a time at AOL when the strengths of our aggregate portfolio of products more than compensated for the weakness of an underperforming product. The realities of the industry and market shifts in online advertising no longer make that possible. Simply put, every product makes a direct impact on our bottom line. With two quarters behind us, it is fair to say that results across the AOL products team have been mixed."

On Weblogs Inc, which falls under Bill Wilson's programming group, some changes: it is asking some of its bloggers, who get paid by the post, to stop blogging until July 31 to save on costs. The blogs affected include, The Unofficial Apple Weblog, and DownloadSquad, according to another internal memo we obtained. DIYLife will be closed down.

The memo, sent out by a programming manager for the blogs:Full text after the jump.

Staci adds: I'm not discounting the possibility of a sale but a lot of these actions would be taken either way given the trajectory AOL has been on for the last year. As for what's happening with Weblogs, not every blog in a big network is going to make it, sorry to say. But I've been down this cost-cutting road before (and with the same parent company albeit long before AOL was part of Time Warner) whenTimedecided to help make its numbers one year by halting freelance spending for the 4th quarter with very little notice. I was lucky; another Time Inc. publication helped me fill a serious income gap. Punishing the people at the lower end of the scale by cutting their income hurts them?and while it may help the numbers now, it hurts the company, too, by endangering both the loyalty of its readers and its contributors.

The Weblogs Inc memo: "Hi Teams. I've spoken to your respective leads about some budget concerns, but wanted to pass along one more last-minute (and unfortunate) effort: we must halt any new posting on the blogs through next Thursday, July 31. There may be some exceptions, and not all blogs will be paused in the same manner."

The goal is to safeguard against further budget overages, thus protecting our business and hopefully continuing as usual (though maybe a little restrained) in August. Going forward we will remain slightly leaner, but my hope is that by the end of the year we'll continue to ramp up as we have historically.

You may see posts get rescheduled to account for the change, and if you have larger features those should not be published until August. Sorry about that, and very sorry about the unintended shortfall of income for all of you. Again, the long view is to return to normal as we re-align with our original budget estimates.

I'm here all day for questions and concerns, on this lists or off. Again, I know this is difficult and will cause some worry.

As of now the only blog to be put on hiatus after this month is DIY Life, effective August 1 (DIY Life could be resurrected at some point, but that is out of my hands). Everyone else should make plans for a resumption in a week. DLS bloggers should immediately press pause on new content. TUAW can continue with 1 or 2 App Store posts a day.

Thanks in advance everyone, we'll get through this an emerge stronger, I know it."

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