AOL's got mail, video, priorities

Exec focusing on monetizing content, expanding market share

AOL is on the comeback trail with the addition of a new chairman and CEO, Randy Falco, and the subtraction of its subscription business. Generating advertising revenue is a top priority, which falls on execs like Kevin Conroy, executive vp products, marketing and distribution. He oversees a wide array of content and applications at AOL, from video search to the company's collaboration with Mark Burnett for the recently completed reality game "Gold Rush." The Hollywood Reporter digital media editor Andrew Wallenstein recently spoke with Conroy about his outlook and priorities for the coming year.

The Hollywood Re- porter: How has getting out of the subscription business helped AOL?

Kevin Conroy: Our new advertising-focused business model is showing signs of success, and we are optimistic that Randy Falco will ensure that success continues. We've had a good couple of quarters of meaningful growth. We're taking share from competitors. It's all about growing audience, growing engagement, bringing in incremental unique visitors into our network, incremental high value page views we can monetize, video streams, video downloads. What's fantastic is that we are now truly one company with multiple divisions. We had separate divisions with the subscription business, but now everyone is focused on a common set of metrics.

THR: How will this benefit AOL's video content?

Conroy: Until now, video and programming were free on their own but didn't have the ability to circulate within the network because stuff like e-mail was still behind the pay wall. Now we have the benefit of being able to drive people to mail, search, video and back to search. There's a lot of leverage that comes from the recirculation effect. AOL is remarkably well positioned in a world where programming is moving online. If you see who has what deals today, we have far more deals with far more content owners ? brands that have household names ? than anyone in the business. We've announced 17 in the past three months. We have everything from five of the major movie studios to 45 branded on-demand networks, including A&E, Turner, MTV. I challenge any of our competitors' to display the content we have in an online VOD format. We're aspiring to create what we believe is the best destination for high-quality branded content across a range of brands, and importantly, access to everything on the Web. It's not just what's in our library. It's also one-stop access to the best of the Web.

THR: You oversee so many different areas. How do you prioritize your responsibilities?

Conroy: We innovate where we can, but in established categories, it's hard to have big leaps of innovation around some of the utilities of how people use the Web. There are some areas where we can innovate in a big way like video and video search. Video search is a place where we have a clear advantage in the marketplace, and I think that will be proven out in a big way over the next year or two. Traditional browsing navigation works well if you know what you're looking for. But when you move from thousands of pieces of video to hundreds of millions, traditional browsing can't support that volume of content. So you need another mechanism to search and look for the things you want to watch. The technology required to search for video on a Web page is different than what is required for text. We could not be a principal in text search, we have a partnership with Google to do that. But in video, we decided to be a principal because multimedia search beyond text would be the next generation of search. In December, we acquired Truveo. We are scouring the market for technologies and haven't found anything that comes close to Truveo's technology. We've leveraged that technology to become the backbone of video search, not just for our own library but the Web.

THR: In2TV made a big splash as an ad-supported broadband channel. How is that venture progressing?

Conroy: We make a decision to build In2TV around the exploitation of assets in classic television that were not being exploited at scale. We would build a base with that and get fresher and fresher content. If you look at Year 1, the relative mix of content 10 years old vs. less than 10 years old, you see the content is getting newer and newer. It's on track for where we thought it would be. In the very near future, content owners outside of (In2TV partner) Warner Bros. will begin to contribute content to In2TV because it achieved scale. Both classic and new content. As we said at the time, if we build it and we gain audience, they will come.

THR: Are you happy with the results of "Gold Rush"?

Conroy: "Gold Rush" has been a blast. No one has done anything like "Gold Rush" ever. It's hard to go first. We created an original interactive experience, a multimedia cross-platform program with TV, radio, Internet and magazines. We had five sponsors, all leading national sponsors. You have an experience that's interactive over an extended number of weeks that builds. It's very complicated, lots of moving parts. Everyone has objectives: advertisers, us, media partners. Putting that all together in ways that works for everybody has been a remarkable experience. It's very important because we raised the bar for ourselves in terms of the type of experience we wanted to create with the hope that it would be a great experience for users. Each of the media partners feels great about the integration. Mark (Burnett) and his team have done an awesome job, our team has done an awesome job. Live 8 prepared us for doing things on a large scale.

THR: How will the online video market evolve in the coming year?

Conroy: There are only a couple of ways to monetize video content today. That can't last. And so models around monetizing this usage is where the focus should be. It's clear there's a critical mass of content and usage, but the market is not very sophisticated as it relates to how to monetize. The level of sophistication around tracking and reporting usage has got to improve in a big way, which will lead to greater advertising demand to reach those audiences. Which flows more money into the market. But there needs to be more ad units in the market. It can't all be a 15- or 30-second preroll ads. There has to be greater reporting, greater clarity from a usage standpoint as a catalyst to drive even more ad dollars.