AOL Europe Shifts to Ad Revenue-Based Business Model

| About: Time Warner (TWX)

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AOL to Focus on Ad Revenue in Europe [New York Times]

Summary: AOL Europe is implementing the same strategy as AOL in N. America, moving from an Internet access subscriber revenue business model to one driven by online advertisement revenue. Earlier this month AOL Europe sold the last of its three Internet access businesses -- earning about $2 billion total from sales in Britain, France and Germany. A London-based research firm estimates ad revenue will account for less than 20% of AOL's revenue in Britain this year. And from now on, AOL must share a sizable portion of ad revenue with the companies that bought its access businesses -- estimated at 40% in Britain. In September, AOL Europe drew 31 million unique visitors, or less than one-fifth the number that visited Google. A potentially positive sign however, is that only one-third of these visitors were subscribers to its access services. AOL plans to boost its online presence in Europe through new site openings and adding additional languages.
Related links: Time Warner Spins Off the Last of its European AOL UnitsTime-Warner Considers Cutting AOL LooseComScore: Google, Ask Gain Search Share; Yahoo, Microsoft Lose GroundAOL Ad Revenue May Drive Higher Valuation for Time-WarnerTime Warner to Spin Off Cable Unit
Potentially impacted stocks and ETFs: Time Warner (NYSE:TWX), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Yahoo! (YHOO), ETFs: Internet HOLDRs (NYSE:HHH), Consumer Discretionary SPDR (NYSEARCA:XLY), PowerShares Dynamic Media (NYSEARCA:PBS)

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