TELECOM Digest OnLine - Sorted: AOL to Buys Weblogs, Courts Bloggers

AOL to Buys Weblogs, Courts Bloggers

Kenneth Li annd Eric Auchard (
Thu, 6 Oct 2005 13:58:21 -0500

By Kenneth Li and Eric Auchard

America Online on Thursday said it will buy Weblogs Inc., a network of
Web sites focused on topics ranging from scuba diving to gadgets,
marking the biggest bet on unfiltered online commentary.

The deal, which is expected to close next week, is worth about $25
million, one source said on Wednesday. Financial terms were not

AOL's agreement is the biggest price paid for a network of blogs, or
Web journals, analysts said, although it is a smaller price compared
with recent Internet acquisitions by media companies such as News
Corp.'s $580 million deal to buy Intermix Media Inc.

Weblogs is one of the more successful attempts at weaving together a
network of individual blogs to attract a stable of advertisers and
cash in on the blogging phenomenon.

The purchase also marks the third acquisition in recent months for AOL
after the online unit of Time Warner Inc. restructured its business
this year to focus on boosting advertising revenue to offset a
declining dial-up customer base.

Once seen as the red-headed stepchild of Time Warner, whose portfolio
includes HBO, the Warner Bros. movie studio, and CNN, top executives
now view AOL as a major source of growth for the entire company.

Over the summer, AOL has made more of its once proprietary services
available for free on its Web site, including music videos and
e-mail. It scored a victory in July when more viewers watched's presentation of the Live8 concerts than on television in the
United States.

"AOL is strong at mass market programing. We needed to go down to the
next level and do it in a scalable community based way," said Jim
Bankoff, executive vice president of programing at AOL.

Web logs adds 85 new Web sites, including the popular Engadget,
Autoblog and Joystiq, with contributions from over 100 freelance
bloggers to AOL's group of properties. The company will be managed
separately from AOL, but will be featured throughout AOL and's
existing services.

Engadget ranks as the Web's third most popular blog in terms of links
from other sites, according to data on traffic measurement site
Technorati (

"We've reached a milestone in the development of citizen media," Jason
Calacanis, co-founder and CEO of Weblogs Inc., said in a statement,
citing AOL's advertising expertise as a reason for the sale.

Calacanis is a dot-com impresario who in the second half of the 1990s
acted as the unofficial mayor of Silicon Alley, a hub of Internet
companies that formed in Manhattan's downtown.

A rival network known as Gawker Media is backed by Nick Denton,
another New York-based blog entrepreneur. The Gawker network focuses
on a smaller number of highbrow, gossip-oriented sites, including
Gawker and Wonkette.

"The concept of unfiltered content being on same level of major media
companies is revolutionary, but also appropriate," Calacanis said.

AOL on Thursday also said it made its AOL Instant Messenger software
and services available on several blogs and social network Web
sites. They include: Facebook, an online directory of high school and
college users; LinkedIn, a social network for job seekers; Six Apart,
which makes blogging software; and, a fashion and beauty

Copyright 2005 Reuters Limited.

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