According to the reports, AOL was looking to offload the asset for $300 million and talking to a pair of non-US companies about an acquisition (likely in a part cash, part stock transaction).

Question is: who are those potential buyers?

We’ve pinned down one who, sources say, has already engaged in late-stage negotiations with AOL about a buy-out that would occur after its planned December 2009 IPO: meet Naspers, a massive multinational media conglomerate that you’ve possibly never heard of.

Naspers (aka MIH Group) is a nearly century-old media company headquartered in Cape Town, South Africa that is listed on the Johannesburg Stock Exchange and also boasts an ADR listing on the London Stock Exchange. The group’s principal operations are in Internet platforms, pay-television and print media.

So what would make this a sensible move for Naspers?

Naspers’ principal Internet operations are currently in South Africa and elsewhere in sub-Saharan Africa, China, Russia, Eastern Europe, India, Brazil and Thailand. To expand its global footprint, buying ICQ would make sense as it already has stakes in a good number of complementary companies that operate on an international level.

An acquisition of ICQ, which has somewhere in between 40 and 50 million active users around the world – mainly in Germany, Russia, Ukraine and Israel – and is ‘moderately profitable’, would be a good move for the publicly listed media company to make in order to increase its international user base and create synergies between some of its ventures.

As outlined by Quintura CEO Yakov Sadchikov in a blog post speculating about Naspers’ interest in ICQ:

- the group owns a 35% stake in Tencent Holdings Limited, the operator of the wildly popular Chinese instant messaging platform QQ
- it boasts a 43% stake in Mail.ru, leading provider of internet and communication services for Russian speakers all over the world
- it holds 38% of Nimbuzz, a Netherlands-based global provider of instant-messaging and VoIP solutions for mobiles
– it has a 25% stake in global mobile advertising network operator BuzzCity (based in Singapore)
- it fully owns 24.com, one of the largest Internet publishers (offering blogs, email, social network and many other services) in Africa
– it recently acquired a majority interest in Brazil’s mobile services provider Compera nTime
- Naspers owns 100% of Gadu-Gadu, the leading Internet communications provider in Poland with further operations in Romania, Bulgaria and the Ukraine
- it has a 30% stake in MXIT, a mobile instant messaging service for South-Africans
- it’s the owner of Sanook!, Thailand’s no. 1 Web portal

The MIH Group also operates or owns a stake in a number of e-commerce platforms and auction websites, including Ricardo (mostly targeting Western European countries), Poland’s Allegro and Brazilian price comparison service BuscaPé, as well as local social networking sites like India’s Ibibo.

In other words, the group has been consistently building up quite a portfolio of multinational Internet and mobile communication properties, and picking up ICQ would fit perfectly into that expansion strategy.

According to our sources, Naspers was approached by AOL about a potential sale proactively, but is not the only corporation who might end up as the new parent company of ICQ. We reached out for confirmation or more information, but AOL declined to comment saying it doesn’t respond to rumors or speculation as a policy, and the MIH Group has not gotten back to us at this point. AOL is said to also be eying a sale of other properties, including MapQuest and Bebo.

AOL acquired ICQ (well, its then parent company Mirabilis) for $287 million in cash back in June 1998, with another $120 million in earn-outs for its executive team. Most of its 100-or-so employees are still located in Israel, where the company was originally established.

Stay tuned for more.

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The news comes a mere week after AOL, which is preparing to spin off from Time Warner and go public, said it would be firing at least 1,000 employees and spend about $200 million cleaning house prior to the planned IPO.

The voluntary layoff program is to begin on December 4 and end after the spin-off date (December 9), and if not enough volunteers come forward the company says it will fire people on its own. AOL says the cuts will drop its annual operating expenses by $300 million, and that it will incur a $200 million charge from the time of the spin-off through the first half of 2010.

Update: Business Insider has the details of the lay-off package.

When AOL will be on its own again, it will be worth about $3.15 billion.

Worth noting: Armstrong says he has personally decided to forego his 2009 bonus (which was guaranteed to be in between $1.5 million and $4 million). This, in contrast to the decision to let 2,500 people go, is not to please the market pre-IPO, but more of a goodwill gesture to current employees.

From the SEC filing:

On November 19, 2009, AOL Inc. (the “Company”) informed its employees of proposed restructuring activities as part of its continuing cost reduction initiatives aimed at aligning the Company’s organizational structure and costs with its strategy (the “Restructuring”). The Restructuring is conditioned upon the successful completion of the Company’s previously announced spin-off from Time Warner Inc. (the “Spin-off”), as well as the approval of the Company’s new Board of Directors that will begin service in connection with the Spin-off. It is anticipated that, if approved, the Restructuring will include the reduction of approximately a third of the Company’s current employee base, which will be conducted on a voluntary and involuntary basis. The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the Spin-off through the first half of 2010.

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Remember all that talk about Bing starting to fizzle in September? Well it didn’t happen, and now October numbers and Bing gained another half a point to reach 9.9 percent market share of U.S. searches, according to comScore’s qSearch service. Five months after launch, Bing has steadily gained two points of market share.

And it is keeping the pressure on, with deals to index realtime data streams from both Twitter and Facebook (Google also has a deal with Twitter, but not Facebook), a deal with Wolfram Alpha for nutrition and diet data, and the constant rollout of new features such as better video search.

The biggest loser in the search wars, however, continues to be Yahoo as it awaits approval to hand over search to Bing.  In a single month, Yahoo’s U.S. search share dropped 0.8 percent to 18 percent, and is down 3 percent since the beginning of the year.  Meanwhile, Google seems unfazed, gaining another half point itself in October to finish with 65.4 percent share.

Bing’s progress is encouraging (someone needs to compete with Google in search), but so far all Bing has shown is that it can take share away from its future partner Yahoo. Bing has yet to put a ding in Google’s share.  Perhaps it needs to do something radical, like cut deals with major news and media sites for exclusive rights to index their content.  Otherwise it will just keep eating away at Yahoo’s slice of pie, which it’s already been promised anyway.

U.S. Core Search Share, September 2009 (Source: comScore qSearch)

(Table below via JPMorgan analyst Imran Khan. Click to enlarge.)

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It’s been a long decade, but AOL will once again be an independently traded company on December 9, when Time Warner will spin off shares. Every Time Warner shareholder (disclosure: including me, from when I was employed there) will receive shares in AOL using the following formula: one share of AOL will be distributed for every 11 shares held in Time Warner.

In other words, we finally have an approximate market capitalization for AOL. The business will be valued at 1/11th 1/12th the value of Time Warner. At today’s market cap of $37.8 billion for Time Warner, based on a closing price of $32, that implies a $3.4 $3.15 billion market cap for AOL. Unless Time Warner shares surge over the next few weeks, it will be in that ballpark. Update: My initial math was slightly off. As some commenters point out, the implied value is 1/12th of Time Warner since at the time of the distribution everyone with 11 shares will receive an additional share. SInce we know how much Time Warner is worth, it is possible to come up with an implied value for AOL based on that ratio, even though that value will change the minute the shares start trading.

So the AOL business which was valued at $5.7 billion just last July when Google sold back its 5 percent stake, is now worth even less—not to mention the initial $20 billion valuation when Google first invested in 2005 or, going back even further, the original $109 billion merger with Time Warner way back in 2000.

But let’s forget about all that. Onwards and upwards. With a little cost-cutting, those AOL shares will shine. Right?

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As AOL prepares to spin off from Time Warner in an IPO, it wants to gussy itself up so that it looks as appealing as possible tp ublic investors. Today, AOL disclosed that it plans yet another restructuring which could cost as much as $200 million. The biggest cost savings from any restructuring is usually through layoffs, and the latest round has already started at AOL, with 100 let go this week and as many as 1,000 of its 6,000 jobs at risk of being eliminated.

Despite new leadership under CEO Tim Armstrong, AOL has yet to turn around financially.  Last quarter, revenues sank 23 percent to $777 million.  The biggest drop came from subscription revenues to its legacy Internet access business, down 29 percent, but advertising revenues also took a hit, down 18 percent.  AOL depends on display advertising, which has not yet rebounded like search advertising appears to be doing.

By cleaning up house and removing as many costs as possible before the IPO, Armstrong is trying to make AOL as lean as possible. But eliminating salaries and benefits can only go so far. He has to show that his new content strategy can create actual growth as well.

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After two straight quarters of annual declines (aka, the Great Ad Recession of 2009), it looks like online advertising revenues stabilized in the third quarter. The combined online advertising revenues of Google, Yahoo, Microsoft, and AOL rose 1.2 percent to $8 billion. While the online advertising industry is not out of the woods yet, it might be stabilizing.

At least it is for Google, which was the only one of the four horsemen of Internet advertising to see its ad revenues rise in the quarter (up roughly $400 million from both last quarter and last year). Yahoo, AOL, and Microsoft were all down on both a sequential and annual basis. (All the individual company figures are in the table below).  Google benefits more from search advertising and is less exposed to display. The question now is whether display advertising will follow the recovery already being experienced by search advertising.

Since these four companies account for such a large portion of total Internet advertising, looking at their combined advertising revenue numbers serves as a good indicator of the health of the overall online advertising industry.  I like to keep track of the combined total every quarter

These numbers represent global advertising revenues, and include network revenues paid to affiliates through AdSense and Yahoo’s ad network. Google’s licensing revenues for Google Enterprise Apps have been stripped out. For Microsoft and AOL, I include only the advertising portions of their online revenues as reported in their quarterly earnings statements.  Microsoft restated revenues for its online division last quarter, largely due to the divestiture of Razorfish, so the overall numbers changed a bit from previous posts.

Below is a table with all the numbers:

Online Advertising Revenues (in millions)

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Hollars is part of Garlinghouse’s old team at Yahoo, and left the company shortly after Garlinghouse did to take over PR and communications at Digg. She joins AOL later this month.

“This is more about working with Brad again, and nothing about Digg,” she told us in a phone interview this morning, adding that she’s excited about the turnaround opportunity at AOL. She joins AOL as senior director of corporate communications, reporting to both Garlinghouse and EVP Corporate Communications Tricia Primrose.

Digg’s looking for Hollars’ replacement immediately. So if you want be the person to handle all corporate communications and Kevin Rose babysitting duties at Digg, let them know.

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AOL is losing another longtime executive, David Liu. He is the senior vice president in charge of Global Messaging, which includes AIM, ICQ, and AOL’s more recent Lifestreaming products. Liu spearheaded the transformation of AIM into a lifestreaming client that mixes private and public messages from Twitter, Facebook, and elsewhere.

When CEO Tim Armstrong was looking for someone to head up AOL’s overall Internet and mobile communications, which also includes email, Liu was the strongest internal candidate. But Armstrong decided to go outside the company and hired Brad Garlinghouse, who used to be in charge of all of Yahoo’s communications products.

That, coupled with AOL’s shift towards becoming a content company, convinced Liu it was time to move on. This morning he sent out an email announcing his departure in about a month from now.

Liu is already being pulled into the startup world as an angel investor (in SimpleGeo). He’s also been talking to VC and private equity firms about joining as a partner focusing on realtime startups.

In the early part of this decade, when many people inside AOL were still fighting the open Web, Liu launched the first AOL.com portal and grew it to 50 million users. He also relaunched the AOL Toolbar.

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A couple days ago at the Web 2.0 Summit, AOL CEO Tim Armstrong caused a little bit of a stir when he hinted that AOL is working on a “secret” technology project. When pressed for details on what exactly it is, he was vague. But after fishing around with our sources, we have a pretty good idea.

The secret project is a new content-management system (CMS) which will make it easier to produce and publish Web content across AOL’s sites and perhaps beyond. It will also help AOL scale up the number of contributors who write articles and produce videos for its numerous media sites well beyond the thousands who are working for it today.

During the on-stage interview at Web 2.0, this is what Armstrong said:

TA: We have some secret sauce that I can’t announce. But we’ve been working on something for 3 months that’s a big tech shift. I can talk about it later.

JB: Wait, tell me more. What tech?

TA: It’s a broader platform with more information about content, and around content. I can’t give you a better answer. We’ve gone from 500 journalists to over 3,000. We’re going to keep growing. Our content is 80% our own, we’re going to keep going. It’s all about taking content management serious. There’s an opportunity there.

Armstrong’s maniacal focus right now is on increasing the amount of content AOL spews out. In addition to its main Website, AOL operates more than 75 independent topic-specific sites and blogs in its MediaGlow business run by Bill Wilson. All told, AOL already employs a growing staff of journalists (3,000 to date).

The new CMS system will allow AOL to accelerate along that path, and bring in even more writers from the outside. Built into the system is a way to include content from freelance writers and pay them based on the views and ads shown on the pages they write. It’s like a fancy blogging platform with all sorts of tracking and ad-monetization built in.

Demand Media has something like this called Demand Studios which is paying out $17 million a year to writers, editors, and video producers. In addition to furnishing Demand Media’s sites with content, Demand Studios also farms out articles and videos to other sites. AOL could do the same thing and provide the ads as well.

In addition to the content coming in from thousands, or even tens of thousands, of lowly-paid contributors, the CMS system might also be able to automatically generate related content on the fly. AOL is already experimenting with lightly-curated, automated topic pages on Love.com, which uses technology from its Relegence acquisition.

What isn’t clear is whether AOL is building an entirely new CMS system from scratch, or integrating technologies from past acquisitions. All of AOL’s blogs (Engadget, TMZ, Autoblog) already run on the Blogsmith CMS that came with its Weblogs, Inc acquisition. The new CMS might very well be based on Blogsmith or at least be built by the same engineers. AOL’s non-blog sites run on a relatively new CMS called Dynapub. It would make sense to have one CMS for everything. Then there’s the contextual feeds from Relegence. And blog-link generator Sphere, now known as Surphace, may also play a role. Put them all together, and you’ve got cheap content galore.

http://www.techcrunch.com/2008/11/05/lazy-publishers-rejoice-get-your-content-from-pluck-on-demand/

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The Armstrong talk can be summarized pretty easily: Content, content, content. Armstrong made it very clear that not only is AOL in the process of spinning off into its own public company, but that they are now going to be a content company. In fact, they’ve gone from 500 journalists to over 3,000 since he took over, he said. And that will keep growing.

The idea is to grow AOL’s unique visitors and then figure out the best way to monetize it. But again, growth, will be the key. He’s not sure if 2010 will see that significant growth, but after that, he expects they’ll be going in the right way.

Notably, Armstrong also hinted at some new technology that AOL has been working on for the past 3 months now. When pressed, he would not say what it is, but said that they will be talking about it at a later date. Mysterious.

Armstrong says he took the AOL job partially because it was a risk. And he noted that if you’re not working in the Internet industry to take risks, you shouldn’t be in it. “If you’re not failing, you’re not trying hard enough,” he said.

Below find the full Q&A (paraphrased):

JB: You and Sergey dress a bit differently.

TA: This is his tie (laughs).

JB: Why take the AOL CEO job? You had other options, like a sandy beach.

TA: I wasn’t thinking about leaving (Google) but the AOL thing came up. I’m a big believer that this is just the beginning for the Internet. AOL has a lot of things that people don’t realize. It’s undervalued. Google was a great experience, but I wanted to learn again. I have on this job in the first 6 months already. And the company was ready to change.

JB: Would you have taken the job if you knew you couldn’t spin it out from Time Warner?

TA: That’s not true. But it does make sense to spin it out.

JB: It hasn’t happened but it will right?

TA: Yeah that’s the intention.

JB: How does one do that? Take it public, private?

TA: If you own Time Warner stock, you will get a share of whatever AOL is. It’s like the Time Warner cable offering. So you can buy a share of AOL too soon.

JB: Is the company ready for that?

TA: Everyone has worked really hard. Still more work to do. We need to prepare to go public, so we have to do investor relations and taxes, etc. We’re in a good position, working towards it.

JB: How profitability and rev growth?

TA: Well that’s the tricky part. (laughs) The company is very profitable. Most of it is paid services, very small is from dial-up. We’re very focused in growing a large platform around content now. That’s the hard work to get down. The rev 2010 for us will see the content coming up.

JB: Lot of AOL brands now, TMZ, women’s brands, etc. Will this be more of that?

TA: We have some secret sauce that I can’t announce. But we’ve been working on something for 3 months that’s a big tech shift. I can talk about it later.

JB: Wait, tell me more. What tech?

TA: It’s a broader platform with more information about content, and around content. I can’t give you a better answer. We’ve gone from 500 journalists to over 3,000. We’re going to keep growing. Our content is 80% our own, we’re going to keep going. It’s all about taking content management serious. There’s an opportunity there.

JB: Will AOL start acquiring again?

TA: Yeah the AOL/Yahoo deal that almost happened really set us back. Now we’ve flipped it, we’re not living in fear. We will acquire other companies again. I’m not sure who yet. Our money is going to the product right now, period.

JB: Talk to me about Twitter, all we’ve heard the past few days. Do you want to integrate Twitter?

TA: Yeah we’re interested in bringing in stuff like that. We have lifestreaming now, we do see that as a part of our future. Brad Garlinghouse’s mandate is ‘how do we take messaging to the next level?’ I’m a bit fan of Twitter, they’ve made it impactful. We’d be happy to use it in some way.

JB: What about Bing?

TA: I think they did a good job with Bing. They’re getting worthy attention. I was surprised.

JB: Can content-bases strategies scale? Content businesses don’t seem to get all the love that tech companies do.

TA: I don’t know what our valuation will be but people in the media business look at Silicon Valley companies with envy. We have the opposite view. Let’s take some tech and be serious about it, around our content.

JB: But how do you scale?

TA: I can’t tell you that! (Yet) I’ll use the television example. When you see the TV channels, look at the depth of content with 300 channels. It could be better. The distribution has massively changed with the Internet.

JB: The deal with Google, let’s talk about that. Is Google going to get a new search deal with you?

TA: AOL is not in the search business. We’re not in a rush to get a new deal done. We’re patiently working to get something done. Google has been a great partner. Google has a leg up on the relationship side, but in my AOL hat I need to make sure we get the right deal.

JB: What about Yahoo not being a search company anymore, like what AOL did a while ago? Did you agree with Sergey that Yahoo should have stayed going it alone?

TA: No, but I wasn’t as concerned as he was about it. Yahoo had to do what it had to do. It’s a tough market. Did I think we’d be major search partners with Yahoo? No. Now they’re getting out.

JB: What are the metrics how you judge where you are now and down the road?

TA: When I got there, pageviews were the main metric. I still am looking at that, more uniques, etc. We need to get to new areas of innovation too. Looking at user interest, etc. It may be tough in 2010, but post 2010, how do we get shareholder value? I think it comes from consumer value. I want to see large growth. Then we’ll figure out how to monetize those.

JB: What are they now?

TA: 270 million globally, 100 million in the U.S. but we’re changing things (unique visitors). 2010 should start showing things, but we may drop a bit at first, then we should see growth after that.

Audience Q&A

Q: What’s the vision for Patch? And what about Yellowpage revenue?

TA: Patch is in about 10 towns, it’s being tested. We’re trying to digitize towns. But all that town’s information online. The vision is that this is a business, but this could be good for the world. This is a core area we can innovate in. We’re excited about that area.

I think in the future the Yellowpage business will be much, much better than it is today. A lot of companies out there are working on it. And Patch will help.

Q: Talk about email and ICQ.

TA: We’ve have: content, ads, and communications. What you’re talking about is the last bucket. People ask why isn’t AIM a billion dollar business? For us, that’s about the community.

Q: 500 to 3,000 journalists? Holy cow, how’d you do that?

TA: Mainly it’s been hiring and getting free-lance people on payroll. We have come up with a content strategy that fragmentation is our friend. We started to quickly add content when we see successful ideas. We’re doing over 3,000 pieces of content a day online, and much more than that soon. We’re also now doing 3-4 times the amount of video we were doing a few months ago. This is a way for us to build a community. We’ve been hiring big names from ESPN and WSJ. For journalism, you’re not just hiring the person, you’re hiring their community too.

Q: What about using new devices?

TA: There’s some interesting stuff from a device perspective. But we’re just thinking about the users now, no matter what they use. Mobile will be even more important in the future. I’m agnostic towards the devices though.

Q: So will mobile be it’s own interface?

TA: I don’t know.

JB: What about Google going into content?

TA: I know Google gets criticized a lot for going into new areas, but they keep ahead of the curves. They’re very good at that. It makes sense to test things, even if they don’t work out. It’s more than just sitting around the room and thinking about it. “If you’re not failing, you’re not trying hard enough.” AOL used to take no risks, now we’re changing that.

Bebo is a great product, we’ve pulled it back out and are trying to do it as its own product again. Shame on us for trying to integrate it to all this other stuff. I came to AOL because it’s a risk. If you’re not ready for that, the Internet isn’t for you.

That’s a wrap.

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Well, a preliminary ruling came out last week when the U.S. District Court for the Eastern District of Virginia granted the startup’s motion to transfer the case over to California, where Advertise.com is headquartered and where AOL boasts multiple offices.

We got our hands on the court documents (embedded below), which conveniently reveal some previously undisclosed numbers about Advertise.com’s current and projected revenues.

The transcripts of both motion hearings are interesting, because part of them reveal how much money Advertise.com – which is what ABCSearch rebranded itself to back in April 2009 – is making with its digital marketing platform / online ad network.

At one point during the first hearing on September 18, the transcript shows the court asked Advertise.com’s counsel about the size of his client’s business:

The Court: I don’t know much about your client. How big is your client?

MR. SELESNICK: Your Honor, they’re expected to — this year I think their projected revenue is about $25 million.

THE COURT: Well, compared to AOL then, I mean, it’s a little bit of a David and Goliath, although again, it’s not a mom-and-pop shop, either.

MR. SELESNICK: Correct.

During the other motion hearing on October 9, it was also revealed that Advertise.com made a grand total of $44,000 from its activities in the Commonwealth of Virginia during 19 months of operations.

This may look like a minor victory for Advertise.com from the outside, but when you consider the few resources the startup has compared to AOL, they must have been pleased not to have to litigate on the other side of the country if just for the extra travel costs and other inconveniences. The reason America Online wanted to have the lawsuit in the state of Virginia in the first place was because it’s a so-called rocket docket, a district that has an accelerated timetable and that strictly adheres to deadlines, resulting in speedier disposition of cases than most other districts.

We should note that when we contacted Advertise.com to double-check the $25 million projected revenue figure, its outside PR representative Ann Shannon of Pan Communications asserted “that figure is inaccurate,” but wouldn’t comment any further.  So either Advertise.com’s lawyer didn’t know what he was talking about and misled the court in a material fact which resulted in the lawsuit being moved to a more favorable venue, or Advertise.com’s PR person doesn’t know what she is talking about.  We’re going with the lawyer.

DOCSEN-_185807-v1-Transcript_of_9_18_Motion_to_Enjoin_hearing –

2009-10-09 Transcript re Defendant’s Motion to Dismiss or Transfer Venue –

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AOL acquired Goowy, a creator of Flash widgets, in early 2008. Now, we’ve confirmed, the core team – Alex Bard, Gary Benitt and Jeremy Suriel, have left AOL to start their next company, Assistly. Brad Birnbaum, formerly the CTO of eShare and Talisma, joins them as well.

So what is Assistly? We don’t know much yet. The website says little more than “Coming soon… Customer service done right. Brought to you by Alex Bard, Brad Birnbaum, Jeremy Suriel and Gary Benitt.” But I did manage to get a little bit of information out of Bard. He says of Assistly:

Assistly is a software company focused on customer interaction and customer relationship management (CIM & CRM). There are at least three different types of users of the application, including end customers that send in support questions via the channels; agents that service the interactions and provide support to customers; and administrators that configure the system. The application incorporates support for case management (customer profiles, history, dispositioning, tracking), and interaction management (chat, email, callbacks, self service, knowledge base, twitter, etc.) Generally, the company will deliver its software in a hosted and managed fashion, although it will also be available in a packaged format for on premises usage.

That’s all we have for now.

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Foursquare

Going

Going, which is an app made by AOL’s Going.com site, has one great feature going (see what I did there) for it. When you check in to a place you can set a “How is it right now?” slider to tell your friends either “Don’t Come”, “Eh”, or “Get Here Now” (or anything in between). That’s a great idea, and something all of these apps could benefit from. A lot of times people will see that I’m checked-in somewhere and may show up, but just because I’m checked-in somewhere that doesn’t mean it’s great, just that I’m there, for some reason.

I also like that you have to “leave” a place you’re checked-in before you can check-in some place else. Though I suppose that checking-in another place means that you’ve left your previous place already.

The main problem with Going is that it has too much going on. One reason that I think Foursquare works is because it’s so simple. Going may be trying to do too much by wrapping personal check-ins, with events, and photos, and city-based public streams, etc. I’m not sure people are really ready for all of that just yet.

There also doesn’t appear to be a way to easily add new venues to the listings. Going’s list of places is pretty good, but it’s definitely not complete, so if a place you’re at isn’t on there, there’s no checking-in for you.

Going is potentially interesting for its events calendar. If Yahoo would have ever made an Upcoming app that just did events, I think people would have definitely used it (it may be too late since Facebook’s app finally got that funtionality). But the events area of Going is nice because you can see a list of things happening on any given day and RSVP to them with your name with a couple of clicks.

Gowalla

Gowalla is more directly akin to Foursquare. Basically, like Foursquare, it’s an app that allows you to check-in places and rewards you for it. Instead of badges, you get stamps for going certain places. And you obtain items that you then leave other places.

The main difference is that rather than relying on users to enter addresses for places manually, as you do with Foursquare, Gowalla pulls the GPS coordinates. This is both a strength and a weakness. On one hand, this makes it slightly harder to cheat, but on the other hand it also makes it harder to check-in places — especially if you’re inside, which you are going to be most of the time at venues, obviously.

When I was first testing out the app a couple weeks ago, it was nearly impossible for me to check in anywhere due to the GPS issue. But since then, the Gowalla team has rolled out some updates using what it calls “elastic GPS,” which has improved things greatly. That’s especially true when you’re trying to add a new venue to Gowalla’s directory of places (which is otherwise very easy to do).

One thing that sets Gowalla apart (other than the GPS thing) is its emphasis on trips. It has a special area dedicated to user-generated treks made by people in various cities. For example, one of the trips recommended for me in San Francisco is the “Golden Gate Gallop,” which is a 18-stop trek that takes you to various venues around the water in the city, leading you to the Golden Gate bridge. The fact that any user can make these and share them with other Gowalla users is pretty cool.

One major problem users have with Foursquare is that it’s still limited to a handful of select cities. Gowalla has no such restriction, and anyone can start using it anywhere, populating maps with venues as they go. Foursquare eventually plans to implement something similar, but if you’re not in one of the cities that it’s in just yet, Gowalla is likely to be very compelling to you.

Something I also noticed about Gowalla as compared to Foursquare is that there seems to be more of an emphasis on you rather than your friends. The main screen in Gowalla is your passport features your stamps and items, and your check-ins. With Foursquare, the main page is your friend check-in stream. Foursquare’s approach seems like a better idea if you want your app to be as social as possible (which is the only way any of these apps are going to find success).

I’m also not a fan of Gowalla’s overall design. The shades of green mixed with yellow, mixed with large item icons, is a bit too garish.

The Challenge

So the obvious question is, do either of these apps stand up to Foursquare? The short answer is that Gowalla has a chance, while Going likely doesn’t.

The key to all of this is the gaming aspect of each app. Gowalla, like Foursquare, has one, while Going really doesn’t. Again, Going could work as an events app, but it’s got too much else going on besides that.

Both Robert Scoble and The Next Web have written up Gowalla over the past couple of days. Scoble thinks Gowalla won’t be able to compete with Foursquare, while Zee from The Next Web actually likes it more. I agree with Scoble that the GPS thing, which may seem like a plus, will likely end up hurting it. Sometimes people want to check-in some place but want to be kind of vague about where they are, you can’t really do that when your location is tied to your GPS coordinates.

Zee, of course, has a good point about the availability around the world. But as I said, Foursquare will likely change that soon. The question then becomes will Gowalla be able to attract these worldwide users before the more buzzed-about Foursquare greatly expands?

Beyond a loyal user base, Foursquare’s real potential lies with its business partnerships. That is likely to ultimately decide if the company sinks or swims. Gowalla doesn’t yet have any of the “mayor deals” that Foursquare offers, and their icon gifts can only go so far before users will start wanting tangible gifts for playing the game if Foursquare is offering them.

Another key is that Foursquare is quickly expanding beyond the iPhone. They already offer an Android app and Blackberry and Windows Mobile are coming shortly. Gowalla is currently only on the iPhone.

Still, it’s good to new entries in the social location space. Both bring some interesting new things to the table; particularly Going with its “How is it right now?” feature and Gowalla with its “Trips” functionality.

You can find Going in the App Store here. And Gowalla here. Both are free apps.

[photo: HBO]

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AOL has been seriously testing lifestreaming in various betas for AIM and AIM Connect for a few months now. At TechCrunch50, AOL just announced that lifestreaming will come out of beta on September 22 and will be part of the AIM product portfolio across Windows, Macs, the Web, iPhones and Windows Mobile.

Last week, the paid version of AIM for the iPhone was updated with lifestreaming capabilities. Today, lifestreaming is coming out of beta across AIM 7 for Windows, AIM for Mac, AIM for the Web, and AIM for Windows Mobile.

The lifestream is AOL’s way of melding instant messaging with social streams from Twitter, Facebook, YouTube Digg, and Flickr. Initially it was just one-way, but recently AOL turned on two-way communications for Twitter and Facebook in the AIM beta so that you can update your status on those two services from within AIM. The beta is being used by about 150,000 people. On September 22, those features will be rolled out across the entire AIM user base of 20 million people.

David Liu, the senior vice-president who’s been leading the lifestreaming charge within AOL, notes that on average users in the AIM 7 beta send 20 percent more IMs than other users. The increased engagement is partly because the lifestream draws them in and gives them another reason to open the app. But the new AIM is also far zippier. “It is faster and lighter than all the major competitors via lab testing,” claims Liu (the competitors being Yahoo Messenger, Windows Live Messenger, and Skype).

As part of the launch, AIM Connect will also be integrated with AddThis across all AOL Media sites to hook back into their lifestreams on AIM, so that they can share content and web pages with their AIM buddies.

Video:

Other Coverage:
AOL embraces Twitter, Facebook with AIM Lifestream CNET.
AOL Integrates LifeStream into AIM AppScout.
TC50: AIM opens up; pegs its future on mobile apps VentureBeat.
AIM Debuts Lifestream Twitter Client ReadWriteWeb.

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The new iPhone app will let you monitor updates from all the services supported by the desktop version of Lifestream. The app also lets you simultaneously post your AIM status updates to Twitter and Facebook — while the Lifestream was read-only until recently (you couldn’t post messages to services other than AIM), the service recently enabled this functionality.

Other new additions to the app include photo uploading, photo viewing on the Lifestream, and various UI improvements.

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The newest hire: former Yahoo exec Brad Garlinghouse will join AOL as President of Internet and Mobile Communications. Garlinghouse will report directly to CEO Tim Armstrong.

Garlinghouse will take control of AOL’s mail and instant messaging products. He’ll also head AOL’s Silicon Valley operations in Mountain View and serve as west coast lead for AOL Ventures. Bebo, acquired by AOL in early 2008, is now part of AOL Ventures.

Garlinghouse was most recently an advisor to Silver Lake Partners. Prior to that he spent nearly six years at Yahoo in a variety of executive roles. His last role at Yahoo was SVP Communications and Communities. His team grew Yahoo Mail to the no. 1 mail provider during his tenure, from no. 3 when he arrived at Yahoo.

AOL SVP David Liu was also strongly considered as a candidate for the position, we’ve heard from multiple sources.

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In July, AOL Instant Messenger (AIM) embraced the stream in a new beta (for both Windows and Mac) and started moving beyond simple IMs. You can now see your Facebook and Twitter feeds, along with AIM buddy updates and feeds from other services.

The problem was that the Twitter and Facebook feeds were only one way. You could read them, but you couldn’t send updates from AIM to the other services. A few weeks ago that changed, and AIM status updates can now appear as updates in Facebook and Twitter as well. There also appears to be a way to comment, or respond, inline to other people’s messages, although I am having trouble getting that feature to work for some reason.

Going both ways turns AIM into a full-fledged Twitter/Facebook client. It is a big deal for AIM because now it can be used as both a private and public IM client. While stream readers such as TweetDeck and Seesmic already have two-way messaging capabilities with Twitter and Facebook, Yahoo Messenger and Windows Live Messenger are still stuck in Read-Only Land.

The AIM Beta doesn’t have the Twitter integration working perfectly yet. Some updates and comments seem to never get through, while others do just fine. On the Facebook side, it is working much smoother. But AIM is making the right moves in an attempt to become an all-in-one instant communications hub. AOL’s new communications chief, Brad Garlinghouse, should keep pushing in this direction.

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But first lawsuits first.

Advertise.com, which was purchased by ABCsearch.com earlier this year and rebranded as such a few months ago, is a variation on AOL-owned Advertising.com, the beleaguered Internet company claims. In legalese, that translates as follows:

“Advertise.com recently commenced use of the virtually identical and confusingly similar designation Advertise.com and design in connection with the same and complimentary services as those offered by Plaintiffs under their federally-registered Advertising.com name and marks and their Ad.com name and marks.”

Update: looks like Advertise.com sued AOL first (August 17, 2009)

A search of the USPTO database shows that AOL does in fact have three registered trademarks for Advertising.com, but all are design trademarks, which means they stand little chance of exercising trademark rights over something as generic as the domain name advertise.com. Granted, the logo looks vaguely similar, but ‘virtually identical and confusing’ it ain’t.

Note that AOL doesn’t even effectively market Advertising.com as a business unit anymore – although it may soon recommence doing just that – and redirects the domain name to its Platform-A website instead (AOL rebranded it to the name of this whole-owned subsidiary in April last year and now prefers AOL Advertising as the overarching denominator).

So why would anyone confuse Advertise.com for an AOL property? It just doesn’t make any sense to try and claim ownership over any domain name with a variation on the word ‘advertising’ in it. What’s next? Ads.com? Advertisement.com? In the court documents, embedded below, AOL even boasts the fact that Advertise.com has only about 25,000 unique visitors per month, so what’s really at stake here?

The second case is even more bizarre: although often used in its communication, Ad.com is apparently not a trademark owned by AOL, although the company has filed an application for it in the past. But that domain name is actually owned by a Marcos Guillen, who recently sold it to Directi and Skenzo for $1.4 million. Well, almost sold it, because the deal fell through after all, according to industry watchers due to the fact that the mark has not yet acquired distinctiveness for any of the applicants – including AOL – following a recent examination. Guillen has now filed a lawsuit against Directi and Skenzo for backing out of its auction purchase of Ad.com, seeking $1.4 million, prejudgment interest, and/or damages according to proof.

Aol

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The global rise of Facebook is nothing less than astounding. In the month of June alone it gained 24 million unique visitors worldwide, compared to the month before, for a total of 340 million unique visitors worldwide.  It is now the fourth largest site in the world, trailing only Google, Microsoft, and Yahoo sites, according to comScore (see table below). Facebook itself only officially acknowledges 250 million active registered users (but you don’t have to be a registered user to visit some Facebook pages).

In the past year, it has grown 157 percent, gaining 208 million visitors.  It long ago passed its rival MySpace on a global basis, way back in April, 2008. Since then, it has passing even bigger sites on its way up. In the chart above, the blue line is Facebook. It passed Amazon back in August, 2008. eBay fell by the wayside in January, 2009. It surged past AOL sometime in February, 2009, and just last month it finally passed the Wikimedia Foundation sites (which includes Wikipedia).

So there it stands at No. 4. It will be a while, if ever, before it catches up to the three world leaders: Google, Microsoft, and Yahoo. They each have between 240 million and 500 million more monthly global unique visitors than Facebook (see chart below). But it’s always good for a company to have stretch goals.

Worldwide unique visitors (June, 2009).  Source: comScore

1. Google Sites: 844 million
2. Microsoft Sites: 691 million
3. Yahoo! Sites: 581 million
4. Facebook: 340 million
5. Wikimedia Foundation sites: 303 million
6. AOL: 280 million
7. eBay: 233 million
8. CBS Interactive: 186 million
9. Amazon: 183 million
10. Ask Network: 174 million

In the U.S., Facebook had 77 million unique visitors in the month of June, making it the sixth largest site in the U.S. (after Google, Yahoo, Microsoft, AOL and all Fox Interactive Media sites combined).

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The recession in online advertising, which began in the first quarter of 2009, continued into the second. Every quarter we keep track of the combined advertising revenues of the four largest Web advertising companies (Google, Yahoo, Microsoft, and AOL), which together represent the lion’s share of all online advertising revenues and is a decent proxy for the market as a whole. In the second quarter of 2009, their combined global ad revenues were $7.864 billion, down 3.4 percent from a year ago.

In economics, a general rule of thumb is that two down quarters marks a recession. Last quarter saw the first annual decline in advertising revenues of 2.1 percent. And the annual decline this quarter got a little worse. However, on a sequential basis compared to last quarter, it is actually pretty much flat (but still down 0.18 percent). So we now have two down quarters on both an annual and sequential basis.

Will this recession continue into the current quarter, or did we just witness a fundamental “reset”, as Steve Ballmer likes to call it. What that implies is that advertising revenues have been reset to a lower level from which they can once again grow. We’ll see what happens in the third quarter, but anecdotally I am hearing from advertising startups that the worst is behind us.

This may be wishful thinking, of course. But barring any new economic catastrophe, the advertising levels of the past two quarters seems like the new floor. But how long will it take to get up off that floor?

These numbers represent global advertising revenues, and include network revenues paid to affiliates through AdSense and Yahoo’s ad network. Google’s licensing revenues for Google Enterprise Apps have been stripped out. For the other companies, we include only the advertising portions of their online revenues as reported in their quarterly earnings statements.

Below is a table with all the numbers:

Online Advertising Revenues (in millions)

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I keep wondering what would happen if the top 10% of the writers at the NYTimes just…walked out. I know it’s crazy, but let’s just explore this a bit for the heck of it.

Today the company is worth just a little over $1 billion. As recently as five years ago it was worth nearly 5x that much. You have to go back to the early 1980s to see a lower stock price.

I certainly don’t think the NYTimes is going to be shutting down any time soon. The company still pulls in nearly $3 billion a year in revenue, down just 10% or so from 2005. But massive overhead, and more than 9,300 employees, make profitability an increasingly difficult goal for The Gray Lady. Her age is showing.

Journalism Isn’t Dead. Just The Old Business Part Of It.

A couple of weeks ago I met the Politico guys just before they taped their Charlie Rose segment. I watched them live from the green room at the show, and read Michael Wolff’s excellent Vanity Fair article on the young company. Their news room is 100 strong and they have more people in the White House Bureau than any other brand. They have roughly the same traffic as we do – 7 million monthly visitors – but they’ve been around just half the time. How did they do it? The site was founded by well known political journalists who bailed to start their own company. They took their personal brands and credentials with them, and the readers followed. Today they are profitable – largely because they launched a three-day-a-week print version of the site. Amazing. Print isn’t dead (yet). Just the overhead is.

And earlier today I got a glimpse at what AOL is up to – they are hiring all the journalists being fired and laid off by the newspapers and magazines. And they now have a news room 1,500 journalists and editors strong. Amazingly, failing old media is throwing away their most valuable assets. And AOL is eagerly picking those assets up for a song. Before anyone knows it, AOL may be the most powerful news outlet in the world.

Journalists still matter. A lot. Especially the good ones.

What if…

So that got me thinking about the NYTimes. $3 billion in revenue. 16 million monthly unique visitors and 124 million page views (Comscore worldwide, May 2009). 9,000+ employees. 1,200 news staff, and just 400 or so writers, critics, correspondents and columnists. I’m still waiting to hear how many editors the paper has on top of those 400, but it’s probably a total full time news staff of no more than 450 people.

I don’t really read the NYTImes beyond the technology section. But I’m guessing that the top performers in the news room, say the best 5%-10% of the writers and editors, produce 50% or more of the real value of the newspaper. The hungriest reporters. The best writers. The most competitive and aggressive editors.

What if that group, the most valuable assets that the NYTimes controls, simply walked out of the building and started their own company? What would that look like?

The New New York Times

The New New York Times, or NNYT, would have a writing staff of say 50 people. These are among the best journalists in the world, and let’s say they wanted to pay themselves $200,000/year, a top salary for a reporter of that stature. That’s just $10 million a year in payroll expenses. Call it $12 million with benefits. Plus, they all have stock options in the new company.

If TechCrunch is any indication, the amount of support staff (developers, office staff, sales people, admin) needed to run the company is at most 20%, or another ten people, particularly if they outsource a lot of that. Put everyone in the cheapest office possible, and you’re looking at additional payroll, benefits and office expenses of another $3-4 million per year.

Now lets just add another 50% on top of that for other expenses and a safety net, and round it up to $25 million per year in total expenses.

That’s $25 million/year to have a well paid staff of the best journalists on the planet. How long before they outstrip those 16 million monthly visitors and 124 million page views? 5 years? Less?

How many private equity funds would kill to put $100 million behind the NNYT to make sure the company had plenty of money until it reached profitability?

My guess is plenty. And Marc Andreeseen, who has already backed two blogs, may be the first in line to invest. And I know a couple of hedge funds that would be right there, too. I know this because they’ve pitched me on a vision not much different than this one.

Of course, none of this is going to happen. Those 50 top journalists aren’t going to be able to self select and organize themselves even if they had the inclination to do something like this. But the interesting thing is that I think something like this would work, really work, if anyone tried it. And the guys at Politico and AOL seem to be doing just that. Lean journalism, for the win.

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AOL now has 1,500 people writing content across its scores of content sub-brands, we’ve confirmed. Around 1,000 of those people are working full time for AOL, the rest are freelancing. That’s more than double the number that they had creating content a year ago, and by this time next year, we’ve heard, the plan is to have 2-3x as many people as they do now.

Where is AOL hiring these journalists? From the failing print world. We’ve obtained a list of hundreds of these individuals, including former journalists at BusinessWeek, New York Times, USA Today, ESPN, Washington Post, Wall Street Journal, Forbes, Consumer Reports, Condé Nast and scores of regional and national newspapers and magazines. A few of them are listed at the end of this report.

From our earlier post describing the media strategy:

But the real opportunity for AOL is to grab marketshare in a relatively open field, say some people close to the company. A contingent of AOL executives are said to be pushing Armstrong to embrace what I’ve heard is called the “Toyota strategy” by building and buying scores of great online media brands. AOL is the “Toyota” and the media brands are like the many car models that Toyota successfully pushes – Highlander, Camry, Pious, etc. The analogy isn’t perfect, but it gives you a good idea of how they’re thinking of organizing things.

The foundation for this strategy is already firmly in place, and has been since AOL acquired Weblogs, Inc. in 2005 for $25 million or so (that was three AOL CEO’s ago, when Jonathan Miller was running things). All those great Weblogs brands have continued to grow at a breakneck pace. Sites like Engadget, TUAW and Joystiq are all great niche brands on their own. And AOL has expanded into many other sub-brands through their MediaGlow division under Bill Wilson.

MediaGlow was unveiled a year ago. These are AOL’s content sites – music, finance, the blogs, and new sites like PoliticsDaily and Love.com. Combined, these sites bring in 76 million unique monthly visitors (Comsore, May 2009). 27 of the Technorati Top 100 blogs are owned by AOL.

The MediaGlow team wants to pick up the pieces of the dying print media business. Advertising is falling off a cliff (billions of dollars in advertising has evaporated). Combined with the high structural costs of print media (high wages, and well, printing on paper and mailing to readers) and the result is a lot of high quality talent is suddenly willing to take a job in online, even at a much lower salary.

The plan would be to build and buy scores of new brands in every monetizable niche possible. If you see a magazine at the newsstand covering a topic, AOL will have their own online brand for that topic, in blog or other format. They’ve already got the publishing platform with MediaGlow. New brands can be inserted or built at little marginal operating cost. And the talent is out there for the taking right now.

Update and clarification: We got the numbers a little wrong yesterday. The total number of full time writers and editors in the AOL newsroom is 500, plus another 1,500 freelancers, for a total of 2,000 full and part time contributors.

A few of the journalists now working at AOL:

Alex Salkever – formerly Businessweek’s Technology Editor, now at AOL Daily Finance

Jay Mariotti is a national columnist and commentator for FanHouse.com. He also is a daily panelist on ESPN’s sports-debate show, “Around The Horn”, seen Monday-Friday at 5 p.m. ET. Mariotti spent 17 years as a lead sports columnist for the Chicago Sun-Times and has covered every major sporting event — national and worldwide – numerous times. Mariotti is a member of the Baseball Writers Association of America and is a Hall of Famer voter. He resides in Chicago.

Kevin B. Blackistone is a national columnist and commentator for FanHouse.com. He also is a regular panelist on ESPN’s daily sports-debate show, “Around The Horn”. Blackistone currently serves as the Shirley Povich Chair in Sports Journalism at the Philip Merrill College of Journalism at the University of Maryland. He is the author of the book: “A Gift for Ron: Friendship and Sacrifice On and Off the Gridiron” detailing Everson Walls donating a life-saving kidney to former Cowboys teammate Ron Springs. A former award-winning sports columnist for The Dallas Morning News, he currently resides in Silver Spring, Md.

Greg Couch is a national columnist for FanHouse. Previously, he was at the Chicago Sun-Times as a sports columnist, takeout writer and beat. He also was a sports columnist at the Akron Beacon-Journal and a sports writer at the Wichita Eagle. He received the 2007 and 2008 Lisagor Award as Best Sports Columnist in Chicago and surrounding areas, was featured twice in the Best American Sports Writing and is an APSE award winner. He resides in Chicago.

David Whitley is a national columnist and commentator for FanHouse. Previously, Whitley had been an award-winning columnist at the Orlando Sentinel for 10 years.

Beth Pinsker Gladstone (Editor Walletpop) worked formerly for Inside.com, the Dallas Morning News, Entertainment Weekly, The Independent Film & Video magazine and iVillage.com and her freelance career has encompassed everything from a column at WSJ.com to a stint on staff at Who Wants to Be a Millionaire.

Todd Pruzan (Senior Programming Manager) has been an editor and writer at Condé Nast Portfolio, Details, Blender, Advertising Age, and numerous other places. He has written for publications including The New Yorker and The New York Times and is the author of the 2005 book The Clumsiest People in Europe.

Andrea Chalupa (Associate Producer) most recently wrote and produced videos for Portfolio.com, covering the Sundance Film Festival, the 2008 Presidential Conventions, among others

Mitch Lipka (consumer ally) Investigative journalist for consumer issues, formerly of the Consumer Reports, the Philadelphia Inquirer and other places

Julie Tilsner (lead blogger) More than 20 years as reporter, writer and editor for regional and national publications, including Business Week Magazine and the L.A. Times. Author of four humor books on parenting. Currently a freelance writer for women’s magazines such as Parenting, American Baby, Redbook and others.

Melinda Henneberger: She spent 10 years as a reporter for the New York Times, in the paper’s Washington and Rome bureaus, and found covering the Vatican a lot like covering Congress, the former having practically invented politics. She is the author of If They Only Listened to Us: What Women Voters Want Politicians to Hear (2007, Simon & Schuster) based on interviews with women in 20 states after the 2004 presidential election. At New York Newsday, and was part of a team that won a Pulitzer Prize for spot news reporting on a subway crash at which she was the first reporter on the scene – at the Union Square station underneath her apartment building.

Carl Cannon: Carl was the DC bureau chief for Reader’s Digest and for a decade before that, covered the White House for National Journal. Before coming to Washington during the Reagan presidency, he worked for six newspapers over a 20-year span. He has covered every presidential campaign and major political convention since 1984, was honored for his White House coverage by winning the prestigious Gerald R. Ford Prize for Distinguished Reporting of the Presidency and in 2006 received the other top honor on the White House beat, the Aldo Beckman award for “excellence in presidential news coverage.” He is also a past president of the White House Correspondents’ Association. In 2007, Carl was a fellow-in-residence at the Institute of Politics at Harvard’s John F. Kennedy School of Government. He authored or co-authored four books.

Jill Lawrence: Jill is a former national political correspondent for USA Today. She has also written about politics for The Associated Press, The Boston Globe, The Atlanta Constitution and other publications. She has covered every presidential campaign since 1988. Columbia Journalism Review named her one of the top 10 campaign reporters in the country in 2004. She was included in Washingtonian Magazine’s 2005 list of the 50 best and most influential journalists in Washington .

Walter Shapiro: Walter has covered the last eight presidential campaigns as a columnist and political reporter. Along the way, he has worked for two newspapers (USA Today and the Washington Post), two news weeklies (Time and Newsweek), two monthlies (Esquire and the Washington Monthly) and two online magazines (Salon and Slate). He served as a White House speechwriter for President Jimmy Carter and a special assistant and speechwriter for Secretary of Labor Ray Marshall. And in 1972, he ran for Congress from Michigan, finishing second in a six-way primary.

Lynn Sweet: Sweet is a frequent guest on MSNBC, CNN and FOX News and other broadcast outlets. In July 2008, Sweet traveled with Obama’s presidential campaign to Jordan, Israel, Germany, France and England. In 2006 Sweet reported on Obama’s Africa trip, including Obama’s visit to his father’s native Kenya. In 2002 Sweet reported from the Middle East as violence between Israelis and Palestinians was deepening. In 1995 she broke the story on perks offered by the Clinton White House to major donors. In 1990, she was among the first journalists in the nation to analyze political ads for accuracy. Sweet was named a fellow at Harvard University’s Institute of Politics at the Kennedy School of Government in Spring, 2004.

Nikhil Hutheesing recently joined DailyFinance as Investing Editor. Formerly, he was at Forbes for 17 years and wrote a top investing newsletter about wireless stocks.

Jonathan Berr is a former reporter with Bloomberg News whose work has appeared in The New York Times, BusinessWeek and The Philadelphia Inquirer. In 2000, he won the Gerald Loeb Award, one of the most prestigious prizes in business journalism.

Image credit: Lisanne!.

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At the same time, we’re continuing the reshaping of Time Warner that we started last year. We’re on track to spin off AOL to our stockholders around the end of the year. Separating AOL will benefit both companies – enabling Time Warner to concentrate fully on our core content businesses and improving AOL’s operational and strategic flexibility.

That’s three AOL mentions in three sentences. Clearly, Time Warner is happy to let everyone know that it will only have a couple more quarters of dealing with that division’s nosedive.

How bad was AOL this quarter? Revenues dropped 24%, to $804 million, versus the year-ago period. The service saw a 21% decrease in advertising revenues, attributable to both display and search ads on its own sites, as well as on third-party sites using its platform.

And the loss of dial-up subscribers continues to hurt the company. It lost over a half million in this past quarter, and some 2.3 million from the year-ago period. Revenues from subscriptions declined 27% from the year-ago period.

In preparation for the AOL spin-off, Google recently sold back its 5% stake in the company, at a $700 million discount from its initial $1 billion investment. However, thanks to the search deal over these past several years, it looks as if Google was much closer to break-even on the deal.

And while AOL’s numbers were awful, Time Warner’s print and film divisions hardly fared better. The print division headed up by Time, saw a 26% decrease in ad revenue from the year-ago period, and an 18% decrease in subscription revenue.

Meanwhile, the film division was hurt by the slide in DVD sales. While movies like The Hangover exceeded expectations at the box office, those profits were wiped out by DVD numbers being down across the board.

Highlighting The Hangover in the results is interesting. One could say Time Warner’s experience with AOL these past several years after the $164 billion mega (or perhaps “drunken”) merger in 2001 (remember, it was AOL that actually bought Time Warner at the time), has been similar to The Hangover. Based on the repurchasing price Time Warner paid for Google’s AOL stock, AOL is now worth less than $6 billion.

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Google finally sold back its 5 percent stake in AOL to Time Warner. Originally valued at $1 billion in 2005, Google ended up getting back only $283 million, including some cash distributions. There goes roughly $700 million, but Google already took a writedown on the investment back in the fourth quarter when the whole world was going to pot and nobody really noticed.

Time Warner took back the shares in preparation for the eventual public spinoff of AOL. When Google initially bought the shares, it valued AOL at $20 billion. Based on the price Time Warner paid for the repurchase of the shares, AOL is now worth $5.7 billion. I’m sure by the time it actually goes public, new CEO Tim Armstrong and AOL’s bankers are going to be arguing that it is worth a lot more.

So did Google get hosed on this investment? Pretty much. But you have to remember that it was part of a larger search outsourcing deal which Google still makes money from today. AOL on its own commands a 3 percent search market share and as such is probably Google’s largest partner site. Even if Google didn’t make back its investment over the past four years, the search volume AOL provides itself is worth paying for. (Search is a volume game, the more search queries you can throw ads against, the better the ROI). So don’t feel too bad for Google. It was buying distribution which helped it maintain its overall market dominance.

Update: According to this preliminary IPO document AOL filed with the SEC, last year the Google search partnership generated $678 million in search advertising revenues for AOL, or 32 percent of its total advertising revenues. Assuming that AOL struck an advantageous revenue sharing deal with Google and gets to keep at least 80 percent, that would mean Google’s 20 percent brought it $170 million in revenues. Multiply that by five years (the deal expires in 2010), add in the $283 million it got back for the shares, and it comes out of the whole deal with $1.1 billion. This is all back-of-the-envelope, but it is not hard to see how Google basically broke even on its investment.

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Yes, Tim Armstrong does have a secret plan to save AOL, and it involves cartoons starring Warren Buffett and Martha Stewart. At an employee meeting today to rally the troops with his new strategy, Warren Buffett and Martha Stewart were on hand to talk about their new Web cartoons. AOL founder Steve Case is also there Tweeting about it (he took this picture of Buffett and Stewart on stage).

Buffett’s cartoon will be called “The Secret Millionaire’s Club” and it will be geared towards teaching kids about business (fun!). “Martha Stewart KIds” will feature a 10-year-old Martha Stewart. Both will be produced by A Squared Entertainment, along with cartoons starring supermodel Giselle Bundchen (”Gigi & The Green Team”) and the late astronomer Carl Sagan (”Kosmos”). Each show will have 26 episodes, which will run three to five minutes each.

Does this mean AOL is going to start producing more of its own Web video content? That would fall into its new mission: “To inform, entertain, and connect the world.” I hear that there are some ex-Yahoo employees in LA who have some ideas on how to create Web video.

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