Ten years ago they were one of the world’s biggest internet service providers. Remeber the numerous free installation CDs they distributed like crazy? Some of them even built ash trays out of them. But that’s another story. At some point they also purchased CompuServe, remember that one too?

AOL sold their dial-up business and kept what was then very profitable for them: online advertising. They owned high-volume sites such as their own aol.com, simply because they made it the default site for their customers.

Ten years later things have changed. Advertisers aren’t willing and able to pay outrageous CPM rates anymore. That paired with some serious miscalculations internally led to a huge operational loss in the company. Their display advertising business wasn’t working anymore.

AOL is downsizing, getting rid of many advertising sales organizations. This includes Advertising.com aka Platform A in Germany, Europe’s largest display market. They’re looking for other companies to take over their business now and are in talks with the unions about layoffs.

So what do we learn from this? Well, in online media you can’t survive with a ten-year old business model. The market value of any asset slowly but surely disappears. Once you’ve reached the stage where you’re really comfortable you need to continue developing new stuff. Otherwise you fall behind because there are more smart people out there than you think.

AOL seems to be in desperate need of a European affiliate network. Last year the owners of Tradedoubler rejected AOL’s offer. This year an acquisition seems to go through: buy.at. It’s a UK-based affiliate network with rather basic technical features. Therefore I think that the 150 million dollars are overrated, just like the 900 million for Tradedoubler.