AOL has bought StudioNow, which provides online video services and tools to companies, a move intended to beef up AOL's Seed.com content management system.
Seed.com is a site where AOL posts topics around the clock that it wants freelancers to cover with articles, photos and videos, which it then pays for and publishes on its Web properties.
AOL, which became a publicly traded, independent company in December after getting spun off by former parent Time Warner, is betting on the creation of original content as key to its strategy for boosting its traffic and, consequently, its so-far disappointing online advertising business.
In Time Warner's third quarter, ended Sept. 30, 2009, AOL's advertising revenue dropped 18 percent year-on-year. Globally, online ad sales fell only 1 percent in the third quarter, according to IDC. AOL's online ad market share in the U.S. has fallen from 8.2 percent in early 2005 to 4.4 percent in this year's third quarter, according to IDC.
In December, AOL started an ongoing staff-reduction process, which seeks to cut a third of its staff of 6,900 employees.
StudioNow, founded in 2007 and based in Nashville, Tennessee, will continue running its existing business for companies. As part of its services to companies, StudioNow makes, stores, manages and syndicates online video content, and has a network of about 3,000 professional freelance videographers, including filmmakers, editors, animators and writers.
The StudioNow deal, which closed last week, is worth US$36.5 million in cash and stock. AOL will pay part of the cash over the coming years.