AOL buys blog network Weblogs Inc.

updated 7:34 p.m. ET Oct. 6, 2005

NEW YORK - America Online Inc. will inherit Engadget, Autoblog and other popular Web journals as part of a $25 million deal announced Thursday that expands AOL’s presence in the blogging community and the company’s potential to attract advertising dollars.

The 85 blogging sites that AOL is getting as part of its purchase of Weblogs Inc. let users read about everything from travel to technology and debate on topics like parenting and movies.

The move comes as AOL, facing drops in subscriptions as its traditional dial-up business declines, focuses more on offering free content to attract a larger audience and create more advertising space.

AOL, a division of Time Warner Inc., is paying $25 million in an all-cash transaction, said an executive familiar with the deal. The executive spoke on condition of anonymity because he was not authorized to disclose financial details.

Although Santa Monica, Calif.-based Weblogs will operate with full editorial control and independence as a wholly owned subsidiary, AOL will integrate the blogs into its AOL.com portal by linking to the best entries. Visitors to AOL’s Moviefone, for instance, might see referrals to Weblogs’ Cinematical blog on films.

Jim Bankoff, AOL’s executive vice president for programming and products, said the company will work with the Weblogs team to create additional journals that fit with AOL’s existing lineup of programming channels and new ones that emerge.

Until now, AOL’s blog presence has been largely limited to giving visitors free tools to create their own blogs.

According to the Pew Internet and American Life Project, 9 percent of Internet users have created blogs and 25 percent have read them. The audience is relatively small, but readers tend to be influential, whether in politics, technology or some other sector.

The appeal of blogs, which can range from one teenager’s ranting about school to an industry insider’s take on the latest gadgets and trends, comes from their unfettered, conversational nature, though those qualities can also give larger companies headaches. Some Weblogs blogs, for instance, contain occasional profanity.

Weblogs’ blogs, which include Joystiq on gaming, Blogging Baby on parenting and Gadling on travel, appear to have accomplished what other blogs only dream of: They make money.

Jason McCabe Calacanis, co-founder and chief executive of Weblogs, has said that Weblogs gets more than $1 million a year by participating in a Google Inc. program in which text ads are triggered by keywords on a Web page. But the company generates even more revenues from other advertising, Calacanis said, refusing to provide details.

Calacanis said advertising has sold out on 12 of his blogs through the end of the year, and the referrals from AOL’s portal will expand the inventory.

“What every advertiser says to us is, ‘Please get us more traffic. We want to spend more money,”’ Calacanis said. “That was one of the major factors” in the decision to find a buyer.

The blogs will keep their look and feel along with their domain names. Still undecided is whether they will carry a tag identifying them as part of AOL.

The agreement with Weblogs, signed Wednesday, is expected to close next week. Dulles, Va.-based AOL will now sign agreements with the more than 100 independent, freelance bloggers who produce more than 1,000 postings weekly on Weblogs’ blogs.

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