CEO: AOL, peers have staying power in media market

The head of AOL believes his company and its peers Google, Yahoo and Microsoft will continue to be the leaders in making money from aggregating online content.

With all the huge changes under way in the online media industry, one thing is staying the same: the identities of the companies making money out of the shift, according to the head of AOL.

"Amidst all the fragmentation, there's staying power," said Jonathan Miller, chairman and chief executive officer of AOL. He named AOL, Google and Yahoo as companies that are making money by aggregating rich online content such as video, noting that Microsoft is also making moves into that business.

"The big companies will stay big companies," Miller said during a keynote address at the Emerging Technologies Conference on the Massachusetts Institute of Technology's Cambridge campus Wednesday.

Those same companies -- AOL, Google, Yahoo and Microsoft -- are seeing their own Web sites attracting less traffic than in the past, losing out to the likes of YouTube and MySpace, Miller said. However, he doesn't expect the newer entrants to escape consolidation by the more established players. "I'm a big user of YouTube, but does anyone believe it'll be an independent company in five years? No," he said.

All the previous boundaries around entertainment are blurring as consumers become more involved in both the distribution and even creation of online content, Miller said. "This is the Golden Age of entertainment," Miller said. "If you love entertainment, this is the best time ever and it's just at the start."

Consumers have much more control over their general viewing habits, choosing where and when they watch the content of their choice. He expects that on-demand viewing for television will become the dominant pattern for users within the next four to five years, with scheduled programming taking a secondary place.

"We're becoming a nation of snackers and samplers of all-round media consumption," he added.

One area that needs work is video search, a market where AOL already has an offering. "To date, video search has not been as good as text search," Miller said. "In the next few years, it will be as good." One major technological advance that's required is how to give a search engine the ability to look at the pixels of an image and tell people what it is, instead of today's approach of relying on how a video clip is tagged.

As to how the "new" AOL is progressing, Miller's estimation is "So far, so good." Last month, the company announced it would stop charging for its range of software and services as part of a planned move away from a subscription-based model toward operations supported by advertising sales.

"We have a different future," Miller said. "In our past, we got people online, our future is about what they do online. It's a leap."

So far, AOL users are continuing to use the company's services at least as much they used to, Miller said. In terms of whether the company has successfully transitioned its business model, the earliest AOL should be able to make a call either way is "realistically the middle of next year," he added.

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