- The Washington Times - Thursday, September 21, 2006

NEW YORK (AP) — AOL will disband its business unit that handled access subscriptions and give product managers more autonomy over designing services for consumers as the company increases its emphasis on generating advertising revenue.

AOL also will name its first chief privacy officer in the wake of a much-criticized disclosure of the search terms used by more than 650,000 subscribers.

The changes, outlined in a memo Chief Executive Officer Jonathan Miller sent to AOL employees, take effect in January and represent the first major restructuring since November 2004, when the Time Warner Inc. unit started making news articles, music videos and other materials available for free, breaking its historic “walled garden” of content exclusive to paying subscribers.

At the time, AOL reorganized into four business units, including separate ones for access and “audience,” its official term for drawing eyeballs to ad-supported Web sites.

“It is my belief that this structure served us well but no longer reflects what we are doing,” Mr. Miller wrote Wednesday. “Starting last month, our whole company became an ‘audience’ business.”

The Sterling, Va., company decided last month to give away AOL.com e-mail addresses and software once reserved for paying customers, accelerating an erosion in access subscriptions. The move was designed to prevent AOL subscribers from defecting to free ad-supported services elsewhere.

Although the company will still provide dial-up Internet access to those who want it, it is no longer actively marketing the service. Joe Redling, 47, head of the access unit, will instead oversee AOL’s international presence, its mobile services and its relationship with free and paying customers.

Ted Leonsis, 50, head of the audience unit, already has announced plans to relinquish day-to-day management responsibilities beginning in January and remain AOL’s vice chairman. At least three senior executives who have reported to Mr. Leonsis will report directly to Mr. Miller, reflecting the increased importance of attracting new customers.

To ensure that lower-level managers can more quickly and effectively develop new services to draw more visitors, they will be given more responsibility for a product’s technology, testing, business plans and rollout.

“and then be held responsible for the results,” Mr. Miller wrote.

Selling ads for those services, however, will remain centralized, as will such matters as legal compliance and human resources.

“The recent search-data debacle is a prime example of why, even with the best of intentions, without proper oversight, costly mistakes can be made,” Mr. Miller said. “There are, and always will be, corporate functions.”

Mr. Miller did not say when a chief privacy officer would be named, other than to say “soon.”

Two AOL employees already have been fired and its chief technology officer resigned after the intentional release over the summer of three months’ worth of search data. One of the fired employees had released the data as a gesture to outside researchers, but had failed to properly seek approval, which the company has said would have been denied.

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