America Online 2010 Annual Report Download - page 22

Table of Contents
Dial-up Internet access services do not compete favorably with broadband access services with respect to connection speed and do not have a significant, if
any, price advantage over certain broadband services. Many broadband providers, including cable companies, bundle their offerings with telephone,
entertainment or other services, which may result in lower prices than stand-alone services. Based on customer survey information, the majority of our
canceling access subscribers either already had broadband Internet connections or are leaving for broadband Internet connections. There can be no assurance
that we will be able to compete successfully in the future with existing or potential competitors or that competition will not adversely affect our business.
Weak economic conditions could adversely affect our revenues.
Advertising businesses may be adversely affected by weak economic conditions. Because we derive a substantial portion of our revenues from the sale
of advertising, declines and delays in advertising spending that result from weak economic conditions have impacted our advertising revenues in the past and
could adversely affect our advertising revenues in the future.
Additionally, declines in consumer spending due to weak economic conditions may cause advertisers to reduce their spending if consumers are
purchasing fewer of their products or services, ultimately resulting in downward pricing pressure on our advertising inventory. As a result, declines in
consumer spending could indirectly adversely affect our advertising revenues.
While we do not believe that our subscription access service was adversely affected by past weak economic conditions, there is a risk that subscribers
may elect to cancel their subscriptions as a result of a weaker economic climate in the future. Should this occur, we may experience an accelerated decline in
our subscription revenues.
Demand and pricing for, and volume sold of, online advertising may face downward pressure which could adversely affect our advertising revenues.
In order for us to maintain or increase advertising revenues in the future, we believe it will be important to increase our overall volume of advertising
sold, including sales of advertising through our higher-priced channels, and to maintain or increase pricing for advertising. If overall demand or pricing
declines occur, our advertising revenues could be adversely affected.
We are dependent on a third-party search provider.
We do not own or control a general text-based web search service. Instead, Google is, except in certain limited circumstances, the exclusive web search
provider for AOL Properties. For the year ended December 31, 2010, search and contextual advertising revenues comprised approximately 33% of our total
advertising revenues. Changes that Google has made and may unilaterally make in the future to its search service or advertising network, including changes in
pricing, algorithms or advertising relationships, could adversely affect our advertising revenues. Furthermore, except in certain limited circumstances, we
have agreed to use Google's algorithmic search and sponsored links on an exclusive basis in the United States through December 31, 2015.
Because we do not own or control such a search service, we are not able to package and sell search advertising along with display advertising services
outside of AOL Properties. As search advertising represents a significant portion of online advertising spending, we believe that our lack of a proprietary
search service could adversely affect our ability to maintain and increase advertising revenues.
We may need to raise additional capital, and we cannot be sure that additional financing will be available.
While subsequent to our separation from Time Warner we have funded our ongoing working capital, capital expenditure and financing requirements
through cash flows from operations and asset dispositions, we may require additional financing in the future. Our ability to obtain future financing will depend
on, among other
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