America Online 2011 Annual Report Download - page 13

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Table of Contents
Subscription Revenues
We generate subscription revenues through our subscription access service. As of December 31, 2011, our primary AOL-brand price plans were $25.90
and $14.95 per month. These plans include maintenance and warranty services, online technical support, anit-virus software and identity theft protection. We
also offer consumers, among other things, enhanced online safety and security features and technical support for a monthly subscription fee. As noted above,
our access service subscriber base has declined and is expected to continue to decline. This has resulted in year-over-year declines in our subscription
revenues. The number of domestic AOL-brand access subscribers was 3.3 million, 3.9 million and 5.0 million at December 31, 2011, 2010 and 2009,
respectively. For the years ended December 31, 2011, 2010 and 2009, our subscription revenues were $803.2 million, $1,023.6 million and $1,388.8 million,
respectively.
Although our subscription revenues have declined and are expected to continue to decline, we believe that our subscription access service will continue
to provide us with an important source of revenue and cash flow in the near term. The revenue and cash flow generated from our subscription access service
will help us to pursue our strategic initiatives.
Other Revenues
In addition to advertising and subscription revenues, we also generate fee, license and other revenues. Through MapQuest's business-to-business
services, we generate licensing revenue from third-party customers. We also generate other revenues by licensing our proprietary ad serving technology to
third parties, primarily through our subsidiary, ADTECH. We generate fees from our consumer applications associated with mobile e-mail and instant
messaging functionality from mobile carriers.
AOL Ventures
Some of the initiatives described above may be classified as part of AOL Ventures. We formed AOL Ventures with the goal of creating an
entrepreneurial environment to attract and develop innovative initiatives. AOL Ventures focuses on acquisitions that we have previously made which have
start-up characteristics or which do not currently fit within our other areas of strategic focus, investments we intend to make in early-stage, externally-
developed opportunities and employee-originated innovations that we believe would benefit from incubation and development within the AOL Ventures
environment. The size of our investment and corresponding ownership interest varies depending on the opportunity, as does our level of involvement and
control. We intend to attract top talent and source attractive opportunities by partnering with leading angel investors, venture capitalists and universities.
Product Development
We seek to develop new and enhanced versions of our products and services for our consumers, publishers and advertisers. While in the past we have
relied primarily on our own proprietary technology to support our products and services, we have been steadily increasing our use of open source technologies
and platforms with a view to diversifying our sources of technology, as well as for cost management. Research and development costs related to our software
development efforts for 2011, 2010 and 2009 totaled $56.9 million, $63.2 million and $63.2 million, respectively. These costs consist primarily of personnel
and related costs that are incurred related to the development of software and user-facing internet offerings that do not qualify for capitalization. At
December 31, 2011 and 2010, the net book value of capitalized internal-use software was $43.2 million and $62.6 million, respectively. For the years ended
December 31, 2011, 2010 and 2009, we capitalized $21.1 million, $22.7 million and $48.7 million, respectively, related to the development of internal-use
software.
Intellectual Property and other Proprietary Rights
Our intellectual property and other proprietary assets include copyrights, trademarks and trademark applications, patents and patent applications,
domain names, trade secrets, other proprietary rights and licenses of
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