America Online 2014 Annual Report Download - page 34

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and engagement of other consumers on AOL Properties in order to successfully execute our business model.
Additionally, consumer engagement on certain of the AOL Properties, such as AOL.com, has a significant
impact on our operating results and we continue to focus on efforts to maintain or increase engagement on those
properties. For example, we derive a significant portion of our search advertising revenue from search queries on
AOL.com. If we are unable to develop online content, products and services that are attractive and relevant to
AOL.com consumers, we may not be able to maintain or increase our existing consumers’ engagement on or
attract new consumers to AOL.com and as a result our search advertising revenues may be adversely affected.
Our subscriber base could decline faster than we currently anticipate which could result in a decrease in our
subscription and advertising revenues.
Our subscriber base has declined and is expected to continue to decline. This decline has been the result of
several factors, including the increased availability of high-speed internet broadband connections and attractive
bundled offerings by such broadband providers, the fact that a significant amount of online content, products and
services has been optimized for use with broadband internet connections and the effects of our strategic shift to
focus on generating advertising revenues, which resulted in us essentially eliminating our marketing efforts for
our subscription access services and the free availability of the vast majority of our content, products and
services. Although we provide many additional products and services as part of our subscription plans, there can
be no assurance that our subscribers will value the bundles of services we offer and they may cancel their
subscriptions at any time. If any of these factors result in our subscriber base declining faster than we currently
anticipate, our subscription and advertising revenues could be adversely affected.
We are dependent on a third-party search provider.
We do not own or control a general web search service or search advertising system. Google is, except in
certain limited circumstances, the exclusive provider of web search and search sponsored links on AOL
Properties through December 31, 2015. For the year ended December 31, 2014, search advertising revenues
comprised approximately 21% of our total advertising and other revenues. Changes that Google has made and
may unilaterally make in the future to its search service or advertising network, including changes in its policies
and guidelines, pricing, algorithms or advertising relationships, could adversely affect our advertising revenues.
Additionally, a decline or an unfavorable change in our relationship with Google could materially affect our
advertising revenues. In addition, if Google fails to perform its obligations under the search agreement or
terminates the terms of the search agreement, it may have an adverse effect on our business.
Upon expiration of our agreement with Google on December 31, 2015, there can be no assurance that the
agreement will be renewed, or, if the agreement is renewed, that we would receive the same revenue share as we
do under the current agreement. In addition, there can be no assurance that if we enter into an arrangement with
an alternative search provider the terms would be as favorable as those under the current Google agreement.
Even if we were to enter into an arrangement with an alternative search provider with terms as or more favorable
than those under the current Google agreement, such an arrangement might generate significantly lower search
advertising revenues.
Changes to products, technology and services made by third parties and consumers could adversely affect our
business.
We are dependent on many products, technologies and services provided by third parties, including
browsers, data and search indexes, in order for consumers to use our content, products and services, as well as to
deliver, measure, render and report advertising. Any changes made by these third parties or consumers to
functionality, features or settings of these products, technologies and services could adversely affect our
business. For example, third parties may develop, and consumers may install, software that is used to block
display or search advertisements or delete cookies, or consumers may elect to manually delete cookies more
frequently. The widespread adoption of products and technologies or changes to current products, technologies
and services could adversely affect our business.
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