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AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
$76.1 million related to Adap.tv, which was acquired in September 2013. AOL Properties display revenue
increased primarily due to increased impressions sold on AOL Properties. AOL Properties search revenue
increased primarily due to an increase in revenue per search.
Other revenues decreased primarily due to the absence of revenue from StudioNow related to the divestiture
in January 2013. StudioNow contributed $7.5 million in 2012 to other revenues. Additionally, there was a
decrease in revenues from our mobile messaging services of $4.7 million and a decline in ADTECH licensing
revenues of $2.1 million, partially offset by an increase in platform fees of $2.3 million related to Adap.tv.
Revenues Associated with Google
For all periods presented in this Annual Report, we have had a contractual relationship with Google
whereby Google provides us with a share of the revenue generated through paid text-based search and contextual
advertising on AOL Properties. For the years ended December 31, 2014, 2013 and 2012, the revenues associated
with the Google relationship (substantially all of which were search revenues generated on AOL Properties) were
$407.4 million, $373.3 million and $350.9 million, respectively.
Subscription Revenues
Subscription revenues decreased for the year ended December 31, 2014 as compared to the same period in
2013 due to an 11% decrease in the number of domestic AOL subscribers between December 31, 2013 and
December 31, 2014, which resulted in a decline in subscription revenues of $58.7 million. This decline was
partially offset by a 4% increase in ARPU for the year ended December 31, 2014 as compared to the same period
in 2013. This increase in ARPU, which resulted in an increase in subscription revenues of $23.5 million, is
primarily due to price increases related to our value plan strategy that provides additional features and services to
subscribers.
Subscription revenues decreased for the year ended December 31, 2013 as compared to the same period in
2012 due to a 10% decrease in the number of domestic AOL subscribers between December 31, 2012 and
December 31, 2013, which resulted in a decline in subscription revenue of $99.8 million. This decline was
partially offset by an 8% increase in ARPU for the year ended December 31, 2013 as compared to the same
period in 2012. This increase in ARPU, which resulted in an increase in subscription revenue of $53.0 million, is
primarily due to price increases related to our value plan strategy that provides additional features and services to
subscribers.
Geographical Concentration of Revenues
For the periods presented herein, a significant majority of our revenues have been generated in the United
States. The majority of the non-United States revenues for these periods were generated by our European
operations (primarily in the United Kingdom and Germany). We expect the significant majority of our revenues
to continue to be generated in the United States for the foreseeable future. See “Note 12” in our accompanying
consolidated financial statements for further information regarding the revenues generated in the countries in
which we operate.
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