AOL LOOKS TO MUSIC TO BOOST SAGGING AD SALES

Online's New President Hopes to Create Fee-Based Packages

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NEW YORK (AdAge.com) -- With America Online's fortunes in decline, the AOL Time Warner unit's new president for Interactive Services will have to tune up in a hurry to help develop and monitize digital music packages.

Jimmy de Castro, 47, who starts April 15, will oversee AOL, develop business models for new digital music services and lead ad sales efforts. Heads of AOL's different channels will report to Mr. de Castro. In turn, he will report to Mike Kelly, chief operating officer for AOL.

Challenging time
A longtime radio vet, Mr. De Castro is being tapped at a challenging time for the world's biggest media company. The media giant is hoping Mr. de Castro, with his expertise in music and radio ad sales, can develop and market subscription-based digital music services, similar to MusicNet, a $9.95-a-month service available to AOL Time Warner's broadband members.

"I know how to monitize consumer relationships. That's really what radio's essence is about," Mr. de Castro told AdAge.com. "AOL is the ultimate mass market."

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Mr. de Castro said he may also try to strike deals with radio networks to "repurpose" music over AOL, particularly through the portal's AOL Music channel.

Sagging ad sales
Mr. de Castro is considered one piece in an effort to boost the Internet unit's sagging ad revenues. He will lead development and marketing for a new series of digital music services for AOL. "We have 10 million unique users using the radio [on AOL Music] product; we need to figure that business out," he said.

While AOL Music has ramped up quickly in the past year, offering exclusive features such as as "Music Firsts," which features downloadable music and videos of emerging artists tied to a sponsoring marketer. Other programs include "Artist of the Month" and "First Listen," a venue for debuts. But none of these services, currently free for AOL's 34 million customers, have been offered on a paid-subscription model.

Mr. de Castro envisions creating a subscription model whereby consumers can create their own listening packages. "I am definitely going to be involved in the discussion about getting the product right first and then monitizing it," he said.

More changes expected
His appointment comes just two days after Barry Schuler, AOL's chairman-CEO, stepped aside to head a new digital services unit within the company. More changes are expected in the near-term as Bob Pittman, AOL Time Warner's chief operating officer-elect and now carrying Mr. Schuler's responsibilities for running AOL, attempts to rejigger internal functions to address advertising woes.

Mr. de Castro has a quarter century of experience in radio as a general manager of Chicago radio stations before going on to build the AMFM Radio Group. Mr. de Castro was also president and chief operating officer of Evergreen Media in the 1990s, and was vice chairman of Chancellor Media Corp. and president-CEO of its Radio Group. Chancellor changed its name to AMFM and in 2000 merged with Clear Channel Communications.

Most recently, Mr. de Castro founded Nothing But Net, a holding company for investments in new media and Internet ventures, and dabbled in restaurant and real estate investments.

While Messrs. Pittman and de Castro have known each other for years, discussions about coming over to AOL took shape several months ago when the two met at an investment conference.

Wall Street worries
On Tuesday, AOL Time Warner shares fell 5.3%, after hitting a low of $20, largely attributed to Wall Street's worries over the company's forthcoming first-quarter earnings report. The report is due on April 24. Slow growing advertising revenues are a major concern, as is the company's migration of dial-up Internet subscribers to its various broadband services.

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