AOL Buys IM Firm Userplane

Aiming to expand its advertising revenue streams, AOL said Monday that it had acquired ad-supported chat and instant messaging service Userplane for an undisclosed amount.

With the deal, AOL will be able to offer advertising on the more than 100,000 Web sites that license Userplane's hosted chat application. The Los Angeles-based company's larger clients include MySpace.com, Friendster, Tagged, and Marvel Comics.

Userplane, which will function as a wholly owned unit of AOL, offers Web sites three options for using its technology: paying a monthly license fee based on usage, accepting third-party advertising in lieu of fees, or a hybrid model in which licensed clients can also split ad revenues with Userplane.

As AOL shifts to a completely free model, the Userplane acquisition will build help to boost its ad inventory, especially for marketers seeking to reach niche communities online. The move also builds on AOL's existing base of 43 million IM subscribers.

"Userplane will expand and extend the reach and relevance of the AOL instant messaging franchise, while continuing to provide social networking audiences and specialized communities with brandable clients tailored to meet their needs," Ted Leonsis, vice chairman and president, AOL Audience Business, said in a statement.

An AOL spokeswoman added that the deal would help the online giant to monetize the "long tail" of small sites that rely on chat and IM software to promote online communities. Earlier this year, AOL opened up its Instant Messenger platform to allow Web sites to create their own customized versions of its IM software.

Userplane ad inventory will continue to be sold by AOL's Advertising.com unit as well as through AOL's traditional ad sales force in New York as part of the overall ad buy for the AOL network.

Userplane sells standard banner and text ads, and recently began experimenting with video ads, according to CEO and co-founder Michael Jones. The video ads run in a panel within its Web platform that is normally used to show a user profile or a photo.

Jones would not disclose which proportion of its customers use which of its three payment models, but he said sites that don't have their own user database or registration typically choose the free, ad-based option. Eventually, AOL expects to offer mainly the hybrid option, combining licensing fees and advertising, in deals with Web sites.

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