• by Wendy Davis  @wendyndavis, October 7, 2005

In hopes of expanding its audience by adding niche content, America Online agreed to purchase Weblogs, Inc., the blog company founded by Jason Calacanis and Brian Alvey, for $25 million. The deal, signed Wednesday, will close next week.

The agreement brings Weblogs' 85 blogs--including the technology blog Engadget, car blog Autoblog, and parenting blog BloggingBaby--within AOL's free network.

The Weblogs' properties attract more than 30 million monthly Web page views and 25 million monthly RSS page views per month, according to AOL.

With this acquisition, AOL aims to recapture a portion of the much-hyped "long tail" of the Internet--the specialty sites that attract small but devoted followings.

"Overall, it's about growing the AOL audience and AOL.com network," said Jim Bankoff, executive vice president of programming and products at AOL. "It's also about enabling us to have a scalable way to reach out to niche communities."

The Weblogs blogs will continue to operate independently, without editorial oversight from AOL, Bankoff said. "The bloggers are in charge of the editorial," he said. "We're not going to filter the postings."

He added that AOL will integrate blogs into features like AOL Television and Moviefone by linking to relevant posts on corresponding Weblogs blogs.

AOL's Advertising.com also will work with Weblogs to place online ads on the sites, Bankoff said.

Currently, Weblogs is believed to generate at least $1 million a year from Google AdSense ads alone. On a July 19 post entitled "$1M a year in Google Adsense (or why 2,739 is my favorite number)" on TheJasonCalacanisWebLog, Calacanis wrote that Weblogs had taken in $2,335 the day before--up from an average of $580 a day in January. He added that if the company reached $2,739 a day, revenues would come to $1 million a year.

The acquisition is just one of several AOL content plays. In July, AOL, XM Satellite, and AEG--a live event presenting company--announced the joint business venture "Network Live," which was created to bring live music and comedy shows to AOL's Web channels and XM's satellite radio.

AOL also is partnering with Time Warner Inc.'s Telepictures Production to create TMZ.com, a digital studio that will focus on Hollywood news and gossip.

The deal also is one of many recent media consolidations. For example, last week, News Corp. completed its $580 million purchase of Intermix Media Inc., which operates the social network site MySpace.com. In June, Intermix reported revenues of $79 million and earnings of $4.5 million for the 12 months ending March 31. Additionally, The New York Times Co. recently purchased About.com for $410 million--about 10 times About.com's 2004 revenue.