AOL vies to become major search player

Called AOL Search, the service reflects AOL's ongoing attempts to keep its users from going to competitors for Web searches and services. The search service can be found online, though not on the main AOL.com page. AOL expects it will launch AOL Search within the next four weeks on AOL.com.

In June, AOL launched a version of AOL Search only for its online service that will become a highlight in its upcoming AOL 5.0 software release. It lets subscribers search for both Web content and its proprietary offerings, which currently can be located through keywords.

AOL also has made some primarily cosmetic changes to AOL.com, part of a larger effort involving posting new features that will coincide with the launch of AOL 5.0. AOL.com soon will include a calendar service, its "You've Got Pictures" online photo section, and AOL search, the company said.

AOL enjoys the greatest market share among Internet service providers and online services, with more than 20 million members including subscribers to its CompuServe service. But it faces threats on all sides. Portals, for one, offer superior search technology along with add-ons such as free email and aggregated content.

In July, AOL.com ranked second among most-visited Web sites, behind Yahoo, according to research firm Media Metrix. AOL also faces staunch competition from firms offering high-speed Net access via cable; for its part, AOL is turning to digital subscriber line (DSL) technology to offer a speedier alternative to users.

Marta Grutka, an AOL spokeswoman, said the company is gunning to become a major search player to keep its members using its services. Until mid-August, AOL had used its Netfind service, powered by Web rival Excite. But AOL is embroiled in a battle with Excite parent @Home and others over high-speed Internet access over cable. Given its dispute with @Home, the companies have severed their ties.

Grutka conceded that AOL's search efforts have not garnered a sizable audience. "We are realizing that we have come up short in the past," she said.

According to David Simons, managing director of Digital Video Investments, Web users are increasingly opting to go to Web sites they like directly, without guidance from an online service.

"As people become more sophisticated, they're getting more comfortable cherry-picking," Simons said. This time, AOL says it has what it needs to become more attractive to its members.

The service primarily uses its Netscape subsidiary's Open Directory Project as its backbone. That means most of the site's search results have been compiled and edited by Open Directory "contributors"--Net users who voluntarily sign up as editors to build the directory. The Open Directory's more than 15,000 editors already have listed 900,000 Web sites, with 3,000 new sites added daily, Netscape has said.

But the use of volunteers has caused problems for AOL in the past. In May, a group of former volunteer "Community Leaders" on AOL's proprietary service filed a class action lawsuit against the company. The ex-Community Leaders alleged that AOL violated the Fair Labor Standards Act by using volunteers to perform work for the company.

Since federal law mandates that companies pay minimum wage to employees, other volunteers also have filed complaints with the Labor Department.

But portals such as Lycos, HotBot, and AltaVista are licensing the Open Directory from Netscape for free.

Despite the controversy, some analysts say AOL will continue to forge ahead with its plans. Since the Labor Department has not decided whether the practice of using volunteers is a violation of federal law, nothing is stopping AOL from tapping and popularizing Open Directory, they say.

"AOL's thinking is, 'If Netscape's already using it, and our competitors are using it, then we might as well use it,'" said Charlene Li, senior analyst at Forrester Research.

Thus far, Li added, AOL is "not engaged in any unfair labor practices...That's for the courts to decide."

The investigation is still open; both AOL and the Labor Department declined to comment on the investigation.