At New Medici we’re intrigued by niche content networks and how they grow, survive and generally roll-up niche audiences. With AOL’s announcement of MediaGlow via NYT, we dug around to see how it was really working. From the articles, PR and even comment threads at Techcrunch, it seems that AOL, former traffic portal hub, now new anti-portal, is turning a corner.

Moving away from the portal, one-stop-site mentality for the network of sites that are connected by an advertising engine, AOL appears to be creating aggregate value: An AOL “hub” feeding a number (75ish) of content niche sites or “spokes” creates something different then your typical Yahoo! or MSN with their parent homepage and family of sites.

With blog nets like Gawker (Nick Denton), WeblogsInc ($25M to Jason Calacanis from AOL) and others adding and selling content editorial sites - some with user editors, many with day and night semi-pro editors - it’s interesting to see how CEOs can slice and dice sites to create sustainable value.

If a niche collapses (think luxury in a recession…), you close it, sell it or downsize it in favor of more relevant sites (think ‘frugalitarian’ sites given the economy). This allows faster dealing and operational awareness, and allows you to concentrate on your darlings with limited attention for the runt stepchildren.

Per the NY Times:

“Instead of having a handful of front doors, we’re creating dozens if not hundreds of front doors that are more relevant to advertisers,” said Bill Wilson, the AOL publishing executive who will be the president of MediaGlow.

However, via Nicholas Carlson at Alley Insider, there’s still heavy dependency on AOL.com’s portal traffic to keep the smaller niche content sites alive:

Web metrics firm Hitwise tells [Alley Insider] that even three of the six sites Wilson and AOL PR discussed with the Times — TheBoot.com, theboombox.com and Spinner.com — remain dependent on links from AOL.com for most of their traffic. As for the other sites, AOL.com links still account for huge chunks of traffic to TMZ.com and TourTracker.com.

We are staying tuned, and haven’t counted AOL out, but they are morphing into a … well, a hub and flow system for the time being. Will the aggregate value of their 75 spokes + 1 hub site change their value in the market? I.e., make it easier for AOL to survive the times, and iterate changes that other more ‘normal’ portals like Yahoo! cannot? Think Russia fragmentation as AOL which became SOL evolves into LOS (Lots of Sites).