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Why Time Warner was Forced Into AOL's Arms
There's a front page story in the Washington Post today about how media giant Time Warner blew it on the Internet despite a huge and expensive company-wide online effort, while AOL, despite many flaws and stumbles, came out of nowhere and became a huge Internet force within five years. This is an excellent cautionary tale of business shifts in what Steve Case calls "the Internet Century."
The same thing happened to CompuServe. I used to work there, before AOL bought them.
We hated AOL. CompuServe had always been The One True Way, the Only Way. We had the de rigeur AOL floppy coasters, etc, etc.
We could have bought AOL. But we were bigger than them, and default definition of the word "online" for 20 years or so. Plus, we were being run by a company who was very used to living on a brick-and-mortar timeline.
So we didn't buy them. Then... one day, they were bigger. Then they fsck'ed themselves over by having too few modems and and too many people. A whole lotta cartoonists got some cheap fodder outta that fiasco.
And then... they bought us. CompuServe. Capital-S serve. *THE* only decent and major information provider for way more than a decade.
They had two meetings on the day of the buyout. They had the guillotine meeting at 9 AM, which 50% of the employees learned they needn't come back ever again, years and YEARS of faithful service notwithstanding. And then the lucky-bastard meeting at 9:15, for everyone with continued healthcare and a paycheck.
I came in at 9:10 AM. Everyone was herding in the halls, practically ripping my head off because I didn't know which meeting I was supposed to go to.
I got lucky that time, but not so lucky in the next round.
The whole point of this damn story is that, Time Warner's not the first. And -- if I may say so -- CompuServe was every bit as meaningful an acquisition as Time Warner will be, but in a different realm.
I guess we'll see about that.
Here's what you could learn from AOL, but probably won't; The future of technology belongs to the billions of people who refuse to adapt themselves to it, but who insist that technology be adapted to them. The future shape, taste and fit of technology will be what they collectively want it to be. You people have very little to say about the future shape, taste and fit of technology. Your attitudes about technology, about the billions of the people in the world and about the relationships between them will live only while you are alive, then will disappear. What will live on is the shape of technology as it is needed by the masses, and nothing else. Get used to this never-changing fact of life if you want to be a part of the future of technology.
Time Warner has limited experience with Internet access (RoadRunner), and AOL has absolutely NO wide consumer media experience, except for (you guessed it) ADVERTISING! So when you take a media Giant like Time Warner, and put it underneath an Advertising Monolith, you get so much diverse, wide range CRAP that you didn't have before.
As much as I hate to this, I think you've got it exactly backwards.
You're assuming that AOL's weaknesses will synergize with Time Warner's weaknesses to produce a colossal trainwreck, but I think AOL's history with Time shows that they are well aware of their weaknesses, and are instead going to synergize their strengths, to wit:
The world's largest provider of online services, which is weak on content, acquires the world's largest provider of content, *AND* a huge new customer base, *AND* a huge backbone that's already in the process of being turned into a massive TCP/IP network.
First they were a company that could afford to give away free 14.4k access and floppies. Then they became a company that could afford to give away free 56k access and CD-ROMs. Now there's a very good chance, if they do things the "right" way, that they can become a company that can afford to give away free 10Mbs access and set-top boxes.
Or, to put it another way; they just acquired 67,500 employees who do one thing really well; content. Some of the world's most desirable and profitable content.
They recognized that Time could solve their content problems in 1993, and since that time they've been kicking everybody else's ass.
Whether you hate AOL, love them, or say "AOL who?", the most likely outcome of all of this is that AOL becames more pervasive a part of our field than IBM or Microsoft. Don't be a bit surprised if they buy one of those two companies in a few years.
Me, I hate the bastards; but I'm typing this through Netscape (AOL owns 'em, remember) and keeping up with several industry and personal contacts through AIM while I'm at it. AIM is the only one of the "big four" instant messaging apps that didn't give us a big hassle to use through our firewalls.
If they can put one of those free web terminals they have out at Universal Studios in Orlando on every street corner and in the restaurants I frequent, I'll use the hell out of 'em, and I won't feel bad about it for one second.
You over look the advantage that AOL brings to customers with their proprietary service. In order to get on the internet, you only need to click the AOL icon. AOL's content is well organized, and you can be 99.9% sure that, supposing you don't frequent chatrooms or engage in IM's, that you're not going to have to wade through loads of smut. You just go to the appropriate keyword, and viola, everything you wanted about that subject.
Users can use AOL's built in browser to connect to the internet, or they can use IE4 or 5, Opera, or Netscape. And if all your friends use AOL as well, you can put them on your buddy list and know when they're online.
Those are all major advantages that AOL offers that other ISP's can't (except for the browsers...). WIth AOL merging into Time-Warner, it goes to show that AOL isn't really an ISP. They're a content company, and just happen to offer internet access (at the same price as their competitors, so it's not really gauging) to their customers so they can retrieve the content.
A lot of people don't CARE for learning about their computers, believe it or not. I know this sounds weird to most of you slashdotters, but its true. My aunt doesn't know how everything is set up on her computer, and she doesn't really care to learn. I set up the Internet for her, so she didn't have to learn, but I know if I wasn't available to help her, she wouldn't go learn how to do it on her own -- she would just get AOL.
People are clueless about different things.
Thats not true at all. If it were true, there would be a LOT more Linux desktop users than there are now.
For instance, StarOffice is good enough for most basic office productivity tasks, Netscape 4.7 is a reasonable alternative to Internet Exploiter, and GIMP is great for editing Web graphics.
But users want talking paperclips, installation programs that look more like videogames than installers, and nice, four-color glossy boxes/manuals with lots of pictures and no content.They care about flash and sizzle and don't give a damn about the steak.
Case in point: back in the BBS days, most users were dialing out with flashy programs like Qmodem with fancy sounds and point-and-click interfaces. Many of those users went to AOL and its bretheren for the same reason: flashy graphics.
Me, I preferred my little {Commo} program that wouldn't crash and used litte memory and ran efficiently, connecting to BBSes rich with content and local flavor to the sizzle of Prodigy or whatever.
Guess who won? Thats right: AOL. Horrible technology will always win over technological perfection when the former has all the bells and whistles.
Another case in point is the Wintel architecture. Despite the fact that Amiga and OS/2 and Macintosh and other platforms had superior technology, Windows won. Windows will continue to win while it has flash and sizzle. Linux may have substance, but Windows has flash and sizzle. Flash and sizzle always wins.
My journal has hot
This illustrates the real problem with this deal beautifully. AOL are doing very nicely at connecting new users who are scared of their new computers and absolutely terrified on the Internet. But this isn't a long term market.
Come back in 20 years time and you'll see a vastly more computer literate society, with the Internet just another media. Where's the place for AOL?
For long-term survival, they need to reinvent themselves HUGELY. They need to become a proper Internet service with a decent interface and connection. Or they'll wither and die, simply because there isn't any quantity of people who need a few year's gentle introduction to the Internet to sustain them.
Can they do this? Maybe. It's not entirely unknown for big, dinosaur companies (which, in Internet terms, AOL most definitely is) to manage a complete about-face and get back on track. I'd say IBM's making a pretty good job of it right now. But it's not all that common, really.
I suspect this is one of those deals which, in 5-10 years time, we'll look back at and laugh that it ever happened. Or cry, if you've got Time Warner stock right now.
Greg
Greg
(Inside a nuclear plant)
Aaaarrrggh! Run! The canary has mutated!
AOL only grudgingly provided its subscribers with Web access, fearful they would desert.
This is a very true statement. AOL would much rather its memebers spend time inside AOL's realm (read advertisers, vendors, etc) instead of the WWW in general. I haven't used AOL in a LONG time, but when I did (I was young and ignorant) I remember hating it.
My concern is that AOL will now have such large control of so many media outlets that the accurate and unbiased spread of news and information will be interrupted. Will we be required to buy from "approved" vendors if we have road runner? Will AOL monitor which TV shows I watch and tailor ads to my likes (maybe not a bad thing)? But, the long and short of it is, the little guy is losing his voice, drowned out by a monolihic media giant, of both the "old" and "new" types. These are dangerous times, dangerous times indeed, and we must be careful gentlemen...
J
- No traditional corporate executive in America was smart enough then to harness the Internet. Anyone already running a profitable company would be mad to risk the whole thing on an unknown that might cost hundreds of millions of dollars before turning a profit. And if the executive wanted to, he likely would have been fired by the stockholders, management team or board of directors.
Actually that is not quite true, one did. As much as we all love to hate him and his company, he has to be given credit for that.I think that as much as it shows the inability of Bill Gates as and innovator that he was among the last to spot the Internet even from his chair, it shows his brilliance as a bussiness man that he dared turn his company around on a dime. If Time-Warner had had that, they would not have known the fate of Mirabilis, Nullsoft and Netscape today...
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We cannot reason ourselves out of our basic irrationality. All we can do is learn the art of being irrational in a reasonable way.
If we're still focusing on the internet in 100 years, then we'll be in sorry shape indeed. The electric light bulb was popularized around the turn of this last century (was the the 1901 Paris World's Fair that was covered in lights?) but you didn't hear anybody in 1980 rhapsodizing about the wonders brought to us by the "man-made suns". Well, maybe one of Jon Katz's ancestors... :-)
Poor Time Warner. They sure are getting the short end of the stick with their meager mega-million dollar deal. Maybe the government should consider subsidizing them.
Speaking of Bambi vs. Godzilla, check out this hilarious movie.
-konstant
Yes! We are all individuals! I'm not!
-konstant
Yes! We are all individuals! I'm not!
The above quote comes from what is probably the most insightful paragraph in the article. AOL was always a loser in everyone's mind! A laughable parody of what an ISP should be, more focused on marketing and on mailing out those damn disks than on providing customer service. Does anyone else remember what happened to Usenet when AOL added a thousand Usenet groups to its own BBS system without explaining to its users what that really meant? The flamewars that followed were legendary...
Yahoo was started by a couple of stereotypical geeks. So was Hewlett Packard, Intel, Apple, Sun and (lets face it) Microsoft. (That is if you give a little leeway to the definition of 'geek'.) But it always seems to be the Marketroids who win in the end...
We geeks change the world because we understand the world's most fundamental source of change: Technology. Sometimes we even understand how and why technology will affect society. But the Marketroids reap the benefits because they understand how to manipulate the masses! They know how to play on fear, greed and sex to sway opinion. We might think ourselves better because we are more 'pure', but that doesn't get us the girls.
Historically this has always been true. Occasionally we remember geeks like Aristotle and Da Vinci, but we tend to point to the Generals, the Kings and the Emperors as the focus of change. Not to the inventors of the technologies they used to create that change or which forced the change upon them. We remember the wars, not the peace. The leaders, not the creative types who designed their palaces and built their weapons.
I truly detest the thought that Steve Case might be remembered as a leader of the "Internet Century". It really chaps my balls! But it seems invetable that names like Torvalds, Berners-Lee, Englebart, Rheingold, Metcalf and (add your favorite geek god here) will, at most, rate no more than a footnote or two. Perhaps there is a way for us to forestall this fate, but first we will have to break the anti-social habits that make us powerless in society at large.
It is an interesting dichotomy: On the one hand the technophiles are the point-source of social change. On the other they are the people least likely to be identified with that change. All because we cannot lie with a straight face. William Gibson put it best -- "The deadliest bullshit is odorless and transparent."
Jack
- -
Are you an SF Fan? Are you a Tru-Fan?
Anyone who hasn't tried one of those infamous AOL floppies should try it some time. Those floppies are the reason AOL dominated. They were entirely self-contained: you didn't need TCP/IP, or even the modem set up. You plugged them in, they figured everything out, and boom! Joe User was online.
Many would like to see Linux be where Windows is. Many have even claimed that Linux is "easier to use than Windows" (which is laughable, but I swear someone claimed it in a post). The lesson here is that the vast majority of people don't care about how the underlying software works. They just want to use the darn thing.
Unfortunately, many Linux advocates worship at the altar of "oooooh, what a beautiful kernel" when the average user says "OK. I see a pretty desktop; what can I do with it?" Unfortunately, in the case of Linux for the average user, not much compared to the applications under Windows.
The lesson is that people will forgive almost endless technical inferiority, but they won't forgive something that is not useful to them. It's all about the content/applications. And until Linux gets at least some applications that are superior to the equivalents in Windows, it will never make any inroads into the desktop world.
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As much as I dislike the interface and services that AOL has, and as much as I dislike the spam that comes from AOL users, I have to admit that the company has grown to it's current size because they are smart at marketing. They saturate prospective customers with free CDs of their software, they have dial-up available everywhere (in and out of the US), and they provide an interface that is very easy for non-computer oriented people to use.
This is a good example of how to win a market. You get a large number of people who don't know how to do something, and provide a way for them to do it easily. They can send e-mail and browse the web (after a fashion), and don't worry about their PPP login scripts or how to configure their mail software to use the proper POP or IMAP server. They don't have to worry about downloading any of the software or whether or not they can install it -- it's simple to use and new copies arrive in the postal mail every month (we use our AOL CDs as coasters).
One person I know told me that the reason she used AOL was because she didn't care to learn anything about being online or the Internet -- she "just wanted to use it." Thankfully, after a few years of using them, she has moved to a normal ISP. She put it "I'm getting annoyed with AOL, so I am phasing it out."
I can see this happening with other people as well. They get "online" via AOL, use it for awhile and "discover the Internet." Then they start to realize that AOL puts a lot of limitations on what they can do on the Internet, so they drop it for a normal ISP service.
In any case, the reason AOL does so well is that they provide an easy entry to basic net services for the millions of people out there who don't want to learn anything about the Internet, but "just want to use it." =(
Jim