Commentary

AOL to Add Salt to Festering Wounds

You thought Time Warner shot itself in the foot when it merged with AOL at the peak of its bubble valuation? Just wait. It’s about to fire again, this time quite a bit higher.

Even dyed-in-the-wool print journalists have been all a twitter about the impending decision of the traditional media giant to start limiting access to its online content by making it available only to those seeing it through the kiddy-proof lenses of the AOL service.

The precise nature of the plan remains a little fuzzy. Some say content that is currently free online will be fenced off into the AOL zone. Others say that the company will merely create new content for this fenced-in area. I suspect there is going to be some internal fighting with the old Time Warner people currently selling online magazine advertising turning out to be loathe to give up their revenue streams so that some Johnny-come-latelies over in the AOL division can sell more subscriptions.

One example of future proprietary content online cited by the online unit’s CEO Jon Miller was the potential to put movie previews online. I’d hate to be the AOL minion who had to show Mr. Miller – presumably later in the afternoon – what the Internet looked like and that, indeed, there are plenty of movie previews already on it. Oh, and they’re free.

On its face this raising of the proprietary content walls might not be a bad decision for some media companies. But for Time Warner, it’s an Internet-banishing, suicidal ploy. If AOL had unique, must-read magazine properties, then the maneuver might actually increase subscription roles to the online service. But Time Warner is the epitome of standard fair. For years it has relied on its massive distribution network to make run-of-the-mill titles market leaders.

Time and Newsweek are so similar, they consistently run the same lead stories, headlines and even pictures on their covers. When Time gets sunk into AOL, what will people do: start subscribing to AOL? No, they’ll start looking at the free Newsweek online.

The traditional media parallel to this would be deciding to put all of AOL’s diverse TV and movie content through their HBO division, hoping to gain revenue by increased subscriptions. I’m sure HBO would benefit from a plan like this, but at the expense of slaughtering other well-established revenue streams.

Time Warner used to have wonderfully innovative publications. Life magazine, the big picture weekly, was an American fixture and was profitable when they canned it some years ago due to internal politics. That decision, for me, was the indicator that the old Time Warner was headed into a spiral.

It may indeed be refreshing now for some to see the new leadership of the company attempting to do something decisive. I too would love to see them pull out of their current slump. But when pushing, they must push in the right direction.

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