Content is King (Again)

The Wall Street Journal is reporting that AOL has made a strategic shift to give away AOL software and email accounts in order to keep people interfacing with the Internet under the AOL umbrella of brands. This shift has been a long time coming, as sales of Internet access through AOL were sinking. That means the company that built its brand on providing Internet access has officially become a content and advertising sales company. Content is, once again, king.

Because content is king, the keepers of the cables and infrastructure on the Internet - the telecoms like Verizon and at&t - want to be able to chop up differential, preferred ease of access to premium-paying content providers, leaving small players, innovators and non-profits in the sloooooow lane. That's what the whole fight about "net neutrality" is about. If the telecoms get their way, further suppressing small business innovation by letting the big players get preferrred access to future customers, expect many more American businesses to suffer what Ford is now experiencing as time goes by. Unfortunately, however, many big boardrooms don't think about the long term as clearly as they review the short term.

Here's a little piece of the Wall Street Journal article today (online subscription required):

Time Warner Swings to a Profit,
Announces Major Shift at AOL

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
August 2, 2006 9:09 a.m.

Time Warner Inc. said it swung to a profit in the second quarter after it recorded a charge for settling securities litigation a year earlier, and the company announced that AOL will give away email accounts and software to broadband users in a major strategy shift aiming to draw more advertising dollars.

For the quarter, the New York-based cable and media concern reported net income of $1.01 billion, or 24 cents a share, compared with a year earlier, when the company posted a loss of $409 million, or nine cents a share, on a litigation-related charge. Its cable-and-networks segment led profit growth.

Time Warner said its adjusted operating income before depreciation and amortization, which now includes the impact of the Adelphia acquisition, will rise by a low double-digit amount.

Time Warner's cable-television business grew, thanks to more high-speed Internet and digital-phone customers, offsetting weakness at AOL. Advertising, though a relatively small part of AOL's revenue, saw a 40% boost in the second quarter, while the unit's overall revenue declined 2%.

"We've listened to our customers, and many of them want to keep using these AOL products when they migrate to broadband -- but not pay extra for them,'' said Jeff Bewkes, Time Warner's president and chief operating officer.