Wednesday, 12 January 2000

RANTING & RAVING

It's funny. Monday's news of a merger/purchase between AOL and Time-Warner didn't overwhelm me. At least, not personally. I've been working for Time-Warner for about 5 years now and I've yet to see one branch touch another. I've been working for both Time-Warner and Disney for about 6 months, and no one has even noticed. So, my opinion was, "Why should I have an opinion?" But then it keeps getting thrown in my face, over and over, in paper after paper, on TV show after TV show, so....

As a content creator and analyst of the world I see around me, my biggest question is whether AOL can make the shift in attitude as a content provider from being a proprietary network, which it has been, to being a true Internet company. To clarify: AOL's traditional strategy regarding content has been one of branding and simplification. They program like a TV network. When they got involved with Entertainment Asylum, then a shared property with Brandon Tartikoff and Scott Zakarin, they started devaluing their other entertainment content in favor of branding E.A. But when e-commerce became valued over content, the funding for Entertainment Asylum was reduced as well. You see, AOL became driven by e-commerce and content became bait. But there were so many viewers that content could actually bring revenues from content companies that were willing to pay for space so that they could do their own branding. To be fair, the same thing happened at Starwave when Disney bought in. While ESPN.com has been fully integrated into the Disney family, funding went up and the ESPN brand crossed all Disney media lines. But Mr. Showbiz has suffered cutback after cutback, stuck as being "only" an Internet brand without a real base for e-commerce.

You see, the model for any entertainment site working as an e-commerce site has not come to exist. There are two working methods. You have the Reel.com strategy, which is pure e-commerce eventually realizing that content could keep people on a site and therefore allow more pitches a day which will eventually translate into sales. (Assuming the price and service are similar, why would you switch sites to get the latest movie when you are already reading Jeff Wells?) There's the Yahoo! strategy, which I'm guessing is about to change, but it's been to aggregate content through deals with branded companies, like roughcut.com and (much more
significantly) a ton of others. AOL/Time-Warner will likely have to find a balance between the two, creating something brand new.

My guess is that AOL will become the HBO of the Internet. I've actually believed that for a long time, but this merger pretty much seals it. AOL simply cannot expand enough to "be" the Internet. That's why the company's content sphincter has gotten tighter and tighter over the years. AOL is an Internet Disney World, so to speak. You enter. You get mail. You start to wander through the park. It's safer than a Six Flags park (ironic, as Bob Pittman brought Six Flags back to life) because the rides are slower, there is a lot more staff around and the entire effort is to make you feel safe. When a retail company is part of AOL, there are not only 25 million eyeballs
available, there is a sense that the company is a vetted part of the family and, between AOL and the company itself, you are safe spending money, giving them your credit card, etc.

As a content provider, AOL offers almost no exclusivity anymore. But the experience has evolved into being one where, again, you feel as though they have chosen carefully for you. How much entertainment news is there? Not a lot. It's pretty much all there. And it's safe. No nudity. No foul language. No coarse ravings of an Internet-based madman whose ego is big enough to make him believe he can see the future. If your kids go there, you can make it even safer, restricting access to anything that might be "dangerous."

Even as the Internet expands and Broadband comes to be, there is going to be a huge value in a network that can be counted on for provided a clean, clear experience. AOL will be that network. I already pay just $9.95 a month to have access to that world, using my own Internet access. Likewise, the Disney web programming channels are essentially value-added networks that you can pay for with their web access or with your own (they've aggregated the web access services of one of the major ISPs, I forget which one). When Broadband gets bigger, expect the same from ESPN. There will be some news you can get for free, but the majority of their content will be stuff from the network, now under your control and accessible only for a few bucks a month on the web. (SportsCenter anytime! And you can just watch the basketball stuff if you want! Or eliminate the smart-ass remarks with just a click!)

There seems little doubt that Entertainment Weekly Online will become the prime entertainment network of the web, given this merger. EW is the most powerful showbiz-related magazine brand, so why not really convert that sucker? I would even expect that People will be branded underneath the EW brand, a part of a massive puzzle. Heck, I wouldn't even be surprised if AOLTW buys Playboy one of these days and creates the first truly integrated premium sex site/network on the web and cable and print. Hardcore sex is big business on the web, but Playboy is still bigger than any of those fringe companies and will always be.

Which brings us to sites like roughcut.com. Even though a Playboy brand will have a value above and beyond any gynecological-style sex site, part of the huge potential of the web is that 50 varied sex sites united can be as valuable as Playboy. Likewise in entertainment coverage, Ain't It Cool News is not in competition with roughcut, really. The two sites aspire to completely different things. Entertainment Asylum has yet another kind of audience. Mr. Showbiz another. E! Online yet another. This is where the oft-heard analogy to early television really begins to turn up. We are all just a bunch of little TV stations, with a wide broadcasting reach, that are still small enough to be driven by single personalities or just a few personalities. None of us are networks yet.

Think about reading EW. Jim Mullen is perhaps the most popular weekly read. Why? He's a personality. But is he enough to keep readers coming back to EW week after week? No. He's just a highlight. The same is true, for instance, of Army Archerd of Variety. The Hollywood Reporter has never had an Archerd-level columnist, yet they survive. Perhaps the biggest difference between the trades is Army. And Michael Fleming, too. Two personalities add enough spice to make Variety more important than The Hollywood Reporter. But not by much. (By the way, I qualify both trade magazines as insider stuff, not really meant to ever go to network level, giving those two personalities much more power.)

"So, What Am I Saying?"