Entertainment Industry: Yes, Please Keep Negotiating Secret Copyright Treaty To Save Our Asses

from the yeah,-that's-convincing dept

Sherwin Siy (one of the few people who actually was allowed to glance briefly at parts of the proposed ACTA treaty, though under strict NDA) has written about yet another letter sent by the entertainment industry to the government in support of ACTA. This letter includes pretty much everyone who benefits from abusing copyright laws and is afraid of the internet:

Advertising Photographers of America
American Association of Independent Music (A2IM)
American Federation of Television and Radio Artists (AFTRA)
American Society of Composers, Authors and Publishers (ASCAP)
American Society of Media Photographers, Inc. (ASMP)
Association of American Publishers (AAP)
Broadcast Music, Inc (BMI)
Commercial Photographers International
Directors Guild of America (DGA)
Evidence Photographers International Council
Independent Film and Television Alliance (IFTA)
International Alliance of Theatrical Stage Employees (IATSE)
Motion Picture Association of America, Inc. (MPAA)
National Music Publishers Association (NMPA)
NBC Universal
News Corporation
Picture Archive Council of America (PACA)
Professional Photographers of America (PPA)
Recording Industry Association of America (RIAA)
Reed Elsevier Inc.
Society of Sport & Event Photographers
Software & Information Industry Association (SIIA)
Stock Artists Alliance
Student Photographic Society
The Advertising Photographers of America
The Walt Disney Company
Time Warner, Inc.
Universal Music Group
Viacom Inc.
Warner Music Group

Funny... isn't it, that all these companies and industry groups are supporting a deal that no one's seen yet? Oh wait... that's because many of them have seen it and actually have had a hand in creating it. But what's really damning is that no where in the letter do they explain why this is actually needed or how it will do anything valuable. Instead, it's a pure faith-based letter saying "if you pass this secret treaty, good things will happen." I don't know about you, but generally, I prefer there to be actual proof and evidence that restricting consumer rights around the world actually leads to some sort of real benefit.

Tellingly, they don't respond to any of the points we raised earlier. This is not a treaty to help people or the economy. It's a deal to try to sneak through a system for propping up an obsolete business model by companies who don't want to adapt.

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Should There Be A Penalty For Falsely Claiming Copyright Over Public Domain Material?

from the happy-birthday... dept

Slashdot and The Register point us to a new paper by Jason Mazzone about "copyfraud" -- or the ability of someone to claim copyright on something that is in the public domain. The issue, Mazzone points out, is that there's no penalty for falsely claiming copyright on something, so there's plenty of incentive to claim something is still covered even if it's not. Remember the story of "Happy Birthday"? While the common wisdom is that the copyright is owned by Time Warner, there's a lot of evidence that this is not the case at all, and the song is in the public domain. Oh, and that could be true of Mickey Mouse as well. But, of course, neither Disney nor Time Warner risks any punishment in claiming that they still hold the copyright to each of those... so who's going to challenge it?

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Movie Screening Phone Bans Reach Ridiculous Levels

from the oh-come-on... dept

For years, we've found it absolutely ridiculous that the movie studios have required that anyone attending early preview screenings remove and deposit their mobile phones in some (often unguarded) box. The entire policy has never made much sense. First of all, a mobile phone is unlikely to have a decent enough camera or enough memory to actually video tape a movie. Second... who cares? This is all part of studios stupidly overreacting to the idea that their movies might leak online before the official release date. Yet, as we've seen there's almost no evidence to support the idea that the availability of the movie online has any negative impact on box office proceeds. So, for the uncomprehendingly small chance that someone at a screening is able to record the movie with his or her phone and get it online, and that version of the film somehow destroys box office proceeds... Hollywood has decided it makes sense to treat everyone (including movie critics) who attend preview screenings as if they're criminals.

It's even being taken to more ridiculous levels now. Valleywag points out that Time Warner entertainment critic was stopped from watching a Warner Bros. (yes, owned by Time Warner...) screening, because he refused to give up his iPhone. Yes, the same iPhone that does not have a video recording function. Perhaps they were afraid he'd be playing games through the screening? Or maybe Twittering away a live commentary?

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Cable Companies Negotiating To Control What TV Shows You Can Watch Online

from the this-won't-end-well dept

Earlier this week when Hulu cut off Boxee, supposedly at the request of its content partners, there was some speculation that the real pressure may have come from the cable companies who are losing customers at a pretty rapid clip. And, while the content companies pretend to deny it, the fact that people can get so much content for free online is almost certainly contributing to that situation.

Now, in theory, this should be a good thing for the TV guys -- who you would think want as many people watching their shows/channels as possible. But, the problem is the business model. Doesn't it always seem to come down to the business model? The TV networks make so much money by selling the channels to the cable companies, that they're scared to death of losing that revenue. We saw a hint of this late last year when Viacom and Time Warner Cable played a big game of chicken over channels like Comedy Central and MTV.

However, now reports are coming out that the cable companies are negotiating with TV programmers to offer their TV content exclusively via their cable internet offerings. In other words, forget Hulu and routing around the cable company and the $80/month they're charging you. You'd have to keep your cable, even if you don't want it, just to get access to many TV shows over the internet (well, legally). Not surprisingly, both the cable companies and the TV programmers seem to like this sort of deal: the programmers continue to get their big fees from the cable companies, and the cable guys avoid losing many more subscribers. Comcast's CEO Brian Roberts is even saying "Online video is our friend, not our enemy."

And, to some extent he's right. If Comcast is going to survive it does need to look at online video as a friend, rather than an enemy -- but the problems may come about if they think that they can force customers to only get online TV if they keep their cable TV service at such a high price. Because, while these deals may make sense for the TV networks and the cable guys, they seem to be forgetting the customers -- many of whom have received a nice taste of TV online for free, and aren't going to be happy about having to pay up for it. The problem is that these cable guys aren't adding any new value. In actuality, it seems like they're looking to take away value from what's already out there -- and that never works. It will likely just lead to increased piracy, increased anger at the cable companies, and a continuing of the downward spiral. But, these days, watching old school companies accelerate their own downward spiral happens so often, you almost have to assume it's likely.

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FCC Just Couldn't Stop Voting

from the election-day-festivities dept

Well, it's election day and apparently the FCC commissioners liked voting so much they took votes on just about everything. Amazingly, it looks like they even made some good decisions. The big one, of course, and the one that will get the most press, is the unanimous vote to free up television "white space" spectrum. While the NAB made a last ditch effort to stop this, the FCC made the right call here. This spectrum can be put to much better use, which can have a huge impact on increasing innovation and wireless technologies. This is a big win. The FCC also approved Sprint and Clearwire's deal to set up a joint venture for their WiMax operations, as well as allowing Verizon to buy Alltel. Both of those deals make sense as well, so it's good to see them approved.

Other than that, the FCC said that it's going to start looking into the pricing policies of cable companies... and Verizon. Who's missing? FCC boss Kevin Martin's best friends over at AT&T. To be honest, while it's quite likely that the cable companies and the telcos (yes, including AT&T) are abusing their oligopoly position, the answer shouldn't be having the FCC act as a watchdog over pricing policies, but for a better system to be set up that encourages real competition. In the meantime, though, can someone explain why AT&T was left out of the bunch?

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Bandwidth Caps Keep Getting Lower And Lower

from the don't-do-anything-useful dept

When Time Warner first announced plans to test out bandwidth caps, there was some talk that it might set the caps exceptionally low, such as 5GB/month for downloads. While Time Warner did eventually put in place a series of tiers, it admits that the 5GB tier is the "lite" tier for very basic usage. Don't tell that to the folks at Frontier. Reader Shea writes in to point out (via RochesterHDTV) that Frontier is now saying that 5GB of combined upload and download bandwidth is all you can use per month. If you go above that, Frontier reserves the right to "suspend, terminate or apply additional charges" for going over this "reasonable" usage.

See how this works? At first, we're told that such tiers will only touch on those super high bandwidth users. Then we see tiers put in place where it's admitted that the 5GB limit is for "lite" users. And now, according to Frontier, it's "reasonable" usage, and it can kick you off -- or add unspecified fees -- for going over. Welcome to the world where doing anything cool or useful online is discouraged. ISPs are working hard to make their broadband offerings less and less useful by the day.

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NY Pressures ISPs Into Blocking Child Porn Websites, News Groups

from the good-goal,-bad-approach dept

New York's Attorney General, Andrew Cuomo, has a history of using his position to threaten big companies into agreeing to take responsibility for something that isn't their responsibility. He did it when he got advertisers to pay fines because their ads showed up in adware -- without ever explaining what was actually illegal. And, now he's done it again in getting a bunch of ISPs (Verizon, Sprint and Time Warner) to agree to block a list of websites and newsgroups that are listed as being purveyors of child porn. The ISPs are also giving Cuomo's office over a million dollars, ostensibly to help wipe child porn off the internet. If that's Cuomo's goal, this isn't the best way to do it -- though, it will get him plenty of press coverage for bullying companies into doing something they aren't required to do under law.

In fact, the state of Pennsylvania tried to do pretty much the same thing, back in 2002, but focused on actually passing a law (unlike Cuomo, who just bullied the companies into "agreeing.") And, of course, a federal court tossed out the law as unconstitutional. The goal is certainly noble. Getting rid of child porn would be great -- but having ISPs block access to an assigned list isn't going to do a damn thing towards that goal. The blocked sites will reappear elsewhere. Those who want access, even to the blocked sites, will simply find encrypted tunnels to hide their paths. Basically, this won't do much of anything, other than increase costs for ISPs.

Even worse, it runs a huge risk of starting ISPs down a very slippery slope of being willing to ban access to online content. No one's against that when it's child porn, but who's reviewing the list to make sure it's really child porn? How hard is it to slip a site that someone just doesn't like into the list? Furthermore, once these ISPs have shown that they're willing to block certain sites, then politicians will quickly look to increase that list beyond just child porn to other types of sites that they find objectionable. It sets a dangerous precedent.

Putting the responsibility on the ISPs is the wrong solution (and, honestly, the folks who are pro-net neutrality should be seriously worried about this -- as it's a clear violation of what they say net neutrality is all about). If the content itself is illegal, go after those actually responsible for the content. Not the service providers. Sure they make for easy targets and big headlines (backed up with that hefty cash "settlement" right to Cuomo's office), but they're not the ones responsible.

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Intel, Google, Cable Co's Give US WiMax A New Lease On Life (In The Form Of $3.2 Billion)

from the let's-try-this-again dept

A bunch of the worst kept secrets in the wireless broadband world have finally come together. No one ever really believed that Sprint and Clearwire would fully break off their WiMax agreement. It simply made too much sense for them to get back together. At the same time, everyone also knew that Comcast and Time Warner were talking to Sprint to help fund WiMax in order to get a wireless pipe with which to compete with the telcos. And... oh yeah, given how much money Intel had pumped into WiMax to make everyone think it just had to be the next generation wireless system, there was no way it was going to let Sprint and Clearwire's WiMax plans collapse. Finally, toss in the fact that Google was known to be interested in Sprint's WiMax plans, and it's not hard to figure out what is actually happening...

Yes, indeed, Intel, Google, Comcast and Time Warner are teaming up to pump $3.2 billion into a joint venture that would merge Sprint and Clearwire's WiMax operations under the Clearwire brand name. This is certainly no surprise given all the earlier stories, but given how many problems have surrounded WiMax as well as earlier attempts for the cable companies to offer wireless services, don't expect this new venture to go smoothly right from the beginning. That doesn't mean it's not the right thing to do. Most of the companies involved didn't really have much of a choice but to do this. Of course, in all this mess, Sprint and Clearwire squandered a portion of the lead they held over AT&T and Verizon. While it will still take a while for AT&T and Verizon to get LTE plans into motion, all this futzing by Sprint and Clearwire took away some of the huge lead it should have had.

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So Much For Those Synergies Between Time Warner Cable And AOL, Huh?

from the nice-work,-guys dept

While the AOL/Time Warner merger has gone down in the record books as one of the worst mergers ever, I still contend that it could have gone much better if stronger management had been in place. Most specifically, there were obvious synergies between aspects of Time Warner and AOL -- but petty squabbles and turf wars kept most of those synergies from being realized. The most glaring and obvious of these was Time Warner Cable (or RoadRunner) and AOL. Both offered internet access, and it seemed perfectly reasonable to merge the two properties, and use RoadRunner to upgrade all those dialup users onto broadband, and then keep them engaged with all the Time Warner content. Of course, the Time Warner content people freaked out about content on the internet of course, so that would never have worked -- but the failure to link up RoadRunner and AOL never made any sense.

In fact, the two services began aggressively competing with each other. Then, after three years, someone finally realized that maybe the two should work together and made an announcement saying so. Of course... an announcement without action is worthless. So, another year goes by and another exec trots out with an announcement that the two divisions will work closely again. And again... nothing. Give it almost another year... and yet another announcement. Sense a pattern? In the end, the two groups never actually did combine, and with today's announcement that Time Warner is selling off the cable business entirely, it just puts an exclamation point on all these years of keeping the two businesses separate. Of course, in selling off Time Warner Cable, it will also likely lead to speculation that the company will sell off AOL (or merge it with Yahoo -- remember that plan?) as well -- though, as an entirely separate entity.

While I tend to be skeptical of mergers based on vague "synergies," it's still rather amazing that in all this time, no one at Time Warner ever got these two divisions together -- and now the company may end up selling each off separately. In the end, this was a deal that only worked out for the investment bankers. Remember, they love to convince companies to consolidate one year and diversify the next -- because they make money on both transactions.

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And Of Course, FCC Sides With Verizon In Argument With Cable Cos.

from the no-surprise-there dept

Last month we pointed out that the cable companies had filed a complaint with the FCC accusing Verizon of some shady practices in trying to get customers to stay, even after they'd already agreed to switch to cable. Since most customers want to keep their home phone number, the cable companies needed to contact Verizon to make the switch. At that point, Verizon would immediately contact those customers to prevent them from switching. As the cable companies pointed out, this gave the telcos an unfair advantage. They were using information they learned from elsewhere (the group in charge of managing number portability) to steal customers back from the cable companies. Of course, given how today's FCC tends to think that telcos are always right and cable co's are always wrong, it will surprise probably none of you, that the FCC has no problem with Verizon's practices. Perhaps the cable companies should have waited until a new FCC commish was sworn in before making this complaint.

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Can Yahoo, Microsoft, Google, AOL And News Corp Sit Down And Just Divvy Up The Internet Already?

from the thanks dept

Well, well, well. So, apparently, the earlier news about Yahoo using Google ads was just the appetizer to the more meaty story, which is apparently... well... that just about all the big name internet players are going to do a bit of horse trading to figure out who owns who in the end. There seems to be a lot of speculating in the WSJ article, but apparently step one is that Yahoo and AOL might merge their internet properties (something that's been rumored before). That pairing would likely lead to Google taking over the ads (it already handles the ads for AOL and owns a stake of AOL). At the same time, the article reports that News Corp., once rumored to be a suitor of Yahoo until it vehemently denied the story, may actually be teaming up with Microsoft to make a joint bid for Yahoo. Who else did we leave out? Nobody?

Anyway, I stand my by original assessment of a potential AOL-Yahoo merger ("like trying to keep a wild animal from eating you by covering yourself with feces"), but honestly, this gathering of the big players should actually be seen as a huge opportunity for everyone else. Basically, the big boys are about to make a big mess, and there will be tremendous opportunities that spill out while they try to figure out what went wrong. People are just starting to realize that you don't innovate by building up huge mega-corporations -- you do it by being small and nimble. These megamergers are going in the wrong direction and will open up huge opportunities for small, quick firms that think big.

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Cable Companies Looking To Buddy Up With Sprint Once Again To Save WiMax

from the let's-see-how-this-works... dept

Remember a couple years ago when all the big cable companies teamed up with Sprint with plenty of fanfare to provide mobile phone service and to compete against Verizon and AT&T? Whatever happened to that? Oh, right, it went nowhere. So, perhaps don't get too worked up over the news today that cable companies Comcast and Time Warner might be teaming up with Sprint and Clearwire to fund their troubled WiMax efforts. If you recall, Sprint and Clearwire had a huge deal (with hundreds of millions in backing from Intel) to WiMax the nation, and that deal also fell apart though everyone knows they've been seeing each other on the sly. They know they can't do it alone, so certainly having some support from Comcast and Time Warner could help move this project forward, but there have been so many false starts and stumbles that you can bet this isn't going to go as smoothly as all the players are about to suggest.

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Cable Companies Accuse Verizon Of Shady Practices To Prevent Customers From Leaving

from the so-we-hear-you're-leaving... dept

Comcast and Time Warner have complained to the FCC that Verizon is taking unfair advantage in preventing customers from dropping their phone service. The basic story is that the cable companies have been offering deals on various "bundles" of TV, internet and phone service, all over cable. When customers agree to switch, most want to keep their existing home phone number (which is allowed under number portability rules). The cable companies take care of that part, informing the phone company of the switch -- at which point (the cable companies say) Verizon calls up those customers and offers them cash discounts to stick around. While it's quite common for telcos (or other firms for that matter) to offer customers who cancel deals to stay, this is somewhat different. The customer hasn't called to cancel in this case. It's just because Verizon owns the telephone network that it finds out about the switch and then proactively contacts the customers. Given the FCC's extra friendly terms with the telcos rather than cable co's, anyone think this has a chance of getting anywhere?

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AOL Realizes Way Too Late That AIM Should Have Been A Social Network

from the catching-up-four-years-late dept

As social networks like Friendster and then MySpace first came to prominence in the 2003/2004 time frame, we wondered why the big players (AOL/Yahoo/Microsoft) in the instant messaging space didn't recognize that those instant messaging networks were better social networks than the networks. Whereas most social networks had little to do once you connected, most people used instant messaging to communicate all the time. Those instant messaging systems already knew who all your "friends" were, and it shouldn't be that hard to then take that information and convert it into a more standard social network, with instant messaging features built right in. Yet, nothing really happened. Yahoo and Microsoft made some half-hearted attempts at social networking with little success, keeping them mostly separate from their vibrant instant messaging networks. Now, it appears that AOL has finally woken up and realized this possibility, but since it's so late to the game, it's decided to just buy Bebo for $850 million and integrate it with AIM.

While $850 million is less than was earlier rumored, and suggests that Bebo's growth rate isn't as strong as it would like, the site does have plenty of users (mostly in the UK). When I was over in the UK a few months ago, everyone was talking about Bebo the way people talk about Facebook here. That said, linking AIM to Bebo in a way that gets people interested may be difficult. There's certainly a bit of social network fatigue going on these days, and it seems as though people are beginning to wonder why they should join yet another social network unless it really provides something different and compelling than the last social network. Yes, AOL should be turning AIM into a social network, but they should have done it four years ago when it still made sense. As it stands, this seems likely to go nowhere fast -- especially with the cloud over AOL's future strategy.

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Yahoo Now Thinks AOL Will Be A Savior?

from the seriously? dept

Over the weekend, reports quickly came out that Yahoo's board had apparently decided to reject Microsoft's takeover bid, which wasn't too surprising, given what the company had been hinting at all week. There was plenty of talk about looking for other suitors, but one by one, the few obvious candidates all backed away. Then, late Sunday a new rumor arose: Yahoo! might try to keep Microsoft away by merging with AOL. That seems sort of like trying to keep a wild animal from eating you by covering yourself with feces. It might make awful sense for about a second, but it's just a bad, bad idea. First, it's unlikely to work -- and, second, it's just pathetic. As much as it seemed like Microsoft merging its web operations with Yahoo would be two also-rans pretending a merger would somehow make them into a web operation people cared about, merging with AOL would be even worse. Of course, the folks over at Google must be laughing hysterically at the possibility. Not only would an AOL/Yahoo merger appear to be less of a competitive worry than a Yahoo/Microsoft merger, Google might actually make out quite well in the deal, since it owns a piece of AOL. So, in the unlikely chance that Yahoo merges with AOL and fends off Microsoft, Google would cash out of AOL, watch Yahoo struggle to merge with AOL and see Microsoft left without a big internet partner. That has to be Google's dream scenario.

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Time Warner Takes Steps To Finally Spin Off AOL

from the a-bit-late dept

As part of Time Warner's earnings conference call, the company noted that it will be splitting AOL into two parts: cutting the rapidly shrinking access subscriber business from the content/advertising business. Many folks are assuming this is in preparation to finally sell AOL off. Of course, like so much that AOL/Time Warner has done over the years, this is too little too late. Remember the happy days in the 90's when AOL would come out with a press release announcing every million new subscribers? Funny that they don't do that for every million lost subscribers... However, it's been those subscribers that have hindered AOL's ability to adjust. For years, they were afraid to do too much with free content to lose that subscription base, even as that subscription base was figuring out that they could already go elsewhere and get the same content for free (and buy access for much less). So, when the company finally adopted a free model, it was too late to simply throw the doors open. People just weren't that interested. The same is true now. Time Warner had a chance to salvage AOL years back, if they had aggressively tied it to a broadband strategy rather than competing with itself and giving lip service to a more complete strategy which never actually seemed to happen. Finally separating out the dwindling access business is hardly going to catapult the rest of the business forward, as most people have simply moved on to other sources. While the sheer size of AOL's traffic can hold it up for a while (and may make it an attractive buyout for someone looking only to buy some traffic), it's lack of innovation and growth have pretty much doomed it to also-ran status.

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Funny That HBO Is Putting Shows Online, Just As Parent Time Warner Starts Charging Extra For Bandwidth

from the coincidence? dept

The NY Times is covering the news that HBO has finally decided it needs a real internet strategy, and will start offering its content online, free of (additional) charge to existing subscribers. The idea of putting the content online makes a lot of sense, and it sounds like it's offering features that many HBO subscribers would find useful, from access to archived materials to live streams. However, there is something a little odd about all this, as noted by the folks at The Hollywood Reporter. HBO is owned by Time Warner. Time Warner is the same company that is now starting to experiment with overage fees, sometimes based on very low usage -- which would clearly preclude watching very much online video.

It is true that both of these programs are merely tests -- and they're tests in totally different markets right now. However, the HBO online video will only be available to Time Warner customers. The Hollywood Reporter story suggests that it's a case of two parts of a business not communicating with one another -- but I'm sure some more conspiracy-minded thinkers will naturally assume it's really Time Warner's attempt to squeeze more money out of people. Sure, it will say the HBO streams are "free," but just wait until you get that broadband bill... Of course, there is also another possibility. The Hollywood Reporter story mentions the possibility that Time Warner would create a special "exception" to the bandwidth rule if that bandwidth was for watching Time Warner-only videos. That, of course, is exactly the sort of thing that will be sure to get network neutrality advocates up in arms, though it's a subtle shift from traditional network neutrality claims. This time it won't be about "better quality," but about which content counts towards a bandwidth cap.

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Funny How Anti-Regulation Telco Buddy Kevin Martin Is Pro-Regulation When It Comes To Cable

from the should-have-sang-happy-birthday-louder dept

December's almost here, and with it, comes FCC chair Kevin Martin's birthday (December 14th, for those who care). This might not seem like a big deal to many, but it was just a couple years ago that a bunch of telco execs got together to sing Martin happy birthday just as he announced a bunch of policy positions that seemed to support the telcos' every wish. What's most amazing is that whenever he's pushed on telco issues, Martin likes to claim that he's against regulations -- but when it comes to companies that the telcos compete with, he's suddenly much more open to regulations. So, it should come as no surprise that the cable companies (who apparently forgot to send Martin a birthday cake) are about to wake up to a different world order, as Martin plans to make use of a loophole in the law to start regulating the cable companies -- including putting serious restrictions on growth. Now, there's no denying that the cableco's have a cushy position, which they all too often abuse. However, especially with the rise of satellite TV and IPTV, more competition is reaching the market. In the end, this move sounds like not just a way for Martin to hurt the cable companies, but also a way for him finally to force them to offer a la carte channel choices, a favorite of Martin's for years, not because of the importance of more choice, but because it could lead to more family friendly programming. It could very well be that regulation makes the most sense for the cable industry -- but it's hard to see how Martin can claim equal treatment of his friends in the telco industry, who he lets merge with abandon, while telling the cable companies they can't do the same.

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AOL Learns That You Can't Just Go 'Free, With Ads.' You Need To Give People Reasons To Visit

from the business-model-101 dept

It's been a little over a year since AOL made the big decision to go free. It was about the only thing the company could do at the time. It's subscriptions were dropping rapidly. It held little to differentiate itself from the many free services out there. It had failed to build a real broadband strategy for years. The problem, though, was that the decision to go free was made way too late and, most importantly, without much additional strategy behind it. It seemed like the strategy was basically just "if we go free, we'll sell ads." They left out the important middle step though: the company needed to actually give people a reason to visit and give advertisers a reason to buy ads. Without that step, it really isn't surprising that the company is realizing its "free, with ads" strategy isn't working as well as planned. On the same day that AOL officially bought another online ad company, it was revealed that the growth in ad revenue has been slowing, and it lost a big advertising partner. This is a good reminder, though, for other companies out there who are trying to figure out how to embrace "free" as a part of their business model. You can't really neglect the rest of your business model.

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One Year After Tearing Down The Walls, AOL Still An Also-Ran

from the free,-as-in-CDs dept

Last year, in a move that came only six years too late, AOL decided that walled gardens were out and that free web services were in. For a brief period, there was a flurry of news about AOL's attempt to reinvent itself as a Yahoo-like portal. With the walls torn down, the challenge for management was to actually give people a reason to use AOL's services, thus driving up traffic and ad revenue. Simply being free would not be enough to bring people back unless there was a compelling reason. A year later, it doesn't look like the company has accomplished this. Earnings guidance was recently reduced as the company's growth rate continues to lag behind the industry average. As Wall Street gets antsy over its performance, it seems likely that we'll hear renewed calls for Time Warner to just dump AOL and finally wash its hands of the whole affair. AOL's problem is the same one facing Yahoo: it's not Google. The difference is that Yahoo still has a lot of market share and traffic to work with. Both companies have made several acquisitions in the past year or so in an attempt to reinvent themselves, but unless one of them stumbles onto the next MySpace, Facebook or YouTube, it's unlikely that acquisitions will hold the key to a turnaround.

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