Todd: Is advertising all there is?
I'm a naif and a newcomer to your thread. I have a dream of what AOL might be, and invite you veterans to throw cold water on it.
AOL has assembled a massive subscriber base. They have as much of a start on a monopoly position as exists in the online world. So far they exploit it meagerly. Email is marginally better AOL-to-AOL. So what? I envision AOL being able to sell per-use software on a utility basis once most users have Java. So what kinds of apps?
Most obviously, word processing. An online WP engine will be (at least initially) slow and limited in function. If AOL provides the disk storage, it will get automatic backup and can easily serve as groupware for small companies like ours that don't have Notes.
Pay-as-you-go interactive games. Don't have to charge much per hour to beat the $4 you are talking about for advertising.
Demographically targeted advertising. There is a long way to go. Let AOL filter out the spam and the sleaze, then put in their own targeted advertising, and they have added some value for me.
AOL is in a position to add protection. Though I don't fully understand "cookie viruses", etc., a content provider like AOL is in a position to add security that is not available on the net itself. They could (at the user's option) filter mail attachments for viruses. They could broker credit transactions. They could even take some of the banking action in online transactions. Remember is was the fear that MSFT would do exactly that which scotched the Intuit merger.
So far AOL has been content to serve as a wide pipe, being generous with their content providers to bulk their own volume. They have me hooked - I use Amazon, E*trade, SI, travel services, etc. I think that the presence on AOL will be of more value to those providers for the same reason a mall provides value to stores. People come to the mall because that's where the stores are. I hope AOL will assemble a compelling amount of content, and think they will be the only provider to do so. It looks from here like their only competition is the raw internet. that they have beaten out Prodigy, Compuserve and others as value-added providers. I think there is a lot of value to be added.
How much value is there to add in other areas, like network telephony? We can already talk over the net if we have the right software. Can AOL add value? Note the number of new services your local telco has added over the past decade. I pay for them - it saves me hassle. Could AOL do the same? Who else has the economies of scale to manage it?
Any and all of these undertakings will require quite a bit of capital, of which AOL doesn't have too much to spare. However, it seems to me they can use their almost-monopoly position to negotiate favorable partnerships with the guys who have the bucks and the expertise to pull it off.
Enough now. Bring me down to reality, you cynics and pessimists!
Graham Seibert |
