Ted,
Thanks for the reply.
I'd buy AOL before I'd buy YHOO, EGRP (that one's close), AMZN, XCIT or LCOS. How's that for fancy footwork on the investment merits of the company?
The point of the comparison of the companies I listed to AOL is not as immediate alternate investments to AOL, as they are all currently highly overvalued. I just happen to believe these businesses and businesses like them have a potentially bright future on the Internet. I can't say the same for AOL because it's not on the Internet and its business model won't work very well on the Internet (which is why it's not on the Internet).
..., but I think you're way underestimating the potential for ad revenues. NBC, for example, seems to pull down more than $5 billion in revenues annually, with over $1 bn in profits this year.
Ted, I don't think this analogy is apt at all. First of all, there are maybe four major networks, ABC, CBS, FOX, NBC, two minors, UPN, WB, and perhaps dozens of cable channels with the ability to charge for ad space, successfully. This is because the mass-media BROADCAST spectrum is limited, and some cynics would even say self-limited, for the very reasons of being able to charge those fancy ads rates upon which you are hanging AOL's bright future. The broadcast media is more or less a controlled, regulated monopoly, and the networks would very much like to keep it that way. (Note the recent failure of the rewrite of the FCC laws that were supposed to provide for high-definition televsion and a substantial expansion of channels offered).
There are now thousands of commercial web-sites. The barriers to entry are near zero. The Internet is as far from a monopoly structure (thankfully) as could be imagined. On top of that, the Internet is a NARROWCAST medium, and a narrowcast medium will probably never approach broadcast rates. You're betting on AOL's future based on an apples-to-spatulas comparison. (I'd normally say apples-to-oranges, but I don't think the comparison's that close :-D).
It is absolutely fascinating to watch "the commercial interests that be" try to shape this new lump of clay called the Internet into their own image:
They want to turn a new medium demanded for a new age into the media of the past. They are trying to send us their commercial messages on their schedule under their control to as many people simultaneously as possible (push technology) through this new medium.
They want to insinuate themselves within every transaction and act as distributor/middleman where none is required.
They want to contain, define, slice, and cordon entire areas for the purpose of tight control and monopoly position where none is possible.
Unless they get the FCC and FTC to agree to some really stupid proposals, they won't make any headway. If they are able to legislate changes to the Internet, they will kill the goose that lays the golden eggs, which, for a great many reluctant participants, AOL included, would be just fine. Everyone else will raise holy hell.
In a way, I see AOL as some sort of weird advertisers/middlemen/monoplists laboratory, sustained for the purpose of determining, experimentally, if there is any chance at all that the Internet can be made to work for them. Hence, all the crap AOL's subscribers are subjected to on a daily basis. I think the results of this experiment are already known, but you have to give them credit for trying. |
