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Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: Follies who wrote (6627)	12/31/1997 12:54:00 PM
From: steve lipson	Read Replies (1) \| Respond to of 13594

I'm afraid we have to put you back in the oven for a little more baking. If you think of each web site as an independent radio station you've described a market so completely devoid of barriers to entry and oversaturated that no one would make any money. How could enough consumers ever find out about www.thisisamazing.com or www.thisisevenmoreamazing.com to make any of those sites profitable? The answer -- and the true money making position to occupy -- is to be the TV Guide of the Web. Now, TV Guide makes a pretty good living sorting out the confusion we face deciding what to watch on at most 100-plus TV stations. So imagine the value-added potential for AOL as an amalgamator and organizer of gazillions of channels of web content. People get distracted and confused thinking of AOL as an access provider, or looking at its proprietary content and stacking that up against everything available from all other Web sources. That's just AOL's variation on the tried-and-true marketing formula of giving away the razors and selling the blades. It creates a physical tie to the customer that YHOO, XCIT etc. don't have. There are advantages and disadvantages to this strategy, YHOO et. al. don't have the expenses and other baggage of providing access, so I'm not saying AOL has hit on the perfect strategy and is a guaranteed winner. I am saying it is not so easy to dismiss AOL's technology, service, business model, etc. as facing imminent and certain doom, which is what so many bears on this thread have done since Day 1 -- mostly to their own financial peril.

To: Follies who wrote (6627)	12/31/1997 1:54:00 PM
From: Steve Robinett	Respond to of 13594

Dale, I like your radio analogy, except the situation is even worse for AOL than you paint it. What makes a TV station, for example, valuable is the limited amount of spectrum. Only so many stations can be on the air at any given time. Cyberspace obvious has unlimited spectrum. Indeed, though I'm in California, I occasionally listen to a New Orleans Jazz station. Following your "growth of radio" story, eventually everybody's got a radio and everybody knows how to use it. The parade of newbies dwindles. KAOL starts losing more "oldbies" than it is gaining newbies. There are real-life comparisons, of course. The impact of cable on TV networks comes to mind. There is also some evidence in the recent quarter that the five largest ISPs saw the dramatic growth of subscribers fall off. Nevertheless, as I said in a previous post, I expect AOL to crack $100/shr ahead of this quarter's earnings announcement due to Wall Street hype. Best -Steve