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

To: steve lipson who wrote (8805)	3/13/1998 11:55:00 AM
From: rhet0ric	Read Replies (3) \| Respond to of 13594

The answer -- and the true money making position to occupy -- is to be the TV Guide of the Web. Really? My guess is that TV Guide makes less profit in a year than the cost of a single Superbowl ad. To be fair, clearly offering TV Guide-like material on the Web is different from TV Guide itself, because on the Web the Guide is in the same medium as the content. So they get the same eyeballs, albeit for a shorter time, and can charge similar ad rates. Now, let's jump ahead five years. (Remember that for AOL stock to hit its revenue numbers, it needs to stay on target right through till the year 2005). In five years time, Joanne Average living in Middle America, i.e. AOL's prime user base, will be surfing the Web on a cable modem or ADSL and getting the content on a digital TV. The major form of content will be streaming video. The major form of advertising will be interstitials, much like current TV ads. She sits on the couch, clicks to her favorite listing site, clicks on the link for a show, and starts watching. At the end of the show, she goes to a chat room and gossips with her friends about the stars and the affairs they're having, and maybe emails the show's producers a fan letter or two. I see five sources of revenue in the above picture: 1) connectivity provider 2) access provider (sometimes the same as 1) 3) ads on the listing site 4) ads on the show 5) miscellaneous sites, such as ad destinations, which sell stuff So the question is: where does AOL make revenue in the above picture? What you're telling me is that AOL's real potential is in 3). Right? What I'm saying is that AOL won't even exist by then, because a) it can't scale its own network to provide broadband services, b) its user base will crumble when AOL's technological lag behind the Internet becomes obvious, and c) without a user base it has no leverage to do anything. The only hope I see for AOL is to convert to TCP/IP. Again, even if they do that successfully, which I doubt, they will then be one among many fiercely competitive ISPs and listing sites, all fighting for market share in one of the least profitable markets on the Web. rhet0ric