Starting before AOL began attempting to build a package of value-added content and services to attract some of the booming broadband market, RealNetworks assembled, and continues to assemble, an impressive library of infotainment such as news, sports and music, which it's hawking without a broadband brick hanging around its neck. In fact, it could partner with any broadband supplier.
America Online, after two years and a lot of promises by both the AOL and the TW organizations, still hasn't been able to shake enough content out of Time Warner to make its broadband proposition an appealing draw.
Sports and news plus you know what are the three main draws for any new media. AOL could certainly have used TW's news and sports content to land a lot of broadband subscribers. But, Time Warner has permitted its three CNN news channels to fall behind in viewership to newcomer Fox on cable TV. Its www.cnn.com web news site trails the Microsoft-GE MSNBC online news venture. Its Atlanta sports teams have slid below the radar, particularly the Braves baseball team, which a few years ago was referred to as America's Team and had the national draw of the Dallas Cowboys football team. And, who knows what might have happened to AOL's high-speed subscriptions if the enormously successful annual swimsuit edition of Sports Illustrated were available on the net only to AOL broadband subscribers.
One thing that America Online could use is an attractive music service. RealNetworks is in the process of acquiring what's considered the best online music service in Listen.com's Rhapsody service. Many analysts say that Rhapsody is superior to Apple's more heralded iTunes service because Rhapsody is compatible with Windows and any MP3 player whereas iTunes currently works only with Macs and the Mac version of the iPod portable music player. iTunes isn't even compatible with Apple's own Windows version of the iPod yet.
One long shot would be for AOL Time Warner to acquire RealNetworks, not for its technology, but for the content deals RealNetworks has in place. That would probably cost AOL TW something on the order of $2 billion, not the kind of money AOL TW would come up with quickly. Plus the company is in the mode of selling businesses to pare down debt, not add to it. Still it's the kind of move that might give AOL what it says it needs to compete in broadband.
Another organizational move that would be less costly and might bring a large sum of additional money into AOL TW's coffers down the road would be to put the America Online operation under the Time Warner Cable (TWC) division. In a flash, Time Warner Cable would become the world's largest dial-up company as well as the largest broadband company, that is, unless Comcast continues its torrid broadband growth. Organizationally the move would make sense:
--The subscription nature of TWC and AOL is similar, certainly more similar than AOL and Time magazine.
--The TWC broadband operation merged with AOL would make a potent marketing and support organization.
--AOL would instantly gain unfettered access to a cable company's wires that connect to homes.
--The move could increase the share value of the TWC operation when AOL TW spins off part of it.
There's a major 'but' that could prevent AOL TW making such a move and that's the various lingering government investigations that AOL has brought on itself. Whether those can be sorted out before the market is ready for a TWC IPO is a major question.
In any events, the early returns on AOL's transition from a dial-up company to a broadband leader ain't good. Something, perhaps an acquisition or reorganization, may be needed to accelerate the change.
Online Music Services Comparison Apple's RealNetworks' iTunes Rhapsody Windows compatible no yes Windows iPod compatible no yes Download 99 cents 79 cents Monthly subscription none $9.95 Streaming no yes Subscriber-customized 'radio stations' no yes Pre-programmed 'radio stations' no yes Music information no yes Editorial recommendations no yes -- Rhapsody is generally considered the easiest--'to-use, most consumer friendly Windows--' based subscription service. --All tracks purchased from iTunes can be burned to a CD. Rhapsody restricts CD burning to about two-thirds of its catalogue.
