AOL Time Warner Goes Old Skool
Signalling the final death knell of AOL's skewed influence over the combined company, AOL Time Warner Chairman Steve Case has resigned. He was prompted to this decision by criticism of the combined company's performance, which has not lived up to expectations.
This move symbolizes better than almost anything else the victory of old media over new, of bricks over clicks. The AOL internet unit has been faltering over the last few years, while the Time Warner entertainment unit has been growing. This does not mean that there is no room for new media. Just that old media will have the greatest influence and will drive most of the decisions for the foreseeable future, with new media supplementing those moves. Many observers had anticipated the opposite.
That expectation, however, displayed a lack of understanding of how business fundamentally works. The key to a successful business is its product, not its delivery mechanism. The internet provides a great delivery mechanism, but it cannot stand alone without content and product. Old media companies specialize in providing content. Manufacturers specialize in providing product. Those who provide the delivery mechanism can exist as stand-alone companies, because there is a value to the delivery mechanism. Nonetheless, their companies still ultimately rely upon the success of the providers of goods.
Even in its heyday, AOL was dependent upon content providers. It provided an easier way to access the internet, a way for the non-technically savvy to get online and find what they wanted. The reason they were online to begin with, however, was for the content, not the delivery mechanism. It is only fitting, therefore, that the content provider drives the combined company forward.