Now What: Are We Going to Let AOL Turn the Net into TV 2.0...
The AOL/Time Warner deal is the “News that Won't Go Away”. Almost overnight, Microsoft became a non-issue. Some commentators even began to see Bill Gates as a sympathetic figure, like Caesar in his last days. Suddenly, we had new Caesars to worry about: AOL's Steve Case and Bob Pittman. The feds could shatter Microsoft into a dozen Baby Bills (or Baby Borgs), and everyone would still be wondering if AOL could actually pipe-weld the Net to the rusty back end of TV's history.
Break up Microsoft? Like, so what? All the pieces will still be caught in the Net, and more than half the people who log on have @aol.com addresses. Which is creepier: a crashy OS, or a giant ISP that dumbs down the Net?
Well, are we going to do something about that? Can we? Slashdot's Jon Katz thinks the situation could hardly get worse. “There is no way for innovators or entrepreneurs to challenge it,” Katz writes about the AOL/Time Warner deal. “No one can compete with the software, the cheap access, the wide range of content. This company is bigger than many countries.” How big, exactly? Let's take a look at what Time Warner brings to the table:
Publishing: Time Inc. has 33 magazines, including Time, Life, People, Southern Living, In Style, Sports Illustrated, Parenting, Money, Health, Sunset and Fortune. Time alone accounted for more than 1/5 of all revenue generated by consumer magazines in 1998. Little Brown, Sunset Books and other Time imprints account for dozens of best-selling books every year.
Cable: CNN, TBS and HBO each have multiple channels, enormous production operations and massive libraries of programs. Then there is Time Warner Cable, which serves 21.3 million homes.
Motion pictures: Warner Brothers has 5,700 feature films, 32,000 television shows and 13,500 animated titles. New Line Cinema is one of the top studios as well.
Music: Warner Music Group accounted for about 1/4 of 1998's top-selling albums.
Meanwhile, AOL sells the Internet on training wheels to nearly 55% of the people who log on from the U.S. alone, and they make money doing it—more than $5 billion US a year. That's on top of Time Warner's $26+ billion US.
Against that, we've got what? A bunch of hackers? Well, yeah—and that's why we'll win.
AOL didn't invent the Net. Hackers did. They didn't invent it as yet another way to pump out content and suck back credit card purchases. They invented it so no one could own it, anyone could use it, and nothing could threaten it.
“All the significant trends start with technologists,” Marc Andreessen told us back in 1998, when we interviewed him about the open sourcing of Netscape's Mozilla code (“Betting on Darwin”, Linux Journal, August 1998). In the same interview, he added, “Technologists are driving progress, and it's easier to drive with Linux than with anything else.”
So let's savor this irony: while Netscape now belongs to AOL, and Mozilla (still funded by what's left of Netscape) lags behind Microsoft's Internet Explorer in the consumer market, Intel is quietly building its new home Internet appliances—TV set-top boxes and thin network clients—with Mozilla code running on Linux. If these catch on, they'll bypass AOL and every other mass-market megalith that continues to regard the Net as yet another one-way shipping system between a few suppliers and a zillion consumers. These appliances will prove yet again that the connections which matter most are the ones between human beings, and that includes the human beings who do e-business with each other.
From the day the first packet moved across a TCP/IP network, economic power has been shifting steadily from supply to demand. Wars and marriages between giant suppliers still make great stories, but those stories have little or nothing to do with what's really going on. Hackers—the programmers, inventors, developers and architects who are building this new world—have been trying to make sure the stuff that matters most is what works for everyone because it belongs to no one. They do it by turning markets into what they were thousands of years before industry turned “market” into a verb: places where people gather, talk about what matters to them and do business together.
Demand will win because it is equipped to win. Mouse-to-mouse, link-to-link, page-to-page, e-mail-to-e-mail, voice-to-voice, customers are going to come out on top, along with the companies who make it easy to do business with them. Those companies will know that the best way to relate to customers is as human beings, not as abstract populations to attack, control, capture and herd like dumb beasts.
The real war is between markets and marketing. For decades, marketing has been the military wing of business, working “strategically” to “attack”, “capture” and “deliver impact” to populations it calls “eyeballs”, “seats”, “end users”, “demographics” and “consumers”. (Jerry Michalski calls them “gullets that live only to gulp products and crap cash.”) The problem with marketing is that there is no demand—no market—for its insults. That's why markets will win.
Is the AOL/Time Warner deal a bet on markets or on marketing? Credit where due: AOL has done a terrific job of equipping demand to deliver clues (as well as money) to supply. But the consumers AOL wants to “aggregate” and “deliver content” to will only become better equipped to screen out unwanted content, and more significantly, to converse with its sources.
What happens when the mute buttons on remote controls send “we hate this” messages directly back to the advertisers who pay for the media? What happens when consumers turn into real customers with real names who express no desire for messages mostly intended for someone else? The business model for mass media advertising falls like a bad tent, that's what.
There's an old advertising adage that says, “I know half my money is wasted. I just don't know which half.” In the advertising tradition, even that's a lie. Direct mail, one of the most efficient forms of advertising, counts a 3% response rate as a success. The dirty truth about most advertising is that it has always been woefully inefficient, especially in mass markets. However, much of it has been successful, which is why it's still around.
That success, of course, came in the absence of alternatives. Worse, it came in the absence of demand from consumers. But consumers were never advertising's real market; they paid nothing for advertising's goods, and exerted no direct influence over it. As a result, countless marketers and “creatives” in advertising agencies (including the hip new “interactive” agencies) still labor over screens and keyboards to come up with messages to deliver to people who have little or no interest in it.
The notable exceptions, of course, are classifieds, yellow pages and trade publications like Linux Journal, which are sources of both useful editorial content and relevant information paid for by companies of interest to readers.
So here's a clue for mass marketers who think AOL's customers are going to sit still for the kind of heavy abuse that television has been delivering to its addicts for decades: there is no demand for messages. There never was. When that clue finally arrives, it will be like a fist through the screen.
Provided, of course, that the hackers keep doing their good work.
The fight is far from over. The good guys will win the OS war and maybe even the browser war, but there are other enabling technologies that still belong to suppliers with controlling intentions. Streaming media is one. Instant messaging is another. Both could be far more useful than the bait-for-advertising vehicles we see today. Look at the differences between AOL's Instant Messenger and what's starting to come from the Jabber people. Better yet, join the movement. Let's start to show these guys what's really valuable.
Doc Searls is Senior Editor of Linux Journal
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