AOL, the former hybrid monstrosity of ISP and loosely aggregated content, is now a premium cable TV property, the Times reports today:
After years of insisting that America Online had to "own" its customers and trying unsuccessfully to persuade cable operators to lease the use of their lines as "dumb pipe" for high-speed Internet access, AOL Time Warner's executives came to a realization this summer: The only way to persuade AT&T and Comcast to distribute the cyberspace service over their cable lines was to package America Online as if it were a premium movie channel.
Seth Shiesel calls this "a wholesale shift in America Online's business model and presumably for its future prospects."
Why does this matter?
For one thing, it's a complete capitulation to Cable Mind. AOL, now a weak sister of TW, is agreeing to let Internet access be packaged like any other cable content, according to the terms of the business model that emerges from this deal.
AOL is agreeing to pay Comcast an astonishing $38 a month per customer. Where will its own revenue come from? Competing with cheaper broadband access provided by Comcast itself, AOL will have to heavily create "content" as a means of retaining customers and bringing in revenue. Cable Mind sez: Think Pay-Per-Vue. Instead of freely accessing things placed on the Net, premium AOL-channel spuds will pay for them and for the privilege of accessing them.
AOL the new HBO?
