Kara Swisher

Recent Posts by Kara Swisher

Chances Are for an AOL Spinoff? The Twelfth of Never.

While it did not get a lot of play last week when Time Warner COO Jeffrey Bewkes dangled the idea of a stock offering for its AOL unit, the suggestion made my head hurt all over again thinking about the myriad opportunities that the online unit had missed over the last few years being held prisoner this long inside the media giant.

“We could create such a currency,” said Bewkes at an investment conference, noting that AOL did not have the heft that other players like Yahoo and Google did, because it did not stand alone as a pure-play Web firm. “We certainly contemplated doing that.”

mathis

Besides Bewkes’s stating of the obviously obvious, it is a contemplation that is, as the Johnny Mathis and Deniece Williams song goes, too much, too little, too late. Here’s why:

TOO MUCH: Face it, Time Warner’s Hamlet act over what to do with AOL is of the most peculiar variety, given that it has been going on since the forces of Time Warner seized back the company from the interlopers from AOL more than four years ago, after what was billed as the deal of the new century turned out to be more like a steal.

But instead of forging ahead after they regained control and doubling down on the company’s digital bets right after the first Internet bubble burst, the pain and rage caused by the merger debacle caused the company to maintain a vise grip on AOL that allowed its power and influence to wither rather than flourish as the Web’s prospects brightened again.

Just using MySpace, which burst on the scene in the last two years, as an example: It took user-generated content, social networking and communications tools and parlayed them into one of the biggest sites on the Internet today. Sadly, each one of those qualities that allowed MySpace to soar were once the major elements of AOL and, I dare say, where such online practices were invented.

TOO LITTLE: OK, fine, you maybe want to spin it out? Well, no one I have interviewed as potential investors or even buyers wants to do that if Time Warner holds onto too big a stake in the venture. That desire not to lose control of AOL by Time Warner is problematic for anyone considering making a big bet with the service, which–though declining in relevance and sheer power–is still one of the bigger and most well-known brands on the Web.

If Time Warner is serious about giving AOL the wings it needs to fly, it has to not clip them in the process and not keep it too close to the nest. As Time Inc. CEO Ann Moore noted in an interview at D5 last week, its magazine sites are doing a lot better since they seized control of their own destiny and are making choices based on individual needs and consumer desire.

AOL needs to be able to act as if it is not beholden to anyone, except its customers. One of its greatest recent successes, TMZ.com (which I did a post about here), a gossip site, is in direct competition with Time Inc.’s People.com site. I say, bring a lot more of that on.

TOO LATE: Would that it could. While waiting, competitors have snapped up all the good start-ups that companies like AOL need to keep innovating. Luckily, AOL managed to get the most excellent Advertising.com, but it never got its hands on the really good stuff like Flickr, for example, and time is not on its side here.

And the more interesting small companies AOL has bought, like Userplane, maker of really terrific communication apps for Web sites, seem to languish within the company (though this is a problem not particular to AOL).

While I am sure to irk Time Warner with a quote from the ultimate Ghost of Disastrous Mergers Past, former AOL Time Warner (when it was called that) Chairman Steve Case said it best when he was interviewed from the stage at D5 last week, too.

I asked him about AOL’s prospects and his message was on point, as painful as it might be for Time Warner execs to hear from such a source:

“I am disappointed that 10 years ago we were kind of in the catbird seat and, for a variety of reasons, [AOL]‘s lost some of that momentum,” he said. “It’s still a major force … but it is certainly not the epicenter of the industry that it was once before.”

It surely is not, and no amount of Wall Street daydreaming can fix that.


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Today, Anon lacks the talent and semi-cohesion it once boasted across the net, and its most recent online crusade is an embarrassing reminder. This is less a war than the hacker equivalent of egging someone’s house and then smoking weed behind a Denny’s.

— Gizmodo editor Sam Biddle, in an article entitled “Anonymous Is Losing Its War Against Israel”