AOL's deal with Gateway , which will create "Internet terminals" tuned to AOL, was widely trumpeted, but there's no guarantee of success there. Red Herring is convinced the company was badly outshined at the last Internet World , where Steve Case delivered a keynote address wearing an old Netscape jacket, adding its latest version of Netscape is a non-starter. The 5.0 version of AOL is also drawing lawyers - rival ISPs consider it a gun pointed at their heads. Oh, and will you please get it through your head that AOL is not an Internet Service Provider? Its access services all fall under a contract with MCI - it is at best a re-seller. 

There are also big problems on the other side of this proposed merger. These problems are more subtle. As a journalist I'm a news junkie. I almost never go to CNN.Com anymore - I'm stuck on MSNBC because CNN.Com never goes beyond what's on-air. CNNSi is a very poor #3 among online sports sites (and I'm being generous there), AllPolitics.Com has practically disappeared from the radar. The only online imagination left within the company is over at Cartoon Network  - profits so far are shielding the people there from ruinous cost cutting. (Oh, and does anyone still think the WB is a real network?) Time Warner's big Web effort of 1999, called Entertaindom, is also on the verge of collapse, according to the New York Post . A brain drain gets the blame here, too. 

The only card AOL-Time Warner has left to play is interactive TV via cable. Set-top boxes should ship in volume in the fall offering "free" interactive services with cable networks being charged for carriage. The trouble is that even if this business model works it's incredibly simple for satellite-based rivals  to meet the challenge - a modem-based return path is no problem given the limited amount of input consumers will be allowed. 

Oh, and this may be the kiss of death . Sheik Ibn Tallil now has a $1 billion stake in the company. (That's less than 1% of the common.) The Sheik's other big bets right now are on Kodak, Xerox and Compaq. 

Still think AOL is a buy? AOL is milking its marketing partners and programming assets dry, mainly to prop up the stock price. The company is milking profit everywhere it can and still sports a P/E of 172. (Merger partner Time Inc.'s P/E is now almost 70.) Is the price fair? Is AOL Time Warner really going to grow that quickly, on the top or bottom line? No, I'm still neither buying nor shorting this stock. I'm just glad to be far away from it. 

It's an honor to be White Hat's "Internet Citizen of the Month" but it's a bigger honor to be read each week, by as many people as possible. So pass this along to friends and urge them to join our list. And don't forget our new e-mail address .

I write daily for ClickZ, and weekly at Andover.News. I write monthly for  NetMarketing, Boardwatch, and  Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.

I'm now making myself available for consulting to a limited number of clients, with an eye toward your long-term success. And remember that it's journalism that keeps the Clues coming. Give me a shout at 404-373-7634.

Takes on the News

Making Profit From Content

A few months ago I suggested a new business model for publishing content). The idea is that writers will act as full partners with publishers instead of just hired hands.

A lot of interest has been generated from that. Both CMGI and Doubleclick are working to give e-mail advertising the standards, rigor and accountability found in Web advertising.

John Audette, who previously founded the Multimedia Marketing Group, is now handling representation on all his popular e-mail digests  and says pricing is all over the map. An individual publisher may only get a $10 CP/M while a professional ad person may draw five times that amount.

All this means a cottage industry is becoming a real industry. The evolution of this space will be incredibly rapid. Talent needs to understand where the bottleneck is - at their keyboards - and refuse to sign deals that look good on the surface but don't really provide them an opportunity to grow.

Jerry Explains It All

A-Clue.Com reader Jerry Pournelle  risked a deadline with Larry Niven (hope he made it - I'd hate to have that hanging over me) to get the background on Laurence Godfrey, whom I excoriated last week.

To make a long story short, Demon Internet of the UK says they settled a libel judgement in Godfrey's favor because their primary defense was struck down . They hope that will be reversed in new laws now going through. But they're not hopeful - present drafts take Godfrey's side.

Demon's settlement decision hurts many people in many ways. First, it is being forced to cancel the access subscriptions of Godfrey's critics. Second, those critics are back online urging others to quit Demon, calling it a censor. Third, the company's decision is impacting all forms of Internet communication in the UK, as ISPs are taking down entire Web sites on single complaints.

Here's another irony. The whole battle seems to have emerged from flame wars Godfrey began over a decade ago regarding (of all things) the Thai royal family . (Godfrey doesn't like them.) Godfrey gave as good as he got in the flame wars following his posts, then used the strict libel laws of the UK to go after his critics. He claims his critics crossed a bright line in the legal sand. But expecting such a line to be acknowledged during a shouting match strikes me as wrong-headed. It's only when the shouting turns to physical violence that the cops should be called.

There remain two significant dangers in this case. First, the Demon decision effectively renders Usenet illegal, at least in the UK. The problem is a technical one. You can't just take a message or file down from Usenet, as presently constituted, based on one nation's laws. It returns again-and-again as part of the general feed from wherever the message remains legal. (In this case, the speech against Godfrey was protected under U.S. law.) More important, it's now becoming evident that many judges want to make links illegal as well. If a statement or file is "illegal" under local law then so is a link to it, they reason. (For more on that subject read the next story.)

Laws are local. The Internet is global. Powerful corporations and judges are quite willing to sacrifice the latter for the former. This conflict is going to get worse. If you believe in the global network you will have to take a stand.

The Law vs. Technology (Gnutella and Links)

Gnutella has a new home , and even an official spokesman  who is apparently at UC Berkeley. (Too bad he's not from the other Berklee . The number of links or "hosts" for the program has doubled in the last week, and now numbers over 2,000, with over 1.5 TB (that's terrabytes, kids) of music available.

Meanwhile the battle against Gnutella (and other forms of FTP) goes on, becoming increasingly outrageous. Cox Cable has labeled Gnutella (and Napster, along with anything that might have similar features) as "server" software, threatening that subscribers will be thrown off for using them . Meanwhile, in the related case of DeCSS, the movie industry has gone to court trying to criminalize links to such programs .

While Salon thinks the Tickets.Com case , whose preliminary decision favors links, will control what happens next, the more likely precedent is the Utah Lighthouse case . The "principle" of U.S. District Court Judge Tena Campbell in that case is that if content is illegal here, so is a link to that content even if it's located in China or Australia. By illegal content we're not just talking about sites advocating terrorism or bomb making - we're also talking about local standards of libel and copyright infringement. If the principle is accepted then China can indeed censor the Net - we'll have given them the weapon (and excuse) with which to do it. We should all think long and hard before doing that.
 

Clued-in, Clueless

Clued-in is Harbinger Corp., for getting $2.1 billion in stock for the sale of the company to Peregrine Systems . I was a contractor to this company when they were a start-up, in 1984. We built a lemon - they made a ton of lemonade from it.

Clueless is the Coca-Cola Co., for handing $100 million to AOL without any idea how they will get that investment back . If you don't have a strategy, it seems you write AOL a check. That will keep the shareholders off your back for a quarter or two. But what do you do then?

A-Clue.Com is a free weekly email publication registered with the U.S. Copyright Office as number TXu 888-819. Subscribers can receive either a .txt file or .htm file. The .htm version features links that become active from inside a browser. To take your name off the list, simply write REMOVE as the subject, or content, of a message replying to any issue. To request your free copy, write us at Dana@a-clue.com  or +A_Clue . To subscribe you can also write to a-clue@list.audettemedia.com  with the word "subscribe" in the subject. (Address your request for the .txt version to a-clue_textonly@list.audettemedia.com . You can unsubscribe with a note to the same addresses and the word "unsubscribe" in the subject.. We're on the Web at http://www.a-clue.com and http://www.ppn.org/clue.