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AOL/Time Warner


January 24, 2000: This message was distributed by Papyrus News, a free e-mail distribution list on the global impact of information technology on language, literacy, and education. Feel free to forward this message to others, preferably with this introduction. For information on Papyrus News, including how to (un)subscribe or access archives, see <>.


This is from Phil Agre's RRE News Service. The top part is Phil's introductory comments, followed by a column by Gary Chapman on the topic...mark


[A couple days after the AOL/TW merger, I started seeing headines and comments to the effect of "Big Victory for the Internet" -- that was pretty much the International Herald Tribune's headline, though I did not write down the exact words. I thought to myself, where do they get this stuff? AOL is not the Internet. AOL is a competitor to the Internet. AOL is homogenized, sanitized, Big Brotherized, and proprietary, and the Internet is none of those things. Well, then, surely the merger is a victory for new media? No -- AOL is run by old media people with old media mindsets and methods. Like the old media, it is an engine for assembling audiences for mass marketing. True, the old media people couldn't replicate their model online within the existing old media organizations; they had to go off into a separate company. Now they're merging back in with the mother ship. Big deal. Weirdness does abound, like the $150,000,000,000 of goodwill that AOL Time Warner will now carry on its books (not counting the considerable goodwill from Time Warner's purchase of Turner), which means that the company's bottom line will be meaningless until about the 22nd century. Even though AOL has supposedly acquired Time Warner, the resulting company is to be run from New York by Gerry Levin, leaving Steve Case with a crummy office building near Dulles Airport and a job that nobody can explain. And think about the stock price. AOL shareholders should be happy. They had been holding shares that were trading at something like six times the p/e ratio of Time Warner's, the merger went down at something like four times, and the shareholders are ending up with much more company for their money than they had before. But they are not happy, and they not happy precisely because they were holding AOL stock at wildly inflated prices for purposes of digital speculation. This only works if enough other suckers out there perceive AOL as the essence of the digital world. Now they own stock in a company that is 80% Time Warner, and so they can no longer count on that perception. I dunno -- it doesn't look good. But I've counted AOL out before and was wrong. I was wrong because I underestimated network effects -- AOL's service was terrible, but the network effects (the benefits of being able to commune with so many other AOL subscribers) and the switching costs (the investment in one's AOL life that would be lost in moving to a plain vanilla Internet provider) were more significant. Time Warner can benefit from the deal if they can somehow move from a zero-sum mass competition model, whose economics are just terrible because of economies of scale, to a network competition model, whose economics are just great. That's not going to happen for ten years at least, though, and the whole thing has to work between now and then.]


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Date: Mon, 17 Jan 2000 09:21:43 -0600

From: Gary Chapman <>


Below is my Los Angeles Times column for today, Monday, January 17, 2000. As always, please feel free to pass this on but please retain the copyright notice.

Even before the new year began, I had planned to write a future column on what I feel is likely to be the number one public interest struggle in the next few years, at least in the domain of digital technologies: a trend towards proprietary appropriation of the Internet. The news of the America Online-Time Warner merger seemed to put big capital letters on this issue. Unfortunately, as some friends have written me to point out, the mainstream news media seem completely dumbstruck by this announced merger, like deer caught in headlights. It's amazing how few complaints I've seen (although Ellen Ullman's piece in The Washington Post on Sunday was right on the money -- .html. And Norman Solomon did a great piece too and was also effective on the PBS News Hour).

We hope everyone is doing well. It's uncommonly warm here, which is wonderful to live in, in January, but it's getting a little scary. Look for a near-future column on Austin author Bruce Sterling and his "Viridian Notes" project about global warming and the computer industry. . . .

Best to everyone.

-- Gary


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Monday, January 17, 2000

Digital Nation

AOL-Time Warner Merger Could Steer Internet Down Wrong Road

By Gary Chapman

Copyright 2000, The Los Angeles Times, All Rights Reserved

The blockbuster news of a pending merger between America Online and Time Warner was, in retrospect, not all that surprising. But the merger would not only produce a corporate powerhouse of spectacular size and scope, it almost certainly would be a turning point for the character of the Internet -- and not for the better.

There are two competing visions for the Internet now, what might be called the "public interest" vision and the "info-tainment" vision. The AOL-Time Warner deal would mark a huge leap for the latter and possibly a fatal blow to the former.

America Online is not really the Internet, although most of its 22 million subscribers can't tell the difference and probably wouldn't care anyway.

AOL is the online version of "The Truman Show," the Jim Carrey movie about a character whose entire life is, unknown to him, a 24-hour television show staged on an immense fake set. Like the town in the movie, AOL is managed, cultivated, screened and constantly under surveillance. It's also saturated with ads, product placements and what last week's news release from AOL called, with Orwellian overtones, "branded content," or info-tainment provided by familiar corporate sources.

AOL is essentially a virtual shopping mall with e-mail and Web access thrown in. Like a mall, AOL controls who gets to display their goods, who can shop there and how, where the advertising goes and what it looks like, etc. The AOL system uses proprietary technologies, controls the dial-up connections of its subscribers and amasses huge databases of records on what users do while they're inside the controlled AOL environment

The Internet, on the other hand, is completely uncontrolled, or at least radically decentralized. It uses nonproprietary and open standards for both connectivity and networking, and the experience of using the Internet is completely shaped by the individual user. The Internet is a public space, more like a big, bustling and diverse city than a designed, commercialized and strictly managed private shopping mall. No one owns the Internet, no one controls it, and this is its dramatic and revolutionary promise -- it's a communications medium unlike any other.

The public interest vision of the Internet starts with the premise that the Internet should not be controlled or dominated by anyone or any institution. That leads to the corollary premise that the Internet should be built on nonproprietary standards that can be used by any software developer or Internet user. That, in turn, means that users should be able to choose how they get on the Internet, what computers and software they will use, and what their Internet experience will look and feel like. Internet servers, the computers that "serve up" Web pages, e-mail and other data, should not favor certain users over others nor discriminate against specific users.

In an ideal world, the entire planet would be wired with a vast web of interconnected telecommunications networks that would be regarded the same way we now regard streets and highways -- as free and open, nondiscriminatory, policed only for safety, and a basic component of freedom and civil rights. The Internet should be, as early Internet pioneer Bob Taylor said in this column last year, "a right and not a privilege."

Within such a model, there would be intense competition in services, the way there is between car companies or between UPS and Federal Express. But the basic purpose of the Internet, communication, would be viewed as an essential right, one that should be provided to every citizen as part of a civilized life.

But the info-tainment vision of the Internet is quite different. The moguls of AOL, Time Warner, AT&T, Microsoft and other companies view the Internet as an advanced form of cable TV -- as a consumer service used primarily to sell products and secondarily to entertain or inform. It's not a right, it's just a business like any other. And to dominate this business you need to own it all -- the wires, the technology, the content, the creative talent, everything.

AOL and Time Warner are not the only evangelists of this proprietary, info-tainment model of the information age. Microsoft has done many things that make some Web sites work better for Windows users. Two weeks ago, Apple Computer announced some new Internet services that will only work for Macintosh users who have the latest version of the company's software. AT&T has vigorously pursued a strategy of locking its cable modem customers into its preferred Internet service provider, its partner Excite@Home.

AOL-Time Warner, and the other big vertical mergers that are expected to follow, would not control the Internet -- that's impossible and also unnecessary for profitability

But they will likely come to dominate the public's impression of what online services look like, what they're for and how they're financed and developed. Instead of thinking of the Internet as a universal, public infrastructure used for democratic dialogue, diversity and building society, we'll tend to think of it as a consumer service like cable TV, complete with updated, digital analogues of MTV, home shopping, Jerry Springer, infomercials, product tie-ins, cooking channels and all the rest. Citizenship will once again be overwhelmed and eclipsed by consumerism.

In a decade, what will the Internet be for young people? A display of rich human diversity, free expression and admirable cultural achievement, or another boring and all-too-familiar mall? We veered off in the wrong direction last week.

Gary Chapman is director of the 21st Century Project at the University of Texas at Austin. He can be reached at


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Last updated: January 31, 2000