AOL/TW is remaking AOL in the image of HBO.
Their thinking goes something like this: (1) AOL’s long-term success depends on moving from the doomed dial-up business to the hip and happening broadband business. (2) AOL’s broadband business depends on relationships with the cable companies who control broadband access to most American homes. (3) AOL must offer cable companies the kind of deal they’re used to from premium channels (like HBO) if they’re to cooperate. (4) AOL must develop premium AOL-only content if it’s going to be able to add value to basic high-speed access.
Every link in this chain of reasoning is weak.
The dial-up business is going to be around a lot longer than anyone thought because the access monopolies control the pipes into our homes. Besides, if AOL feels it needs to move beyond dial-up, it should be exploring wireless infrastructure with IBM, AT&T, and Intel.
InStyle Online is not premium content. AOL’s premium content is its software and its network of users–not its content. AOL has neglected its software and its users for too long. Especially insulting is its tag line for AOL 8.0 (“It’s more than an new version, it’s a whole new vision” — it’s barely a new version).
HBO’s success is not based on TV versions of Time Inc magazines–CNN gets those. It is based on access to movies that are available from lots of other sources, and original content that is available nowhere else.