Remember AOL Time Warner?

Junddep Junnarkar and Jim Hu, AOL to buy Time Warner in historic merger - CNET News, 2000

In a stunning announcement, America Online said today that it will acquire Time Warner to create the world’s largest media company.

The new company will be called AOL Time Warner and will combine AOL’s online services with Time Warner’s vast media and cable assets. In a world where online services, media and entertainment are rapidly converging, the new company could have almost unparalleled resources.

“It is probably the most significant development in the Internet business world to date,” said Phil Leigh, an analyst at Raymond James. “If it hasn’t been evident to most of us yet, it should be obvious to us now that the Internet is about audio and video and not just merely text and graphics.”

News of the merger, the largest in corporate history, sent Time Warner’s stock up at “dot-com” speed, with shares rising $25.31, or 39 percent, to $90.06. The stock has traded as high as $78.63 and as low as $57.19 during the past 52 weeks.

AOL, on the other hand, rose early but ended the day lower, falling $1.88, or more than 2 percent, to $71.88. The stock has traded as high as $95.81 and as low as $32.50 during the past 52 weeks.

The purchase, an all-stock deal, amounted to more than $160 billion based on today’s trading prices. According to both companies, the new firm will have an estimated combined value of $350 billion.

[…]

Today’s deal also gives AOL access to Time Warner’s media properties such as CNN, Warner Bros., Sports Illustrated and many others.

The new company will have more than 100 million paying subscribers, including AOL’s dial-up customers and Time Warner’s cable and magazine subscribers, AOL chief financial officer J. Michael Kelly said at the news conference.

Steve Case, the chairman and chief executive of AOL, will become chairman of the board of the new company. Time Warner’s Levin will become AOL Time Warner’s CEO.

[…]

Analysts said that the Net landscape is likely to change rapidly over the course of the year as large capitalized Internet firms look to acquire media companies. Web portal Yahoo has a market cap of $107 billion—far greater than some leading media companies, including Disney, which has a cap of $64.19 billion.

“About 18 months ago, the feeling was that some of the media companies would buy Internet companies, but what happened is that the valuations got so reversed that it is really the opposite that is likely,” said Raymond James’ Leigh. “With 55 percent of the new company’s stock being controlled by AOL shareholders, I think AOL is in the driver’s seat. Today’s deal is psychologically a big step, and now it is likely that we will see others come along.”

For all those folks who forget how much of a world-beater AOL Time Warner seemed, and how well positioned it was for the broadband era just over the horizon.

The same is being said now about Facebook.

To me Facebook already feels over. I really don’t feel like I’m missing anything. Look at it this way. There’s lots of stuff going on right now that I’m not part of. That’s the way it goes. Me and Facebook are over. It’s going to stay that way. And if I’m on a ship that’s sinking, well I’ve had a good run, and I can afford to go down with the ship, along with people who share my values. It’s a cause, I’ve discovered, that’s worth giving something up for. #

- Dave Winer,  Scoble: I’ll go down with the ship via Scripting News

Facebook is the new AOL, despite the market cap. But it’s headed for a hard landing for other reasons than Winer is pushing. Facebook will fail because of the imminent rise of social operating systems — future versions of iOS, Mac OS X, and Android — which will break the Facebook monolith to bits.

Who Benefits?

Bryce Roberts, For Whom Is This Service Built?

As I absorbed the new messaging around Facebook as the place to tell the stories of our lives I couldn’t help but be reminded of a post Fred wrote when Google launched their Facebook killer. In it, Fred surfaced a question he had when looking at why Google was requiring use of “real names” as a condition of Google+:

It begs the question of whom Google built this service for? You or them. And the answer to why you need to use your real name in the service is because they need you to. Well at least we got that out there and can deal with it.

I had the same feeling looking at the new Facebook- for whom were these new features built?

Does all of this new structure make my experience more engaging? Or does the added structure make my experience easier to index? Does the connection to my past posts inspire me to add more chapters of my life’s story? Or does it remind me of how much of my personal information Facebook owns to make me rethink leaving for other service? Is Facebook really interested in helping me tell the story of my own life? Or are they more interested in having me help them tell the story of my life to their app developers, partners and advertisers?

We are onto Facebook, but the average person doesn’t care.

I am a philosopher: I am interested in broad answers to general questions. Most people are living in a more constrained way, looking for simple answers to narrow questions. Facebook works in that context.

Facebook will be blindsided by tectonic technology shifts, not an exposé of how and why the Open Graph is designed to ransack our lives, stealing every quarter from the back of the sofa and milking every episode of our online lives for royalties.

I just hope that social operating systems come soon, and Facebook is caught wrong-footed.

Vint Cerf Agrees With Me

Another brilliant mind that thinks Facebook is the new AOL:

Dan Sabbagh, Google evangelist warns Facebook could be the next AOL or IBM

Speaking at an event organised by the Guardian, [Vint]  Cerf said that Facebook was at risk of following the path of companies such as AOL, whose original business model became irrelevant, or being rendered obsolete like proprietary networking systems once invented by the likes of IBM.

Amongst US technologists, comparing Facebook to the old AOL or outdated IBM technology is a way of trying to argue by analogy that the wildly successful social network has no long term future - and comes in the week when Google is desperately trying to break Facebook’s dominance with the launch of its own Google+.

Cerf first noted that AOL began in the 1980s as “a walled garden model” that “persisted for quite a while until the users of AOL forced it to be made accessible to the internet” - and that IBM persisted with “proprietary networking protocols” and was only forced to adopt internet technology for its computers because “users didn’t want to be locked in” to one brand of hardware.

He went onto to say that “Facebook was becoming that way” as “a closed walled garden” and that its problem was that the “ability to connect to people inside the walled garden” would be overwhelmed by “a desire to interconnect” to other social networks or websites.

AOL was forced into a painful business transition that has gradually seen the company migrate from providing its own version of the internet into an online publisher, while the IBM technology he described no longer exists. Facebook, however, remains on a rapid growth path with its revenues doubling to $1.6bn in the first half of this year.

Facebook’s painful business transition will come with the rise of social operating systems, starting in 2012.

The Yahoo comparison makes sense the way Elgan constructs it, but I think it’s more apt to say that Facebook’s goal has been to be the new AOL. “Walled garden” is a phrase that gets batted about a lot with regard to the Big Fruit, but Apple rarely builds services that you’re forced to use in lieu of interoperable standards. Facebook has little interest in building anything but.

Coyote Tracks: Why Facebook is the New Yahoo  

I don’t agree with Elgan, it seems like a very stretched and somewhat fallacious comparison right now but I love this gem from Watts Martin. It feels like Facebook is trying so hard to look ‘open’ with all their apps, API’s and login systems but I almost always end up at Facebook rather than departing it.

(via christopherdwhite)

(via christopherdwhite)

Facebook Is The New Yahoo? No, Facebook Is The New AOL.

Mike Elgan makes a case for Facebook’s future: becoming obsolete, sidelined, and non-innovative. He looks at the recent efforts of Facebook to copy features of Twitter and Google+ and suggests that Facebook is the new Yahoo:

Mike Elgan,  Why Facebook is the New Yahoo

I don’t think Facebook will die. In fact, I think the company will continue to survive indefinitely. I think Facebook will become the new Yahoo. Here’s what I mean.

It’s hard to remember now, but there was a time when Yahoo was the hottest company in Silicon Valley. Everybody knew, or thought they knew, that information portals would yield all the power and influence online.

As millions and billions of people got Internet connections, they would all need directories to help them find resources online, as well as search. Yahoo leveraged its traffic to drive usage of e-mail and a gazillion other services.

But the portal era faded away, replaced by the search era. Google rose to dominance to become the hottest Internet company in Silicon Valley.

But you know what? Yahoo is still a going concern. They still have a lot of traffic and bring in a lot of revenue.

But as a driving force, as an influential driver of news and information, Yahoo is out in the woods. Once the darling of Silicon Valley, Yahoo has become this… thing — a service nobody can describe, a kind of machine that acquires companies, then closes them down.

Yahoo has no vision. It has no purpose. It’s dispensable. Yahoo continues like a zombie, animated by the life it once had.

And that’s what Facebook is becoming. Yes, they’ll continue to have users. And yes, they’ll continue to make money. But Facebook is looking increasingly like a one-trick pony that doesn’t have the vision to reinvent itself for the post-Facebook era.

Facebook is the new Yahoo.

I’ve made the case for several years, so I buy it, although I usually refer to Facebook’s fall as coming from the rise of social operating systems, which haven’t happened yet, and compare that coming fall to that of AOL:

Stowe Boyd, Facebook is the new AOL

Facebook is managing the chaos of social interaction on the web, normalizing it and standardizing it for us, just as AOL made the web neat and tidy. That seemed a winning proposition in the late ’90s, which led to astonishing valuations for AOL. They acquired Time-Warner using that wealth, and in 2002 Time-Warner wrote off $600M as AOL started to fall. Now, AOL has been spun out, and has no central role in our experience of the web. 10 years is a long time. Time-Warner is now the second largest entertainment company in the world.

The moral of this story is that you can make a business out of simplifying what is chaotic and confusing, but only at the outset. As people become habituated to what at first was scary and headache-inducing, they will move away from controlled experience to more personally managed negotiation of the world.

‘But, all my friends are on Facebook!’ That was true in 1999 about AOL, too. All my friends had AIM accounts, so it was the best place for instant messaging. Until Yahoo and MSN offered audio and then video, and blogging broke loose. And then everything changed with broadband.

And what is going to be the equivalent of broadband for sociality online? What is going to come along to destabilize the Facebook stranglehold on our ‘social graphs’? Simple: sociality has turned out to be the most interesting thing to emerge from the past decade of the web. It’s not all the servers, the cloud computing, the data, or even the explosion of materials online: its the social dimension, and the tools we have built to explore that.

At the same time, we are witnessing an almost unprecedented era of invention around new devices, form factors, and operational premises for computing and communications. Smartphones, tablets, app stores, and the emergence of activities like geolocation, massively parallel gaming, social TV, and so on. These are leading to a deep rethinking of the operating environments we rely on, in our PCs, mobile and gaming devices, and formerly internet-deaf devices like TVs and appliances.

The next generation of operating environments will be social at their core. Our current operating environments are based on standard understanding of things that programmers care about, like files, directories, and access controls. The average person could care less.

We will see social operating systems where following people’s activities, or creating likes, or publishing profiles will all be built-in. These will not be features of apps, or managed as metadata in walled silos. The primitives that structure our social connections will be built into the fabric of the next generation of operating environments, just like file systems, URLs, and HTTP are well-integrated into today’s.

[I found out after I wrote that piece that Jason Kottke used the same metaphor in 2007.]

related

Facebook Places Is Nowhere

Gizmodo reports Facebook Just Killed Places, the competitor to Foursquare that was supposed to destroy the upstart start up. It’s still on the Facebook site, but the company has announced plans to disable the functionality in its mobil clients.

Remember all the folks saying that Foursquare was going to be crushed, that Facebook was the 800lb gorilla in any niche it wanted to move into? I suggested at the time that Places might be the point of clear overextension for Facebook.

Just remember: Facebook is the new AOL, and it will stub its toe a million times on a million niches.

The Decline and Fall of Facebook - Cringely on technology

Cringely heard a talk by Roger McNamee in which McNamee cites the now-conventional tech viewpoint: Facebook has won.

Again, I’m not saying he’s wrong, but what I took away from this speech was first an image of Microsoft as the Roman Colosseum being mined for marble after the barbarian invasion, and second a sense that while Facebook is certainly a huge social, cultural, and business phenomenon, I just don’t see it being around for very long.

Facebook is a huge success. You can’t argue with 750 million users and growing. And I don’t see Google+ making a big dent in that. What I see instead is more properly the fading of the entire social media category, the victim of an ever-shortening event horizon.

Each era of computing seems to run for about a decade of total dominance by a given platform. Mainframes (1960-1970), minicomputers (1970-1980), character-based PCs (1980-1990), graphical PCs (1990-2000), notebooks (2000-2010), smart phones and tablets (2010-2020?). We could look at this in different ways like how these devices are connected but I don’t think it would make a huge difference.

Now look at the dominant players in each succession – IBM (1960-1985), DEC (1965-1980), Microsoft (1987-2003), Google (2000-2010), Facebook (2007-?). That’s 25 years, 15 years, 15 years, 10 years, and how long will Facebook reign supreme? Not 15 years and I don’t think even 10. I give Facebook seven years or until 2014 to peak.

Does this feel wrong to you?  Listen to your gut and I think you’ll agree with me even if we don’t exactly know why.

Roger may not care since he will have already made his Facebook fortune and then some. But I think this foreshortening is important because it makes Facebook the winner, yes, but the winner of what? Super-IPO of the decade? Yes. Dow-30 company of 2025? No.

My interest is in what follows Facebook, which I think must be its disintermediation by all of us reclaiming our personal data, possibly through our embracing the very HTML5 that Roger loves so much. The trend is clear from “the computer is the computer” through “the network is the computer” to what’s next, which I believe is “the data is the computer.”

You’ll notice I didn’t mention Apple. Black swan.

Facebook is the new AOL.

Cringley doesn’t get into my argument about the rise of social operating systems, but he points to Apple, where we just might see it first.

Future Of Facebook Project

Some snippets from my interview at the Future of Facebook project are online. Go take a look. One of the memes: ‘Facebook is the new AOL.’

Facebook Sees Big Traffic Drops in US and Canada as It Nears 700 Million Users Worldwide

Eric Eldon via

Facebook is still growing towards 700 million users, having reached 687 million monthly actives by the start of June, according to our Inside Facebook Gold data service.

Most of the new users continue to come from countries that are relatively late in adopting Facebook, as has been the trend for the past year.

But overall growth has been lower than normal for the second month straight, which is unusual.

The company gained 11.8 million more people over May, following 13.9 million over April. In contrast, it grew by at least 20 million new users over the typical month in the past 12; while there have been a few months that have registered lower growth numbers, they have not been back to back.

Why the drop? Most prominently, the United States lost nearly 6 million users, falling from 155.2 million at the start of May to 149.4 million at the end of it. This is the first time the country has lost users in the past year. Canada also fell significantly, by 1.52 million down to 16.6 million, although it has been fluctuating around that number for the past year. Meanwhile, the United Kingdom, Norway and Russia all posted losses of more than 100,000. If these countries — most of whom had adopted Facebook many years ago — had not lost users, and instead posted even small gains, Facebook would have had a much more typical month.

As I wrote last summer, Facebook is the new AOL:

I believe that Facebook represents the high water mark of social networking, as we understand it today, a time dominated by social networking applications, as if our social interaction is something best managed in a single enormous database, whose rows and tables are designed by a small group of developers in one company.

Facebook is the new AOL.

Facebook is managing the chaos of social interaction on the web, normalizing it and standardizing it for us, just as AOL made the web neat and tidy. That seemed a winning proposition in the late ’90s, which led to astonishing valuations for AOL. They acquired Time-Warner using that wealth, and in 2002 Time-Warner wrote off $600M as AOL started to fall. Now, AOL has been spun out, and has no central role in our experience of the web. 10 years is a long time. Time-Warner is now the second largest entertainment company in the world.

The moral of this story is that you can make a business out of simplifying what is chaotic and confusing, but only at the outset. As people become habituated to what at first was scary and headache-inducing, they will move away from controlled experience to more personally managed negotiation of the world.

‘But, all my friends are on Facebook!’ That was true in 1999 about AOL, too. All my friends had AIM accounts, so it was the best place for instant messaging. Until Yahoo and MSN offered audio and then video, and blogging broke loose. And then everything changed with broadband.

And what is going to be the equivalent of broadband for sociality online? What is going to come along to destabilize the Facebook stranglehold on our ‘social graphs’? Simple: sociality has turned out to be the most interesting thing to emerge from the past decade of the web. It’s not all the servers, the cloud computing, the data, or even the explosion of materials online: its the social dimension, and the tools we have built to explore that.

At the same time, we are witnessing an almost unprecedented era of invention around new devices, form factors, and operational premises for computing and communications. Smartphones, tablets, app stores, and the emergence of activities like geolocation, massively parallel gaming, social TV, and so on. These are leading to a deep rethinking of the operating environments we rely on, in our PCs, mobile and gaming devices, and formerly internet-deaf devices like TVs and appliances.

The next generation of operating environments will be social at their core. Our current operating environments are based on standard understanding of things that programmers care about, like files, directories, and access controls. The average person could care less.

We will see social operating systems where following people’s activities, or creating likes, or publishing profiles will all be built-in. These will not be features of apps, or managed as metadata in walled silos. The primitives that structure our social connections will be built into the fabric of the next generation of operating environments, just like file systems, URLs, and HTTP are well-integrated into today’s.

As a result, actors like Google, Apple, the Linux community, and Microsoft — as well as upstarts that don’t even exist yet — will be the implementers of the next generation of social web, with social interaction built into its DNA.