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Last Updated: Friday, 19 September, 2003, 11:51 GMT 12:51 UK
What's in a name?
As AOL Time Warner becomes plain old Time Warner, technology analyst Bill Thompson wonders what the move can tell us about the future of the net.

Screenshot of AOL.com
AOL has 35 million members
Sometime in the next few weeks Time Warner's New York Stock Exchange ticker code will revert to TWX from AOL.

It is a tiny change of only three letters, but the meaning would seem to be clear: the internet revolution is over, consigned to dust just like all those expensive signs saying AOL Time Warner that adorn the company's offices, and millions of business cards, letterheads and expensively produced onsite graphics.

When the merger was announced in January 2000, I was as overawed as everyone else by the sheer scale of the enterprise. It was to be a $350bn company, bringing 24 million AOL subscribers, 120 million magazine readers, CNN, HBO and Warner Bros, under one corporate roof.

At the time I wrote: "the online world looks different today, and every other company will be forced to respond in some way to what AOL has done. If not, they could quickly find themselves out of business".

I was not alone in thinking that this changed the way we would think about the internet.

All change

Since then everything seems to have gone wrong, and the failure of the merged company to live up to its promises of vast growth in subscriber numbers, profits and share price has made it a case study in the hubris of the net visionaries.

Bill Thompson
We may no longer be afraid of the AOL monster crushing all opposition, imposing a corporate identity to our online experience and taking over the world
Yet I am not so sure that we can draw any wider lessons about the future of the net from this one company and its problems.

For one thing, it is only a change of name - AOL is still part of Time Warner, and the merged company still has its massive range of cross-media and cross platform interests.

We can be sure that Time Magazine will still promote the next Harry Potter movie and get privileged access to the Warner Brothers production team, and that AOL will feature the boy wizard heavily on its home page.

We should also remember that AOL remains profitable, even if it does not make as much money as its owners would like.

It has 35 million members, 195 million instant messaging users and a massive presence in the online lives of many of us through Netscape, Winamp, Mapquest and ICQ.

We may no longer be afraid of the AOL monster crushing all opposition, imposing a corporate identity to our online experience and taking over the world. But AOL is still one of the big three internet service providers, and it is not going away.

Business case

To some extent the merger failed only because the claims made for the combined company were foolish, based on wishes rather than any realistic assessment of the market and the world.

Other internet companies, like Amazon.com, eBay, or even Lastminute.com, have shown that longer-term thinking and careful management can produce some profit, and enough growth to keep investors on board.

Perhaps the problem was simply with AOL as a company, not the net as a whole.

We have since discovered the details of the unorthodox accounting practices and advertising deals done to boost AOL's earnings and share price in the run up to the merger.

We have seen that even the best and brightest of AOL's senior management team failed to cope within the corporate culture of Time Warner.

And the company failed to exploit many of its advantages and annoyed many with its unwillingness to work with the grain of the net culture by supporting the Netscape browser or opening up AOL's Instant Messenger to work with other services.

The biggest lesson of the AOL Time Warner merger may simply be that well-run companies, those that exercise good corporate governance and accounting practices, care and nurture their markets, and are realistic in what they offer to their shareholders, will do better than those that do not.

Bill Thompson is a regular commentator on the BBC World Service programme Go Digital.

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