SCN: AOL & Microsoft

[Steve]

x-no-archive: yes

==========================

A kind of online "people power" forced open Microsoft's and AOL's 
doors seven years ago. Today both companies are itching to turn 
back the clock. Can they do it?


by Scott Rosenberg, Salon, excerpts

...we know in our guts that control of the Web is concentrating at an 
alarming rate. Sure, it's still possible for anyone to put up a Web 
site. But as the carcasses of independent Web start-ups litter the 
landscape, the once-wild online free-for-all is rapidly devolving into 
a showdown between AOL and Microsoft. AOL controls the 
subscriber lists and a huge chunk of the content; Microsoft controls 
the consumer operating system and browser.

We're reaping the worst of both worlds, networked chaos and 
monopolistic consolidation. The least common denominator of 
individual behavior multiplies, while the least common denominator 
of mass taste prevails. 

How did we...wind up in such straits? To answer that, we have to 
look back to the roots of today's commercial Internet, the heady 
days of 1994 and 1995. 

What made that time so exciting? For the first time in our 
experience, the spread of the Web had...leveled the playing field of 
media distribution. The Web's open design and standards meant 
that publishers of all stripes could stop worrying about getting their 
products to people; all you had to do was plug your content into the 
Web, and anyone who had access to the Web could get it. 

The Web didn't eliminate distribution costs (there are still servers to 
buy and bandwidth charges to pay), but it dramatically reduced 
them, and gave the notion that "everyone's a publisher" some 
credence beyond hype. 

"Publisher" covers a vast spectrum, though, from AOL Time Warner 
to your local HTML whiz kid. As commercial publishers colonized 
the Web and private individuals flexed their new publishing 
muscles, two vastly different visions of the Web's purpose and 
value emerged. Old-line media corporations that viewed the Web as 
a threat and commercial start-ups that saw it as an opportunity 
shared one perspective: The Web had to be made a safe place for 
profits, whatever it took in the way of advertising, subscriptions, 
privacy invasions and other increasingly desperate measures.

 Meanwhile, the do-it-yourself Web publishers -- from the "build your 
own page" homesteaders of 1995 to the more recent explosion of 
weblogs -- reveled in the new ease with which they could post 
information, from personal trivia to headline-making revelations, to 
the entire world, and didn't worry much about money. 

In no other medium have "pro" and amateur, commercial and "just 
for fun" found themselves so inseparably intertwined. But along the 
way each camp tended to conveniently forget some facts: The 
amateurs lost sight of how heavily their "free" publishing was 
subsidized by venture-capital investments in Net infrastructure -- 
investments that, having proved largely unprofitable, are no longer 
flowing. The pros, meanwhile, talked up projections of vast growth 
for Internet usage, without acknowledging how much of that use went 
to e-mail or Britney Spears fan pages, neither of which was likely to 
boost a media company's bottom line. 

Thanks to this dynamic, the Web we know today evolved. The 
medium became a laboratory for big corporate media and 
technology companies to test new software and new business 
models at relatively low risk and cost. Much of the Web's seven-
year history is a chronicle of these failures: The e-commerce 
missteps of 1996..., the city-site wars of 1997, the me-too portal 
mania of 1998 and 1999, the dot-com dollar palooza that peaked and 
then cratered in 2000. 

A lot of predictions made with great idealism didn't pan out. After a 
brief first wave of innovative new sites -- Hotwired, Feed, Word, 
Suck, Salon and Slate -- the notion that the Web would foster a 
renaissance of independent publishing quickly withered in the face 
of some hard truths about Web media: Yes, it's easier and cheaper 
to put up a site than to print a newspaper or magazine or start a TV 
station, but journalism and information still cost money. And once 
you hang out your Web shingle you still have to figure out a way for 
people to find out that it's there. 

So of that first wave of high-profile "indies," Hotwired and Word are 
long gone, Feed and Suck have just gone into deepfreeze and 
Salon's financial difficulties have become a long-running soap opera 
in the financial press. (Slate may belong to this group in its target 
audience, but it is now so deeply intertwined with the Microsoft 
Network that its Web address has become a mere redirect from 
"www.slate.com" to "slate.msn.com," and its editor, Michael 
Kinsley, says he doesn't even have a separate balance sheet.) 

There's no reason the Web can't support a flourishing field of 
independent professional publishers in the middle ground between 
Big Media and feisty amateur -- no reason, that is, as long as you 
give this still-fledgling business time to sort itself out. Web users 
will eventually accept the necessity of paying subscription fees for 
the content they really want. Advertisers will eventually stop holding 
the Web to standards of guaranteed effectiveness that their bloated 
print and broadcast budgets could never meet. 

Sustainable businesses will evolve out of the carnage of the dot-
com downturn, or grow off the corpses of failed start-ups. Broadband 
connections and software improvements will, across a decade-long 
vista, reduce users' frustration and impatience. Anyone, anywhere, 
will still be able to put up a Web site and reach anyone else online 
with news, gossip, truth or lies. 

One big "but" hangs in the way of this rosy scenario, however. As 
Microsoft and AOL play out their corporate duel, each will inevitably 
seek to lock in customers and lock out competitors. I think a 
significant number of Web users, myself included, would be happy 
to see these two giants cripple each other in the process. The 
trouble is, their moves are more likely to injure bystanders -- and 
could wreck the Net itself. 

While no one company may "control" the Web, Microsoft and AOL 
each have it within their power to wreak a lot of damage on the 
network and its users. At the moment, the pressure is on Microsoft 
to whittle down AOL's overwhelming lead in the subscriber rolls, so 
it's Microsoft that's causing the most trouble. 

Since Microsoft controls the operating system and Web browser that 
most consumers use, Microsoft looks to bend its software in 
directions that will help drive users to its Web sites and other 
businesses. This is what Microsoft calls "innovation" and 
"integration" -- and what the U.S. legal system, depending on which 
court's ruling is currently in force, calls "monopolistic behavior" and 
"antitrust violation." 

Microsoft's role in the ecology of the Internet business has long 
been to "cut off the air supply" of competitors. Microsoft execs deny 
coining that memorable phrase, which emerged during the antitrust 
trial -- but whether they used it or not, it accurately describes the 
company's tactics. 

Today, AOL -- with its tens of millions of subscribers -- has the 
luxury of, in essence, being the atmosphere of the online world. 
Where Microsoft needs to subsidize its online efforts with the 
obscene profits generated by its desktop-software monopoly, AOL 
controls the world's largest stream of direct revenue from online 
services. This is thanks to the company's unique position in serving 
as the country's biggest Internet service provider and its largest 
producer of content. 

It's not yet clear how AOL will respond to Microsoft's offensive, but 
you can be sure it will give up no ground without a battle -- in the 
courts or the consumer market or the software arena or everywhere 
at once. AOL will do everything in its power, as it always has, to 
keep users' eyes and dollars from roaming beyond AOL turf -- and 
now that AOL's turf is so vast, that's an easier task. 

Before asking whether either of these companies could control the 
Web or the Net, you have to pin down what you mean by "control." 
There's control of speech -- of individual users' ability to say what 
they want. There's control of access -- of whether and how we're 
able to find and reach others across the network. And of course 
there's control of the ability to make money online. 

As long as AOL's and Microsoft's struggle is fought primarily in that 
final realm, the fight won't be one that most Net users will care 
about; one mega-corporation's money grab looks pretty much like 
another's. Things will get far more interesting, however, if the 
conflict spills over into the other two categories. 

...the more AOL and Microsoft "leverage" their advantages in, 
respectively, subscribership and software, the more likely they are 
to start closing off entrances and exits and transforming their 
fiefdoms into private networks. In the world of instant messaging, 
each company's users are unable to connect with the other's -- a 
preview of what corporate control of access on the Net looks like. 
Think of how it would feel if e-mail worked that way! 

In fact, it's not hard to imagine this at all -- because it's exactly how 
the commercial online world worked before 1994. The smoke of 
today's AOL/Microsoft war obscures a secret agenda the two 
companies will never admit to publicly: They don't like the Internet -- 
and never have. 

Microsoft's MSN and AOL were both closed, proprietary networks 
when the Web exploded and upended their business plans, forcing 
each to change course radically: Microsoft turned its battleship 
around to sink Netscape in the browser wars, while AOL dropped its 
hourly charges. Both companies hooked up their networks to the 
open Net, while conniving to keep their users just a little fuzzy about 
where the "branded" AOL or Microsoft turf ended and the rest of the 
Net began. 

Both companies, you can bet, would be far more comfortable in a 
world without the Internet -- a world in which they governed who 
could post content on their networks and taxed anyone who made 
money from it. Seven years ago, only one thing made them accept 
and embrace the strange new notion of a network that nobody owned 
or controlled: the overwhelming enthusiasm for the Net on the part of 
masses of users and developers. 

A kind of online "people power" forced open Microsoft's and AOL's 
doors seven years ago. Today both companies are itching to turn 
back the clock. Can they do it? They'll certainly try. But if these 
companies push too hard, those who care about the survival of an 
independent Web may simply vote with their feet and wallets, as 
they did once before. If they don't -- and only if they don't -- it will be 
time to sing a requiem for the Net. 


Copyright 2001 Salon.com





* * * * * * * * * * * * * *  From the Listowner  * * * * * * * * * * * *
.	To unsubscribe from this list, send a message to:
majordomo at scn.org		In the body of the message, type:
unsubscribe scn
==== Messages posted on this list are also available on the web at: ====
* * * * * * *     http://www.scn.org/volunteers/scn-l/     * * * * * * *