Ron Resnick (
Mon, 15 Sep 1997 02:44:22 +0300

I read about the AOL/Compuserve deal in the paper a few days ago. I'm
sure most of you have seen something about it. As I understood it, the
deal was-
HRBlock sells Compuserve's network to WorldCom, customer list to AOL
AOL sells its network to WorldCom for cash
AOL becomes a 'pure content' outfit, and gets out of the connectivity
It agrees to use WorldCom as exclusive carrier for 5 years.

AOL thus gets the million+ Compuserve membership, cash, and out of a business
it didn't want to be in. This is supposed to be a 'good deal'. Markets react
favourably and all that.

Am I missing something? What is 'pure content' anyway? These are the kinds
of content I can understand-

1. Regular folks like us who can send email to mailing lists, maintain web
etc. Literally anybody can get into the 'pure content' business as an amateur,
with no capital at all.
2. Professional, existing content organizations who make the move to
new media. Newspapers, radio, TV, wire services, book publishers,
3. Value-adds. Services that cull and sort, bin and refine, tailor and filter.

None of these have to be standalone. There are typically mixes of all of them
in most meaningful online content.

What is AOL's offering? Maybe it's a form of 3. But there are lots of services
in that business. That's hardly something I'd think you could justify a
of AOLs size and market cap giving adequate value to.

Besides the typical scorn us Netters usually heap on things like AOL or MSN,
can there really be a 'goodnews' picture here for AOL? Or are the markets
just that dumb, that they'll swallow any story if it's slick enough?

Being a quasi-ISP may have been a bad business for AOL, but at least
it was a business. I'm not sure what they have left to sell to their
membership now.

I'd think that if AOL's new business plan is 'pure content' that an
market reaction would be to seriously downgrade the earnings estimates,
and pummel the stock rather than offer polite applause. Don't markets
*ever* act rationally?