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Time Warner Inc. Message Board

  • TelevisionReporter TelevisionReporter Jun 4, 1999 8:17 PM Flag

    Raging Bull on AOL acquisitions

    AOL's "Sticky App" Crusade Continues

    The
    streaming media and Internet music wars continued to heat
    up this week.
    Brace yourself Yahoo (YHOO),
    America Online (AOL) has joined the party.
    The
    Dulles, Va., online services giant entered the digital
    music fray in a
    big way Tuesday by acquiring online
    music service Spinner.com and Nullsoft,
    creator of
    the popular WinAmp MP3 player. The total deal was
    worth $400
    million, and sources close to it estimate
    the purchase price of Spinner at
    roughly $320
    million. Nullsoft, founded by 20-year-old netrepreneur
    Justin
    Frankel, is believed to have fetched $80 million. Not bad
    for what started
    out as Frankel's part-time hobby.
    Gotta love the Net.

    I'm not particularly
    surprised that AOL decided to snatch up Spinner.

    Frankly, I expected someone like AOL to make the move
    sooner. Back in the
    March 28 Cyberstock, I suggested
    that "perhaps AOL's master marketer Bob
    Pittman
    will decide to snatch up Spinner.com and package
    Spinner Plus in
    downloads with ICQ and AOL's Instant
    Messenger." I also wondered aloud if
    Yahoo would care to
    double-dip in the streaming media/online music space.

    AOL obviously ended up the proud parent, but Yahoo
    did announce an
    agreement with Spinner last month
    to provide audio programming and
    technology for
    Yahoo Radio. You can rest assured, however, that
    with
    Spinner now becoming a part of the AOL family, the Yahoo
    Radio-Spinner deal
    is history. Sorry Yahoo, AOL beat you to
    the punch.

    The media was also buzzing with
    discussion this week that AOL's purchases
    suggest it is
    getting back into the business of owning its own content.

    Wrong. Try Again. I believe the two deals were largely
    done for AOL to
    acquire additional sticky desktop
    applications and millions of captive
    eyeballs. Both
    services directly compliment AOL's existing AOL
    Instant
    Messenger and ICQ instant messaging applications. I expect
    to see
    significant cross promotion in the coming
    months between the growing stable
    of sticky aps that
    AOL has acquired. Just as important, both of
    these
    deals give AOL leading gateways between the user and
    the delivery of
    digital music. Once encryption
    standards are set, I believe AOL has the
    potential to
    skim substantial downloadable music revenue from both
    the
    WinAmp player and Spinner Plus player.

    Finally,
    these purchases give AOL two ideal broadband
    applications to serve
    as promotional tools for its AOL Plus
    broadband service. I continue to
    maintain that the major
    cable players will eventually come to the table
    and
    do business with AOL. They can't ignore AOL's
    industry leading 19 million
    members if they hope to
    achieve mass-market penetration. AOL's acquisition
    of
    broadband applications like Spinner and WinAmp fit nicely
    into its
    recent high-speed satellite and DSL deals,
    as well as its cable plans.
    When the cable
    companies finally wake up to reality, AOL will have
    the
    sticky broadband applications to help back up its
    incredible marketing
    muscle. I still believe AOL should
    cement its position in the streaming
    media space by
    snagging streaming media leader RealNetworks (RNWK).

    Although, RealNetworks Chief Executive Rob Glaser seems
    convinced that he
    can fight and win the streaming media
    battle with Microsoft by himself. We
    shall see.

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