Content is not a king, it is an emperor… and the emperor has no clothes

Corporate maneuvers around AOL Time Warner (TWX) revived among the media pundits such as CNBC the old chestnut that “content is a king”. A more accurate statement would be that, in this case, the content is an emperor. TWX is best compared to Franz Joseph I, benign but feeble ruler of the Austro-Hungary empire before the World War I. Like Franz Joseph I, AOL presides over an impressive array of properties and, like Franz Joseph I, it is full of good intentions. But also, like Franz Joseph I, it is ineffectual and, despite lofty talk and grandiose vision, has no clue how to handle its fractious subjects and reconcile unity and diversity. We know that the, despite its glorious history, Austro-Hungary empire finally collapsed and split into many constituent parts. Is it going to be the ultimate fate of AOL Time Warner? Its history is far from glorious. Actually, it is one of continuing disappointment. Content synergy and technological convergence proved expensive delusions and strategic failures. One even hesitates to call ‘strategy’ the haphazard and opportunistic succession of deals that market the evolution of the company. From the shareholder perspective, the only thing worse than the controversial merger between Time Inc and Warner proved to be the disastrous marriage between Time Warner and AOL. Since the marriage, the TWX stock has underperformed both broad market indices and its competitors such as New York Times or Disney (which itself is not exactly a shining example of a synergestic media empire strategy). The whole of TWX remains stubbornly smaller than the sum of, often splendid and successful, parts. The process of slimming down and divestment already started, with spinning of Warner Music and on-going joint venture discussions about AOL. Whether this process will lead to a complete unraveling of TWX remains to be seen. After all, even with its woes, TWX remains the largest media company in the world. But then, the Austro-Hungarian empire at its height was a most impressive sight to hold.
All this does not mean that the content is not important. Useful, incisive and catchy content remains the critical success factor of the emerging new media. But in the universe of open access and network connectivity, you do not have to own content. The two most successful new media companies, Google and Yahoo, do not control the content they display. It is their ability to aggregate, in case of Yahoo, and to monetize, in case of Google, the content from an ever changing variety of sources, which make them so powerful and successful.