Who's Dancing at the AOL-Time Warner Merger?

The word is that the AOL Time Warner Inc. merger, which is now being referred to simply as "The Merger," is about content. AOL gets access to Time Warner's content. True, true. AOL will be a place where people can watch music videos or, soon, buy downloadable music from Warner Music Group's artists. But AOL has never had an empty dance card when it comes to getting content from people; in fact, in many cases, the majors have paid AOL to promote music. The real musical winner in this merger is Warner Music Group, which will sell more CDs than ever through AOL's crafty e-commerce initiatives.

If you read the tech press, you probably have heard this promise a lot: "You'll be able to click on a video, and buy the CD." It's a no-brainer e-commerce application that doesn't yet exist. But AOL is working hard to turn it into a reality, and that's good news for Warner Music Group.

On the broadband front, AOL has worked out cool ways to buy CDs. For instance, it partnered with a company called Veon that adds links, called hotspots, to online video. The hotspots are invisible until you roll your mouse over the screen, and then the option to buy appears below. Hotspots make the one-click purchase option classy and unobtrusive. Now, of course, AOL has distribution for this technology through Time Warner's high-speed online service, Road Runner.

Then there's AOLTV - the interactive TV service that will roll out in March through DirecTV. Under wraps until now, AOLTV finally revealed itself last Friday at the Consumer Electronics Show in Las Vegas. It looks like AOL on TV, with the TV show going on in a window off to the right hand side, and chats and instant messaging taking place on the left. (If that doesn't sound appealing, you're probably over the age of 20.) Surprise, surprise, when the demo people showed off the e-commerce capabilities, they used this example: "If you're watching MTV ..." For AOL, as for everyone who's hopping on the interactive TV bandwagon, the key word is commerce. Companies that can convince people to buy from their TVs will be very big winners. For AOL, that impulse buy could mean selling CDs and other entertainment-related merchandise to teens while they chat during "Buffy." That would also be good news for Warner.

Warner Bros.' Entertaindom may get top billing on AOL, but the portal probably won't be the place where Warner Music Group throws up the hot new single. That honor will remain with AOL's Spinner and Nullsoft, which have already done successful promotions for the majors, including one last year for a Warner group, Barenaked Ladies. The S.F. music company duo has proven that it does a decent job at promoting new albums: A recent Winamp promo for Beck's "Midnight Vultures" drew 20,000 downloads.

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