From Aol to Apps: The Return of the “Walled Garden”

By Paul Maxwell Report Archives
Cover image for  article: From Aol to Apps: The Return of the “Walled Garden”

Remember "You’ve Got Mail!"? Of course you do. After all, it was a movie, too. And besides nearly destroying Time Warner, the former America Online pioneered (well, the available technology also effectively dictated) the so-called “walled garden.”

By the late ‘90s, Aol dominated.  It had bypassed Prodigy, GEnie and CompuServe as the leading online service.  Among the Aol milestones reported by Wikipedia: “Aol launched services with the National Education Association, the American Federation of Teachers, National Geographic, the Smithsonian Institution, the Library of Congress, Pearson, Scholastic, ASCD, NSBA, NCTE, Discovery Networks, Turner Education Services (CNN Newsroom), National Public Radio, The Princeton Review, Stanley Kaplan, Barron's, Highlights for Kids, the US Department of Education and many other education providers. Aol offered the first real-time homework help service (the Teacher Pager, 1990; prior to this, Aol provided homework help bulletin boards), the first service by children, for children (Kids Only Online, 1991), the first online service for parents (the Parents Information Network, 1991), the first online courses (1988), the first omnibus service for teachers (the Teachers' Information Network, 1990), the first online exhibit (Library of Congress, 1991), the first parental controls and many other online education firsts.”

All of these things were available only to Aol subscribers via the Aol connectivity (mostly landline telephone with some growing broadband access).

That was the “walled garden” … only Aol subs could browse in it.

Meanwhile, the Internet (capitalized), also known as the World Wide Web, was growing fast.  Aol bought the early web browser Netscape and opened its users to a wider world.

Perhaps seeing some changes on the way and worrying about a stock price that was somewhat challenging to maintain, Aol CEO Steve Case approached Time Warner CEO Jerry Levin about a merger. Aol, with 34million subscribers including international was, in stock market terms, worth more than the owner HBO, Time, Inc., Warner Bros., Time Warner Cable and the Turner networks.  In other words, Time Warner was a real, but legacy, business.

They merged in early 2001 with Aol stockholders getting 55% of the combined company … valued then at $164 billion.

Nice timing. In September, the dot.bomb hit. The “ bubble” burst. The walled garden got breached. And Steve Jobs began dreaming about what, five years later, would be the iPhone. Which gave birth to the “app” (application).

The Apple app store carries apps that do license deals with programmers.

Fast forward to today. Netflix is an app on (some) MVPD set-top-boxes.  TiVo is, too.

New “walled gardens” … you can’t watch other networks “on” Netflix but you can become addicted to House of Cards.  You can watch somenetwork programming via Roku.  It all about who licenses whom.

Now TVs have more than one set-top-box. With apps. 

So, the new question is, how many apps will you need?  Think that’ll be cheaper than the despised cable bundle?  Want to make a wager?

Random Notes:

My book The Revolutionary Evolution of the Media continues. Go here to read the latest chapter or here to read it from the beginning.

Will the Federal Confusion Commission actually go ahead and let anybody be a Multichannel Video Programming Distributor (MVPD)?  Today, cable, satellite and telco are so categorized if they provide programming packages over their distribution infrastructures.  The FCC thinks it wants to categorize over-the-top providers the same way … no infrastructure needed.  There’s a reason: compulsory broadcast licenses.  This should not, in my not-so-humble opinion, be allowed.  Let the new guys build competing infrastructure … the FCC should require it!

Kudos: The Cable Center announced seven inductees to the 19th class of the Cable Hall of Fame. They are: MSNBC’s “Morning Joe” hosts Joe Scarborough and Mika Brzezinski, Cox president Pat Esser, Evans Telecom Chairman/CEO John Evans, TiVo president/CEO Tom Rogers, Arris Chairman/CEO Bob Stanzione and retired Landmark president/ CEO John Wynne.  Since 1998, 113 men, women and I have been inducted into the Cable Hall of Fame. A ceremony honoring this year’s class will be held during INTX at the Westin Boston Waterfront on May 16.

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