Yeah, AOL.  The company best known for littering the planet with signup disks.   Or, if you’re a student of the fast and loose business practices of Web 1.0, the company whose revenue shenanigans helped land a number of startup execs in the big house (remember homestore.com?).  I know it sounds crazy, but read on.

 I’ve been wondering about Tim Armstrong’s move to AOL.  He seems like a smart guy, and going there didn’t make sense to me at any level.   Fortunately, David Weir, one of the smartest people over at BNET, has been thinking about where the creators of original content will land as the dust from the print and online media collision settles.    Some of his recent pieces look at AOL, and in an interview with Marty Moe (SVP of media at AOL) David reveals a remarkable plan that, if successful, could change the game not only for creative types, but for everyone who values the role of original content in the online dialogue.  

I firmly believe original creative content is a key control and value point in the online media food chain.    So when I read about Moe’s plan to employ a stable of creators of high quality content for online use, my curiosity was piqued.   Not only does Moe want to hire all kinds of writers and journalists, but he wants “to pay them to produce high-quality stories.”   What an old school idea!

The AOL Moe describes bears great resemblance to a record label or movie studio, which has consequences for their revenue model and for ”artist” compensation.  As we all know, music and movies are “hit” businesses – a few megahits pay for everything else, and the people who conceive, create and star in the hits are by far the most highly compensated.

So my question to David and anyone who would listen is: will the new AOL (or however they rebrand themselves) look like a music label or movie studio, with the present and future creative stars that it signs getting the most attention, generating the most revenue, and making the big money?  Personally, I can’t see Moe’s model working any other way.  I know people talk about the balkanization of the web (and other media), but I don’t see the revenue generated in a bunch of niches as being sufficient to power a business on the scale that Armstrong/Moe have to envision.

I do think the journalist/writer stars can generate the necessary attention to support AOL’s aspirations – the big, unanswered question is how they will generate significant revenue from their content once they are unbundled from their old distribution channels (think Maureen Dowd without the NYT).

The unbundled content revenue question has two parts – mechanism and the mindset. Contrary to many others, I think the mindset part is the least difficult to overcome – no one would ever pay for digital music, for example, until everyone was paying for digital music.  The mechanism part is harder.  It took arguably the most creative consumer design and business people around (aka Apple) many years to get to the point where using digital music was even close to easy.  

And it’s instructive to recall that Apple succeeded in digital music where many others failed not by forcing digital rights management (DRM) and payment down the throats of consumers, but by the strength of its brand and image.  Consumers bought into Apple’s restrictive, proprietary hardware and music distribution not because they had to, but because it was cool and exclusive to do so.

Maybe there is a lesson here for AOL.  Can they build and brand a content creation and distribution system – complete with certifiable superstars – that people who want to be cool HAVE to use, even if it is proprietary and costs too much money?    That would be quite a turnaround for a company whose most memorable invention to date is the un-cancellable subscription.  Stranger things must have happened, but I must confess I can’t think of one at the moment.