BuzzMachine

As a Microsoft shareholder, I’d be delighted if they are saved from buying Yahoo. As a Time Warner shareholder, I’d be delighted if they were saved from owning AOL. But I do think a Yahoo-AOL lashup is this is Dumb and Dumber, Incorporated. Who would run the thing? None of their current bosses, I’d hope. What would the strategy be? Nothing like what it is now: get out of portalthink and get into platformthink, please.

: LATER: A reporter asked for my take and predictions on the MyMicroYahOLSpace orgy. I said:

First, I think a Microsoft-Yahoo combination made little sense. It was Microsoft’s attempt to buy audience — as if you can own audience today, as if we can be bought and sold. That is the old-media way of looking at the world: they controlled content, marketed to get people to come to you, showed them ads, then waved good-bye.

The new way — the Google way — is to be distributed, to make your content, brand, and advertising exportable and embeddable (as with Google AdSense or YouTube videos or Google Maps). I believe that both Yahoo and AOL should follow that example, making everything they have exportable, and becoming a platform for individuals and companies to create and mash-up content and even start businesses.

The other opportunity is to become the ad network for this distributed world. Problem is, Google got there first. AOL and Yahoo have invested fortunes in ad platforms. Again, they did this in the old-media manner, trying to aggregate audience and networks under their roofs. Google, meanwhile, not only bought DoubleClick but also opened Ad Manager, which will serve anyone’s ads for free (and give Google the chance to serve its own ads when sites want). That will expand Google farther and faster than any acquisition like Yahoo or AOL could. If Google can also expand via Yahoo and Yahoo can get more revenue from that than from its own advertising — which says a lot about Yahoo’s strategy — then fine; but doing anything you can to avoid Microsoft is not itself a strategy; it’s a move of desperation.

Microsoft is trying to buy the online strategy is still has not managed to build on its own.

Yahoo and AOL are trying to regain an online strategy they lost. Will they be better together than they were apart? It depends on who manages them and who comes up with a strategy. Clearly, the incumbents at both companies have failed. This takes new leadership who understands the new architecture of the media world and I’m not sure where they’ll find that person. Trying to lash together these two failing strategies and cultures and come out with something new is a thankless task.

News Corp., meanwhile, is being very clever in trying to offload some of the risk of MySpace. People ridiculed the purchase when it was made. It turned out to be smart, as so often happens with the moves Murdoch takes that others ridicule. MySpace is worth more but its strategy is also somewhat unclear as Facebook — and even new platforms like Twitter — build deeper relationships with their members. So if Murdoch can get value out of MySpace now, at a high, and lessen his risk, then he’d be happy.

At the end, I think Microsoft could still win because it is the only one willing to pay much of a premium. Time Warner is a bit desperate to get rid of AOL but it won’t value it too low after having valued it way too high. News Corp. has already shown it is not willing to pay a premium and will only go along for the ride if someone else does.

(CommentIsFree asked me to write this post about AOL acquiring Bebo.)

Poor Bebo. I feel for the residents of their hip and convivial apartment block. It has just been bought by a slumlord.

AOL — which is paying $850m for the social networking site, the other Facebook — is where innovations go to die. Remember Netscape? Bought for $4.2b and now dead. AOL bought a mess of advertising platforms — Advertising.com, Quigo, Tacoda — and can’t make them to get along; the New York Times reports on continuing warfare that has resulted in AOL firing the business talent it just acquired. Back in 1998, AOL bought the pioneering instant-messaging platform ICQ and though AOL’s IM went on to become huge and though ICQ lives still, it was never the leader again. And then there’s what AOL did to Time Warner and its stock (which I bitterly regret holding onto from my days working at the magazine publisher).

In its purchase of Bebo, AOL — like Yahoo, Time Warner, Microsoft, and no end of media companies — is trying to buy the strategy it doesn’t have. And that’s a strategy that rarely works.

The terrible irony is that if anyone should have understood community and how to support, nurture, and profit from it, AOL should have. The problem is that AOL never understood its real value. At various times, it thought it was an internet service provider and then a portal and then an ad network. But all along, AOL’s greatest asset was the community of people under its nose: millions of enthusiasts in countless niches meeting and enjoying each others’ company in forums and chat and personal pages, the platform for community that AOL created.

AOL should have been Bebo before there ever was a Bebo. It should have been the Google of people. It should have been Facebook. Instead, having killed the golden goose of its own community — one it created as the social pioneer of online — it is going to the market to buy a tin gosling.

So what will become of Bebo? I shudder to think. These acquisitions rarely work well. We can look not just to AOL but also to Yahoo, which bought the wonderful photo service Flickr and bookmarking service Del.icio.us. Both live on but without the rush of innovation that made them so valuable and Yahoo has saddled each with its own klunky membership structure.

If history is any guide — and in AOL’s case, it certainly is — I fear that Bebo’s talented, visionary founders will leave in frustration or firings; AOL will bury the service inside its outmoded portal; and AOL will treat the people inside not as people but as ad inventory.

But then, maybe I’m just a pessimist.