- The Washington Times - Monday, January 17, 2000

We have seen the future and it is not wearing a tie. America Online's decision to buy Time Warner represents the crossing of a line between Internet business and traditional media, the new way and the old way, the future and the past.
The deal shows that the upstarts of the digital revolution are not content to stay in their place, buying and selling companies like themselves. It is beginning to look like nothing short of world domination will satiate their hunger.
So what about the rest of us? We may know our way around a computer, use e-mail and collect information through Internet sites related to our fields. But we still like to hold a newspaper rather than read it on a Web site. There is a sharp division in our minds between a computer and the TV set. And we believe that one-on-one relationships are important to success.
Are we getting left behind? Not a chance.
Internet companies have as much to learn from established companies as vice versa. The ones that learn the lessons of the past will be the survivors.
The 1999 holiday shopping season is a good example. The most successful electronic commerce companies used some old-fashioned techniques, such as consistent customer service and delivering a product on schedule.
Sites that advertised in traditional media or were associated with long-established brick-and-mortar stores were among those that drew the most traffic.
Effective public relations helped draw attention to what companies were doing differently and heralded the impact such sites might have on the retail industry overall.
America Online of Sterling, Va., provides an example of a company that learned some lessons and has so far managed to blend the old with the new. The world's largest Internet service provider (ISP) failed to provide good service in 1996 and settled lawsuits brought by state attorneys general on behalf of customers who had trouble logging onto the service as a result. For AOL, which got to work adding phone lines, it was a lesson learned.
Somehow, through the wonders of traditional marketing, AOL has managed to convince many customers nationwide that it offers an easier way to the Internet than its competitors. The company has created a certain aura, seducing customers with the idea that it alone is the place to be in the cyber-world.
Steve Case, AOL's founder and chief executive, knows about the importance of personal relationships. He has become a player in local business groups and his relationships with politicians such as Virginia Gov. James S. Gilmore III didn't hurt the company's successful effort to get $26 million in tax breaks last year from state and local officials.
Like Mr. Case, any successful entrepreneur knows the value of hard work and that applies to technology companies as much as any. The successful tech companies of today are the ones that took a good idea and built it into something through sustained effort.
Jeff Bezos, chief executive of Amazon.com, was Time magazine's Person of the Year because of his foresight. He led a company that lost about $350 million last year. But Time notes in its article that profits do matter, and that Mr. Bezos promises that the oldest part of his business books, music and videos will turn a profit by the end of 2000.
Whether Mr. Bezos meets that target or not, there can be no question that his company will be judged by its profits or losses. It's just a matter of time and, of course, money.
Investors who have resisted the pull of Internet stocks have shaken their heads at the profits of others. One company, Qualcomm of San Diego, gained nearly 2,000 percent last year, because its technology is likely someday to be used in most phones.
Stock analysts say long-established companies with strong management in a good business are suffering only because their names do not end with a dot-com.
On Thursday, Federal Reserve Chairman Alan Greenspan sounded an alarm in his low-key way, questioning whether stock prices are justified. It's possible, he suggested, that the economy is in a "euphoric, speculative bubble."
Bubbles can burst.
There is no doubt that technology companies are radically affecting business and entertainment. And there is no doubt that these companies are creating wealth, both for investors and for employees enjoying the benefits of stock options.
But other industries are going along for the ride, because they are needed. Commercial real estate companies in the Washington area are profiting from serving the needs of technology companies growing here. Journalists are bringing their writing and photography skills to the Internet. And the world of finance is both feeding into and feeding off of the growth of technology.
Employees have always had to change to keep up with the times. The change has only accelerated in recent years.
AOL wants Time Warner because it's not good enough to sell service; to stay on top, AOL needs to be able to offer what other ISPs cannot. Time Warner's movies and news products, old fashioned as they may be, are part of AOL's future.
It was an interesting twist at the AOL Time Warner press conference in New York a week ago today that Mr. Case was wearing a tie even as Time Warner Chairman Gerald Levin did not. There are bound to be some uncomfortable periods as these two worlds mesh, but if AOL continues to succeed, it will be in part because it has realized that there is something to be learned from Time Warner. Success will come if the two companies can learn from each other as they become one.
Bernard Dagenais, business editor of The Washington Times, can be reached at 202/636-3173.

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