HITS Daily Double
Our agreement to work together on digital media initiatives marks an important step forward in better serving consumers and protecting the interests of
all content businesses."
——AOLTW chief
Dick Parsons


Gates and Co. to Pay $750 mil to Dulles, as Two Firms Promises to Clean Up “Digital Environment” and Make Online Content Pay
They returned from the wilderness of mutual acrimony and clasped hands in the pleasant pastures of peace.

Yes, AOL and Microsoft have patched up their differences, and announced a pact to work together on projects to speed the growth of the digital-media sector.

Ol’ Bill Gates joined AOLTW grand poobah Dick Parsons for one o’ them backslappin’ PR hootenannies to announce the hellish alliance, er, fence-mending.

By “differences,” of course, I refer to that little antitrust suit AOL Time Warner’s America Online slapped on Microsoft waaaaay back in January 2002. The beef was over the two firms’ rival web-browsing technologies.

And by “patched up,” I mean Microsoft will fork over a measly $750 million to AOLTW, which Parsons said would be used “to retire some debt.”

Hell, I heard Bill spent more than that on a tracksuit once.

But Redmond is offering more than cash, pledging to provide “a new distribution channel to certain PC users worldwide.” AOL discs will be circulated to PC makers for bundling, and the software will presumably be much cozier on Windows machines in future, with promises from Microsoft of “technical cooperation and information disclosures.”

Come on, people—you know Bill has had some technical cooperation and information disclosure issues in the past, and he’s trying real hard. I think we should give him some support.

The two companies are promising a much more ambitious duet, however, vowing to work in tandem to help make digital media distribution safer from piracy, more equitable to multiple industries and—get this—easy and enticing for consumers.

This includes a hearty embrace of digital rights management technology, to help content owners regain control of how many copies may be made of content and what can be done with them. Some credit Apple’s relatively judicious balance between DRM and user options for increased optimism in this area (despite that unfortunate Rendezvous sharing loophole in iTunes).

Both AOL and Microsoft say they intend to use DRM to protect, according to Gates, “business documents and e-mail.” Parsons noted that this was non-exclusive, and expressed the hope that other “stakeholders” would get involved to create “an environment that is secure.”

“We’re content creators,” Parsons mused, adding that creating such an environment was key to safeguarding the profitability of said content.

AOL will have access to Microsoft’s Windows Media 9 platform and DRM for content delivery, which could be a shot in the arm for WMG-BMG-EMI-Real-backed music subscription service MusicNet, among other digital distribution ventures. Or not.

Microsoft will give AOL a royalty-free, seven-year license to its Internet Explorer browser technology, and Redmond will help make it work better within AOL, with some lovely information disclosure for users thrown in. Asked if this meant AOL would abandon its proprietary Netscape browser, Parsons replied, “Not at this point.”

Perhaps just as significantly, the two companies’ instant-messaging systems will be made to function more harmoniously together.

I could go into all the steamy, sexy details about “measures emphasizing interoperability and content rule compliance in a mixed analog-digital environment,” but this is a family-oriented website. You pervs who want the nitty-gritty can go here.

Oh, and along with the technical mumbo-jumbo was a good old-fashioned commitment to teaching consumers to “respect” intellectual property. Good luck with that, guys.

Anyhoo, Bill and Dick stepped up and said nice things in that aw-shucks way that the titans of soul-crushing industry do so well.

“With Microsoft’s media technology expertise and AOL Time Warner’s content expertise, we believe we can accelerate the adoption of digital media for the Internet and help content providers across the entire industry,” Gates proclaimed, though carefully avoiding any variant of the word synergy. “While our companies will continue to compete, I’m pleased that we’ve been able to resolve our prior dispute and I’m excited about the opportunity to work together collaboratively to make the digital decade a reality.”

Exulted Parsons: “We welcome the opportunity to build a more productive relationship with Microsoft. Our agreement to work together on digital media initiatives marks an important step forward in better serving consumers and protecting the interests of all content businesses. We look forward to others in the media and entertainment industries joining together with us to help to advance the digital distribution of content to consumers while maintaining copyright protection.”

The two then jumped in a limo and partied like it was 1999.

Given the timing of the announcement—mere days before the FCC is expected to relax limits on media ownership—the hatchet-burying by these two infamous congloms must have more than a few digerati hearing black helicopters.

The agreement, Gates declared during the press conference, “puts any past issues behind us.” Parsons, meanwhile, noted that ongoing litigation “isn’t really all that constructive in terms of creating new opportunities for your [Gates’] business or ours.” He added that past conflicts have prevented the two from being able “to get our arms around the piracy issue.”

Parsons said Gates had phoned him and opened discussions on cooperation “six, [or] eight weeks” before.

In a related story, Satan and Beelzebub recently lunched together at The Ivy and are now jointly pitching a basic-cable reality series.