FORTUNE -- To AOL CEO Tim Armstrong, Silicon Valley is a "pig pile" where every company is copying every other company. "Everyone is putting out the same services, the devices have become more commoditized, and the platforms are the same," he said Thursday during a presentation at the Paley Center for Media in New York.
Sounding a bit like a Web-media executive from 1998, Armstrong basically put forth the idea that, as a lot of people said back then, "content is king."
That might sound a bit quaint in this era of ad rates falling with breathtaking speed and many Web publishers stretching the limits of propriety to draw page views and generate revenue. But Armstrong is a true believer, and he believes that "content," more than gadgets and more than platforms, will be what drives communications technology. AOL's (AOL) aim is to be the "arms dealer to Silicon Valley," he said.
Somewhat overblown rhetoric, to be sure. But it's hard to count Armstrong and AOL out entirely. The Huffington Post is succeeding better than most Web publishers (thanks in large part to sheer scale), and the company's stock is up by 109% over the past year. Lately, it has been outpacing the stock of most other media companies.
Much of the boost in share price is attributable to the patents AOL sold to Microsoft (MSFT) for $1.1 billion. But that was a year ago, and the upward trend has continued. Another issue: profits. While revenues are up for the first time in eight years, the company's profits come mainly not from its media properties, but from the high-margin business of continuing to collect revenue from people who are still using AOL's dial-up Internet service. Demographics alone spell eventual doom for that business, and over time AOL will be increasingly reliant on the highly uncertain and risk-riddled business of Web publishing.
One of the company's riskier continued bets is on Patch, its network of local-news sites. It continues to bleed money, to some degree because even struggling local newspapers often have larger staffs, more-complete coverage, and better brand awareness than Patch sites can manage. Armstrong argues that Patch gets a bad rap in the media because journalists are put off by its sometimes-iffy ethical practices, such as when it makes journalists directly responsible for generating ad revenue. "The journalism world pounds on Patch," he said. But that argument might carry more weight if shareholders didn't pound on Patch even more. He insists that Patch is a good long-term play.
A big question at the Paley Center was whether AOL might be interested in acquiring Time-Warner's (TWX) stable of magazines. It was announced this week that the titles that once made up Time, Inc., -- including Fortune, Time, Sports Illustrated, and People -- will be spun off into a separate company, perhaps as soon as the end of this year. But that's a non-starter for AOL, which can't afford any major acquisitions (estimates of the new magazine company's potential valuation put it not far below AOL's market cap of about $2.85 billion.) Armstrong sees the reality of this, but seems a bit wistful about the impossibility of reuniting with AOL's former Time-Warner cousins. He would buy them, he said, "if I had my private druthers."
The druthers of public investors, though, are paramount, at least in the case of Time Inc., if not in the case of Patch.
The major film studios think they've found a way to sell and deliver movies online. Will consumers buy it?
By Robert Levine, contributor
FORTUNE -- Consumers who recently purchased Warner Brothers' final Harry Potter film on DVD or Blu-ray found a surprise in the package: a digital copy of the movie in the new UltraViolet format. Although the name is not yet familiar, UltraViolet represents Hollywood's first step into the cloud MOREFeb 3, 2012 5:00 AM ET
"I can't believe I bought my soul mate at Glendale Galleria."
Another triumph of product placement for Apple (AAPL). Catch it on YouTube before Time Warner (TWX) takes it down.Philip Elmer-DeWitt - Jan 29, 2012 7:01 AM ET
He mapped out a strategy to rescue the failing merger on a whiteboard in 2003
After a long meeting with Steve Jobs last year about what the iPad would mean for publishers, Fortune's technology editor Stephanie Mehta -- known to her colleagues as "Stephanie Telephony" when she covered telecommunications -- remarked that Jobs was a surprisingly astute student of other people's businesses, including hers.
Case in point: A story Brent Schlender, who covered MOREPhilip Elmer-DeWitt - Oct 25, 2011 7:05 AM ET
Reed Hastings' disruption tour continues as Netflix weighs ploughing its profits into an original series. "It's not TV, it's HBO" may soon be "It's not HBO, it's Netflix."
Update: 24 hours later, it's official. "Netflix has committed to a minimum of 26 episodes," the press release reads, of "House of Cards." That sounds like 2 seasons worth, and it should begin, um, "airing" in late 2012. Kevin Spacey and David Fincher MOREMichael V. Copeland, Senior Writer - Mar 17, 2011 10:29 AM ET
Warner Brothers Digital Distribution head Thomas Gewecke says the Facebook "Dark Knight" movie-streaming experiment changes the future of online video.
Earlier this week, Warner Brothers, a division of Time Warner (TWX) (parent company of Fortune), made a splash when it offered up Batman: The Dark Knight for viewing on its Facebook fan page. Users who "Liked" it and shelled out 30 Facebook Credits, or $3, could watch a Standard Definition stream MOREJP Mangalindan, Writer - Mar 11, 2011 12:20 PM ET
Pandora's IPO might look like dot-com Bubble 2.0. But the company actually has a sound case for going public.
By Kevin Kelleher, contributor
In 1995, Netscape went public. Underwriters believed the stock was worth $14 a share but demand was so strong they doubled the offering price overnight. It rocketed to $75 a share on its first day. But Netscape was a browser maker, with no clear plan to make money. In time, it was bought MOREScott Olster, editor - Mar 1, 2011 5:00 AM ET
Zinio's digital revenues have grown 350% since last April. Will Apple put a stop to that?
When we wrote a few weeks ago about the signal failure of Apple's iPad to halt the magazine industry's downward spiral (See Why digital newsstands stink), we had forgotten about Zinio.
Zinio, which has been giving publishers a venue to sell their wares online for nearly a decade, is the exception to all the rules of MOREPhilip Elmer-DeWitt - Jan 24, 2011 12:57 PM ET
The author responds to our Scott Woolley's review of his new book, "The Master Switch."
By Tim Wu, contributor
"Time has upset many fighting faiths" – Oliver Wendell Holmes
My book, "The Master Switch" asks a simple, age-old question: Is history destined to repeat itself? Is the great revolutionary medium of our times, the Internet, destined to follow the path of its ancestors, radio and the telephone, a path of MORENov 22, 2010 11:58 AM ET
After years of flirtations, Aol and Yahoo, or at least their bankers, seem to again be talking about a union. Our business relationship advice columnist has had enough, and says they should seal the deal already.
By Chadwick Matlin, contributor
I am at a loss. Not, for once, of my money. (I've had a great few months.) I'm at a loss of what to do about somebody I like. It's not MORENov 9, 2010 12:21 PM ET
|Five things you didn't know about Bernie Madoff's epic scam|
|Obamacare: 365,000 have signed up for insurance on exchanges|
|What the budget deal doesn't do|
|Teen millionaire helping Yahoo become cool again|
|1.3 million set to lose jobless benefits|