AOL's True Believers

Conroy ticked off the assets that he could put at Warner's disposal. He had more than 27 million AOL subscribers at the time, many of them avid music fans. He had a wildly popular online radio service, Spinner, that could be used as a launching pad for new talent. His message: "I've got an enormous audience that can get excited about your artists. If we connect our audience to your talent, we'll sell more music. That's fundamentally what you want, and it's what I want to accomplish."

Sensible as that strategy sounded, it would only work if Warner executives could easily tap into AOL's potential. "When I took over, it was utterly impossible to create one promotion that would cut across all of our properties," Conroy recalls. Every time people tried, music executives would spend months in meeting hell. So within weeks after his visit to L.A., Conroy summoned all of his key business managers to New York.

"We're going to create a new team for artist and label relations," he explained in an all-hands meeting. "Each project will have a point person whose job will be to make sure that the whole deal happens smoothly. That way, labels will only need to talk to one person." The approach was Management 101, but it was vital. "At first, all I wanted was to do one thing successfully," Conroy explains. "If we could do that, we would start building a foundation of trust with the labels. If you try to do too much, you don't get anything done right. And in this case, nothing mattered more than simplicity and focus."

Before long, Conroy -- and Warner -- had some successes. When WMG wanted to launch newcomer Michelle Branch, AOL offered free downloads of one of her songs, "All You Wanted," four weeks before it began airing on the radio. More than 70,000 people downloaded the song. And in traditional music stores, her album's best selling week coincided with her maximum exposure on AOL -- before she got radio play.

For bigger-name artists, AOL Music promoted virtual listening parties before their CDs hit the stores. That tactic worked spectacularly well for Jewel, whose picture and sound clips were plastered all over AOL just before the release of her CD This Way last November. AOL Time Warner executives estimate that this online exposure pushed up her first-week sales by at least 30%. And in an in-house video, Jewel herself thanks AOL for making her album a bigger hit.

What's also noteworthy about Conroy is what he isn't doing. He has been strikingly low-key about Napster and all of the subsequent attempts to make the Internet a powerful new way to acquire copyrighted music in digital form. "A lot of people are focused on the wrong things," he explains. "Instead of trying to build businesses around online distribution, it's much easier -- and more productive -- to use the online world as a way to market music in CDs and other physical formats."

By 2004, he says, downloadable music may become a real business. But "it takes time for people to change. There's a disconnect between what we can do and how fast people will want to do it." Yet for all of his low-key talk, Conroy reveals big ambitions: "I want to have a bigger impact on this industry over the next 20 years than MTV has had over the past 20."

Messages That Matter

If there's one statistic that defines the power and the lighter-than-air nature of AOL's business, it's this: Every day, AOL Instant Messenger (AIM) users send about 1.4 billion instant messages. In contrast, all of the long-distance carriers in the country transmit a combined total of barely one billion long-distance phone calls a day.

Do those messages matter? The popular conception is that IM is all fluff, just another way for giggly teens to ask, "Wassup?" and gossip about their friends. Even the basic format of the service cries out, "Don't take me too seriously." AIM has never been dressed up as a Microsoft office-productivity tool, with gray accent colors and requests to provide "business contacts." Open up the AOL service, and you're looking at loud rainbow colors and a chance to start filling out your Buddy List.

But appearances deceive. At AOL's Virginia headquarters, AIM is as crucial to how business gets done as Microsoft Word or Excel. When AOL executives want to schedule a meeting or haggle about the fine points of a deal, they don't use email, the phone, or the fax. They IM one another.

When AOL Time Warner's chief talent scout, Michele James, wants to put her final offer in front of a job candidate, she often uses AIM to get top-level approval for her terms. "We had one case recently where the boss was at the airport, about to take off," she recalls. "We were down to the last few minutes in deciding what we could do to win a candidate. He sent me an IM from his mobile device saying, 'Wheels up in 10 min. Deal?' I sent back, '$200K b w 30,000 options y/n?' He came right back with 'Y,' and we were able to make the hire."