London's The Times reports on yesterday's New York Post scoop that AOL parent Time Warner is mulling over a spinoff of the profitable but shrinking online service. The Times article speculates that possible suitors for a purchase may include Yahoo! and Barry Diller's InterActiveCorp. AOL suffers from any number of ills well analyzed elsewhere, but from our own perspective it's interesting to see how the marriage of media and online content interests continues to be rocky at best. The Web is not something that works best with forced selections of interest: its underlying premise is that it's okay for anyone to create any kind of content for anyone and for people to get it any way they want with near-zero distribution costs. Traditional media packaging falls apart in this environment. AOL's relentless commercials blare forth from televisions trying to sell us the Web as if it were a box of laundry detergent. Sorry, folks, but we all know that there's nothing in the box anymore. Now that AOL has abandoned content creation as an activity, all that's really left is an incredibly dumb user interface and a connectivity business that was commoditized years ago. Its only truly valuable content assets are its email and instant messaging accounts - certainly valuable to Yahoo!, MSN or others, as these are sources of valuable personal content that are difficult to migrate without acquisition. Fearing Microsoft, TW will probably go with Yahoo! The remaining online assets could be merged in with its cable assets as a complementary home portal for its cable modem subscribers, similar to the alliances that Yahoo! has struck with SBC and other cable operators. Unless one controls the distribution technology, one does not have a distribution business. Unless one controls the content, one does not have a publishing business. Time Warner appears to be facing these facts head on now and moving on to search for the soul of a 21st century media company in its more tangible assets.