AOL banks on Rod Stewart advance

AOL Time Warner's America Online division is letting subscribers listen to Rod Stewart's upcoming album the day before the release, one of several exclusive promotions that signal how the company is exploiting its recent merger.

As company executives dream up ways to turn AOL's 27 million online subscribers into new customers for AOL Time Warner's laundry list of products and services, music has emerged as a potential hot spot. While the company mulls an ambitious music strategy, including a possible MP3 subscription service, it has moved quickly to offer easy tie-ins.

Stewart, who is signed to Warner Music Group's Atlantic Records, joins Madonna and Matchbox Twenty in exclusive "appearances" on the service. AOL.com users will be able to hear his soon-to-be-released album, "Human," Monday night.

The pressure is on for AOL Time Warner to live up to its hype. The company has told Wall Street that it will reap in $40 billion in revenues; $11 billion in earnings before interest, taxes, depreciation and amortization (EBITDA); 18 percent to 22 percent advertising and commerce growth; and 12 percent to 15 percent revenue growth in 2001. Company executives have repeatedly touted the merger for its cross-promotional opportunities and the savings involved in marketing products within its own family.

"Although this particular stream won't have a material effect on AOL's ocean of cash flow, put enough of them together and they will," Merrill Lynch analyst Henry Blodget wrote in a note to investors Monday.

Time will tell if AOL Time Warner will succeed in putting money where its mouth is.

According to executives, the synthesis has begun. Time magazine has gathered nearly 800,000 new subscribers through pop-up ads on AOL's service. On the flip side, Time Inc.'s magazines will distribute AOL CDs in its upcoming issues. And AOL's Netscape division is revamping its Web site to feature Time Inc. content online.

An AOL representative noted that the promotions do not preclude non-Warner artists. She pointed out that last month AOL hosted an album preview of Jennifer Lopez's latest release "J. Lo."

"We look for artists with albums that our members will enjoy whether they're Warner labels or not," the representative said.