AOL founder Steve Case may have left Time Warner Inc. (NYSE: TWX) and AOL, but he isn't out of the web space entirely. His latest venture, Revolution Money, promises to lower transaction fees on the Web. And he has an interesting new partner in the venture: his old friend, AOL.

Revolution Money, still in its pilot stage, will let users transfer money to individuals and merchants for free through its Revolution MoneyExchange service. AOL will be a launch partner, and will allow users and customers to make payments and fund transfers through its AOL instant messaging service, AIM, for free. It will also offer RevolutionCard, a credit card with an interchange fee of 0.5%, which is below the average of 1.9% for other cards.

The truth is that you and I will win from this venture because this will help drive fees down. The bad news is that as transaction fees move closer and closer to zero, so do the profit margins. Whether the margins are enough to keep these operations viable is an open question.

According to a story in Red Herring, The cofounder of AOL, Steve Case, as well as a big executive name from the '90s, Ted Leonsis, have invested about $5.5 million in Clearspring.

Clearspring develops so-called widgets. Basically, these are small programs that can enhance a web site. For example, widgets can do things like show videos or allow for quizzes or slide shows. What's more, Clearspring has a proprietary system that allows for tracking the use of widgets.

It's cool stuff.

So, I pinged a good friend of mine, who works for a tier-1 venture capital firm. He also thought it was cool. But he did have a good question: "How do these guys make money?"

I'm not sure. But, at least for now, Clearspring is making money from some willing investors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Steve Case is "sorry" for the AOL merger with Time Warner (TWX). That's what he said to Charlie Rose Friday. I've seen this characterized as a Steve Case "apology" (to shareholders who lost about $200 billion in share value, I guess) but I read it more as a regret things didn't work out as he expected. Apologies don't usually include the statements like Case's that he still thinks the merger was "a good idea."

Now we have left the bubble long behind us. With hindsight it is certainly easy to beat up on the guy, and that's been a lot of fun for a lot of pundits since 2001. Trying to look back on my own feelings about it at the time, I thought the deal would be a bad one for competition, part of the inevitable, but disturbing gathering of the reigns of large corporations into fewer and fewer hands, but -- much as cringe to admit it -- I never imagined the deal would be disastrous for AOL and Time Warner Inc. themselves.

I'm wondering what BloggingStocks reader think. Did you believe back in 2001 was Case making the right decision by merging Time Warner into his AOL? Or did you believe even then the merger was headed for disaster?