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The Sinking Ship that is AOL
EyesWideOpen writes "This article at Salon discusses the ways in which AOL is trying to stay afloat, with the release of version 8.0 of it's software, in a time when AOL (which recently merged with Time Warner) has had a string of bad press -- falling stock prices, SEC investigation, etc. -- attached to it's name. One of my favorite quotes from the article says of AOL: ''It was never really an Internet company. AOL was based on the idea that people needed to live in a halfway house while they became accustomed to the Net.'...If folks can get a better, faster, cheaper online experience by ditching AOL, they'll do it in a heartbeat.'"
While we all hate AOL they still do offer the most access numbers out of any other ISP if you do a lot of traveling.
Is it really possible for AOL to go out of business? Sure, they suck, and they've been losing a great deal of their consumer base, but they are still the single largest commercial ISP in the US. Time-Warner, if anything, would sooner split up AOL into smaller regional ISP's than bankrupt it, I would believe.
"Quoting famous computer scientists out of context is the root of all evil (or at least most of it) in programming." - K
My family used to use AOL at the rate of $23.95 a month, plus any phone charges that we incurred. When signing my apartment up for Ameritech DSL, they had a special going on - for one year, the price would be $30/month! For $7 more a month, we'd get a free DSL modem, free install, etc. etc. What an amazing deal! I don't know why Ameritech didn't advertise it more, but any family who has a teenage son or daughter that can install DSL can easily be stolen away from AOL - AOL simply can't charge as much as it does for what little it gives.
Not really sensical arguments, but when they start giving answers like that it's hard to get through.
Also, where I work, one of our techs had AOL before starting here. Even after having our dial-ups (free) and our T1, he still kept his AOL for a year or two - would even connect to it over our T1 connection.
Must be nicotine levels or something addictive.
If folks can get a better, faster, cheaper online experience by ditching AOL, they'll do it in a heartbeat.
Especially now that no one has any money to spare on AOL pleasantries like half-assed chatroom censorship and 50% of bandwidth going to ads, AOL is dying. Expect A0L to lose more ground over the coming months... considering their future next to cable and DSL access, for all intents and purposes AOL is dead.
But what do I know. I'm just looking for anonymous gay sex.
This may be a last ditch effort to get the AOL side of the business profitable, before splitting back into two seperate companies again. I don't think anyone thinks that this merger was a good idea in the first place.
It doesn't seem to be mentioned much in the mainstream press, but here in the DC area AOL is aggressively hiring software engineers with Linux/Perl/CGI/database experience for their "internal" functions. One would suppose that this will reduce the cost and increase the efficiency of their back-office functions, after they fire all those MSCE's that run around doing the retry/reboot/reinstall cycle on their current internal network of MS machines.
I'm more worried about Comcast owning the internet. They already own a major portion of the US cable market, and they're offering broadband to all those customers. In fact, they're pushing it rather heavily as a better solution than dial-up.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
What was left to me was AOL, so I signed up for that 1025 hours, and then did some shopping around online for another internet provider... I eventually ended up with a wireless internet service provider that uses the Motorola Canopy system, which gives me sustained performance comparable to a decent cable or DSL service, plus even more nice things like static IP and RDNS allocation.
Needlessly to say, then it was "Goodbye, AOL!" ... "The call" was pretty funny to me, since I had (ab)used their service to leap to a competitor. The rep on the other end tried in vain to convince me to keep my AOL account, and even tried to use the argument that "a dynamic ip is good because it's more secure." I got tired in the end and basically told him to cut the crap and just cancel my account.
Don't start flaming me immediately. I'm a techy EE and I never use AOL. But my girlfriend (who is a non-geek...she's a lawyer) has used it for years and loves it. For all its flaws, its easy to use, has tons of great features, and is surprisingly good at self-healing (i.e. fixing broken installs, etc).
Having said that, ever since I've started showing her news blogs, free email, Yahoo, Amazon, etc., she's been using AOL less and less.
Anyway the vast majority of AOL users were idiots and I was truly embarrased by having a @aol.com in my email address when posting to a unix usenet group for obvious reasons. Anyway I switched as soon as the internet boomed and I could finally pick a good ISP. I figured aol would slowly die as the internet became more popular.
The only true benifit of AOL was that everything was centrally organized and you did not have to search to find specific information. However yahoo now has groups that relate to about ever interest known to man and the search engines have improved and can be catagorized.
Anyway it seems the only true benifit of AOL is IM and chat.
The internet is truly a superior platform now and the world runs on it. Its time aol became a portal like yahoo and an isp. THey can no longer have two different online platforms. Its expensive to maintain and the AOL network is the dying platform while the internet is the one thats growing and standard.
http://saveie6.com/
I suspet that the number of free hours given out by AOL accounts for millions of dollars each month in 'lost' revenue.
I agree with your original comments about how AOL has the touchy feely stuff down pat. They have huge customer service departments to answer questions when the like "how do I send a picture through e-mail" and so on. I have worked in small home-based businesses selling custom computers and internet access and frankly, support is the most troublesome part of it because most users just don't get it. Although I eschew AOL internet and pre built PCs (dell, gateway, etc) for myself, I must unfortunately recommend such solutions for clueless users because it's the only way they're going to get support for answering stupid questions because the people who run small businesses that ship better products don't have the time or money of all of that.
How quickly people forget that at one time AOL tried to "beat" the Internet.
I've had enough abrasive sigs. Kittens are cute and fuzzy.
I used to, and still do, consider AOL the equivalent of "Internet for Dummies". It was the first ISP, if you can call it that, that I had. Then I desired the real internet and cut them loose. Now, even thought I pretty much loath the service and their stereotypical user, I understand that AOL still has the greatest benefit of being EASY. This is their greatest asset. There are professionals out there that know how to use their PC, but barely know how to configure it. They may have the intellect to figure it out, but when their time is more valuable than the guy at Best Buy, then why should they bother? (Not to mention, it keeps the guy at Best Buy employed)
Life moves pretty fast; if you don't stop and look around once in a while, you could miss it. -FB
Alternatively, I have found thousands of sites that bombard IE with popup ads, and Ad-aware reports that much more nefarious activity is happening as well.
In this comparison, it is blatantly obvious that IE is the inferior product which fails almost completely in its attempts to meet my expectations. If AOL can provide a web browser that does not include 1,001 ways to violate my security, require third party software to repair the damage, and inundate me with advertisements, then that is a marvelous advantage for them and for their users.
If, however, you are more concerned with preserving advertisers revenues and consider the end users' rights and privacy to be an inconvenience, then your comment is right on.
Long live microsoft trolls, eh?
It was never really an Internet company. AOL was based on the idea that people needed to live in a halfway house while they became accustomed to the Net.'...If folks can get a better, faster, cheaper online experience by ditching AOL, they'll do it in a heartbeat.'
I don't think this analogy is fair. AOL is definitely an Internet company, it's just that their "online presence" is so huge that they can justifiably call themselves their own little Internet (so to speak) even though none of their content is really available to the general Internet community. Hundreds of other Internet companies have tried to do with web sites what AOL has done with their business, namely the ultimate portal. Even the most successful of these attempts (e.g. Yahoo!, MSN, Netscape) has no where near the content, usability, and breadth that AOL has achieved through their proprietary software and business partnerships. No one advertises Yahoo! keyword "The WB".
I ditched AOL years ago but AOL does honestly have an interface to and navigation context with an enormous amount of general content which cannot be rivaled by anyone else.
On a more cynical side, they also offer an easy way to identify people that you don't want to associate with.
But seriously, they do offer a good product to a group of people that need that product. If people realized that they were stupid, and stayed with someone that catered to stupid people, the rest of our experiences would actually be better.
Think of all the tech support people that would have to know more than how to read a script. Think of all the bandwidth that you'd have on your broadband connection with granny watching all her flash sites on some one elses network.
I think they should continue to market themselves the way they have, even if the implication is that it is a "halfway house". Not just because I am a pretentious prick, but I think the newbies are better served by a company that is developed to serve them.
Just think how much better MS would be if they either a) didn't try to make their enterprise software able to be run by a PHB, or b) only made nice interfaces. You would have a really good server (and you know you would) or a really good desktop. Now you just have halfassed servers that only rubes can figure out.
email sent by Robert Hughes, disgruntled Time art critic, to AOLTimeWarner macher Gerry Levin, quoted by Tina Brown:
How can I convey to you the disgust which your name awakens in me begins Hughes to LevinThe merger with Warner was a catastrophe. But the hitherto unimagined stupidity, the blind arrogance of your deal with Case simply beggars description. How can you face yourself knowing how much history, value and savings you have thrown away on your mad, ignorant attempt to merge with a wretched dial-up ISP? . . . I dot know what advice you have to offer, but I have some for you. Buy some rope, go out the back, find a tree and hang yourself. If you had any honour you would.Seems like some of the Time Warner employees are feeling some strong emotions about their management's attempt to hitch themselves to a sinking ISP...
If you're traveling and need internet access from your motel room, AOL CDs are just the ticket. 1000 free hours for 40 days, no hidden charges, BOOM. You're on the internet in any state in the Union, usually through a local call. Pick up the CDs at any Walmart (read: anywhere in the US) and you're good to go.
I will be sad to see them go for that reason alone. AOL's helped me out for two summers in a row.
But what do I know. I'm just looking for anonymous gay sex.
Heh. I just read a few of the posts here. Lotsa accusations of AOL tricking people into giving them money etc. Going back over the last few days, lots of people have really interesting (and false) ideas about how large companies get big.
Let me give you all a piece of economical trivia: Q.) How does a company get big? A.) A lot of customers pay for a service or product it provides.
It's true for AOL, it's true for Microsoft, it's true for Starbuck's, it's true for Walmart, it's true for Disney, it's true for the RIAA, etc etc etc.
Have these companies done less than ethical stuff to get that way? Sure. Whatever. At some point, people still had to voluntarily give them money. At that same point, most had to be pleased with the service or product.
In other words: You cannot build a business solely on thievery and deceit. You cannot just build a monopoly one day. You cannot just build a coffeeshop next to an existing one and turn on a magic mind beam to make customers zomby-walk into your store. There's something enticicing for them.
AOL's not everybody's favorite ISP. So what? It does it's job. A.) They make it easy for one to get on the net, B.) They offer a price that seems (emphasize SEEMS) reasonable. C.) They don't make the user feel like it's a huge technical challenge to get up and running. There are better deals out that, but that doesn't negate what AOL provides. They didn't get big by playing games with people's credit cards or manipulating minutes or whatever the other overly-creative people have come up with.
Just chill. A corp can't get big by being 100% bastard, 30% is about as high as you can get away with.
> Over the weekend, I heard analyst say that if
> AOL had not purchased Time/Warner, the
> Time/Warner stock would be around $40 and AOL
> would be around $4. Right now, AOL is at $11.89.
I have always thought that AOL was never in the business of selling internet access. It was in the business of selling AOL stock.
Because I own parts of a couple of various businesses, I get a pile of free magazines, including "Inc." "Inc." is for "growing businesses" and "entrepreneurs". Lovely people, those. Unfortunately, the writers at "Inc." are horribly out of synch with real live american small businesses. One example of this was the Inc article where it was discussed how one whould "market" a company for sale. Lo and behold, the company's products and business weren't the interesting thing anymore, the company itself was being marketed. AOL should have been listed in this article as the ultimate example of this. It made the owners of AOL billions.
AOL shareholders had no way to justify the valuation of their ISP/online service based on revenues or expected future profits (the traditional model of valuation). The ISP business is hard: it is low margin, price-sensitive, the barriers to entry are low, it is basically unregulated, and you're at the mercy of the ILECs. AOL has all these problems -- it's not just other ISPs.
"Ordinary" dial-up ISPs might sell privately today for $100-$150 a subscriber, and maybe $250-$350 during the bubble. AOL was valued at about $2,500. AOL didn't run from that -- it brayed repeatedly about how its size and scale were so valuable and about how controlling the onramps to the internet was so valuable. But they feared that the game would be up before that value could be locked in.
So...faced with the prospect of having all their paper wealth evaporate, Case et al ginned up the idea of using a stock purchase deal to buy some legitimate assets. This made perfect sense, and I argued with some friends that more tech bubble babies should have done this.
AOL could have bought GM or Chrysler or any number of major banks. Instead, they had to buy something with a tenuous connection to an ISP: a media company with a bunch of cable assets. Bingo. Content and a means to deliver (at some as-yet-undetermined date) high speed access and new services.
As with most ill-conceived mergers of large companies, the big thing was "synergy." If you are unfamiliar with it, "synergy" is the modern financial philosopher's stone that auto-magically turns horseshit into honey. (Look for HP/Compaq to have either horseshit or honey coming out of its ears sometime in the next couple of years -- I suspect you know where my bet is).
AOL essentially pimped itself so well that it fooled the stodgy old dorks at Time Warner (who feared and still fear that technology will impoverish them) that not only would AOL save them, it would make everyone filthy rich. It didn't. In essence, AOL gave some (not so) magic beans in exchange for the Time Warner cash cows. Time Warner was fleeced. They probably lost more in the stock market bubble than anyone else in the world.
I wonder if former Time/Warner stock holders feel like idiots for approving the merger.
What do you think?
Note: I have no problems with how any of this went down -- everyone involved had smart advisors and lawyers and accountants. Time Warner people aren't sympathetic victims -- they just made a horrible decision about a business that they just really didn't understand, IMHO. I do not consider this to be an indictment of AOL or Time Warner. It's just an interesting story to me.
guac-foo
Lots of petrified grits
If theres a source that knows Bankruptcy its Salon! I am surprised everyday they are still in business
Think about Prodigy....back in the day they used to be a power house. Now they have molded into some SBC namesake incarnation. People can move to other ISPs...and will. You could see AOL fading away, though I think it will morph into something less internet and more mass media like.
So unless AOL can find a way to distinguish itself from other ISPs, like it used to be, then I say let it sink. (Innovation -- what a concept!) Somewhat less spam, fewer annoying people online.
I run about 1000 websites. Analyzing the logs for all sites combined over the past few years, the drop in AOL activity is pretty staggering. AOL alone used to account for 25% of all our traffic. As of today, it's down to about 8%.
Jan 1 2000: 24.97%
Jan 1 2001: 17.08%
Jan 2002: 12.32%
Feb 2002: 11.89%
Mar 2002: 11.41%
Apr 2002: 11.42%
May 2002: 11.26%
Jun 2002: 10.36%
Jul 2002: 8.22%
Aug 2002: 10.16%
Sep 2002: 9.97%
Oct 14 2002: 8.12%
AOL is still holding the #1 slot, but not by much. In January of this year, it had a 6% advantage over the #2 spot, now held by attbi.com. Now, that margin is down to about 2.5%.
Give the newbies the pretty hand-held interface..
Give the rest of us a national inexpensive connection... Both analog modem and broadband..
Might keep them alive.. and flourishing even..
They have the resources to become a 'real' isp..
---- Booth was a patriot ----
A lot of people will stay with AOL, either because of inertia or because, once you turn off the popups and spam, it's actually an okay ISP. (Not the best, but not terrible.)
The company is still ****ed, because it's trying to grow at the same rate it was early in its life. It probably won't go bankrupt, but it's bascially the leader in a low-margin business without much room for growth.
Interestingly, AOL realized this three years ago, and cashed in its own inflated stock for TW. For some insane reason, TW stock-holders took the deal.
Uhhh, actually, this is wrong.
There was an article in the WSJ a few weeks back about how Starbuck's, while growing wildly, is actually losing market share to local coffee houses.
A lot of locals complain about the competition, but their sales are way up for the most part.
A few coffee houses go under when a Starbuck's springs up, but it may not be related. It turns out that there's always been a large turnover rate in coffee houses, a lot of them close down every year for decades. Coffee house closings are actually down.
It appears that the introduction of Starbuck's just increases the market for good coffee.
ObSlashdotObservation: Wouldn't it be nice if MS could view their competition the same way, not as enemies that have to be eliminated at any cost, but rather as part of a healthy market that allows everyone to prosper?
Time Warner could save AOL in a heartbeat if they started really thinking about the products they could bring together.
The merger was touted as the beginning of that great "convergence" thing VC's were all abuzz about in the mid 90's
You want convergence? Offer AOL broadband subscribers the ability to stream Sopranos episodes on demand. Sex and the City episodes. Mind of the Married Man.
think about it, they own the client and the transmission technology... it'd be (almost) hack-proof digital distribution.
Whatever else one may think of AOL (don't get me started...), it's one of the great business stories of our time...
More or less at the peak of the bubble, the folks at AOL managed to merge a company of highly dubious quality into a media empire that was chock full of real assets. They took a mountain of funny money and converted it into a somewhat smaller but still substantial pile of real green.
On the other hand, TW spent billions for a giant pile of crap--the shareholders of the old TimeWarner should band togethor to hunt down and publicly humiliate the TW execs that allowed this to happen....
Here's a little interesting (and off-topic) tidbit -- and one that reflects people's insistence on using products from companies like AOL/Microsoft/whatever that aren't necessarily the best, but are perceived as the "safest":
I lived on Southport avenue in Chicago for a while, and every morning went to a small bagel shop for breakfast. It wasn't a brand-name shop, but it was inexpensive, clean, and the food was really good. It didn't do super business, but got by just fine for years.
As the neighborhood gentrified, a corporate-chain bagel shop leased a space 1/2 block over and announced their imminent opening. The small bagel shop began preparations to close, assuming they wouldn't be able to do business against the chain. Right up until the day the corporate shop opened, I thought they were being pessimistic.
Well, the morning that the corporate shop opened, they had a line outside the store full of people who had picked up a "buy one bagel get one free" grand opening coupon.
Just down the block, the small shop had set up a table with bags of bagels and a sign: "take one bagel for free, get two more for free" -- offering passers-by three free bagels with no line.
I sat on my front steps, and watched people WALK BY the free bagel table to go stand in line at the corporate shop...then, after waiting in line and using their coupon, WALK BY the free bagel table AGAIN to get onto the train.
Eventually, I went over and got three free bagels. Nobody had taken the bagels since I had started watching, and the girl next to the table said nobody had taken them since they'd opened. After hearing this, I paid for all three bagels, and admitted to myself that I had been wrong about their pessimism -- they were right all along.
They closed for the last time that afternoon, and the corporate bagel shop was soon joined by a corporate coffee shop. Of course, there was already a corporate coffee shop nearby, but that's OK -- both are thriving.
Oh, and once I bought a sandwich at the corporate bagel shop. It (honestly) wasn't very good, and I never went back.
For all of you AOLusers out there - version 8.0 will be pop-up free [News.com].
-- jimmycarter
If I follow this quote from the article correctly,
"I'm not sending you a file that you listen to later," Kimball says, describing the service. "I'm getting you right now, while we talk. I know you like the Stones, and you're in my life, and as we listen to the song I say, 'Remember the time we went to the concert three years ago?'"
Is this not a violation of copyright law? Even if the sender own a *legit* copy of the CD and ripped the Stones song, isn't sharing it in digital form illegal since the listener could also save the song?
Or does this come under the realm of illegal broadcasting? Does the sender need to pay CARP fees? Is this addressed in the article on Webcasting from earlier today?
OK, so who wants to bring AOL up on charges...
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Yeah, I think you're absolutely right - but the numbers of these folks keeps decreasing. The point is, in the *long run*, the AOL business model will probably become non-viable.
EG. At my last employer, we had several users who had AOL accounts. When we started allowing remote access to our systems through a VPN, the VPN tunneling software had compatibility issues with AOL's software. Of course, AOL made no effort to correct the issues. (It was pretty much "over the heads" of those doing their phone tech. support anyway.) We enacted a policy that "AOL is unsupported", if people wanted to use our corporate systems remotely.
A couple die-hards still refused to switch. One guy even got a seperate Inet dial-up account just for connecting to us at work, but still used AOL for everything else. The biggest roadblock in the way of ditching AOL? Usually, the kids/family. The employee wanting to switch wasn't willing to make his kids and/or wife suffer through getting a brand new email address, learning everything all over again, etc.
So yeah, right now, some people feel pretty "locked-in" to using AOL -- but the pressure is on them to move away from it. Every time AOL software causes conflicts with other software packages people need, it shrinks their customer base. Every time Microsoft makes it easier to get online without the need of additional software on top, AOL's customer-base shrinks. Every time someone is lured in by the benefits of broadband via their local phone company (who also serves as the ISP), AOL's customer-base shrinks.
"If folks can get a better, faster, cheaper online experience by ditching AOL, they'll do it in a heartbeat.'"
AOL doesn't really seem to be having this problem, given that their user base is up to nearly 40 million people and growing every day. As for broadband competition, most AOL users who go broadband just switch to the "roll-your-own" service that only costs $9.95 a month, and has way less overhead for AOL.
AOL's real problem at the moment is the loss of advertising dollars that came after the dot-com busts, when companies realized that consumers tend to ignore online advertising, which doesn't really matter in the long run, because all the TW money will offest things in the long run.
Give AOL a few years for AOL to be absorbed into TW, and for all the idiots who bought AOL at stupid prices to get over their losses, and the company will look just as good as it always did.
AOL
(I knew that would get your attention.) Actually. For the father, grandmother, kid in high school or someone without a technically-savy background, AOL is just what it is...a good start for people to learn online skills. I have tried AOL, its very basic and I have to say without broadband its terrible. I would think the child controls help someone with kids in the household rather than unleashing the whole internet on them. Chatting (some rooms bad), IMs (from strangers not good), and Im sure theres a lot of other bad things on AOL for the younger crowd.
The main reason they're still in business is that there still is a high percentage of people with computers which wouldnt know how to go about getting out onto the internet and finding things without AOL offering them in menu format. (well, gui menu format). Not saying it sucks, since for that crowd its great, but as the world's population becomes more PC and tech literate, AOL membership will be slowly creeping downward. It serves its purpose for those who need it. Yes, they do have the largest dialup list, possibly bigger than AT&T worldnet/prodigy/etc.
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Maybe AOL should pick him up...
"Dude, you're getting AOL..."
What a winning combination.
American coffee is several orders of magnitude better than it was a generation ago.
Add me to the list backing up this assertion.
I've been drinking coffee in the U.S. since 1976, when all you could get typically were robusta bean variants. I remember drinking swill like dishwater that, well, at least it was hot and caffeinated...
Since the time of Starbucks it's been possible to get good, dark, fresh-roasted arabica bean coffee that makes the old stuff taste like chicory.
Recently I was in Europe, anticipating super excellent coffee everywhere. Guess what? Didn't happen! I got better coffee in the U.S.! (Guess I'll have to go to a coffee-growing nation to get something better than what I can find in the U.S. on every other street corner.)
"Provided by the management for your protection."