CEO Calls For AOL Paradigm Shift

An anonymous reader writes "The New York Times is reporting that Jonathan Miller, AOL's chief executive, is calling for the effective dismantling of marketing for their dialup service. In a new plan to be presented to the Time Warner board in a couple of weeks, Miller outlines a new direction for AOL which moves towards using advertising as the main source of revenue while offering most everything they have (software, AOL.com email addresses, etc) for free."

Comments

AOL's new technique for retaining customers:

[Andrew Nagy]

Disable the log-out button.

Hmm AOL For free?

[opieum]

That will seem very enticing....until they start flooding the internet with more of their spam. They are using the existing setups to beat google to the free internet punch. Oh well call this AOLs deathsong. They are pretty much on the way out with a declining userbase. Poor product being made free? It's like putting a cherry on a pile of crap. The cherry may taste good but the crap wont :P

Re:Hmm AOL For free?

[p!ssa]

You see, thats your problem. You dont understand AOL, the monkeys may eat the cherry but they _fling_ crap, its the user base stoopid.

No more cds?!?!

[Doches]

My god, I hope they still give away CDs! I may never finish decorating my dorm now...

Re:No more cds?!?!

[RsG]

And to think - I was this close to perfecting a power generator that ran on burning AOL CDs. It could've solved the energy crisis at a stroke.... ....ah well, back to the drawing board. Maybe I can build one that runs on slasdot dupes.

This makes absolutely no sense

[Fubar411]

FTFA: Under the new plan, almost everything AOL offers -- its content, software and AOL.com e-mail addresses -- will be available to any Web user free.

Even my mother who has had broadband for only a year now knows user@aol.com == newbie. She knows better than to pay attention to mails from there declaring "Important, new email virus alert!!!" as these people are still wet behind the ears.

Given the number of CDs AOL has sent out, and the negative response to their bloated dial-up software, I don't think people will be scrambling to aol.com to get their hands on the latest.

So why would anyone go to AOL.com? The article leaves me unconvinced. About the only thing I can agree with is the CEO's statement about it is going to get worse (before it gets better, but there is no guarntee of that)

Re:This makes absolutely no sense

[mbradshawlong]

I don't buy it that one is stuck with his or her first e-mail address forever. I've used the same username for years, but changed domains several times (i.e. joeuser@anydomain.com). I simply send out several mass e-mails to my contacts in my address telling them and reminding them that my email address is changing. I've lost a few contacts along the way, but generally they weren't close contacts anyways.

Paradigm Shift?

[Dryanta]

More like refocusing on what actually makes AOL profitable. We knew this was coming when we saw AOL ad-words on superbowl commercials, and REALLY knew it was coming with the 10% Google aquisition. Can you really blame them for no longer competing in the sub $25/month dialup when FIMUX and muni wi-fi networks easily bring in close to 2X that per month for broadband after taking out TCO?

Just a thought

[Andrew Nagy]

AOL sucks. We all know this. So they think that providing their services for free, in an advertising based model will help them. It probably will. I think it misses the point, though. How many stories have we heard about their terrible support, lacking features, and inability to change with the market? They should probably focus on providing a great product before they make it free. Free crap is still crap.

Re:Just a thought

[t0qer]

AOL sucks. We all know this. So they think that providing their services for free, in an advertising based model will help them.

I strongly disagree...

AOL has some really good properties under its belt. Namely, i'm talking about Winamp. Let's not forget about all the Time Warner stuff they have access to as well.

With Winamp and it's shoutcast technologies, they have a good platform for content delivery, a really smart user base that constantly provides free features for Winamp through plugins. Since the 5x series Winamp has moved beyond just being a mp3 player, it has live streaming content, access to tons of Time Warner properties (Animaniacs/Freakazoid anyone?) and there's a ton more stuff planned on the horizon.

Recently a job for Music Director has popped up. Part of the description talks about things going towards social networking in the Winamp microchasm. As we know, Nullsoft is sort of the place where new AOL technologies are being developped, so it stands to reason that the social networking on the horizon for AOL and Winamp is going to include some aspects of both communities, myspace with NSV video is my guess.

The AOL client isn't completely suck ass either. Now before I get boo's from the peanut gallery let me explain... I run my own consulting company, and today I had to do some work at a lawyers office, and she's been using AOL as her email for years. She got a new PC, wanted me to transfer files from her old PC to her new PC, then hand-me-down her old PC to her assistant. I walked in thinking "OH noes! PST and outlook!" Since the AOL email client stores all the emails on the server, it was pretty painless. It wasn't *that* bad. They just logged in with their screen names, and like magic, all their stuff was there.

The AOL client isn't too shabby for reading news or other things either. Sure you can fire up Moz, but it's really not that bad... If AIM was so terrible, why do so many people use it?

About the only thing that has been bad with AOL is their dialup. Even there, not that bad. AOL has always had the biggest banks of blade modem banks. Dial up numbers just about anywhere you can think of.

It's a shame so many people judge AOL on what it was 20 years ago. Sure, it was crap then, but over the years AOL has been pretty good about responding to customers outcries about the bad, and then AOL has always moved quickly to resolve it. Remember when folks complained about busy signals? AOL took care of it. Hard time cancelling your account? AOL fired the person who got recorded, then told all their staff to not give customers a hard time. Despite all outward appearances of AOL being a hard company to deal with, force feeding their customers what they want, in reality the opposite is true.

Anyways, I have no beef against AOL. It's made the internet easier for some people, which is a good thing in my opinion. It takes a corporation with deep pockets to accomplish what AOL has, and my hats are off to them. Money well spent.

--toq

Re:Just a thought

[pluther]

OK.
As a person who uses AIM every day, I have to concur with the consensus: AOL sucks.
Since the rest of my team at my new job uses it, I went ahead and signed up for an AIM account myself. I used my own home email address for the contact. Why does AOL insist you provide a valid email address? Apparently to sell to the spammers.

Despite clicking all the "don't advertise" "don't share my address" "don't tell me about exciting new products or features" buttons, the account I used, which previously averaged perhaps one or two SPAM messages per month getting through the filters immediately jumped to 10-15 per day. It's now down to about 5-10 a day, and has stayed at that level for over a month. I shared the account with nobody else during that time.

I am not happy with AOL. No, sir, not happy at all.

Oh, yeah, and AIM is nowhere near as easy, useful, or feature-rich as Yahoo messenger, which I've used for many years.

Re:Just a thought

[clayanderson]

You clearly have not had to deal with AOL's continued poor decision-making over the years.

In the early days, they were actually much better. They made a valuable contribution back then: they made this new 'Internet' thing accessible to the masses. (And back then, it needed the help...when it was mostly a bunch of BBS's.)

But AOL soon lost it. They got exceptionally greedy, for one, evidenced most clearly by the purchase of Time Warner. And they completely lost any and all focus on their customers. For YEARS now, they've been giving the hardsell to anyone who tries to "quit AOL". (I'm sure you've heard the recent phone recording that's been circulating.)

So now, instead of being a great place for newbies to stick a toe in the water, AOL has become a detriment for newbies. AOL complicates the Internet much more than is necessary. In these days of broadband and wireless, most people (even newbies) need to do nothing more than open up a browser and type in an address. There is no need for a fat client to manage the connection.

And AOL's software is a real porker. It's e-mail. It's virus and spyware protection. It's a photo manager. It's a web browser. It's a dozen other little value-added features that AOL has included in a desperate attempt to preserve their user base.

Nice generous gesture, but AOL, of all companies, does not deserve your generosity or trust. They are an ugly, prideful company who fully deserves the fate which has befallen them.

Good Price Point

[andphi]

So...AOL users will finally get their money's worth?

Maybe it's the content?

[Dekortage]

"In May 2006, 14.8 billion pages were viewed on AOL's branded service -- by both paying users and others -- down 27 percent from a year earlier, according to comScore MediaMetrix. In the same period, Yahoo's page views increased by 10 percent, to 38.1 billion."

Here's a clue: try improving the quality rather than lowering the price. Actually, chances are that AOL's stuff isn't that bad (/. bashers aside) but just the fact that it says "AOL" on it gives people a certain predisposition against it. So, a second clue: try honestly rebranding yourself to improve market perception. If McDonald's can do it, AOL can too.

Re:Maybe it's the content?

[Aladrin]

I'm so gonna get modded down for this. -sigh-

I'm not sure exactly how you mean 're-branding', but if you think changing their logo or even their name will make techies think anything but 'newb' when they see it, you're dead wrong.

I think you may also suffer from a perspective problem. Not every person out there thinks of AOL as 'newb-ville'. Most non-geeks actually think it's just a rather large internet service provider that has many 'features' and is very very well known. They have heard jokes about it, I'm sure, but every company out there has its 'haters' and people will make fun of every company. It's just human nature. If we listened to everyone, nobody would ever use any company.

Instead, most people think of AOL as 'safe' ISP that will help protect them from the dangers of the internet. Why is this? Re-branding! They recently went through a major ad campaign that has lasted years and tells people that AOL will protect them from viruses, spam, and other problems. Most of the things they advertised were new services, which is another aspect of re-branding.

This ad campaign didn't faze techies one iota. But the general populace now sees AOL as warm and fuzzy instead of a rabid bunch of fools that has no control over itself. I'm sure there's someone on AOL that isn't a freak, but I haven't met them.

In case you think I'm just talking out of my ass, I should tell you my background. I've worked for many years as a PC Technician. People that come in with problems with AOL don't say 'Get this horrid crap off my computer!' they say 'AOL doesn't work. Can you fix it?' We (sadly) usually just uninstall the latest version and install an old one and tell them not to upgrade because it isn't stable yet. (Always true, fortunately for us.) Even attempting to explain what AOL is never works unless the person is already biased against AOL. After a certain amount of time, you just give up and accept the fact that people believe the marketting. No matter what someone actually knowledgeable says.

So again... Rebranding? Nah, they've already successfully done that. As for whether their 'paradigm shift' is going to work... Well, I doubt it. But that's their decision and anything that hurts AOL is probably good for me.

Re:Cancellation?

[ShecoDu]

Just stop using it, it's free, you won't notice the difference.

You cancel services when you dont want to continue paying for them.

Sad News

[Yaksha42]

No More AOL CDs, while they may accomplish the goal of stopping CDs from being sent out, may not be able to achieve that goal of rolling up to AOL HQ with a million CDs.

Disturbance

[Anonymous Coward]

Today, I felt a great disturbance in the force...

It was as if millions of mail carriers suddenly cried out, then, peaceful silence.

An ad for every surface on earth

[PCM2]

As someone who works in publishing, this seems symptomatic of what is a very disturbing trend to me. Somebody has to pay for content. Popular wisdom is that the consumers of that content won't pay for it. There's only one other place to go for the money, it seems, and that's advertisers.

I don't know how to feel about it. I'm somebody who hates ads. I watch a lot of PBS, tend to rent shows on DVD rather than watch them when broadcast on commercial television, or if I do watch them, I skip the ads in my DVR. Likewise, I run AdBlock and an aggressive set of filters in Firefox. My goal is to see no advertisements at all. Ironically, however, those same ads are my livelihood. Am I cutting my own throat?

Even scarier is the fact that all the movie and TV studios are aware of this behavior and are taking steps to correct for it. Product placement, for example -- it's no coincidence that guy is drinking a Coke and not a Pepsi, or that there's a big RSA Security logo on that video monitor in that episode of "24."

So if we don't want to pay for our content, and we refuse to be receptive to traditional advertising messages, how long before that kind of influence gains a foothold in other kinds of media? I work in the trade press, so we're right on the cusp of that -- some people will never believe that a story in my magazine is meant to be impartial, no matter what it says. But does anyone really think the mainstream news media -- even something like the New York Times -- is completely impervious?

I really, really do not want to live in the kind of world where every flat surface is paved with an ad, every movie is a sales vehicle, every TV show is a survey, every newspaper article is corporate public relations. But is it avoidable, given the direction our society is going?

Re:An ad for every surface on earth

[vertinox]

Popular wisdom is that the consumers of that content won't pay for it.

Actually, that is a lie perpetuated by cable companies that wanted to double dip their revenues.

People wanted to pay for programming with no ads... Remember the original setup in the 80's with cable? There is a market for "good" programming being sold directly to the consumer.

However, I use the word "good" loosely because most programming on standard TV is nothing but cheap crap thrown together for the most viewers in whatever niche possible. They need advertising for those because no one will pay for that crap.

Personally, for the good shows I do like I will buy my DVDs of TV series rather than watch them on TV.

Re:An ad for every surface on earth

[ConceptJunkie]

I agree that advertising alone is an outdated business model. I mean, newspapers and radio are really hot right now, NOT. The fact of the matter is, however, that's exactly what Google is doing, and they seem to be doing just fine with advertising providing their only revenue.

Web 2.0 has been a big buzzword for the last year, and the technological achievements and potential are impressive and exciting. But name me one Web 2.0 business that is actually a successful business! And even if there are some (MySpace?) that are generating non-trivial revenue, they are doing so through advertising.

Paying for content online has some serious hills to climb because ultimately customers want something concrete for their money. If you buy a newspaper for 50 cents, you get dozens of pages of content (and full-page bra and panty ads if it's the Washington Post), so what would be a analogous price for a single article (let's forget for a minute that most Web-based news articles consist of about two paragraphs and are barely a summary leave alone an actual article)? Would you pay to post on /.? Micropayments are certainly a possibility, but after years of "all you can eat", who's going to want to suddenly start paying per page, even for good content?

For people who aren't selling actual objects and services, whether it's Amazon selling books or iTunes selling MP3 files (which are still concrete enough to make feel like you are "getting something") or Everquest selling some Chinese slave laborer a change to farm gold, who is actually making money on the Internet without relying mostly or even solely on advertising?

In other words, if the customers aren't shopping and there's no advertising, how exactly is someone going to make money on sites like /., Digg or IMDB? I go to IMDB almost daily, but I have to admit I'd balk at having to pay to access it. AOL's past success was in providing content their customers couldn't get anywhere else, but now they can't do that any more because relatively few people are still accessing the Internet through AOL and its client.

Ultimately, I don't think the post-advertising/non-subscription business model has been discovered yet. So I don't think you can criticize AOL for doing the only thing I think they possibly can do, at least for now. My biggest criticism would be that they took too long to figure this out. But the company is too big and has far too many resources to just disappear; it just won't be the AOL we've come to know and joke about.

Re:An ad for every surface on earth

[ConceptJunkie]

No thanks. I'll stick with Firefox and AdBlock.

And that's exactly what wrong with advertising. Smart people (usually the ones with more money) are finding more and more ways to avoid it, which is fair since advertising has become more and more pervasing, intrusive and down-right annoying. I take great glee in shutting off loud obnoxious ads from the radio and TV, although when they are not obnoxious or (Heaven forfend!) interesting or entertaining, I might not bother.

I can't remember the last time I saw an animated ad on the Web.

Re:An ad for every surface on earth

[flooey]

I watch a lot of PBS, tend to rent shows on DVD rather than watch them when broadcast on commercial television, or if I do watch them, I skip the ads in my DVR.

As far as I'm concerned, that's the key. Give us the choice: ads or cash. I understand money needs to come from somewhere, but I want some control about whether I pay for it via my time or my wallet. For television, for instance, I really like what ABC is doing. Want their shows in high quality? Buy the DVD. A bit cheaper and right now, but lower quality? Buy it on iTunes. Want it for free? Watch it on the website, along with some ads. Some of their implementations aren't great (especially their ad-supported web version), but I like that they're giving the consumer the choice about how they want to pay for and receive their content.

Re:An ad for every surface on earth

[monopole]

The solution is better/targeted advertising. Advertising (and moronic network executives) are currently stuck in the same diminishing returns/kill the messenger cycle as the MPAA/RIAA is. Deprived of a captive audience, they freak out trying to further oversaturate the world in ads, which makes people turn off further. But there are three better ways:

a. Make people want to see ads. A good ad will make people stop and rewind their PVR and watch it over. It will make people send it to their friends. Remember, music videos used to be ads.

b. Target your ads and make people ask for them. Google AdSense is good and getting better at this. Arguably, eBays "favorite searches" featue is even better. Every day, eBay sends me new items which match my search terms. I WANT this information and I always read it, and often buy items based on the information, and that is perfect advertising.

c. Integrate feedback. Incorporate honest "Next!" and "Hooray!" buttons in PVRs and on banner spaces. Hit the "Next!" button and the ad disappears replaced by another, Hit "Hooray!" and it's in heaver rotation. The results are sent back to the advertiser. They get invaluable feedback, you get relief from ads you'd zap anyway. Guys get more beer ads, less tampon ads and a virtuous circle is achieved!

Re:An ad for every surface on earth

[marcosdumay]

"What bothers me are childern being to exposed to ads. They don't even realize what is happening and they are very impressionable."

That bothers me almost as much as adults being exposed to PR. But at least one can educate the children.

Re:An ad for every surface on earth

[Kadin2048]

Once the mass of humanity is freed from the need to scramble for scarce necessities...

I think this is a beautiful, but utterly naive sentiment. As society progresses, we constantly change what we define "necessities" to be, so that everyone can never have them.

Consider what was considered the 'basic necessities' for life 100 years ago, and compare it to today. Things that were utterly frivolous luxuries (like air conditioning) not too many generations ago are considered so critical to life today, that if you can't afford it you can sometimes get a government handout. Easy example: electricity.

This is because society defines "necessities" not as 'things a person needs in order to stay alive' (which is surprisingly minimal), but 'things a person needs in order to lead a reasonably average life.' At the same time, people who do have an income constantly strive to exceed that average -- to do better than the people surrounding them. Thus, the "average" bar gets constantly higher.

The net result is that there will never be enough "necessities" for everyone. If the total amount of resources in the world is n, then the amount you'd need to provide for everyone is permanently defined as n+1.

Unappreciated genius.

[DysenteryInTheRanks]

All I can say about this "Jonathan Miller" is that he's an incredible visionary and way ahead of his time.

For those unfamiliar with his vision for the future, Mr. Miller would replace our telephone modulator-demodulators with an "Ethernet" entering the home over thick black cables -- or perhaps even copper telephone wiring!

Anyone the world over could view America OnLine's pictures through an interconnected "Web" of compters independent of the company. They could even manipulate America OnLine's own computers to "search" this "Web!" How very generous!!

This new vision for inter-networking has already caught on with the kids, who have crowned it "CyberWeb 2.0" or somesuch.

I would explain further, but I must telegraph my stockbroker posthaste, to see if we can't convince this America OnLine to detach itself from old Time Inc. and sell off its own shares! It's growth potential is simply ex-plosive!

Posting via dictaphone,
Charles Fornwall Huston XII

Paradigm Shift?

[gamer4Life]

They can start by avoiding the words "Paradigm Shift".

Wait A Sec...

[somethinghollow]

They are just now relying on ads as their main source of revenue? Back when I used AOL, their ads were pervasive to the point of being annoying. Everyone I know that uses AIM thinks the number of ads are annoying.

So, what they are saying is that it will only get more annoying as they bump off dial-up. Great plan, AOL.

If AOL wanted to swap from service revenue to an ad revenue, they shouldn't have been shoving as many ads down people's throats before the switch.

Re:Simple question

[Millenniumman]

What does "regardless ... or not" mean?

Typo

[metamatic]

"AOL Paradigm Shift"

How did that letter 'f' get in there?

Eternal September

[mind21_98]

Does this mean Eternal September is almost over? ;)

Re:It's AOL...

[couchslug]

Free will get a shitload of subscribers.
Not ME, but there are many, many people who are not going to get broadband wired connections and cannot justify/afford satellite internet. They do spend money and buy stuff. I fix and reload lots of AOLified machines for happy/semi-happy AOL users.
Make it free and you 0wn them.