AOL Planning Move to Ad-Supported Model

garzpacho writes "In recognition of the fact that its subscriber-based revenues continue to plummet, AOL is planning to shift to an ad-supported business model. AOL's subscriber base, which peaked at 30 million users, now has less than 19 million subscribers and is still dropping — over 800,000 subscribers dropped the service in this year's first quarter alone. In addition to seeing fewer AOL CDs, a shift to ad revenue also means some serious cuts in staff size, especially in the customer service and retention departments. From the article: 'Time Warner plans to announce a series of changes at AOL that analysts say will mark the end of the company's paid-subscriber model. The company will begin relying on advertising sales rather than monthly fees paid by customers, according to the Wall Street Journal. 'I don't know whether advertising will work, but my thinking is (the changes) are basically an acceptance of what is happening,' says Joseph Bonner, a media and telecommunications analyst at Argus Research. 'This is a reflection of reality, that they have to find some other source of revenue.''"

Comments

What's the Draw?

[Puls4r]

It seems to me that AOL is looking at the search engine model and trying to copy it. The only problem is that AOL has absolutely nothing to "draw" people in the way google does. It's kind of backwards actually. AOL continues to offer bloatware, horrible customer service, a poor product, and is now going to try adding advertisement into the deal to save itself. Google offers a top notch search engine with innovative product that makes people WANT to come, and now they are looking at offering broadband and becoming their own ISP..... AOL needs to fix it's business model and offer something compelling. If you're not drawing people advertisements won't do much.

Re:What's the Draw?

[Red Flayer]

It seems to me that AOL is looking at the search engine model and trying to copy it.

Looks more like the magazine model to me. And like the magazine industry, likely to not do so well in the long run -- there is just way too much free content out there easily available. AOL makes its living off:
(1) People who don't know better (who, BTW, are excellent targets for ads for the same reason they know no better)
(2) People who don't want to let go of their email address.

Finally, as we see minority browsers get market share, especially Firefox (with its ease of customization and extendability), subscription web portals are becoming less and less useful -- moreso as the population becomes more facile with the internet and computers in general.

Re:What's the Draw?

[Andrewkov]

But AOL has a killer demographic for advertisers: Clueless noobs with more money than brains. This is an advertisers wet dream.

Re:What's the Draw?

[operagost]

now-a-days people are becoming more computer savvy

Ten minutes on MySpace will disabuse you of that notion.

Is anyone paying full price right now?

[Blimey85]

My sister uses AOL and a few months ago one of her friends called AOL to cancel his service. He told the customer service rep that he couldn't afford the service any longer and was then asked how much he could afford. He said he could afford ten bucks a month and the rep asked if he would continue his service if they would lower his cost to $10. He then called my sister and told her what happened. She called AOL, got the same question, and told the person she could only afford "maybe $7 or $8 a month" and now pays $7 per month for her service. Of course she told everyone else she knows that uses AOL.

I know a lot of companies do this but most companies aren't a network of people that like nothing more than to sit around all day bs'ing on the web.

That's why I quit AOL

[krell]

Ad supported? It was the ads that made me quit AOL a few years ago. I got 60 spams per day in my AOL inbox, and there was no way to filter than other than to add a complete individual URL to the spam filter.

In unrelated news...

[Reverend528]

AOL blocked 0 spam e-mails today!

For Whom the Bell Tolls

[Billosaur]

If the speculation and news reports prove correct, AOL's changes would be ambitious indeed. But will they go far enough, and is it possible for AOL to regain its past heft? "Will the advertising revenue ever replace dial-up?" says Bonner. "I'm not sure when and if that will ever happen. In the dial-up world, you could be all things to everybody--that worked. Now AOL needs to focus." Adds Helfstein: "The question is: What can AOL do for customers that can convince you to stop using Google or Yahoo as your homepage?"

It's safe to say that AOL has died, but the body doesn't know it yet. At one time it was a lot of people's portal to the Internet, especially in the pre-DSL days, but now I can't honestly understand why anyone keeps it. With on-demand Internet connections and browsers readily available, there's no need for this cheesy portal application, unless you're stuck using dial-up, but those numbers continue to fall rapidly.

AOL never saw the forest for the trees -- popularizing the Internet forced up connection speeds and access, and eventually they were outstripped by Yahoo, Google, and everyone else.People got tired of being kicked off and having to log back on, or paying too much on their phone bill because their "local" number was anything but. Once AOL had a large enough subscriber base, and once all those folks got a taste of the true Internet, they made demands that AOL couldn't meet, and so now they are soon to be relegated to the dustbin of history. There may come a time when people won't remember what the "A" in AIM stands for, and then AOL will be truly gone.

Pure Crap

[MBCook]

I'm sorry, but that's what AOL is. I've had the displeasure of having to deal with them for YEARS.

I'll just be nice and ignore the fact that they bought and killed The Imagination Network, which was a blast.

Let's talk about their software. Their software that, to this day, takes like 30 seconds to start up, if it's feeling fast. Their software that often crashes after closing so when you think it's gone it's actually there sucking up 100% (happens almost daily on one of our computers). Let's talk about their integrated software suite that made since back when no one had a web browser but is now just an annoying piece of bloat-ware that should have been replaced 5 years ago minimum.

But they are going ad supported. You don't say. You'd think they were now based on using their software. In the last few years, they have gone to incredible lengths to cram ads on EVERY SINGLE SCREEN they display. Your mailbox? It has ads. Reading an e-mail? It has ads. Their welcome screen? Ads.

About a month ago, they started something new. When you exit AOL... an ad comes up. But it isn't just some little ad. It's as big as the welcome screen and it always seems to be for AOL.

But wait, it gets better.. that ad has a close button. And AOL doesn't exit until you press it. That means that choosing "exit" from the file menu DOESN'T EXIT AOL. This also seems to happen before you log off, so good luck if you don't have an unlimited plan for some reason and you forget about this.

I can only tell you from having to support my parents on AOL for the last 5 years or so (they've been members longer, it just wasn't so bad before) that AOL is a NIGHTMARE. It's amazingly slow. It crashes. If it gets screwed up (and it has) reinstalling often doesn't fix it. When you upgrade, it makes a new folder in Program Files and leaves the old version there, but deletes the shortcuts to it. Nothing like looking at someone's computer and seeing 5 copies of AOL. They continually add terrible software that only slows things down OUTSIDE AOL like their virus protection (we already that had), their firewall (WE ALREADY THAT HAD), and more. And there is something to be said for a program that keeps ALL the users downloaded files in some random directory by default. That was acceptable back in the Windows 3.1 days, but ever since Windows 95 those thins are supposed to be in My Documents. But instead, this are spread across the computer. Can't find a file? Did you open it in AOL? Then it isn't where it should be, it's in C:\Program Files\America Online 9.0 Security Slowdown Edition\Something\Or\Other. Also, what other e-mail client DELETES THE MESSAGES YOU'VE READ? You read a message, and when you log off it gets moved to "Read Meassages" or something like that. And the stuff in that folder, seems to get deleted. I don't know if it is the next time you log off, or after 1 week, or what. But if you don't specifically save it somewhere or keep choosing "Keep as new" (what my parents use) then it will go away FOREVER.

I've tried to switch my parents off. I've tried to get them to use IE or FireFox (instead of their constant problems in AOL). I've tried to move them over to GMail. I think I'm getting closer. I can't tell you how much easier my life would be without AOL.

Ah, AOL. You only outlived your usefulness about 7 years ago. All you've done since then is make things worse for everyone else. You were good at one point. It's telling that you've been hemmoraging subscribers for years, and the only way you managed to stay around during the boom (when EVERYONE was buying computers) was by generating 0.5% of all trash in the US with those stupid CDs that were put in EVERY MAGAZINE PRINTED.

Oh, yeah, then there is the Time Warner merger. That was a stroke of genius, huh.

Anyway, the point of this whole rambling anti-AOL post was that AOL already puts ads everywhere. Either their are raking in the cash and don't need the subscriber fees, or they are going to be in trouble when they do this because there is nowhere else to put ads except video ads in the background of the AOL window.

In related news

[merc]

Due to plummeting sales Mcdonalds announced plans to add dirt to their menu.

Fantastic idea. No, really.

[Weaselmancer]

Dwindling user base? Here's the cure.

Flood them with mandatory advertising through your connection client. I'm sure that lots of modem using people are going to be double-plus happy waiting all that extra time downloading megabytes of extra rich shockwave advertising content at 56k, and then wading through it all just to get their email. Freaking brilliant.

If you call to cancel

[Vengie]

They will switch you to the free plan now. I have a number of people for whom I manage their "internets!@#@@!!" and have finally gotten around to getting them all comfortable with gmail. I've had them in the "walled garden" for a while (14.95 a month AOL over Broadban plan) -- when I called to cancel for each one of them, AOL offered the same "we'll give you the service free" shtick. So if you're still using AOL, might as well take advantage now. (No clue what happens when the program is discontinued)