60% of AOL's Profits Come From Misinformed Customers

satuon writes "Ken Auletta's big New Yorker piece on AOL (subscription only) this week revealed an interesting detail about the company's inner workings. According to Auletta, 80% of AOL's profits come from subscribers, and 75% of those subscribers are paying for something they don't actually need. According to Auletta: "The company still gets eighty percent of its profits from subscribers, many of whom are older people who have cable or DSL service but don't realize that they need not pay an additional twenty-five dollars a month to get online and check their e-mail. 'The dirty little secret,' a former AOL executive says, 'is that seventy-five percent of the people who subscribe to AOL's dial-up service don't need it.'"

Comments

Re:My grandmother is one of them...

[vlm]

And particularly the person who actually NEEDS AOL?

I was also bit mystified by the 25% actually needing it.

It seems to be insurance.

Can you absolutely 100% guarantee that your hotel or conference center will have a phone line to dial up and check your email etc when business traveling? Yeah, pretty much. Thats right up there with "having sheets" or "has HVAC" or "has electricity".

Can you absolutely 100% guarantee that your hotel or conference center will have WORKING wifi? Well, err, ... um... Yeah maybe 90% but can you financially afford to take that chance for only $50/month to AOL?

Re:Where are the lawyers?

[LibRT]

You must be kidding. If I sell you a screwdriver, am I under any sort of obligation to determine whether in fact you require a screwdriver, and if so, that the screwdriver you are considering purchasing is the appropriate one for your purposes??? And why "...especially elderly ones..."? Give your head a shake - adults can make their own decisions on how to spend their money, even when those decisions are not to your liking.

Re:Inertia

[tunapez]

I've told them until I am blue in the face!

The AOLers cannot grasp the concept that they can retain their email addresses without paying for the unnecessary services. We've even downloaded their emails and contacts, opened IE and FF without AOL but they still don't believe. MSNers are no different. They are all the 60yo+ crowd who got online with the dial-up services and believe they still need these portals to get online with their Comcast/Cox/Qwest hi-speed. It doesn't help that the AOL operators outright lie to them about the necessity of the service.