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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.'"
Who are the other two? And particularly the person who actually NEEDS AOL?
We've tried, and she actually understands. But she's hooked on the "experience". Maybe she just likes some disembodied voice telling her that her internet is up or down.
Well, maybe it will go away once she starts using a smartphone and starts uploading all her stuff into the cloud. That doesn't seem like a very compelling argument we have to make to her, though.
So, essentially the bottom line of AOL is bolstered by "inertia"? Is there a compelling reason why someone hasn't told the investors and / or the people getting bilked?
http://www.sec.gov/Archives/edgar/data/1468516/000119312510245249/d10q.htm Page 10.
How to Cancel an AOL Dial-Up Service By Stacey Price, eHow Contributor
Canceling your AOL account is a simple task that can be done over the phone or online. With the integration of AOL's free web-based email service, you can cancel your dial-up service and still enjoy some of their features by converting to a free AOL account if you have an Internet connection.
Instructions
Things You'll Need:
Tips & Warnings
AOL Inc.
PO Box 65100
Sterling, VA 20165-8800
Source: http://www.ehow.com/how_5955872_cancel-aol-dial_up-service.html
Quack damn you!
It took me YEARS to wean most of my AOL using friends/relatives off of AOL. Once something winds up getting "automatically charged" on their credit card every month, a lot of folks are just too lazy to change. None of them were using any of AOL's "value added services" and it was just an email application for them. Most of them already had high speed internet from their cable company or a telco DSL line already. They're all using gmail now.
Sounds like a class action lawsuit to me.
No, I'm being serious. This is an abusive business practice. In financial circles, similar actions to intentionally mislead clients, especially elderly ones, especially by omission of whether a particular service is needed or not, is a very big deal and results in loss of license to the sales agent and potentially punitive action by the SEC to the employing firm. The scales of money are different, but the sleazy flavor is the same.
Put my fist through my alarm clock with its ding-dong death inside my ear. - The Blackjacks.
I found my mother was being billed $50/month by earthlink even though she had service through another ISP. The phone number earthlink claimed they were providing service to was not only in another area code but did not even exist in that area code. When I complained to earthlink that they had stolen thousands of dollars from her over the years they just said "Earrthlink is not a usage based service". Of course not, especially when they supply service to telephone numbers that don't exist.
It get's worse. actually. I had canceled her service. but it turns out they called her back aftrwards and asked if she was unsatisfied and would she like to continue the service. They then told her that given her usage patterns they reccomended she buy extra space! Extra space on an account that she could not even use if she wanted to.
Never got any money back. Thieves. Boycott Earthlink.
Some drink at the fountain of knowledge. Others just gargle.
He'll be okay.
Failure to follow this advice may result in non-deterministic behavior.
seventy-five percent of the people who subscribe to AOL's dial-up service don't need it.
Many dozens of times I've seen customers come in that are using AOL with their DSL. I don't see it so much with cable because the majority of people using AOL are using it because cable isn't available to them, they're too far from the city, but DSL is available and they've had it for years. Many of them signed up for their DSL (service by Qwest, formerly AT&T) through AOL and don't even realize it's not AOL providing it.
So I ask them why they are still using AOL, and it quickly becomes apparent that they believe that AOL is the internet. I'm able to reason with some of them, but even a percentage of those still want to keep AOL because they're comfortable with it. Me personally, having to change my email address would be the big problem. But last I checked, AOL reduces your charges down to something like $9.99/month if you just want to keep email and not have the rest of their service such as dial-up. But even when I explain this to them, many are just not interested in it. Many years ago when I quit my dialup, I switched to my isp's "email only" plan for that same amount and kept it for about 6 months, and it made the transition to cable a lot smoother for me.
I try to explain it to them, how using a local email app on your computer makes things like managing attachments so much easier, but a lot of these people just aren't interested in anything making their computer use unfamiliar again even if only for a brief time. They're in their secure zone and don't want to leave. Only just this year I finally got my next-door neighbor to drop AOL after showing her just how much easier it was to email photos from her new digital camera using a local email app.
And I'll just toss it right out there - they're all old people Every last one of them. So eventually AOL's user-base is going to literally die off.
I work for the Department of Redundancy Department.
AOL has claimed in the past that its subscriber base hit 30 million, this was probably somewhat exaggerated (rounding up a couple of million) but taking them at their word their subscriber base is now something like 3.3 million. Not quite 90% yet, but they have been losing at least half a million per quarter so we are only a couple of months out from that mark.
Any mass auto-billing subscription service that is going to have some fraction of subscribers who are inappropriately signed up through ignorance or error. On your way down to zero again it is inevitable that you will reach the point where these are essentially your only remaining customers. Approaching the 90% decline point, AOL clearly reached that stage some time back.
I await to see how AOL will arrange to screw their last few customers when the service is finally shut down.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
AOL still makes profit.