It’s a Matter of Patience
In December of 1996, while I was working for Internet World magazine, I made a comment: “General-interest online services like America Online are doomed.”
I said this because it was obvious to me that the Internet was going to be the place where everything happened. AOL, CompuServe, and (at the time) GEnie were proprietary services that (at the time) didn’t connect to the Internet proper.
Even if they did, I reasoned, Internet access was getting cheaper and cheaper, and heck, it’s the same Internet whether you get it through a small local company or through AOL.
A few years later, in 1999, Wired poked a little fun at that.
After all, AOL seemed to be growing like gangbusters, even though we all knew that the umpteen-million subscribers the company was claiming was inflated.
The problem with Wired was it’s inability to think or see beyond a few years. “Look,” it seemed to be saying, “It’s been three years and AOL is still going strong!”
Just wait, I thought.
Waiting’s over. In an Associated Press article that’s appearing in lots of papers, we learn that AOL is “abandoning its strategy of exclusivity and will free much of its music, sports and other programming to non-subscribers in hopes of boosting ad sales.”
In other words, AOL doesn’t have enough subscribers — or the turnover is too great — to keep it afloat. It’s going to rely on ads.
That doesn’t strike me at the best of all possible models. The company is betting that its formerly proprietary content is better than what can be found on the Net — so much better that people will be willing to sit through even more ads to get it.
Two other bits of data to throw into the mix:
1. On Dec. 7, AOL cut four percent of its workforce to cut expenses.
2. On Nov. 12, AOL announced that it was getting into the online travel business. In other words, it’s going to enter an already-crowded market — crowded with the likes of Expedia, Orbitz, and Travelocity — and hope to make some money that way.
These are two indicators that don’t bode well for the company. The first says, to me, that it’s hurting. While more and more people are getting online, they’re choosing to do it without the stigma of an aol.com address.
The second says that the company is in the hands of management that’s clutching at straws. Online travel? That’s the plan?
Let’s face it, the big draws of AOL were ease of use, chat rooms, and good marketing. The first two are no longer applicable; it’s easy for anyone to get online, now that we’re past the days of hard-to-configure modems, and many sites offer Web-based chat rooms that are as good or better than AOL’s. And the third point — well, it’s tough to compete in the broadband market with a dial-up product.
(But wait, you say, there’s AOL from Broadband! But in some places that costs more than the local company’s broadband, and in others its competing with Road Runner. From Time Warner — its own parent.
So, Wired folks, I stick with my original statement. I’m sorry it took more than three years for the AOL implosion to happen, but things move slowly when you’re talking about a big, rich corporation. But doomed it is.
