Like the wounds of the ten children a year who plummet into holes in the ground filled with the jagged shards of discarded AOL cds, America Online is just hemorrhaging money and subscribers these days.
The reasons aren’t hard to figure out. First of all and most importantly, AOL as a service has always sucked. But the business model itself presumes that customers actually want to pay for an online service that coagulates access, advertising and e-commerce; unfortunately, that business model has been obsolete, if not since the 90′s, then at least over the last few years. People now buy themselves a pipe directly from a telecommunications service… why pay for advertising or e-commerce, when you can get better deals on those things for free than when going through AOL and better service to boot?
Even Time Warner hates AOL. The executives still nurse grudges against AOL for having to put up with the swaggering pomposity of its staff even as shares fell 75%. AOL bleeds a couple million subscribers every year; profits shrunk 17% last quarter alone.
We’d always hoped that AOL would die — perhaps by having an AOL starter CD propelled at railgun velocity through the directors’ necks. The Economists’ article is a good summary of why a business model centered around bad service and sending junk mail to every citizen in America isn’t a tenable long term business model.
From to [Economist]