bureaucracybusters

AOL: WORKING HARD TO COMMIT SUICIDE

In Bureaucracy, Business, History, Social commentary on October 18, 2017 at 12:06 am

When the movie, You’ve Got Mail appeared in 1998, no one needed to be told that America Online (AOL) would be prominently featured.

It was through AOL that the two main characters in this romantic comedy—Tom Hanks and Meg Ryan—found offline happiness through an online romance.

You've Got Mail.jpg

The film was aptly timed to boost AOL’s popularity. By 1997, about half of all American homes with Internet access had it through AOL.

Founded in 1983, AOL began  began as a short-lived venture called Control Video Corporation (or CVC). Its sole product was an online service called GameLine for the Atari 2600 video game console.

Subscribers bought a modem from the company for $50 and paid a one-time $15 setup fee.

On May 24, 1985, Quantum Computer Services, an online services company, was founded by Jim Kimsey from the remnants of Control Video.

Kimsey changed the company’s strategy, and in 1985, launched a dedicated online service.

During the early 1990s, the average subscription lasted for about 25 months and accounted for $350 in total revenue.  AOL greatly expanded its customer rolls by distributing free AOL trial disks through companies like The Good Guys and Circuit City. At one point, 50% of the CDs produced worldwide had an AOL logo.

By 1997, about half of all U.S. homes with Internet access had it through AOL.  

AOL’s Silicon Valley branch office

Over the next several years, AOL launched services with the a wide range of educational organizations, including:

  • The National Education Association
  • NPR
  • The American Federation of Teachers
  • National Geographic
  • The Library of Congress.

A big draw for AOL customers was its “Instant Messenger” service. Launched in 1997, it allowed AOL members to “chat” with each other. No other online service had anything like it, and AOL refused to share the technology that made this possible.

(Eventually, an anti-monopoly lawsuit by the Justice Department forced AOL to share its “Instant Messenger” technology with its online rivals.)  

By 1998, anyone with an Internet-connected computer could access AOL for free.  Its revenues were now driven by ads companies eagerly paid to showcase their services or products.

In January 2000, AOL and Time Warner announced plans to merge, forming AOL Time Warner, Inc.  AOL shareholders would own 55% of the new, combined company. The deal closed on January 11, 2001.

At the time, it seemed a merger made in heaven.  It would supposedly allow Time Warner to digitise its content and reach out to a new online audience.  And AOL would gain access to Time Warner’s cable systems, innovative broadband capability and additional content to provide to its 27 million customers.

Yet by 2002 the merger resulted in a net loss of $99 billion, the largest loss ever reported by a company.  By 2009, the merger-marriage was over. Time Warner Chief Jeff Bawkes called it “the biggest mistake in corporate history.”

In June, 2017, AOL warned its customers that, starting in August, they would have to pay about $5 a month to access its services. The company was switching to a “new, improved” version called AOL Gold.

As usually happens when new software is launched, there were bugs all around in it. A complainant to the Pissed Consumer website wrote:

“If I have to pay I don’t want to see ads all over my mail, reading or when I’m writing. Send to later folder is all messed up. It seems to crash more & runs slower….

“I read an email & clicked on ‘mark unread’ when I tried to pull it back up I only got the heading but NOT the info. Trying to send email to a group of friends & being told there is a problem, but no idea what is wrong.  I always used this group in my 9.8 desktop with no problems.”

And another customer wrote: “Aol gold sucks.90% of the time I get error to load account.”

A third customer: “Spent 4.5 hours waiting for aol gold to import my old pfc [Private Filing Cabinet–where emails are stored] only to find it imported the wrong version of my favorites…. Then spent 3.5 hours on a remote tech call where he repeatedly uninstalled and reinstalled gold with the same results.”

Other problems include:

  • AOL shutting off immediately after sending an email
  • The lack of a “Clear Toolbar History” function (as was available on the “old” AOL)
  • The inability to transfer an image from the Internet (such as a beautiful seascape) to the desktop (another feature that was also available previously)

Customers who call AOL’ at (888) 265-3733 and press “1” for “support on your existing AOL account” automatically get transferred to the billing department.  So anyone seeking technical help needs to press “2”.

But AOL apparently doesn’t have enough techs trained in its new Gold technology.  So there is usually a long wait before one of them comes on the phone.  This means that if you’re calling on a cell phone, you can easily run out of battery time before your problem is resolved.

Then, in early October, AOL announced that, on December 15, it would shut down its Instant Messenger service.

The reason: Competing “chat” systems—such as texting, Gchat and Facebook—have replaced Instant Messenger as go-to forms of communication.

Nor does AOL plan to replace its Instant Messenger service.

Perhaps only the movie business can rival AOL for sheer self-destructiveness. Once “the big dog on the block,” AOL now risks the fate of dogs sent to the pound.

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