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  • The Rise and Fall of AOL

    May 13th, 2015

    With the news that AOL will shortly be in the hands of Verizon in a $4.4 billion cash deal, an era that began in the early days of the Internet is coming to a close. Now the tech pundits and financial community will no doubt be discussing this transaction for days, but I’d prefer to take it personal.

    In 1989, shortly after setting up a brand new Mac system for my home office, I received a tiny cardboard envelope in the mail from a place called America Online. Inside was an offer to try out a brand new online service for the “low price” of $4.00 per hour. At a time when you paid up to $22.50 per primetime hour for the main rival, CompuServe, AOL’s “bargain basement” price may have seemed really cheap.

    Now many regarded AOL as the “kindergarten of the Internet” because of its relatively simple graphical user interface. In fact, the service was pretty well confined to its own walled garden in those early days, and true Internet access was only added some years later. But then it was a pleasant and friendly place, and I quickly sought out the new Mac forums and found myself deeply involved in the back and forth discussions.

    Over time, my bills climbed, but a content producer took pity on me and kept granting me credits. Finally he got me a gig as a member of one of the Mac support forums in exchange for a free account. Later on, I became the leader of a forum, a paid gig. A couple of years later, I got two forum leader gigs thus doubling my salary, though it was still rather less than a living wage.

    At any rate, my presence on those forums attracted attention in high places. Macworld signed me up as a contributing writer of reviews and features, and I got the first of many book gigs in response to an email from a publisher looking for someone to handle a title on, believe it or not, AOL.

    While AOL rose to the top of the online heap, efforts to add a web browser and access to other Internet services proved less successful. With the growth of broadband at prices not much higher than AOL’s flat monthly fee, many of us saw the beginning of the end. AOL even cut back on the Mac forums, so I eventually found myself without the paid gigs by the late 1990s.

    Due to the dot-com bubble, AOL found itself with an artificially high market cap, and leveraged its overwrought value to acquire the media giant, Time Warner, in 2000. For a time the company even became AOL Time Warner, and AOL CEO Stephen Case was praised as the consummate financial genius. Or an expert at corporate shenanigans.

    For a while.

    The bubble burst, and the country went into a recession. According to published reports of the time, AOL was ultimately forced to take a $99 billion write-off, a record for the time. As broadband Internet spread across the landscape, AOL shed millions of customers.

    Soon it was Time Warner all over again, and AOL was unceremoniously spun off. To many, that was the beginning of the end for AOL, but somehow the company lived on as an “online” portal, though one expects they were merely waiting for the right suitor.

    Believe it or not, as of the time Verizon made the deal to take over AOL, over two million people were still using it to get online.

    Now the transaction is touched in the usual vague terms about Verizon using AOL as part of its “over-the-top” video capability. That appears to signify distributing TV content online, in the fashion of Netflix. So is that Verizon’s intent? Did it really require shelling out $4.4 to buy AOL, or could they have simply used their own vast server network?

    By the way, AOL also owns such online news outlets as The Huffington Post, and one wonders how long founder Arianna Huffington will remain with the company. Also, I wonder how the publishing assets will fare under Verizon’s ownership, particularly if, for example, one of these outlets, such as Engadget, decides to run an article critical of the parent company. Or will these divisions end up being spun off some time in the future?

    While I have kept the very same aol.com email address all these years — and you can guess what it is — I do not have AOL Internet access, though I technically still have a press account. I also do not feel warm and fuzzy toward the company. When I worked for them, they occasionally screwed me out of promised raises and made other promises they failed to keep. At one time, in fact, AOL had to apologize to customers of poor service and other lapses. They were not always squeaky clean in their dealings with the paying public.

    I also wonder, at times, why anyone would still be paying an estimated $20 or so per month for dial-up access in 2015, but I realize some people reside in remote parts of the country where there are no viable alternatives. Or perhaps they dutifully pay that bill without realizing there are far better sources for online access.

    I also wonder whether, in another year or two, the name AOL will simply vanish in the dustbin of history regardless of how Verizon handles this acquisition going forward.



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